Avanti Feeds Ltd Management Discussions.


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. 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 operations, no representation is made that the following presents an exhaustive coverage on and of all issues related to the same. Further, the discussion following reflectsthe herein 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 Aquaculture Production:

Aqua culture production is projected to grow from 47.2 Mn MT in 2006 to 93.6 Mn MT by 2030, while fishery production is expected to decline from 64.5 Mn MT to 58.2 Mn MT during the same time. To feed world growing population, the aquaculture has to deliver an additional 46.4 Mn MT to meet the worlds sea food needs (source: GOAL).

Shrimp aquaculture production constitute significant part of fish and fisheries production

During 2016-2019 the global shrimp aquaculture production was projected CAGR 4.8% as compared to CAGR 3.6 % during 2006-2012. The farmed shrimp is estimated as 3.5 Mn MT in 2018.

The shrimp production in the country during 2018 was 6,20,000 MTs. The shrimp production in 2019 is likely to be down by 10%-15% compared to 2018 with an estimated production of about 5,75,00 MTs, with corresponding feed consumption estimated to around 10,50,00 MTs.

As per GOAL data, global shrimp production and supply is 3.75 Mn MT in 2018 as against 3.30 Mn MT in 2017 with a growth of about 13.64%. However, considering the present shrimp industry situation, a growth of about 5 % over 2018 is considered possible with a global shrimp production and supply at about 4 Mn MT.

After registering growth for successive five years from 2012-13 to 2017-18, the shrimp production in

2017-18 and 2018-19 the growth was flat. It was mainly due to extended winter in US, growth in shrimp production globally, resulting in decrease in export prices of shrimp. However, the export prices are in the process of stabilization and with positive forecast of growth in shrimp consumption, the industry is anticipating to pick up the growth trajectory in future.


The Company is a pioneer in Indian Shrimp industry having over 25 years of proven track record. The Company has technical expertise in developing need based feed formulation to suit the shrimp culture condition of different regions in India.

This flexibility of Companys feed in varying climatic and other conditions of shrimp culture with assured yield to the farmer.

The Company provides the technical assistance to the farmer in shrimp culture by trained technical team and also provides the farmer with the . developments in the techniques of shrimp culture for improved yields.

The Company has a strong dealership network as channel partners Pan-India catering to the requirements of the farmers. The Company engages, on continuous basis, research and developments in collaboration with technical experts of Thai Union Group in adopting to the changed needs of the shrimp culture activity.

The Company, with its technical expertise is capable of scaling up the production at short notice with competitive CAPEX.


Although shrimp production has tripled in the recent years, the shrimp culture industry is continued to be concerned about inadequate infrastructure facilities, particularly inadequate power supply to aquaculture farms and inadequate cold store chain available for farmers to store their product.

Though, the aquaculture is similar to agriculture in many aspects, the recognition of aquaculture on par with agriculture is still awaited from the

Government in order to avail the benefits that are available to agriculture.


The global sea food consumption is increasing as Sea food is rich in nutrition and is a healthy food compared of other forms of meat. As per GOAL report the wild caught sea food is declining year after year necessitating the increase in farmed sea food.

With long coast line, India is ideally suited for development of seafood industry. A planned development would provide abundant opportunities for seafood industry. The successful adoption of Vannamei Specie shrimp culture has to be replicated for other species of exportable fishes for broad basing the export basket and gain recognition in international market.


The aqua culture activity is dependent on climatic conditions prevailing during season to season, which is unpredictable. Natural calamities like floods, cyclones, during the culture season can have serious impact on the prospects of successful culture. Inspite of technical advancement and development of Specific Pathogen Free (SPF) seed, the possibilities of the shrimps getting affected by virus and diseases cannot be ruled out.

Volatility of international prices of shrimps and fluctuating foreign exchange rates, US Anti-

Dumping Duty and US Countervailing Duty continues to be the major areas of threat for the industry.

However, development of potential domestic market to support exports, strict adherence of traceability, scientific pond management, a judicious approach on prices and forex management is expected to reduce the impact of threats to a great extent.


With sustained growth of sea food consumption globally year after year, the demand for shrimp is estimated to grow at about 3.6% CAGR. India being one of the major source of supply of processed shrimp the growth Year-on-Year is estimated at 5% with an estimated sustainable margin of about 10%.


The Company has investment in the following power projects :

(a) The 3.2 MW Wind Mill Project in Chitradurg, Karnataka State is operational and has generated 40.06 lac units during the year.

(b) Srivathsa Power Projects Private Limited: Srivathsa Power Projects Private Limited, is a 17.2 MW gas based independent power project situated in Andhra Pradesh in which company holds 49.99%of equity shares.

During the year 2018-19, the gas supplied by GAIL was only 20,422 SCMD as against the nominated quota of 65,000 SCMD stated to be due to non-availability of APM-Gas. As a result, the power generation was limited to 308.20 lakhs units as against generation capacity of 1,100 lakhs units. During the year 2018-19, the Company reported a turnover of Rs. 1,138.80 lakhs and a loss of Rs. 210.97 lakhs after charging interest and depreciation, as per audited financials.

(c) Patikari Power Private Limited:

The Company holds 25.88% equity shares of Patikari Power Private Limited which has a 16 MW Hydel Power Project in Himachal Pradesh. During the year 2018-19 as per audited financials the Company generated 52.80 lakhs saleable energy units, yielding a gross sales income of Rs. 1,188.05 lakhs which resulted in a net profit of Rs. 530.94 lakhs after charging interest, depreciation and tax. The term loan of Rs. 7506 lakhs availed by the Company has been repaid fully on 9th April, 2019 and it is debt free company.


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.

In addition, Company has an internal Risk & Compliance Department headed by a Chartered Accountant having 20 years of experience in the relevant field. The Department is responsible to ensure compliance of all the statutory requirements by the Company. This Department is also responsible for Internal Audit and periodical risk appraisal, internal as well as external, of all the functional departments in the organization. On the basis of the appraisal, potential risks are identified and preventive measures are initiated depending on the perceived gravity of the risk.


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 of

Rs. 33,567.18 lakhs before tax adjustments as compared to profit Rs. 62,915.17 lakhs in the previous year.

(ii)Segment-wise Performance:

The segment-wise performance of the Company during the year 2018-19 is disclosed in the Notes to Accounts at Schedule No. 37


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

• 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, and

2019 2018
(i) Operating Profit Margin (%) 10.49% 21.16%
(ii) Net Profit Margin 1 (%) 7.66% 14.61%
(iii) Debtors Turnover – Based on Gross Sales Value (no of times) 155.47 181.11
(iv) Inventory Turnover 7.76 6.25
(v) Current Ratio 4.80 3.17
(vi) Return on Net worth1 (%) 20.06% 44.41%


1. Net Profit Margin and Return on Net worth ratios have been computed based on Profit

After Tax (before exceptional items).

2. Return on Net Worth is higher for the year ended 31st March, 2018 due to higher rate of growth in Profit After Tax.

3. 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. During the year under review the Company employed 90 persons and the total number of employees as on 31.03.2019 is 1008 employees.