Avanti Feeds Ltd Management Discussions

Caveat

This section of Annual Report has been included in adherence to the spirit enunciated in the code of Corporate Governance approved by the Securities and Exchange Board of India ("SEBI"). Though, utmost care has been taken to ensure that the opinions expressed by the Management herein contain its perceptions on most of the important trends having a material impact on the Companys day-to- day operations, no representation was made that the following presents an exhaustive coverage on and of all issues related to the same. Further, the discussion following herein reflects the perceptions on major issues as on date and the opinions expressed here are subject to change without notice. The Company undertakes no obligation to publicly update or revise any of the opinions or statements expressed in this report, consequent to new information, future event, or otherwise.

Global Economy

The Global Economic Growth is slowing due to a substantial rise in trade barriers and the pervasive effects of an uncertain global policy environment. Growth is expected to weaken to 2.3% in 2025, with deceleration in most economies relative to last year. The global economy in FY2024-2025 experienced moderate growth amidst geo political tensions, inflationary pressures and evolving trade policies. The current year (2025) would mark the slowest rate of global growth since 2008, aside from outright global recessions. In 2026-27, a tepid recovery is expected, leaving global output materially below January 2025 projections. The outlook largely hinges on the evolution of Trade Policy globally. Growth could turn out to be lower if trade restrictions escalate or if Policy un-certainty persists, which could also result in build-up of financial stress. The subdued global growth prospects are unlikely to improve materially with policy actions to address increasing trade restrictions, geo-political tensions, heightened uncertainty and limited fiscal space.

Global Economy Vs Indian Economy

The Indian Economy is currently the worlds fourth largest by nominal GDP, having recently surpassed Japan. While Indias growth rate is impressive, particularly, compared to other major economies, and it is projected to remain the fastest - growing economy, challenges remain in terms of per capita income and certain social indicators. The global economy in contrast is experiencing slowdown with many developed economies facing headwinds.

Salient features of Indian Economy

• Faster - growing major economy

India is projected to maintain its position as the fastest-growing major economy in the coming years, with growth rates around 6-7%.

• Fourth largest economy

India has recently moved up to become fourth largest economy globally, surpassing Japan.

• Strong domestic demand and public investment

Indias growth is fueled by robust domestic consumption and significant public investment.

• Digital transactions

Digital transactions, particularly through UPI have seen a massive increase, indicating a growing digital economy.

• Export Growth

Indias exports, particularly, in engineering goods, electronics, pharmaceuticals and marine products have seen significant growth.

• Inflation under control

Inflation has been effectively contained through targeted fiscal and monetary policies.

Global Economy

• Slow down in many developed economies

Many developed economies, including the US and those in Europe, are experiencing slower growth rates than in the past.

• Global growth projections revised downwards

Global growth is projected to be significantly lower than previous estimates, with a weak recovery expected in the coming years.

• Trade barriers and policy uncertainties

Increase trade barriers and policy uncertainty are impacting global economy.

In essence, while India is a bright spot in the global economy, experiencing robust growth and rising global profile, it also faces internal challenges, the global economy, on the other hand, is facing headwinds and a slowdown in growth, making Indias performance all the more noteworthy. (*Source: Global Economic Prospects by World Bank, 2025)

Global Aquaculture and Seafood Industry Overview

After a challenging 2024 marked by weak consumer demand in key markets, the global aquaculture industry is poised for stronger production growth in 2025, according to a new report from Rabo Bank in partnership with Global Seafood Alliance (GSA).

In the Fish Sector, Atlantic Salmon, Seabass and Seabream, Pangasius are expected to have the highest growth.

The global Shrimp Aquaculture production is expected to increase by 2% in 2025, amid moderate growth rates in Asia and Latin America. According to the latest global Aquaculture survey from Rabo Research and the GSA, Shrimp output is set to reach around 6.1 Million Mts in 2025. The production in Asia is expected to grow by 2% in 2025.

The global Aquaculture market size stood at USD 310.6 Billion in 2024 with expectation of a 5.1% CAGR through 2030 from 2025 to 2030 with a projected USD 417.8 Bn by 2030, driven by rising health consciousness demand for sustainable protein and advances in Aquaculture Technologies. Global Shrimp demand has flat lined around 4 Million MT over the past years and is expected to remain subdued during the current fiscal as well, due to muted economic growth reduce consumer spending in key importing regions such as the US, the EU and China. (Source: Crisil, Southern Shrimp Alliance, Rabo Bank.)

Despite the optimistic outlook, the industry remains concerned about the market, economic conditions and Trade and Tariff barriers as a result of ongoing Trade pacts with US by several exporting countries as a result of Reciprocal Tariff announced by US.

Aquaculture and Seafood Sector - Indian Scenario

Aquaculture continues to be an important sector in the Indian economy, contributing not only to food security but also to employment generation and foreign exchange earnings. Recognizing its strategic significance, the Government of India initiated a "Blue Revolution" in the late 1980s and early 1990s, encouraging shrimp farming along Indias vast coastline. Since then, India has emerged as a leading global producer and exporter of shrimp, with Andhra Pradesh, Odisha, West Bengal, Gujarat and Tamil Nadu driving cultivation and processing.

In FY 2023-24, India exported 1,781,602 metric tonnes of seafood valued at Rs.60,523.89 crore (US$7.38 billion), according to the Marine Products Export Development Authority. Frozen shrimp accounted for 716,004 metric tonnes, earning Rs.40,013.54 crore in export revenue, about 66% of the total.

The following table outlines Indias seafood and frozen shrimp exports over the past five years:

Exports during the Year	Total Seafood (Qty in MT)	Value (Rs crore)	Frozen Shrimp (Qty in MT)	Value (Rs crore)
2023-24	1,781,602	60,523.89	716,004	40,013.54
2022-23	1,735,286	63,969.14	711,099	43,135.58
2021-22	1,369,264	57,586.48	728,123	42,706.04
2020-21	1,149,510	43,720.98	590,275	32,520.29
2019-20	1,289,651	46,662.85	652,253	34,152.03

(Source: Marine Products Export Development Authority (MPEDA), June 2024)

India currently holds about 20% of the global shrimp market share, with production expected to remain flat at 1.2 million metric tonnes this fiscal. Nearly 48% of Indian shrimp exports are destined for the US market, making the country highly exposed to policy shifts in that geography.

Despite these headwinds, revenue growth for Indian shrimp exporters is expected to rise modestly by 2-3% in FY 2024-25, primarily driven by higher realisations due to increased prices and favorable currency movements. However, export volumes are likely to remain flat, and operating margins will face pressure as the tariff burden is passed on only partially and gradually.

The government has responded to this disruption with renewed emphasis on market diversification, exploring opportunities in East Asia, the Middle East, and Europe. In parallel, the Pradhan Mantri Matsya Sampada Yojana (PMMSY) continues to support domestic production and infrastructure development, targeting 22 million metric tonnes of fish production by FY 2025 and aiming to double export earnings. (Source: Wikipedia, 2024).

In addition, state-led initiatives-such as Jharkhands road map to boost inland fisheries-underscore the decentralised approach to aquaculture expansion, focusing on training, infrastructure, and research.

As Indias aquaculture sector enters a new phase of resilience and reform, efforts are underway to improve disease control, promote sustainable aquaculture practices, adopt digital technologies, and expand into value-added product lines. These transformations are expected to shape the sectors trajectory in the years ahead, sustaining its vital role in the economy.

(Sources: FAO, Grand View Research, Financial Times, Vox, arXiv, MPEDA, ExportImportData.in, Reuters, Wikipedia, Times of India)

Company Overview and Performance

In this volatile landscape, Avanti Feeds Ltd. demonstrated resilience and agility, delivering a steady performance while making strategic strides to diversify its business portfolio and reduce market dependence.

Segment-wise Performance

Shrimp Feed Division

The shrimp feed segment remained the primary contributor to revenue. Revenue increased to Rs.4463.21 crores in FY 2024-25 as compared to Rs.4395.66 crores in the previous year, reflecting a growth of 3.81%. Total volume increased marginally 5.5 lakh MT (from 5.32 lakh MT) during FY25 profitability improved significantly. This was driven by increased revenue, lower input costs (notably soybean and fish meal), better cost controls, and improved product formulations. Profit before tax from this segment rose to Rs.658.74 crores compared to407 crores in FY 2024-25.

The Company continued to strengthen its engagement with farmers, offering field-level support, training, and advisory services aimed at improving shrimp yields and feed conversion ratios. These efforts not only supported farmer confidence during a turbulent year but also reinforced Avantis position as a partner of choice in the shrimp feed market.

Shrimp Processing and Export Division

The processing division reported revenues of Rs.1,219 crores (previous year: Rs.1,118 crores), reflecting modest growth despite global challenges. Export volumes increased from 13,444 MT in FY 2024-25 to nearly 14,149 MT during FY 2024-25. The division strategically expanded its customer base in Japan, Korea, and the EU, reducing its reliance on the U.S. market.

However, margins were impacted by higher ocean freight, countervailing duties, and post-expansion depreciation. Profit before tax was Rs.86 crores (FY 2023-24: Rs.136 crores). Efforts are underway to shift to more value-added offerings and improve realizations across all export destinations.

Strategic Diversification Initiatives

Pet Food Segment Entry

Taking advantage of significant growth in the Indian Pet Food market (Dog, Cat food etc.,) due to increase of pet population, Avanti Group has entered the pet food business through a joint venture with Bluefalo Petcare Co. Ltd., Thailand establishing Avanti Pet Care Pvt. Ltd, (APCPL) as a subsidiary of Avanti Feeds Limited. APCPL is in the process of establishing a state-of-the-art manufacturing facility for production of Dog and Cat Food in India, catering to the increase in the domestic consumption of Pet Foods. The commercial production is scheduled to be commenced early 2027. In order to establish a market for Pet Food products, APCPL has started marketing Pet Foods under its Brand by importing premium cat food from Joint Venture Partner. Bluefalo, Thailand. The Brand name of the product is "Avant Furst," and marketed pan India. APCPL has plans to launch the Dog Food under brand "Avant Furst" across India in August 2025.

Fish Feed

The Company, with the object of undertaking production and sale of Fish Feed in the domestic market, has undertaken performance trials of Fish Feed, imported from the Joint Venture partner, Thai Union Feed Mill Ltd, Thailand. On successful trials, the Company proposes to set-up the manufacturing facility of Fish Feed with Technical-Know how provided by Thai Union Feed Mill under Technical Collaboration Agreement with them.

Response to Trade Disruption

The Company promptly reassessed its exposure to U.S.-bound exports and accelerated efforts to diversify product lines and markets. The strategy includes:

• Pivoting to value-added shrimp products to improve margin stability

• Expanding exports to less tariff-affected geographies

• Strengthening the domestic feed distribution network Financial Performance

During FY 2024-25, the Company recorded a consolidated revenue of Rs.5,777.73 crores compared to Rs.5,505.16 crores in the previous year, reflecting a year-on-year growth of 4.95%. Profit Before Tax stood at Rs.737.49 crores (previous year: Rs.536.85 crores), while Net Profit after Tax rose to Rs.557.05 crores from Rs.393.80 crores in FY 2023-24.

This robust performance was underpinned by strong demand recovery during the year, operational efficiencies, and a favorable input cost environment, especially in the shrimp feed segment. Despite a challenging year quarter marked by trade uncertainties and processor push backs following the U.S. tariff hike, the Company maintained profitability through prudent inventory management and strategic cost rationalization.

On a standalone basis, the revenue stood at Rs.4,563.21 crores, with a Profit Before Tax of Rs.658.14 crores and Net Profit of Rs.492.30 crores.

Strengths, Weaknesses, Opportunities and Threats:

Strengths

Avanti Feeds is pioneer in Indian Shrimp Industry having over three decades of operations. The company has strong and long lasting collaboration with Thai Union, a multi- national company in Global Seafood Industry. The Company is in constant interaction with Thai Union in exchange of developments in Aquaculture industry, bringing into India and to the door step of the Indian farmer to reap the best results in Aquaculture. The Feed formulation, Disease Management, Global market developments are exchanged periodically and Strategies are formulated to be the best provider of services to the farmer. This has resulted in a strong base of loyal farmers to the Company. The Company has ventured into research & development projects for sustainable growth in Shrimp Farming.

Avanti is well-equipped to meet the comprehensive needs of farmers. It has built a strong PAN-India feed dealership network and established partnerships with channel partners, processing units, and hatcheries. Regular interactions with stakeholders ensure seamless integration of operations. The company maintains constant communication with aqua-farmers, offering outreach programs and round-the-clock services through its qualified and experienced technical staff.

These initiatives have propelled Avanti to achieve a dominant position with a nearly 50% market share in the shrimp feed sector. The company is taking further steps to not only maintain but also increase its market share. Its subsidiary, Avanti Frozen Foods Private Ltd., focused on shrimp processing and export is expected to experience significant growth in both traditional and value-added products. The processing facilities are being expanded, with a particular focus on cooked and value-added products. Avanti is strategically focusing on exploring new export markets for both shrimp feed and shrimp exports.

Weaknesses

Despite being a significant sector in the Indian economy, the aquaculture industry faces several challenges and weaknesses. These include high production costs, inadequate infrastructure facilities, power supply issues, unregulated cost of raw materials, and shortage of cold storage facilities, and rising cost of ocean freights.

In addition, highly fluctuating raw material costs, dependence on climatic conditions and international developments on Shrimp prices, the Company is put to severe hardship, more often than not, due to factors beyond its control.

While the aquaculture industry and its stakeholders are aware of these challenges and taking measures to address them, government policies are slowly coming into play to help overcome some of these issues.

Avanti Feeds is aware of these weaknesses and challenges and is pro-actively preparing to overcome them through sustained measures. The company remains confident in its ability to address these issues and mitigate their impact on its operations.

Opportunities

The global seafood market has been witnessing a continuous uptick in recent years riding on recognition of its benefits to health. The growing awareness of the health benefits of seafood, with its nutritional and protein content, presents a favorable environment for increased consumption.

Health experts promoting seafood as a healthier alternative to red meat, which is being associated with challenges to human health, further contributes to the markets potential. Additionally, the rising purchasing power of the middle class and their desire for diverse food choices create opportunities for the seafood industry, including shrimp.

India, with its long coastline, farming community, and availability of land and labor, has emerged as a major player in the global shrimp industry. The Marine Products Export Development Authority, under the Union Ministry of Commerce, has drawn up a plan to achieve marine products exports worth Rs.1 Lakh Crore by 2025, showcasing the governments commitment to supporting and promoting the industrys growth.

However, recent international market challenges, such as high inflation in developed nations, ongoing Russia- Ukraine conflict, and Middle-East crisis, have posed supply chain and price challenges in the short term. As a result, the rapidly growing shrimp export industry in India has come under pressure.

To mitigate the risks associated with excessive reliance on exports, there is a need to focus on promoting and expanding domestic consumption and markets. Avanti Feeds has recognized this need and is preparing itself accordingly.

The company has taken proactive steps, including product innovations, exploring new distribution channels, embracing e-commerce and home deliveries, and optimizing supply chains. These measures have strengthened the companys position and demonstrated its preparedness in anticipation of market trends. The companys performance over the past two years, with increased top-line growth, is a testament to its readiness to tap into domestic opportunities and adapt to market dynamics.

Threats

The aquaculture industry, including shrimp farming, faces various threats and challenges that need to be addressed for sustainable growth. These threats can be categorized into climate-related risks, production costs and disease control, market volatility, and external factors.

1. Climate-Related Risks: Aquaculture is highly dependent on favorable climatic conditions, and events like floods, cyclones, and other natural disasters can disrupt production. Climate change poses longterm risks to the industry, including changes in water temperatures, ocean acidification, and rising sea levels, which can impact shrimp farming.

2. Production Costs and Disease Control: Farmers face challenges related to the cost of production, including feed costs, availability and quality of seeds, disease prevention and control measures, and ensuring food safety standards. Disease outbreaks can cause significant economic losses and affect the overall sustainability of the industry.

3. Market Volatility: The international shrimp market is subject to price volatility, which can impact the profitability of shrimp farmers and exporters. Fluctuating foreign exchange rates and increasing raw material costs, including feed ingredients, can further add to market uncertainties.

4. External Factors: Factors such as high inflation in importing nations, restrictions due to the COVID-19 pandemic, and continued Russia-Ukraine War, its fallout of pushing up inflation in developed economies, the recent Israel invasion of Gaza and conflict with Iran and the consequence of Red Sea crisis and increasing ocean freights can impact international trade and export opportunities. Dependence on imported Specific Pathogen-Free (SPF) Vannamei brood stock raises concerns about the long-term impact if international cargo movements are restricted.

The levy of Countervailing Duty (CVD) which is 5.77 % presently is always an additional burden to the export of shrimps to USA. The USA announced new reciprocal tariffs on 2^nd April 2025. A baseline tariff of 10 % on all exports to the USA came into effect from 5^th April 2025 with country specific reciprocal tariff scheduled to begin on 9^th April 2025. However, the USA announced a 90-day suspension of country specific reciprocal tariffs on 09^th April 2025, which may be an additional burden to the Company.

To mitigate these threats and achieve sustainable growth, Avanti Feeds focuses on the following:

Diversification and Domestic Market Opportunities: Explore and tap into the potential of the domestic market to reduce reliance on volatile international markets. Developing strategies to meet the growing demand for seafood within the country can help de-risk the industry.

Traceability and Pond Management: Implementing strict traceability systems and adopting scientific pond management practices can enhance productivity, reduce disease risks, and ensure compliance with food safety standards. This can help build consumer trust and confidence.

Forex Management: Managing foreign exchange risks through effective forex management strategies can help mitigate the impact of fluctuating exchange rates on profitability.

Research and Development: Continued investment in research and development is crucial to developing disease-resistant shrimp varieties, improving feed formulations, and implementing sustainable farming practices.

By addressing these threats and implementing necessary measures, Avanti minimize risks and works towards long-term growth and sustainability.

Future Outlook for Indias Aquaculture and Seafood Sector:

With favorable domestic policy shifts, increased budgetary support, and growing consumption of seafood and pet food, Avanti is well-positioned for sustainable growth. Long-term global demand for high-protein, responsibly farmed seafood remains strong, and Indias competitive edge in aquaculture will continue to support expansion.

The Company remains committed to delivering long-term value through science-backed nutrition, market diversification, and stakeholder-centric growth.

To conclude, the stake holders of the industry look forward for a bright future for the Aquaculture industry in 2025, unless any unforeseen developments in climate condition or changes in global market scenario impacts the Industry.

POWER

The Company has investment in the following power projects:

a) The 3.2 MW Windmill Project in Chitradurga, Karnataka State installed in the year 2005 is operational and has generated 47.95 Lakhs units during the year.

b) Srivathsa Power Projects Private Limited (SPPPL): SPPPL is a 17.2 MW gas based independent power project situated in Andhra Pradesh.

From the Financial year 2023-24, Plant has stopped generating power due to increase in APM- gas price and non-availability of APM-gas since May, 2022. In addition to that in the month of July, 2022, Gail India Limited - a Government of India undertaking - a Maharatna Company, who is a natural gas supplier to Srivathsa, had informed that, as per the Ministry of Petroleum and Natural Gas guidelines and directives, the APM gas from KG basin allocated to power plants will be diverted to CGD (City Gas Distribution) entities outside KG basin w.e.f 01st August, 2022. As per the above guidelines, Srivathsa is not getting APM gas from Gail India Limited. As a result, there is no power generation during the financial year. During the year 2024-25, the Company reported Other Income of Rs.14.83 Lakhs and a loss of (161.03 ) Lakhs after charging interest and depreciation, as per audited financials.

(c) Patikari Power Private Limited: The Company holds 25.88% equity shares in PPPL which has a 16 MW Hydel Power Project in Himachal Pradesh, India. During the Financial year 2024 25 as per audited financials the Company generated 38.79 Million saleable energy units, yielding a gross sales income of Rs.872.70 Lakhs which resulted in a net profit of Rs.156.27 Lakhs after charging interest, depreciation and tax.

Internal Control Systems and their Adequacy

The company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are properly authorized recorded and reported correctly. Further, the internal control system is designed to ensure that all the financial and other records are reliable for preparing financial statements and for maintaining accountability of the assets.

The Company has engaged an Independent Chartered Accountant firm as Internal Auditor responsible to ensure compliance of all the statutory requirements by the Company. The finance department in coordination with Internal Auditor is also responsible for periodical risk appraisal, internal as well as external, of all the functional departments in the organization is being taken up. On the basis of the appraisal, potential risks are identified and preventive measures are initiated depending on the perceived gravity of the risk.

Discussion on Financial performance with respect to operational performance.

(i) Operational Performance

The financial statements have been prepared in compliance with the requirement of the Companies Act, 2013 and Indian Accounting Standards in India. During the year under review, your company reported Profit Before Tax of Rs.65,873.76 Lakhs as compared to Rs.40,700.13 Lakhs in the previous year.

(ii) Segment-wise Performance

The segment-wise performance of the Company during the Financial year 2024-25 is disclosed in the Notes to Accounts at Schedule No. 34.

Key Financial Ratios

Pursuant to Schedule V(B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Particulars	2025	2024
Operating Profit Margin (%)	14.87%	9.50%
Net Profit Margin (%)	11.11%	7.18%
Debtors Turnover - (No of times)	19.13	12.56
Inventory Turnover	7.70	7.00
Current Ratio	6.18	6.25
Return on Net worth (%)	20.65%	15.52%

Notes:

Debtors Turnover ratio has been computed for both years on the basis of Gross Sales Value (net of rebates and discounts) instead of Gross Revenue.

Net Profit Margin and Return on Net worth ratios have been computed based on Profit After Tax (before exceptional items).

Interest Coverage Ratio and Debt Equity ratio are not relevant for the Company as it has negligible debt.

Human Resources / Industrial Relations

The process of Shrimp Feed production involves specialization in procurement of suitable raw materials, feed formulation, production to suit the needs of Shrimp Culture, which needs qualified and trained staff for these operations. The marketing staff has to be well trained in techniques of shrimp culture to assist to the farmers. In this direction, the Company imparts expert training in the respective field and develops Human Resource capabilities. The periodical trainings, incentives, increments and other welfare measures ensure healthy industrial relations. The total number of employees as on 31^st March, 2025 are 1548 employees.

	For and on behalf of the Board AVANTI FEEDS LIMITED
	A. Indra Kumar
Place : Hyderabad	Chairman and Managing Director
Date : 28th May 2025	DIN: 00190168