Coastal Corporation Ltd Management Discussions

Annexure - 5

Coastal Corporation Limited:

A Leader in Sustainable Shrimp Processing

Coastal Corporation Limited is a prominent player in the Indian shrimp processing industry, offering a diverse array of delectable, fresh, and frozen shrimp products. We cater to a wide range of customer preferences, encompassing raw, cooked, and value-added options including headless, shell-on, butterfly, and skewered shrimp. Our unwavering commitment to excellence has solidified our position as one of the top Indian shrimp exporter to the United States and other significant markets across the globe.

A Bounty of Products Reaching Global Shores

Coastal Corporation Limited offers a delectable selection of shrimp varieties, including the ever-popular Black Tiger (Penaeus Monodon) and Vannamei (Litopenaeus vannamei), renowned for their exceptional taste and texture. We cater to diverse customer needs by providing a variety of product forms, including raw frozen blocks, Individually Quick Frozen (IQF) options, cooked frozen blocks, and IQF shrimp.

Our commitment to brand excellence is reflected in our portfolio, featuring established brands like Coastal, Coastal Premium, Coastal Gold, Jewel, and President. These brands have garnered recognition and trust amongst consumers worldwide, solidifying our presence in key markets like the US, Europe, Canada, UAE, China, Hong Kong, Japan, and Korea.

Processing with Precision and Sustainability in Mind

Coastal Corporation Limited operates three state-of-the-art processing plants, strategically situated in Yelamanchili, Visakhapatnam and Kakinada, Andhra Pradesh. These facilities boast a combined approved freezing capacity of 71 MT per day, ensuring efficient and high-volume production. We are committed to upholding the highest quality standards throughout the processing journey, leveraging advanced technologies and stringent protocols.

Furthermore, demonstrating our dedication to sustainable operations, Coastal Corporation Limited has invested in a commendable 3.6MW captive solar power project. This initiative not only reduces our environmental footprint but also translates to cost-effective operations in the long run.

Expansion and Strategic Alliances Fueling Growth

Coastal Corporation Limiteds commitment to growth is underscored by our subsidiaries. Seacrest Seafoods Inc. (USA) facilitates the export and sale of our exceptional seafood products within the American market. Continental Fisheries India Limited plays a pivotal role in furthering our marine product exports, while Coastal Biotech Private Limited spearheads the promising venture of ethanol production.

A Thriving Industry with Immense Potential

Indias seafood industry is witnessing a remarkable surge, with exports reaching an all-time high of 17,81,602 MT of seafood, valued at a staggering US $7.38 billion. This impressive feat signifies the industrys immense potential for continued growth and solidifies Indias position as a key player in the global seafood market. Andhra Pradesh, in particular, is leading the charge, contributing a significant 20% by volume and a noteworthy 32% by value to Indias total marine product exports.

While this positive trend is a welcome sign for the Indian economy, there are areas for further improvement. Supporting aquaculture farmers by minimizing the cost of feed, electricity, and other production-related ingredients can significantly propel Indias seafood exports to even greater heights. With ambitious targets set for the coming years, Indias seafood industry appears poised for continued success, and Coastal Corporation Limited is well-positioned to ride this wave of growth.

Capitalizing on Rising Demand for Nutritious Shrimp

The demand for shrimp is witnessing a steady rise, driven by its exceptional nutritional value and versatility across various culinary applications. Coastal Corporation Limited is strategically positioned to capitalize on this growing demand by offering a comprehensive range of high-quality shrimp products.

Forging Strategic Partnerships for Market Expansion

Coastal Corporation Limited is constantly innovating and expanding its reach. We recently entered into strategic agreements with Mitsubishi Corporations Toyo Reizo Co. Ltd. (Japan) and SPC GFS Co Ltd. (Korea), paving the way for significant market expansion in these crucial Asian countries.

Financial Performance (FY 2023-24)

The financial statements of Coastal Corporation Limited and its subsidiaries are prepared in accordance with the Indian Accounting Standards (referred to as Ind AS) as prescribed under section 133 of the Companies Act, 2013, and the Companies (Indian Accounting Standards) Rules, as amended from time to time. The significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements. Below is an overview of the companys consolidated financial results:

Particulars	Year Ended 31.03.2024	Year Ended 31.03.2023
	(CONSOLIDATED)
Revenue from Operations	43302.33	35272.45
Other Income	961.93	1154.09
Total Income	44264.26	36426.54
Profit before Taxation	792.84	1076.10
Current Tax	195.82	IGHT>103.82
Tax relating to earlier years	10.21	3.82
Deferred Tax Credit/(Charge)	134.64	298.56
Profit After Tax (PAT)	452.17	669.89

Key Financial Ratios:

Financial Ratio	FY 202324	FY 202223	% Variance	Reasons For Change
Current Ratio (Times)	1.10	1.18	(7.10)	-
Debt Equity Ratio (Times)	0.82	0.65	25.55	Due to increase in the borrowings during the year
Debt Service Coverage Ratio (times)	1.65	3.49	(52.64)	Due to decrease in the Profit during the year
Net Profit Ratio	2.04	2.76	(26.02)	Due to decrease in the Profit during the year
Return on Equity Ratio	3.20	3.62	(11.52)	-
Return on Capital Employed	8.31	5.36	55.12	Due to increase in Revenue from Operations during the year
Trade Receivable Turnover Ratio (times)	9.32	9.73	(4.23)	-
Inventory Turnover Ratio	3.47	3.54	(2.06)	-
Trade Payable Turnover Ratio (times)	53.59	73.22	(26.81)	Due to prompt payment of Trade payables
Net Capital Turnover Ratio (times)	17.11	11.84	44.52	Due to Increase in Revenue from Operations during the year

• Revenue from operations: Rs.43,302.33 Lakhs (compared to Rs.35,272.45 Lakhs in FY 2022-23)

• Profit after tax (PAT): Rs.452.17 Lakhs (compared to Rs.669.89 Lakhs in FY 2022-23)

• Reason for decrease in Profits is due to the increase in cost of the raw materials and also the increase of the depreciation during the financial year.

Future Outlook

• Vision: To be a leading global supplier of high-quality and sustainable seafood.

• Strategy: Customer-centric approach to identify and capitalize on market opportunities.

Challenges and Opportunities

The challenges faced by the company are:

1. Timely finance from the Financial Institutions in the beginning. Now that all were streamlined, we are operating smoothly.

2. Shortage of material leading to price hike of raw material i.e. aquacultured shrimp due to loss of crop by the farmers, impact of white spot syndrome, a viral infection. Partly they could overcome by maintenance of good environmental conditions and husbandry practices and use of specific pathogen-free post larvae.

3. World Market:

a) Impact of Covid 19 period the company had faced, huge financial crises due to non-acceptance of shrimp products from India.

b) Impact of recession and inflation in major consumed countries like USA, Europe, China etc.

c) Dumping of seafood products by Equador in USA had affected previous two years.

d) Anti-Dumping duties by USA.

e) Government withdrawn electricity concessions.

f) Imposed Agriculture Market cess.

Solutions:

1. Pond maintenance and treatment of soil before seeding had resulted good harvest, quantities have improved now.

2. Government of India supporting with incentives for export community.

3. Government of India extending the interest subvention.

4. Refund of GST for export units and Input taxes.

Solutions sought:

5. Power subsidy.

6. Exemption of GST on Shrimp Feed.

7. Removal of Agricultural cess on shrimp exports by state government

Internal Controls And Adequecy:

The Company has a proper and adequate system of internal controls. These controls ensure transactions are authorized, recorded and reported correctly and assets are safeguarded and protected against loss from unauthorized use or disposition.

Conclusion

In conclusion, Coastal Corporation Limited is a company built on a foundation of excellence, innovation, and sustainability. As we navigate the dynamic currents of the global seafood market, we remain steadfast in our commitment to providing customers worldwide with the finest quality shrimp products. Our company is well-positioned to capitalize on growth opportunities in the global shrimp industry. By focusing on innovation, sustainability, and market diversification, we aim to remain a leading supplier of high-quality shrimp products to customers worldwide. By embracing change, fostering collaboration, and advocating for industry-wide advancements, we are confident that Coastal Corporation Limited will continue to be a leading force in the years to come.