Coastal Corporation Ltd Management Discussions

Coastal Corporation marked a significant milestone in FY 2024-25 with a historic consolidated turnover of Rs. 639.32 crore, reflecting a 44.43% growth over the previous years Rs. 442.64 crore. The companys standalone turnover reached Rs. 623.47 crore, registering a strong year-on-year increase of 45%, primarily driven by a 48% surge in production volumes to 9,329 tonnes, enabled by the full-scale operations of its third processing unit (Unit 3).

While operational performance remained strong, profitability saw a slight dip due to the imposition of Rs. 13.81 crore in countervailing duties by the United States, resulting in a consolidated net profit of Rs. 4.48 crore, compared to Rs. 4.52 crore in FY 2023-24.

The companys solar power unit also delivered commendable performance, generating 48.14 lakh units of clean energy during the year. Of this, 30.48 lakh units were consumed internally, with the surplus banked for future utilization, underscoring Coastal Corporations commitment to sustainable and energy-efficient operations.

Coastal Corporation continues to deliver a wide variety of shrimp products, including raw, cooked, butterfly, IQF, headless, shell-on, and skewered shrimp, featuring the premium Black Tiger and Vannamei varieties.

Our brands — Coastal, Coastal Premium, Coastal Gold, Jewel, and President — have a strong presence in the US, Europe, Canada, Japan, China, Hong Kong and Russia.

Coastal Biotech Private Limited: which recently completed successful trial runs and began full-scale ethanol production from May 2025. It projects a turnover of Rs. 300 crore and a net profit of Rs. 18 crore in the coming year, despite a project cost overrun of Rs. 35 crore due to infrastructure additions and delays in machinery supply.

Continental Fisheries India Limited: reported a turnover of Rs. 9.99 crore and has confirmed orders worth Rs. 10.76 crore. It anticipates a threefold revenue increase in FY 2025-26. However, due to prevailing market uncertainties, its seafood project at Deras has been paused, and proceeds from the rights issue are proposed to be redirected to working capital.

Seacrest Seafoods Inc (USA): saw a surge in turnover to Rs. 71 crore from Rs. 17.7 crore last year. Though the subsidiary posted an annual loss of Rs. 2.67 crore, this reflects an improvement over the previous years Rs. 3.66 crore loss, with profits registered in Q3 and Q4. Given US market uncertainties, the proposed buyback arrangement has been deferred by one year.

India exported 1.78 million MT of seafood in FY25, valued at US$7.38 billion, maintaining its global standing. Andhra Pradesh remains the leading contributor, accounting for 20% of volume and 32% of value in exports.

The Indian shrimp industry is bracing for a potential rise in the US reciprocal tariff to 50%, in addition to anti-dumping and countervailing duties. The US accounts for 41% of Indias shrimp exports, making this a significant concern. At the same time, Ecuador, a major competitor, faces only a 10% tariff and is gaining market share, particularly in basic shrimp segments.

The withdrawal of interest subvention has added further financial strain, lengthening working capital cycles and increasing exporters reliance on external borrowings. Crisil projects a modest 2-3% revenue growth for Indian shrimp exporters in FY 2025-26, largely due to higher prices and forex gains. However, export volumes are expected to remain flat, with operating margins declining further to 6.5-6.7% amid tariff burdens and weak demand from the US, EU, and China.

Despite these challenges, India retains a competitive edge in value-added shrimp products due to superior processing infrastructure. While currently contributing 10% to total exports, value-added products are expected to account for 15-17% over the next 2-3 years, offering opportunities for higher margins and product diversification.

Coastal Corporation is actively pursuing market diversification to reduce reliance on the US. Strategic partnerships with Japans Toyo Reizo Co. Ltd. (Mitsubishi Corporation) and South Koreas SPC GFS Co. Ltd., along with expanding exports to Europe, China, and Russia, are expected to mitigate geopolitical trade risks.

Our value-added product range — including cooked, butterfly, IQF, skewered, and shell-on shrimp — continues to be a key differentiator. With our three modern processing facilities in Andhra Pradesh and a combined freezing capacity of 71 MT/day, we are well-positioned to scale further.

On the sustainability front, our 3.6 MW captive solar power plant reduced energy costs and environmental impact.

Key challenges during the year included, delays in financing, shrimp crop diseases, high import duties in the US, intensifying competition from Ecuador, and rising energy costs. In response, we implemented operational streamlining, enhanced pond management practices, and actively engaged in policy advocacy through SEAI (Seafood Exporters Association of India). Additionally, our strategy of targeted export diversification has helped reduce risk exposure and sustain momentum. To further strengthen industry resilience, we continue to seek government support for critical policy interventions — including the reintroduction of interest subvention, GST exemption on shrimp feed, removal of the agricultural market cess, power subsidies for processing units, and fast-tracked tax refunds. These measures are vital to maintaining competitiveness and enabling longterm sector growth.

To bolster the growth and competitiveness of the shrimp industry, we seek the implementation of key policy measures. First, we recommend the reintroduction of interest subvention to reduce the financial burden on shrimp farmers and exporters. Second, we urge the exemption of GST on shrimp feed, a critical input, to enhance affordability and encourage sustainable aquaculture practices. Third, power subsidies for shrimp processing units are essential to improve cost-efficiency and global competitiveness.

Additionally, we advocate for the removal of the Agricultural Market Cess on exports, which currently inflates costs and hampers export performance. Finally, we request the fast-tracking of export refunds, including GST and input taxes, to ensure better liquidity and smoother operations for exporters. These measures, if implemented, will provide significant relief and growth impetus to the sector.

Despite a challenging global environment, Coastal Corporation Limited remains well-positioned for steady progress across key performance areas. Revenue growth is projected to align with CRISILs industry forecast of 2-3%, reflecting resilience in a dynamic market. The company ensures operational stability, with all units fully functional and ongoing investments to expand capacity for value-added exports. Through strategic alliances, Coastal is actively entering Asian and European markets, mitigating risks associated with US trade uncertainties. Reinforcing its long-term vision, the company maintains a strong focus on sustainability, with continued commitment to green energy adoption and eco-friendly aquaculture practices, paving the way for responsible and resilient growth.

To be a global leader in high-quality, sustainable seafood production.

• Customer-Centricity: Tailored offerings and flexible production formats.

• Innovation: Investment in R&D and product development.

• Market Diversification: Reducing over-reliance on the US market.

• Sustainability: Environmental responsibility embedded in operations.

The Company maintains a robust and comprehensive internal control system designed to ensure the integrity of its financial reporting, the safeguarding of assets, compliance with applicable laws and regulations, and the efficient and effective operation of the business. These systems are an integral part of our governance and risk management practices and play a critical role in supporting long-term sustainability and shareholder value.

Our internal control systems are designed to achieve the following objectives:

Reliability of Financial Reporting: To ensure accurate, complete, and timely financial disclosures in accordance with applicable accounting standards and regulatory requirements.

Compliance: To ensure adherence to applicable laws, regulations, and internal policies.

Operational Efficiency: To promote effective and efficient use of the Companys resources.

Asset Protection: To safeguard assets from unauthorized use, loss, or fraud.

The internal control framework is overseen by senior management and the Board of Directors, particularly through the Audit Committee.

The Internal Audit Department operates independently and reports directly to the Audit Committee. Its primary role is to assess the adequacy and effectiveness of internal controls, risk management practices, and governance processes. Internal audit findings and recommendations are communicated to management and the Audit Committee, and corrective actions are monitored regularly.

Management has conducted a review and evaluation of the effectiveness of the Companys internal controls over financial reporting as of the reporting date. Based on this assessment, management believes the internal control systems are effective and provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. No material weaknesses were identified during the period under review. The Company continues to enhance and refine its internal controls in response to changing business needs and regulatory developments.

Coastal Corporation Limited has not only achieved historic financial performance in FY25 but also laid the groundwork for longterm resilience in a volatile global market. While tariff and regulatory risks persist, our strength lies in innovation, strategic partnerships, value addition, and unwavering commitment to quality. With a clear vision and robust capabilities, we are confident in navigating the future and reinforcing our position as a premier Indian shrimp exporter on the global stage.

For Coastal Corporation Limited

Sd/- T. Valsaraj

Mangaing Director

DIN:00057558

www.coastalcorp.co.in