Good evening, ladies and gentlemen. I'm Vidya, moderator for the conference call. Welcome to Avanti Feeds Limited Q3 FY 2023 results conference call, hosted by KFin Technologies Limited. We have with us today from the management, Mr. A. Indra Kumar, Chairman and Managing Director; Mr. C. Ramachandra Rao, Joint Managing Director; Mr. Alluri Nikhilesh Chowdary, Executive Director; Ms. Santhi Latha, General Manager, Finance and Accounts; and Ms. Lakshmi Sharma, Senior Manager, Corporate Affairs. As a reminder, all participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Please note, this conference is recorded. I would now like to hand over the floor to the management. Thank you, and over to you, sir. Thank you, Vidya. Good evening, ladies and gentlemen. I extend a warm welcome for all for this investors conference call to review the unaudited financial results for the quarter 3, financial year 2023. Along with me here are A. Indra Kumar, Chairman and Managing Director, Mr. Alluri Nikhilesh Chowdary, Executive Director, joining from France, and other team members. The results of Q3 FY 2023 are already issued for some time now, and we are sure that you have gone through them. However, I would like to share with you some of the key indicators relevant for our discussion today. Consolidated financial results of Q3 FY 2023. The comparative performance of Q3 FY 2023 with that of Q2 FY 2023 and Q3 FY 2022 have been given in the presentation already circulated. Gross income in Q3 FY 2023 is INR 1,132 crore, as compared to INR 1,349 crore in the previous quarter, Q2 FY 2023, a decrease of INR 217 crore by 16%. Compared to Q3 FY 2022, gross income of INR 1,088 crore, there is an increase of INR 44 crore, is by 4%. The PBT is INR 96 crore in Q3 FY 2023, as compared to INR 90 crore in Q2 FY 2023, an increase of INR 6 crore by 7%. Compared to Q3 FY 2022, PBT of INR 66 crore, and there is an increase of INR 30 crore by 45%. The consolidated results indicate net impact of several factors which have increased, decreased in income, expenditure, exceptional items, et cetera, relating to Feed and Frozen Food division, which have been discussed in the following divisional performance of the units individually. If you first take up the standalone financial results of feed division for Q3 FY 2023 results. The gross income of the Q3 FY 2023 is INR 878 crore as compared to INR 1,040 crore in the previous quarter of Q2 FY 2023, a decrease by INR 162 crore, representing a decrease by 16%, mainly due to decrease in quantities of quantities of feed sales and early harvesting on account of disease rains, increase in farming sizes of bigger sessions compared to smaller size. The gross income in Q3 FY 2023 increased to INR 878 crore from INR 2,819 crore in the corresponding quarter of Q3 FY 2022, which increased by INR 59 crore, representing 7% due to increase in sales realization. The PBT for Q3 FY 2023 is INR 70 crore as compared to INR 52 crore in Q2 FY 2023, an increase of INR 18 crore by 35%, mainly due to stabilization of prices of major Raw Material. The Feed sales is reduced to 106,313 metric tons in Q3 FY 2022/2023, as compared to 126,034 metric tons in Q2 FY 2023. The PBT in Q3 FY 2023 has increased by INR 14 crore from INR 38 crore in Q3 FY 2022, represented by 37%. As you know, the cost of raw materials constitutes major share of cost of feed production, particularly fish meal, soyabean meal, and wheat flour. The average raw material cost in terms of percentage for feed sales price was 83.61% in Q3 FY 2023, as compared to 87.40% in Q3 FY 2022, and 88.11% in Q2 FY 2023, indicating a marginal decrease by about 3.7% as compared to Q3 FY 2022 and 4.5% in Q2 FY 2023. The average cost takes into consideration volatility of the major raw materials like fish meal, soybean meal, and wheat bran, sometimes increase and sometimes decrease during the respective quarters. The present rates of fish meal, soybean meal, and wheat bran are INR 110/kg for fish meal, 57/kg for soybean meal, and INR 36/kg for wheat bran. Now, I would like to share with you some of the recent developments which has contributed to the cost of raw materials, the raw materials. First, let me take the fish meal. There's a significant increase in the export of fish meal from India. The export of fish meal from India to countries like China, Japan, Vietnam, et cetera, has gone up significantly over the past 8-10 months, creating shortage of fishmeal for domestic consumption. The spike in demand for exports is due to increase in import of fish meal from India, like China, Taiwan, Vietnam, due to shortage of production in Peru, but also higher ocean price from Peru compared to imports from India. Adding to this, the Indian rupee has been depreciating against USD, giving a higher sales realization to the Indian exporters of fish meal. Further, the exports are incentivized by the duty drawback of 2.9% on FOB value and 2.30% of RODTEP. The fish meal production in India is about 3.75-4 lakh tons per annum, and shrimp feed industry consumes almost 3 lakh metric tons per annum, for feed production. 75%-80% of fish meal is required for feed production in India. With the present trend of exports demand, almost 3-3.5 lakh metric tons per annum are likely to be exported. This is a great disadvantage to the domestic consumers of fish meal, creating shortage for pushing up the domestic prices. To mitigate the hardship, the Government of India has been approached to initiate measures to safeguard the domestic Shrimp Feed manufacturers in the interest of shrimp exports, earning valuable value-added foreign, value-added exports for foreign exchange. In this context, it is pertinent to mention that the recent budgetary decrease of customs duty on import of fish meal to 5% from 15% is not significant and advantageous to the domestic consumers. Let me now develop on the wheat flour price. Like fish meal, wheat flour prices also increasing steeply, which appears to be due to inconsistent policy of exports of wheat and wheat products during 2022. In anticipation of allowing import-exports of wheat and wheat products, the traders seem to hold these products, resulting in increase of wheat flour price. In order to check the rising domestic wheat and wheat product price, on twentieth of January 2023, the Government of India announced a sale of 30 lakh tons of wheat in the open market. Again, yesterday, that is, twenty-first of February 2023, the center announced a sale of an additional 20 lakh ton wheat in the open market to further bring down the retail prices of wheat and wheat flour. The government has decided that the state-owned Food Corporation of India will offload an additional quantity of 10 lakh, 20 lakh metric tons of wheat in an open market sale scheme. Further, this year, that is 2023 crop, 2022-2023 crop year, the wheat crop also estimated to rise to 112.28 metric tons as compared to 107.74 metric tons in the previous year. It is expected that these factors would influence the wheat flour prices and soften and stabilize hereafter. To sum up, I would like to share with you that prices of these major raw materials, along with related products like fish oil, soya lecithin, et cetera, keep changing from time to time, depending upon the seasonality, production, global trends, et cetera, which has a direct impact on the raw material cost of the feed beyond, this beyond the company's controls. Let me move on with the shrimp processing division now. The Q3 FY 2023 results, the gross income for Q3 FY 2023 is INR 256 crores as compared to INR 310 crores in Q2 FY 2023, a decrease by INR 54 crores, representing 17.7% due to decrease in sales volume by 627, representing 18%. The significant reason for the lower sales volume in Q3 FY 2023 is postponement of shipments on buyer's request because of the inventory holding at their warehouses. The gross income in Q3 FY 2023 decreased to INR 256 crores from INR 270 crores compared to corresponding quarter, Q3 FY 2022, a decrease of INR 14 crores, representing 5.2%. Though the sales volume decreased by 18.2%, the gross decreased by 55.2% only. The positive impacts of increase in average export realization by $0.29 per kg and foreign exchange gain due to depreciation of INR against the US dollar. The PBT for Q3 FY 2023 is INR 30 crore as compared to INR 40 crore in Q2 FY 2023, decreased by INR 10 crore, which represents 1.1% of gross income, mainly due to decrease in sales volume and average sales realization by $0.32 per kg have changed. Having said that, the PBT has not decreased proportionately with gross income reduction. The company was able to maintain the PBT owing to increase in the foreign exchange gain and marginal decrease in ocean price cost. The PBT in Q3 FY 2023, INR 30 crore, increased from INR 26 crore in the corresponding quarter, Q3 FY 2022. Provision for recall expenses in the financial statements. In Q3 FY 2023 financial statements, an additional provision of INR 1.52 crore has been made as an exceptional item towards the value of returned and destroyed products and other related expenses, with cumulative provision of INR 32-35.62 crore till 31 December 2022, out of which the amount of INR 31.56 crore has been paid on the basis of claims, leaving the balance of INR 4.06 crore as a provision in the financial statements. Because the product liability claims for bodily injury caused by consuming the company's contaminated product under the recall, the company's insurer, New India Assurance Company, has appointed a surveyor for processing of the claim. So far, the company has received 13 claims towards bodily injury, which have been forwarded to the insurance surveyor for processing. Since the liability has been covered under the Commercial General Liability insurance policy, no provision has been made in the financial statements. The extent of claims in the financial term is yet to be ascertained. Now, let me share with you the industry overview and future outlook. You may notice that in Q3 of FY 2023, the feed division resulted in an increase of profit, though the sales have decreased, mainly due to stabilization of the prices of major raw materials during the quarter. The shrimp, the shrimp exports have also decreased in Q3 FY 2023 compared to Q2 FY 2023. The later part of the year 2022 experienced severe stress on the shrimp culture industry by increase in production of shrimps, farm gate prices going down, global recession, et cetera. The year 2022 ended with a rather disappointing note for several reasons. Coming to the budgetary support to the industry in 2023 budget. As far as import duties and GST are concerned, the aquaculture industry did not receive much support from the 2023 budget presented on first February 2023 by the Honorable Finance Minister, except the following: The import duty on fish meal has been reduced to 5% from 15%. However, this decrease has not helped the feed industry, as explained earlier. The import duty on fish oil for manufacture of aquatic feed has also been reduced to fifteen percent from 30%. However, this decrease is not also helpful to the feed industry on the same lines as in the case of fish meal. The import duty on krill meal for manufacture of aquatic feed has been reduced to 5% from 15%. This is also an expensive import item, and the decrease of 10% has not really helped the industry much on krill meal. The import duty on vitamins and mineral premixes used for the manufacture of aquatic feed has been reduced to 5% from 15%, which has provided a marginal relief to the importers of vitamin and mineral premixes used for feed manufacture. The import duty on algal flour for manufacture of aquatic feed has been reduced to 15% from 30%, providing a marginal relief. The quantity of vitamins and mineral premixes, algal flour used in the feed manufacture is not significant, and as such, the decrease of duties of 10% or 15% does not give much relief expected by the feed manufacturers. Continuing this outlook, the year 2022-2023 started on a low key. The farmers did not show much interest and are reluctant to stock the seed, which otherwise would have started now, now quickly. As per the information available up to mid-February 2023, the stocking was 5,700 million seed as against 7,800 million seed during the corresponding period of the previous year. According to the stocking, the stocking went down by 26.92% in the first 45 days of the year. However, as the farm gate prices of shrimp is increasing, the farmers are looking for stocking from March 23 onwards. It is anticipated the shrimp sector will pick up from March 2023 to make up the shortfall in the first two months. However, three questions: With global economy looking bleak and recession looming large throughout the world, the production, the shrimp production in 2023 is likely to be around 8.5%—only 850,000 metric tons, as against 900,000 metric tons in 2022. Let me now try, well, on, develop on shrimp production and feed consumption in for financial year 2022, and company plans for 2023. Shrimp production consumption, though at start of the first season, the shrimp feed consumption in FY 2023, India is expected to grow by about 15% compared to calendar year 2021, with an estimated sales of 1,200,000 metric tons. However, due to the various reasons stated earlier, the shrimp feed production in calendar year 2022 is now expected to be 9.75-10 lakh metric tons as compared to 11 lakh metric tons in calendar year 2021. The company's feed sales during the financial year 2022 was about 5.41 lakh metric tons as compared to 4.77 lakh metric tons in FY 2021. It is expected that for financial year 2023, it will be around 5 lakh metric tons, unless the shrimp culture in the rest of the year goes down cheaply due to uncontrollable reasons. The company has completed setting up of a new shrimp feed manufacturing facility in Bandapuram with annual installed capacity of 1.35 lakh metric tons, with a CapEx of roughly INR 125 crore. The new facility has commenced the production in December 2022. With the new plant coming up, commencing production, there would not be short supply of company's feed during the peak season this year, as it happened in the previous year, which has resulted in the short supply of feed in the market, to the market, to the extent of about 50,000 metric tons. Processing and exports. Shrimp production and export has come down in calendar year 2022 to about 6.5 lakh metric tons as compared to 7-7.5 metric tons in calendar year 2021. The company's shrimp exports during financial year 2022 was about 12,836 metric tons, as compared to 11,580 metric tons in financial year 2021. It is expected for financial 2023 could be around the same level of 1,212,500 metric tons. Avanti Frozen is in the process of expanding pre-processing and main processing, as detailed below. Pre-processing facility in Gopalapuram adjacent to the existing processing plant. The status is completed and waiting for final approvals to start pre-processing CapEx of INR 11.43 crores. New processing plant and cold storage in Krishnapuram is East Godavari district in Andhra Pradesh, with 7,000 metric tons per annum capacity. Land is acquired, and civil works commenced. Estimated cost of this project is INR 64.6 crores. The company has been selected under two investment incentive schemes of the Government of India. One is a sales-based incentive under Production-Linked Incentive scheme. The other is granted aid under Operation Greens Long Term Intervention scheme. The Production-Linked Incentive scheme, company is eligible for the incentive of 6%, value-added products 10% on incremental sales over a period of 6 years from the financial year 2021-22 to 2026-27, subject to a maximum of INR 79.44 crore, with a minimum of 5% CAGR, CAGR in sales. The company has made a claim application on a claim at 6% on the incremental sales of INR 57 crore, a release of incentives under PLI for financial year 2022, and it is under review by the ministry. This is not accounted for in the books accounts as per the policy of the company, to account such items only on receipt. Operational, the other scheme, Operation Greens Scheme, approval from the Government of India for granting aid for the proposed investment in new shrimp processing plant at Krishnapuram, has been received in December 2022. Maximum granting aid under this scheme will be INR 10 crore. Grant-in- aid will be released in three installments. Application for disbursement is yet to be submitted eight months, 16 months, and 24 months after the date of approval of the project. The outlook for coming quarters are good, but the feed processing division appears to be promising on account of the softening of the ocean prices, increase in value-added products exports, and also with the Chinese market promising, it is hoped that the processing division would do better in the coming quarters. I think with this, I close the brief background that with the setting, the tone for discussion. Now, we'll go into the question -and- answer session. Thank you, sir. Okay. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask a question. If you would like to withdraw your request, you may do so by pressing star and one again. Please wait for a moment while requesting queue assemblies. The first question comes from Onkar Kulkarni, Shree Investments. Please go ahead. Hello. Yeah, yes. Yeah. My question was regarding just now you mentioned that the softening of raw material prices, the future seems to be bright. So what do you think, what could be your margins in the medium to long term? I mean, we are not able to gather, like, what kind of margin percentage you can deliver in the mid to long term because of so much of volatility in all the things. Yeah, I think the question has to be split into two. One is about the feed, the other about the processing. Let me first take up the feed division, as I explained very clearly in my, you know, presentation, that the raw material prices are likely to come down for the reasons, but which is very uncertain to what extent it will come down, and what extent we'll be able to take advantage of that. These are all the factors which will only can be answered in due course. The decision of the government to release the 30 + 20, about 5,000,000 tons of the wheat has come very recently. So we have to see how the market is going to react for this, whether the prices are going to come down or how it is going to affect. Similarly, we are trying to see the exports, the fish meal has really created a great disadvantage for the domestic consumers, like fish meal producers, because the prices are very high, which were export prices, which they are giving, giving it about INR 150. So they are selling it INR 110 per kg now, fish meal. So I think, whatever amount of that transition, the difference is so huge that to divert in some, government has to come with a very strategic planning. So to domestic, to save it, to provide the comfort to the domestic industries as far as the, the availability of, fish meal is concerned. We are working on that. So, like this soya bean also like that. In today and yesterday, the prices have gone up again, soya bean meal. The reason is not known why it has gone up. So these are all, as we have been telling, almost in all, every, our, investors call, that these raw materials are very highly volatile, and it is very, very difficult to, give you a precise, margins it is going to result in. And on the other side, as you know, that the pricing of feed is also not totally free from, you know, the certain conditions, regulations by the government. So we are, on the both sides, we have a very stringent, you know, conditions whereby we are operating. So under these circumstances, it is very difficult for giving you any specific percentage of the profit margin. Coming to the question of processing. Here also, there is always a mismatch between the raw materials, the farm gate prices, and the final export price. So there also we try our best to reduce our cost of processing and maximize the profitability. I think, okay, Indra Kumar, as CMD, will explain more on this aspect. Yes. See, the international market is everything depends on the international market situation and the openings of the different markets. As of now, because the recession and the inflation across the world, there is a pressure on the players. And definitely within another two to three months, that would come to normalcy. And in the US, there are the all the, they have huge inventories, and because of China declared a complete lockdown and lifted it only in the month of December. So there has been the the the the ship was not no item was was exported to China because of the lockdown, and they they declared 100% lockdown. Because of that, there was turbulence in the market, because China constitutes around, they are the second largest importer of seafood, mainly shrimp. With the lockdown declaring all the exporting countries and exporters have looked into single market of America, US. And, as everybody knows about the Russia-Ukraine war, the European market is also very volatile. Definitely, because of that, the shrimp farmers were a little skeptical of stocking in the beginning of this year, January, but slowly they're coming back to restocking. The prices looks stabilizing, and, as of now, since our company, our company is concentrating more on value-added products, we are able to sell. The margins are quite reasonable. If you look at the whereas the supply and demand, the supply of shrimp for the processing plants is very low now because in the end of 2022, there were because of the cyclones or the disease, and also the China, China's lockdown, different, different the farmers were slow in stocking, and so that the raw material availability has come down right now. So it is the farmers are going back to stocking, and it will stabilize. Okay, this is about margins, but, what about the revenue trend? I mean, with all the headwinds you have, what kind of revenue you are expecting from this term, given the market trend? The revenues will be the same as last year. Maybe there won't be much increase. The revenue may be around 5% or 10% more, or similar as last year. Because seeing the world situation, entire world situation, we cannot expect much jump in the revenues. Here I'm asking you about overall revenue? Yeah, overall revenue. Yes. Yeah. What seems to be, most of our customers are long-standing customers, and they have the ties. They are in the US a long time, so we are able to cater to them. They are more consistent buyers. So we, as far as the demand for the product, the same exports for the company is concerned, we do not foresee any big headwinds in the export market as far as the company is concerned. B ut my question was regarding little bit long term, around two to three years, what kind of revenue you are with, even all the headwinds you have? The company is working on increasing the revenues. That's why we are expanding the second ordering capacities and also going in for the value-added products. We have to see the market situations and the world situation. Additional case. Hello? Hello. Yeah, hello. Yeah, I just to add in on the long term for two to three years, we are adding in additional capacity to produce more value-added product. And once we do, this, these kind of value-added products require high people activity because a lot of the preparation is being done in-house, so the consumer can consume the product without much preparation on their side. So that's the reason why we're expanding the pre-processing capacity. So on two to three years horizon, we have already started taking in new product orders. We have already started shipping out some of these orders, but the market needs to develop for these orders, and we need to develop the recognition in the market for these kinds of products. The trial orders have already started going out from two to three years horizon, and it becomes fully commercialized as we hire, revenue in this sector. We are also, that is for one, we started two to three categories of value-added products, which need to get into full commercialization. Once they do, we should expect a higher level of realization from the current levels and also an increase in revenue. The quantity would not increase as much, the volume, because we're producing high-value products, so the quantity might not increase as much, but the value will increase. With the additional capacities, lately, very recently, what kind of asset turn you are expecting on them? What is, what did you, a sset turn? The asset turnover ratio, how much you can, how much your revenue could increase because of those additional facilities coming in? It's very hard to put a number to it right now, because, like I was saying, it's a step-by-step process. It's a new product that we're introducing in the market, so we need to gain recognition for producing such kind of products. I wouldn't put a number to it right now, but I would say as per strategy, it's to diversify our product portfolio to enable even higher margins and revenue. So right now, I wouldn't, I can't put a number because we're in very early stage of even the construction. Okay, that's a process. But as far as the company is concerned, your capacities have gone up, right? You have recently increased your capacity. So on that also, how much revenue you can produce with those increased capacities? We can produce, see, we have increased the capacity of 175,000 tons. Because of the product mix, the product mix and now what has happened, we have to upgrade to the technologies and technologies, what is required by the customer. We are gearing up, gearing up to that, and definitely last year, in 2022, we could not supply to our customers because we did not have capacity. We have increased the capacity, and also during the—due to the product mix, what the product mix, what we are trying to do in the market, as per the requirement of the customer, say, we are geared up for all the products what is required by the shrimp culture. In fact, say, for example, earlier we used to supply the starter feed in a crumble form. Now we are doing it in a pellet form. So the productivity will come down, but the growth of the shrimp will be much better with the good FCRs. Another question. Yeah. And if the shrimp culture, because of the world scenario, the shrimp culture has, s ee, there is a little bit apprehension by the farmers, which they are coming out. So as the shrimp culture increases, we can increase our revenues. At full capacity utilization, how much more revenue you can generate with the additional capacity? We cannot say. At At full capacity, we can generate around, I think, 25,000 more. Oh, sorry, I missed the number. Huh? I missed the number which you talked about. Can you please? I cannot say, but the INR 25,000 more on this. Okay. All right, another question which keeps coming back to the management for the last, say, two to three years, is the utilization of cash. There have been plans about entering into new segments which haven't been justified, which haven't been utilized in cash. Yeah, Mr. Kulkarni, see, we are, we have expanded our, with our own generation, and we acquire, working capital requirement in this industry is very high. Very high. As of- Please listen to us. Sorry for interrupting you, sir. I request the participants to restrict with two questions in the initial round and join the queue for more questions. Yeah, yeah, I'll join with the queue, but let the management answer the current question I asked. Okay. See, the capacity increases and the markets what we are planning to expand into the new segments, it requires a lot of study, which we are, because of the COVID reason or different markets position, we have to go carefully. What plans are still on? You mean- Yeah, plans are still on. How much progress has been made on them? See, please understand, we are—we have to go cautiously. We have to see the market, and we have to supply the what is required by the market. And when we are diversifying into other products, we need to study, we need to be very careful, and we need to work on success. Yes, so what I'm asking, at what level you are in terms of that? We are almost, say, once the markets are right, we can start the production and supply within six months. Okay. All right. Thank you. Thank you, sir. The next question comes from Vishwanath Shettigar, an individual investor. Please go ahead. Hello? Hello, am I audible? Hello. We hear. Yeah. The first question is that right now, the shrimp- Your voice is very low, sir. Hello. The shrimp processing segment contributes somewhere around 2%-2.5% of the total segment. So, in terms of percentage, what do you feel that, the processing segment would contribute, say, 5 years down the line? No, it's not 2%-2.5%, sir. We are almost, almost 20% of the revenue. 20% of the revenue? Yeah. In terms of, secondly, as far as the pricing pressure is concerned, with regard to increasing shrimp price, like you, other players are also having similar issues, that you cannot raise the price. Do you feel that when the prices of raw material goes down, there will be a pressure again from government that you need to reduce the price? So definitely there'll be. See, we have to see the market, sir. You have to see the customer and your competitor. First, you have to see the customer and the competitor. When we have to carefully see the pricing so that the customer is comfortable and we are able to market our products. See, we have competition, and we have to see the one way, because the government also tries to interfere because it's more of a agriculture nature and more of a political populist scheme. So we have to carefully handle all those things. Okay. Okay. And last question is with regard to the following ROE and ROCE, right? If you look at the company's ROE and ROCE, it's very low, right? It's below 10, right? So you need to work something around on that thing, because it's basically below cost of capital right now. Yeah, because as we explained to you, the activities, what you say, ROE, depend on the revenue that we get and the expenditure and net profits that we are going to EBITDA, and this one. So unless they automatically, once they improve, it also improves. So I think we have to bear with this. Unless you have a high, better opportunity, we cannot go for any investment to get a better ROE and ROCE. Mm-hmm. Mm-hmm. So what is the management viewpoint with regard to long-term ROE, where they want to be, say, five years or 10 years down the line? If you take in the segment of shrimp processing, we are working out on the value addition, higher value addition products, and where you are, you're adding value, adding value to the products. Mm-hmm. And we get higher, higher margins. And in the shrimp feed, in the shrimp feed, we are also trying to bring a working out and see there's a lot of research has to be is being done to reduce the cost of production, how, how it comes to, and improve the FCR. Okay. And sorry, again, the last question is with regard to hatchery. I've seen that you started with the hatchery. What's the way forward on that front? Yeah, the hatchery business has started just to provide the shrimp farmer with just quality, good quality seed, and o ur hatchery capacity is not compared to the industry, and this we have just started it. And we have started the by the time we got permissions and all those things, it took a long, long time. And we have start hatchery with the business would be around we can scale it up to 1 billion 1 billion capacity, which would the revenue would be around approximately around INR 30 crore. Okay. Yeah. That's it. That's it from my side. Arjuna, INR 1 billion. Thank you, sir. I request the participant to restrict with two questions in the initial round, join back the queue for more questions. The next question comes from Rahul Shah, from Crown Capital. Please go ahead. Hmm? Rahul Shah. Mr. Rahul Shah, please go ahead. Sir, hi, hi. My questions have kind of been answered on the guidance for the next year, so thank you. Thank you. Thank you, sir. The next question comes from Jasdeep Walia, from Clockvine. Please go ahead. Hi. Thanks for taking my question. So we understand there's a demand issue on account of high inventory in US, but let's say the demand were to come back, are there any issues which constrain production in India? For example, we have been hearing that there's a lot of disease issue with the shrimp, on account of which the farmers have not been able to scale up production even if they want. So just want your comment on that. Yeah, no, no. Please come back again. Your voice is not clear, and please speak slowly because we could not understand your question. Sure, sir. Sir, I understand that there's a demand issue, right now on account of high inventory in US. And let's say the demand were to come back, are there any other issues in India which are constraining production? For example, we have been hearing that there's a lot of disease issue in India, on account of which farmers may not be able to scale up production. Let's say if the demand were to come back. So just want to know your comment. That is not, that is not right. If the demand is there and the price is there, India can scale up production. Got it. So there is no, not, issue with regard to disease controlling- Disease is there, but the disease management also is there. Got it. Got it. Thanks a lot, sir. That's all. Thank you, sir. Okay. The next question comes from Ronak Shah, from Equitas. Please go ahead. Yes, sir. Thank you for the opportunity. My questions are regarding two things. First is, what is the current capacity utilization of our existing feed and processing plants? Feed plants, feed plants, we are utilizing, we were utilizing around 98%, and now with the expanded capacity, we are almost, we are, because just now the season has started, we are, at, at around 80%. Just because the season has started. If you talk about today, the season has just started, so the stocking has just started. We are working on an 80% capacity, and with days passed by, the stockings happen much more, we may touch around 90-95%. Okay, sir. For the processing- In the processing, we are operating at around 60%-65%, because we are concentrating more on the value-added products. When the value-added products, see, the capacity is there, but doing value addition is a major—it's a human, actually not machine made, it is a human, human cut and all these things. Okay, sir. Got it. Pardon me? Yeah, sir. Sorry? Yeah. Because the capacity, because the customers want human, like, man, cut, this is the process is, either you can do by machine or by hand. They want hand, hand, handmade. Manual. Okay, sir. The capacity would not be, we cannot touch 90% or something, because it is manual. Human factories. Because of value addition, if it is a bulk, as you say, if it is a commodity side, we can touch around about 80-90%, but it is a value addition, we are not able to, we have to, that, we are able to do around 60-65%. Okay, sir. Got it. And, sir, in terms of processing division, what is the benefit in terms of if we are saying we are focusing on the value-added products, how it benefits in terms of the realization? So what is the incremental realization which we can get from the value-added products? And what is the current proportion of the value-added products in the processing from exports? Nikhilesh, are you answering? Yes, sir, I have two questions in this. No, no, no, I'm asking, I'm asking- One second. Could you repeat? Could you repeat that, please? Yeah, yes, sir. So what is the current proportion of the value-added products in our exports and processing region? And the second is, what is the incremental realization which we can get from the value-added products, from the normal exports? Mukund, could you give the makeup of what is the percentage of value-added exports? Eighteen percent. Yeah. No, value-added. Value-added is much more. Percentage, I think. It is around 24-25% of the value-added. Okay. So out of the total export, 25% is value-added. On a regular day, today, we're facing kind of price pressure, but it should develop. I think we've reached the bottom of the pricing pressure, and it should start increasing from now. We can expect a double-digit margin on the value-added products and commodity high single-digit margin. For you to understand a little bit more, see, earlier what we were doing value-added has become a commodity now. Okay. PDTO and PD, butterfly, and all earlier they were value, value-added, value-added. Now they have become commodity, and we have gone into higher this, you know, products like cooked, rings and all these things. Now they are the current value-added. Okay. So we are taking see the newest products as value addition. The ones which were earlier called value-added, we have taken into a commodity grade. See, in shrimp exports, there are different things. Headless shrimp is a commodity product. And if there is a further, further value-added, the de-veining and de-shelling and all these things are supposed to be value-added. Now, we are not taking as a value-added product further. We are taking various products like the cooked products or skewers, different as a value-added. Oh, got it. Got it. Sir, last question from my end. Sir, I think, USFDA case, at that time, we have created a provision, and at that time there was incremental INR 80 million of provision. So are we expecting any reversal of that in the coming quarter? No, Sir, can you please come back? Repeat the question. Please repeat the question. Yes, sir. So in earlier quarters, for the USFDA issue, we have created some provision in the books of accounts, and at this time, we have set up INR 80 million, around INR 80 million of incremental provision. So are we expecting any reversal of the same in the coming quarter? Sir, not exactly. Reversal means, what we are doing is, depending upon the claims received from time to time during a particular quarter, we are making the provision. So, that particular quarter, if there are any additional claims, we make a provision for that. And when the claims are settled, we take that as the expenditure from the provision. So what we do now, it has almost come to the almost zero level now. There must be not much hereafter. So what we are intending to do is, by thirty-first March, we will close all the claims that have been received so far and how much the settlement is there. Whatever is, there is an excess provision, it will be written back, or, if it is a shortfall, we'll provide further and close it. By thirty-first March, we should be able to take the total, the liability, which we have incurred on the account of the recall. That we'll be able to do it by end of this year. But we do not foresee any much increase hereafter. Almost all the claims, we hope that has been received already. Okay, got it. Got it, Got it, sir. Thank you. Thank you so much. Thank you, sir. The next question comes from Satish Kapoor, from Kapoor & Co. Please go ahead. Yeah, Namaskar, sir. Namaskar, sir. Sir, if you could explain to us the sector in the business, how the sector plays? Sir, shrimp culture, see, if you take a calendar year, shrimp farmer starts stocking from after Pongal. Pongal or Sankranti. Because shrimp culture in the cold climate, the metabolism shrimp doesn't work. So actually, it is a seasonal. After Pongal, after January 15th or 16th, they prepare the ponds and they from after 20th of January, just some people gradually, they stock. That goes on up to March, end of March, because the temperature, as higher the temperature, is good for the shrimp. The first crop gets over. The people who, people who stock in January, they harvest in April. People like that, it goes on. The first crop gets over by June, andm again, June, because people who are harvested in May, May, they stock in June. There are two crops. One is, January to April, or depending on the stockings. Second crop is from July, June, July to September, October. This is the pattern of the shrimp culture. Hope your question is answered. Yes, sir. In your opening remarks, you did mention about the degree of the raw material prices also, with the feed prices, and then if you could give us some more color of what constitutes the raw materials, sir. The major raw materials, yeah. Fish meal, soya, soya meal, wheat flour, and we have different, almost 21 varieties of raw materials, both minor and major. The major are fish meal, soya meal, and wheat flour. Okay. Sir, when we take this fish meal as a major constituent, what, why have you not looked at backward integration in terms of developing our own fish meal, and therefore, removing the element of the risk? I think that other players in the same segment are coming up with this idea, and they're also into the thinking as we can do it. So what is our thought in terms of fish meal as a- Fish meal is done from the marine fish, which is available on the west coast of India. See, there is the fish meal companies. They are majorly they specialize in that product. They specialize in their product. See, we cannot do everything, everything. Fish meal is a business itself is a big activity, which deals with the fisherman community, fisherman community, and a lot of concentration, and a lot of this thing is required. So they are specialized. Thank you, sir. In terms of time consuming, we are taking two questions per participant. We have a follow-up question from Onkar Kulkarni, from Shree Investments. Please go ahead. If you recall, 8-10 years back, there was a Vannamei shrimp, which were introduced, and that was a game changer for Avanti as well as for the overall industry. I mean, any such opportunity arising in the future, or that was just a one-off? See, there's lots of research and, lot of, innovation is going on. Today, vannamei, we have earlier our, our native species is the Black Tiger. The Black Tiger, there was a, there was a wild seed, which was, were used earlier, a wild seed. Now, an SPF seed of a Black Tiger is being produced. That, that, so the Black Tiger is also coming back into the picture. Along with vannamei, because vannamei is successful because of that specific pathogen-free. Pathogen-free vannamei was available, the survival rate was very high. Now, the specific pathogen-free Black Tiger seed is also being available, because the technology they have developed, the seed, and now it is available, and we have some farmers who are going for that also. And there is a lot of work is being done for blue shrimp and different types of shrimp. That has to come into the commercial viability. Okay, but, there is no immediate or like, say, within a year, there is nothing which is happening or on the cards? There's a lot of work is going, sir, which I cannot or anybody cannot tell that is coming tomorrow or within one year. But Black Tiger SPF is coming. Okay, can you just- SPF, SPF seed is available. It is coming. Already people have started stocking SPF for Black Tiger seed. It took almost 10 years for them to develop it. Okay. Can you just let me know what was the cash in the current balance sheet as of thirty-first December? Very good. Very good. Sir, we have about INR 1,100 crore. Okay, and you said majority of that you require for the working capital. I mean, may I know how much percentage from that is required generally, like every year? It is seasonal. See, as we answered earlier, this is a seasonal, business. In the peak season, we would be requiring around equal, INR 700 crore-INR 800 crore. How much? INR 700 crore-INR 800 crore. 700-800, or sometimes 900, because the availability of the raw material, we have to book the raw materials, seeing the prices and all these things. There are a lot, these things we have to look in, keep the stocks and keep getting only because. There is just, you know, we have to, we have to cover those, and before the prices go up, we have to buy. All these things are there. May I add something to what CMD said, that by using these funds, we are in a much, much better advantageous position compared to going for a bank borrowing. Because one thing is that we are able to pay our raw material suppliers immediately within 3-4 days of receiving the product, and the quality control is cleared. So this has given us a lot of advantage in pricing the price and to bargain for good price. This is one advantage we are getting. Similarly, if in the season, what happens is, apart from the raw material required, for example, now January, February, March, the year-end, what we do is we provide these discounts to our dealers, so the cash rotation is less in these two, three months when we use these funds for all our raw materials. So we procure the raw materials by paying with these funds. So if you compare, the way, really speaking, if you look at the returns today, because of the FD, the interests have gone up and what at the same time, your borrowing cost has also gone up. If you are to use this, it will be a disadvantage if you use the borrowed funds. So we use the same funds for this working capital requirements. This, in fact, is an advantage to the company and the shareholders also. We are able to maintain the, you know, costs, particularly interest costs, much, much lower, almost negligible. So this entire amount, see, it depends upon it throughout the year. Maybe a couple of months we may have some surplus, but does not mean that, you know, we have got a lot of cash surpluses for a longer period. It was a short period. In almost nine months in a year, we require these funds. It is a rotation, I think, is a very, the seasonal items when the crop of soy comes, we have to care, keep, purchasing and all these things. So the money is used, mostly for the working capital. Yeah. In October, November, it is wheat meal. In March, April, you get this wheat flour. See, sometimes there is a you know this one fishing ban or fish meal. At the time like this, every year they will have their own calendar. We have to manage the funds to keep the stocks. Thank you, sir. That will be the last question for the day. Ladies and gentlemen, we would like to come to the end of this conference. On behalf of KFin Technologies Limited, we would like to thank the entire team of Avanti for giving us the opportunity to host this call, and we appreciate the interest from the investors and analysts for the participation. Thank you. If you need any further information, you may connect with Mr. Vivek Jain of KFin Tech at vivek.jain@kfintech.com. Thank you for your participation and for using Tour Sabah's conference call service. You may disconnect your lines now. Thank you, and have a good day, everyone. Thank you.