Avanti Feeds draws multi-pronged strategy for growth, to hold at least 51pc in pet care JV

Kolkata : Leading shrimp feed, processor and exporter Avanti Feeds Ltd Group is working on a multi-pronged strategy to weather the industry headwinds and protect margins and maintain growth, a senior official said on Sunday.

The strategy includes focusing on value-added exports, newer markets, ready-to-eat shrimp products, and a foray into the pet food business in a joint venture with a Thai company. The company also looks forward to government support in ensuring raw material availability at competitive prices in the domestic market.

"There are headwinds in our industry in both feeds and shrimp processing and exports. We are taking several strategies to overcome it," Avanti Feeds joint managing director and CFO C Ramachandra Rao told PTI in a telephonic interview.

"We have also sought government intervention to ensure adequate availability of fishmeal in the domestic market for cost-effective shrimp feed production, as the duty cut is not adequate to provide sufficient relief," he said. About pet feed venture, Rao said the company has entered into a technical know-how agreement with Bluefalo Company Limited, Thailand. "They will also pick a stake, but finer details of the project, such as project cost, site, and holding pattern, are still being worked out.

We will hold at least 51pc as the JV will be a subsidiary," he said. Rao said the company is looking at new markets like China and Japan, apart from the traditional US and European markets, due to subdued demand and prices in the latter. "On average, realisation is about 10-15 per cent less from shrimp exports due to economic woes in the US and European markets," he pointed out. "In the second half of the year, we expect a 15-20 per cent decline in export demand.

The subdued prices are also discouraging production at the farm level, so cost-effective raw materials are key to the stability of the industry," he said. He said while the first quarter for feeds was good, the full year may see a decline in feed output due to the headwinds. "We had suggested the government to impose export duty and quota on fishmeal. No respite has been received so far," Rao said.

The export of fishmeal from India to countries like China, Taiwan, and Vietnam has gone up steeply over the past 8 to 10 months, creating a shortage of fishmeal for domestic consumption. Fishmeal production in India is about 3.75-4 lakh metric tons per annum, and the shrimp feed industry consumes about 3 lakh metric tons per annum.

This means that 75-80% of fishmeal is required for feed production in the domestic market. The company posted a net profit of Rs 115 crore for the June quarter of the current fiscal from a revenue of about Rs 1,553 crore