Avanti Feeds Ltd (NSE: AVANTIFEED) Q2 2025 Earnings Call dated Nov. 20, 2024
Corporate Participants:
C. Rao — Joint MD, CFO, Compliance Officer, Company Secretary & Executive Director
Santhi Latha — General Manager of Finance and Accounts
DVS Satyanarayana — Chief Financial Officer
Alluri Nikhilesh — Executive Director
A. Sanjeev — Executive Director
Analysts:
Kunal Ochiramani — Analyst
Pradeep Rawat — Analyst
Nitin Awasthi — Analyst
Kamal Sharma — Analyst
Suresh Pal — Analyst
Amit Kumar Rajput — Analyst
Shriram R — Analyst
Presentation:
Operator
Good evening, ladies and gentlemen, I’m Soumya, moderator for the conference call. Welcome to Avanti Feeds Limited Q2 and H1 FY ’25 Earnings Conference Call. We have with us today Mr. C. Ramachandra Rao, Joint Managing Director; Mr. A. Venkata Sanjeev, Executive Director; Mr. Alluri Nikhilesh, Executive Director of Avanti Frozen Foods Private Limited; Mrs. Santhi Latha, GM of Finance and Accounts; Mr. Lakshmi Sharma, Senior Manager, Corp Affairs; and Mr. DVS Narayana, CFO of Avanti Frozen Foods Private Limited. [Operator Instructions]
I would now like to hand over the floor to Mr. C. Ramachandra Rao, Joint Managing Director. Thank you, and over to you, sir.
C. Rao — Joint MD, CFO, Compliance Officer, Company Secretary & Executive Director
Thank you, Soumya. Good evening, ladies and gentlemen. I am pleased to extend a warm welcome to all of you for this investors conference call to review the unaudited financial results for the quarter two financial year ’25. Along with me here are Mr. Venkata Sanjeev, Executive Director; Mrs. Santhi Latha, General Manager of Finance and Accounts; Mr. DVS Satyanarayana, CFO; and Lakshmi Sharma, Company Secretary. And Mr. Nikhilesh is joining from the Avanti Frozen Foods Processing plant from Yerravaram.
To begin with, Mrs. Santhi Latha, GM Finance and Accounts; Avanti Feeds will present highlights of the financial results for the period ended 30th September 2024 of Feed division and also consolidated financials of the Company for the same period. Thereafter, Mr. DVS Satyanarayana will present the financial highlights of shrimp processing and export division. After presentation by both of them, we will take a question-and-answer session.
Over to you, Mrs. Santhi Latha.
Santhi Latha — General Manager of Finance and Accounts
Thank you, sir. Good evening. Now I’ll take you through the consolidated and Feed division financial performance highlights for the quarter ended 30th September 2024. So Q2 FY ’25 results, consolidated financial results. The comparative performance of Q2 FY ’25 with that of Q1 FY ’25 and Q2 FY ’24 have been given in the presentation already circulated.
Gross income in Q2 FY ’25 is INR1,397 crores as compared to INR1,541 crores in the previous quarter, Q1 FY ’25, a decrease of INR144 crores by 9.34%. Compared to Q2 FY ’24 gross income of INR1,312 crores, there is an increase of INR85 crores by about 6.48%. The PBT is INR162 crores in Q2 FY ’25 as compared to INR180 crores in Q1 FY ’25. a decrease of INR18 crores by 10%. And compared to Q2 FY ’24, PBT of INR113 crores, there is an increase of INR49 crores by about 43.36%.
The consolidated results indicate the net impact of several factors such as increase or decrease in income expenditure and exceptional items, relating to both feed and frozen food divisions, which have been discussed in the following divisional performance of these units individually.
Now I’ll move on to stand-alone financial results of Feed division. Q2 FY ’25 results. The gross income for Q2 FY ’25 is INR1,118 crores as compared to INR1,298 crores in the previous quarter of Q1 FY ’25, a decrease of INR180 crores, mainly due to decrease in quantity of feed sold by 23,694 MT. The gross income in Q2 FY ’25 is INR1,118 crores from INR1,064 crores in the corresponding quarter, an increase by INR54 crores representing 5.07% due to increase in sales quantity by 7,033 MT.
The PBT for Q2 FY ’25 is INR145 crores as compared to INR153 crores in Q1 FY ’25, a decrease of INR8 crores by 5.22%, mainly due to decrease in sales volume. The feed sales decreased to 134,897 MT in Q2 FY ’25 as compared to 158,591 MT in Q1 FY ’25. The PBT in Q2 has increased by INR59 crores from INR86 crores in Q2 FY ’24, represented by 58.6%.
The increase in the PBT is because of the raw material and other overhead absorption. So the major raw materials are fish meal, soya bean meal, and wheat flour. The noticeable development in this quarter is marginal softening of two major raw materials data, fish meal, and soya bean meal prices, resulting in marginal improvement in the profitability.
The prices of these raw materials keep fluctuating since their production is based on agriculture and fish catches from the ocean. The prices of fish meal decreased in Q2 FY ’25 to INR105 per kg from INR117 per kg in Q1, and from INR126 per kg in Q2 FY ’24. In case of soya bean meal, their prices were stable at INR49 in both Q2 and Q1 of FY ’25, and it was INR54 in Q2 FY ’24. However, the wheat flour price increased to INR31 per kg in Q2 FY ’25 from INR28 per in Q1 FY ’25 and Q2 FY ’24. The present price of wheat flour is INR36 per kg, which is a steep hike from Q2 FY ’25.
While on one hand, the raw material prices are instrumental in determining the margins, on the other hand, the status of aqua-cultural activity conditions such as climatic changes, diseases, etc., determine the consumption of feed in terms of volume, which will have an impact on the overall performance.
In the normal course, the quarter July to September is when the second crop for the shrimp culture has started. However, in the current year, due to cyclone and fires in Andhra Pradesh during July and August, the consumption of feed at a lesser volume as the harvesting took place early with small size shrimps that is 100 count and the culture in programs as expected. However, favorable climate conditions supported farmers to reharvest from September, extending the season up to October, November, December, raising their restocking. Reharvesting from September extended the season from October, November, and December, raising the hope of higher consumption of feed during Q3 FY ’25 compared to corresponding period of the previous year.
To sum up, in general, FY ’24, ’25 is expected to be a challenging year for the aquaculture industry, both in respect of shrimp production as well as global demand for shrimp exports. In spite of the challenging year, your Company is expected to have better capacity utilization. Shrimp production and feed consumption in FY ’24 and Company plans for FY ’25. So on the basis of estimated shrimp production of about 10.5 to 11 lakh MTs in 2024, the feed consumption is expected to be about same level.
The Company’s feed sales during the half year ended FY ’25 is 293,487 MT against 293,370 MT in half year FY ’24. Shrimp processing and exports. India seafood exports touched 17,81,602 MT, an all-time high in volume during the financial year ’23 ’24.
Frozen shrimp remained a major export item in quantity and value accounting for a share of 40% in quantity and 60% of — 66% of the total dollar earnings. The country shrimp exports in terms of value increased in FY ’24 compared to FY ’23 by 1.5% from $4,809 million to $4,881 million. The country’s overall export of frozen ship in quantitative terms for FY ’24 was 7,16,004 MT as compared to 7,11,099 MT in FY ’23, an increase of 4,905 MT representing 0.69%.
The Company’s shrimp exports during FY ’24 was 13,443 as compared to 12,497 MT in FY ’23, an increase by 946 MT. It is estimated that the exports during FY ’25 would be around 16,000 MT.
Now I hand over to Mr. DVS Satyanarayana to present highlights of Shrimp processing and export division.
DVS Satyanarayana — Chief Financial Officer
Thank you, madam. Good evening, everyone. Now I would like to take you through the financial highlights of shrimp processing and export division. Q2 FY ’25 results. The gross income for Q2 FY ’25 is INR284 crores as compared to INR243 crores in Q1 FY ’25, an increase by INR41 crores, representing 17%, mainly due to increase in sales quantity by 640 metric tons, representing 23%. The gross income in Q2 FY ’25 increased to INR284 crores from INR253 crores during Q2 FY 2024, an increase of INR31 crores, representing 12% year-over-year. The sales volume during Q2 FY ’25 increased to 3,423 metric tonnes from 2,950 metric tonnes in Q2 FY 2024, an increase by 473 metric tonnes.
The PBT before exceptional items for the Q2 FY ’25 is INR23 crores as compared to INR27 crores in Q1 FY 2025, decreased by INR4 crores. The PBT decreased mainly due to increase in raw material costs during the quarter. The PBT in Q2 FY ’25 is INR23 crores, a decrease from INR31 crores in the corresponding quarter of Q2 FY 2024 primarily due to the impact of CVD, an increase in ocean freight, and also depreciation on profitability in the current quarter.
Comparison of performance for six months ended 30th September 2024, with six months ended 30th September 2023. The gross income for six months during FY ’25 was INR527 crores as compared to INR491 crores in the corresponding six months period of previous year, that is FY ’23, ’24, an increase of INR36 crores in the gross income during six months of FY ’25 is mainly due to increase in sales quantity by 597 metric tonnes, representing 11%.
The PBT in six months FY ’25 is INR50 crores as compared to INR64 crores in six months FY 2024, a decrease in PBT by INR14 crores is mainly due to CVD and increase in ocean freight rates and also depreciation. So government incentives. As you know, the Company has been availing the following two incentive schemes from the government of India. Sales-based incentive and the production-linked incentive scheme and granting under operation scheme long-term intervention scheme.
Production-linked incentive scheme Company is eligible for incentive of 6% for raw products and 10% from value-added products and incremental sales for a period of six years from the financial year ’21, ’22 to ’26, ’27, subject to a maximum incentive of INR79.44 crores with a minimum 5% CAGR in sales.
The Company has received an incentive of INR9.92 crores pertaining to financial year ’22, ’23. The total incentive including FY 2023 received until the quarter ended 30th September 2024 is INR16.77 crores. The Maupay [Phonetic] team conducted a physical site inspection in June 2024 as part of the investment verification. The Company fulfilled the investment obligation and also commenced production before 31st March 2024, as committed to the Ministry of Food Processing of Industries.
The incentive claim for FY ’23, ’24 will be filed in the month of December 2024. Operation Green scheme. Approval from Government of India for granting in aid for the proposed investment in new shrimp processing plant at Krishnapuram is received in the month of December 2022. Maximum grant-in-aid under the scheme is INR10 crores, the first installment of 1/3 of the grant-in-aid is due from the ministry. The Company has submitted all the relevant documents in this regard. As required by law [Phonetic], the Company shared the latest update on the project status and also geotech photographs in the month of June 2024.
Now I hand over to JMD sir, for sharing future outlook of the industry.
C. Rao — Joint MD, CFO, Compliance Officer, Company Secretary & Executive Director
Thank you, Satyanarayana. In my previous discussion which you had given an outline of global economic prospects and also prospects of aquaculture industry based on the World Bank Group’s flagship reports on global economic prospects. Review of the expectations and forecast made a quarter ago remains promising and achievable during the year 2025. So far, there has been no serious disturbing factors having major impact on achieving the projected performance for the year 2025 other than the normal fluctuation.
Global shrimp market versus Indian shrimp industry. Global shrimp market size was valued at $68.40 billion in 2022, and is poised to grow from $72.16 billion in 2023 to $110.75 billion by 2031, growing at a CAGR of 5.5% in the forecast period 2024 to ’31. In recent years, the global shrimp market has been changing as per consumer preferences demand due to increasing consumer demand for seafood, a rise in health-conscious eating habits, and the popularity of shrimp in various cuisines worldwide. The versatile nature of shrimp feed take ingredients in various dishes and its appeal extends across diverse cultures, leading to the increasing popularity on consumption of seafood choice globally.
Whatever, health-conscious consumers are attracted to low-calorie, high-protein food source of shrimp. The global market for shrimp continues to be volatile and global industry faced mixed expected to make face a mixed outlook — I mean, growing competition, market shifts. However, the forecast continues to be promising with projected higher volumes of consumption due to reasons mentioned above.
The government of India has been initiating several measures from time to time by encouraging increase in productivity in all sectors, including shrimp and processing and export or shrimp. Apart from the existing incentives of production linked incentive on incremental sales and one-time bank under the operations, team were setting up seafood shrimp processing plants in the — in the recently announced budget for 2024, ’25 under the leadership of Honorable Prime Minister, the Honorable Finance Minister has announced financial support for setting up an effort of nucleus breeding centers shrimp group stocking and financing for shrimp processing and export facility through NABARD.
We understand that the NABARD in consultation with the government of India Ministry of Officials are working on these proposals. Apart from these incentives, as mentioned in my previous discussion, the Honorable Finance Minister has also announced incentive scheme for employment generation and skilling in her budget speech for 2024, ’25. The Company has initiated the following central government’s schemes during Q2 FY ’25.
Apprenticeship program. We have initiated the hiring of apprentices under the National Apprentice Promotion Scheme and have selected 75 apprentices under the Apprenticeship Act. By March 2025, we aim to train at least 150 apprentices across all of our facilities. The apprentice will be impacted railing in shrimp culture, shrimp processing, hatchery, and feed-related activities.
The other incentive is the private internship scheme we have enrolled in recently launched PM internship scheme. Initially, we will be taking about 100 interns and the process will begin on 25th of March — 25th of November this year. Further, the Company has been training workers on personal hygiene, team building, housekeeping, techniques, anger management, communication, and grooming in association with Learned [Phonetic], a business affiliate of National Skill Development Corporation since July 2024, a total of 350 workers have been trained to date as part of Phase 1 and an additional 500 workers will be trained in Phase 2.
I would like to share an update on Levy CVD like this on ship and coast by them. The U.S. Department of Commerce announced its final determination on 22nd October 2024 in the countervailing duty investigations are frozen warm water shrimp [Phonetic] from Ecuador, India, Indonesia, and Vietnam. The proposed rate of CVD for India 5.77% as a preliminary determination of 4.36%. However, this rate is subject to U.S. International Trade Commission’s final announcement, which is expected in December this year.
Apart from that — coming to the diversification of Company’s plan into pet food and pet care products. As you know, the Company has tied up with Blue Buffalo Company Limited, Thailand, a well-known pet food and pet care products manufacturing company in Thailand by setting up a joint venture company in India, involving the investment by them, along with the transfer of technology. This joint venture Company name is Avanti Pet Care Private Limited, which has been established as a subsidiary of the Avanti Feeds. The Company has purchased about 30 acres of land to set up the facility under APCPL. APCPL will initially commence trading of pet food products in India under the APCPL brand name — brand name importing from Blue Buffalo, Thailand. After completing the setting up of manufacturing facility in India, the products will be produced and marketed in India. The trading activity is planned to start before 31st March 2025, for which the Company has already recruited team for market development of the Company’s products.
Apart from pet care, we have fish feed, which we have been making a lot of efforts to bring into Indian fish culture. As we put it earlier, the Company has undertaken market revenue for fish for various species of fish and intends to initially import feed from Thai Company Limited and standard price at the Indian conditions.
Once the product performance is approved, the production in India will be taken for domestic sales. A very serious study is being made on this aspect and we have identified about five or six, the fish culture, the fish culture, prawns and the where fish culture is being done and associated with them for import of the sample feed trial runs will be held. And if it is proved to be effective in Indian conditions, it will be brought initially as the trading activity. And in course of time, we will set up necessary production facilities in our existing feed plants, for which, already there is sufficient civil works with only the imported fleet — the machinery has to be installed to start production.
Apart from that, I think we have covered all the aspects. And I think we can take up the question and answer session now. Okay. Thank you, Soumya, we can start the Q&A session.
Questions and Answers:
Operator
Thank you so much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]
Our first question comes from Mr. Kunal Ochiramani from Kinara Capital Private Limited. Please go-ahead.
Kunal Ochiramani
Hi, sir. Congratulations on good numbers. Just wanted to know, this quarter was good in terms of exports due to strong demand in Europe. So just wanted to gauge how is the global demand currently. And how will you as per your industry? Secondly, there was marginal softening in commodity prices. However, as your team reported in processing, due to raw material prices have profits were down. So on that front, I wanted some clarity. And overall, some clarity on how — when are you going to take on fish feed business?
C. Rao
I think first question, Nikhilesh, can you answer the first question, please?
Alluri Nikhilesh
Okay. Hi, good evening. So on the global demand for shrimp, shrimp continues to be a strong seafood category. A lot of customers, consumers always think shrimp is a good food meal. So consumption only will increase with higher income levels. So that’s positive, and being closing, it can give also long shelf life. So like overall global demand for shrimp is good and is forecasted to be positive in the long term. What was the second question?
Kunal Ochiramani
It was about the raw material prices being high in processing business and hence, the profits were down.
Alluri Nikhilesh
So in September this year, it was very unfortunate that Andhra Pradesh suffered huge rainfall. So a lot of crop shrimp falls were watched away. So the off-season continued instead of 2 months for almost 3, 3.5 months, so we didn’t get the second crop even till now. So we had to buy raw material at higher prices due to limited availability. So that is the reason for the high cost of input.
C. Rao
The third question, can you please repeat?
Kunal Ochiramani
For the fish feed business.
C. Rao
As I told you, the fish feed business, we — we have undertaken a lot of survey, and also, we have identified about six farms, fish culture farms where we would like to run the trial feeding and seeing the results, how the fish feed, which is the formula which we have now, that is Thailand Thai-Union has got fish feed which we are going to import and use it here in our farms and see how the results are because there are several varieties of fish like Sea bass and the each product has got different parameters like protein levels that is required. So it is a bit difficult for us to have different types of products and the species of fish feed.
So what we are doing is now we are trying to undertake the trials in respect of each one of them and try out in about five to six fish culture farms. We have entered into some sort of understanding MoU with the owners of these farms to undertake the trial runs. And once it is proved to be effective, and if it is good, then we will make them produced in Thailand and import to start with. And gradually, we will — once the demand picks up in India, we will start our own production facility in course of time.
A lot of work is being done because the price is the important challenging factor, which the prices of Indian products see fluctuating. And once we enter into the imported feed, it would have a cost-effective is going to be determined the demand for the product. So we are trying to balance these two things and arrive at a competitive price for the Indian farmers so that we will be able to give them in competition with the other producers in India.
So while it gives a better yield, it should be competitive also price should be competitive. That is what our endeavor is, and we are working very seriously on this. Maybe in next three to six months, we should be able to start off on this.
Kunal Ochiramani
Sir, relating to my second question says CVD and freight rates are high, and it’s been two months in the quarter has ended. So what is the outlook now and going ahead?
C. Rao
The CVD is — they have — we have been — the final determination has come at 5.77%. So we’ll have to see that announcement sometime next month, and that will have a direct impact on that. But we are also working on various other cost-effective measures and try to see that we still make margins out of this by increasing the value-added products and all. I think Nikhilesh, can you just throw some light on this?
Alluri Nikhilesh
So CVD and ADD, the two separate duties, countervailing duty and antidumping duty. And right now, our antidumping duty is about a little 1%, 1.2% something. And CVD is determined to be 5.77% where the final determinations are being made right now. So maybe we expect or we anticipate that the CVD might reduce by maybe 4.4%, but not sure. But on the alternate route — on the alternate all the other countries like Ecuador, Vietnam, Indonesia, everyone attracted CVD or ADD. Unfortunately, India stands with the highest duty of 5.77% compared to the other countries.
In the long run, in the past, we’ve had CVD duty for shrimp before, but it’s a lot of working with the government, the U.S. regulatory authority, and also the private sector while — to submit and rework on some of these claims that the U.S. DOC is taking. And so this is a timing-taking process. But if you work it right, then the duties will come down, it’s not any tariff per se, which was not revised previously.
So it is a complicated case, which is a small problem for India at the moment. And also the other countries have CVD. So everyone has this problem. But on the long run, I think we can work with the government to reduce such duties. And second, also, this also means higher selling price in the market. So that would be helping to drive revenues up because the selling price of shrimp has been falling continuously for the last 2, 3 years. So that’s about the CVD and ADD.
C. Rao
It’s very important. It all depends on the government in the U.S. and also it is an ongoing process. It is almost done CVD one year. The second year, again, it will be reviewed, and again, the data is collected, whether the — what the incentives that the government is giving and what is the taxes that is being maybe — and all the workout. And as Nikhilesh said, it may come down also in the next year, but it is an issue which we have to live with it, because the CVD has been levied by U.S. in almost all the countries. It is only our efforts should be to reduce the CVD percentage on levied on Indian share exports.
Kunal Ochiramani
Thank you so much.
Operator
Thank you so much, sir. [Operator Instructions] Our next question comes from Pradeep Rawat from Yogya Capital. Please go-ahead.
Pradeep Rawat
Yeah, good evening, and thank you for the opportunity. Sir, I have just one question about Ecuador. So how is the competition faring up with respect to Ecuador, especially after the power shortage issue over there?
C. Rao
Nikhilesh, can you take that?
Alluri Nikhilesh
So Ecuador, we’ve told in previous meetings that Ecuador and India, we have separate product categories India does more field and cushion that Ecuador does head on very commodity product. On the power shortage, at the current moment, this has affected Ecuador’s exports, they’re not able to produce as much. So the selling price in China has been moving up due to nondelivery from the Ecuadorian market from what we gather in market intelligence and also in the U.S. There’s also less exports of Ecuador shrimp in the past one, two months.
However, we need to see how this pans out in the long term, currently, where most of the buying for the primary market is done for the holiday season. So right now, there’s no large impact for any other producing countries like India, Vietnam, or Indonesia, because of the power problems during the quarter.
Pradeep Rawat
Okay. Understood. And one last question, if I can squeeze in? Sir, can you also mention the CVD on other countries like Ecuador and Vietnam?
Alluri Nikhilesh
Maybe if you could send an e-mail, we can send it in a separate note.
Pradeep Rawat
Okay, sure. Thank you.
Operator
Thank you, sir. Our next question comes from Nitin Awasthi from Ingrid Equites. Please go-ahead.
Nitin Awasthi
Hello, sir. One question continuing from the previous participants’ questions is that the amount of CVD that we have paid so far I believe we are liable to pay CVD from April this year. And for how far have we paid the CVD? And if we — whenever you have paid it, have you booked it as an expense or is a different item?
C. Rao
Satya, our CFO will answer the question.
DVS Satyanarayana
Yes. So far, the Company has paid around INR8.5 crores CVD till 30th September 2024. And whatever the CVD we deposited with the U.S. government, we are booking as an expenditure, we are debiting to P&L.
Nitin Awasthi
Understood, sir. So as of now, when the rate increase is coming, they’re still continuing and depositing what we are depositing earlier? Or are we depositing as per the new rate?
C. Rao
No, we are depositing the — for the existing rate, the rates of which decided during preliminary determination, which is 4.36%.
Nitin Awasthi
Understood, sir. Sir, second question from my side would be, are we looking to use CVD [Phonetic] as a component in our fleet, given that there has been a lot of production of that commodity in the country now due to a different reason, which is the ethanol program? But however, there is a lot of animal feed companies are experimenting with this product. Are we also doing the same?
Alluri Nikhilesh
No, Nitin, we’re not using it in feed. Hello.
Nitin Awasthi
Yes, sir.
Alluri Nikhilesh
We’re not using TGS in shrimp feed as of now because there has some nutritional factors which are not very good for growth promotion.
Nitin Awasthi
Understood. However, are we experimenting with it, trying to make it efficient or that is no order?
Alluri Nikhilesh
But we didn’t get favorable results.
Nitin Awasthi
Okay, understood. Thank you.
Operator
Thank you, sir. Our next question comes from Kamal Sharma, an Individual Investor. Please go-ahead.
Kamal Sharma
Yeah, thank you, ma’am. Sir, my question relates to two recent announcement — announcements coming from government. So one is, of course, what you mentioned in the presentation about the budget, wherein there were, I think three separate instances where shrimp or aquaculture was referred to. And then a recent one wherein there is a MSP hike on soya bean. Plus, of course, in your presentation, you have mentioned about hike in the rate as well. So how do you see these two together? So first one is what is the opportunity size and the budgetary announcement open up for [Indecipherable] that we will have it like the government is planning to achieve those targets in one year, two years or whatever or do we have that clarity yet? And of course, do we have the capacity to support that opportunity utilization? Combined with the impact of soya bean price MSP announcement. So how will these two go together?
C. Rao
See, the MSP announcement has been made with — from the government from time to time, and mostly is related to some political activity rather than the real the situation of the crop or the prevailing in the country. That has been the stand that is been the procedures are being followed by the government. Whenever they consider that the farmers are not getting remunerated for the crop, they increase the MSP that is MSP is the price at which the government produces they think the soya from the farmers.
But there are other factors which are working in the market keeps on changing. For instance, recently, soya price has been increased. So MSP has been increased. But we did not feel that much impact on the soya price as such. It is remaining more stable. And 5% side of it is fluctuating on a day-to-day basis. So MSP is something which is the government regulation, which says that if you buy from the farmer, you have to buy only from that. And MSP is a price which the farmer has to sell. That is the remunerative price.
So that in fact, will not have a direct impact immediately, but over a period of time, when the government starts purchasing more, then it will have an impact. Then there will be demand for that. The prices will be more than the MSP, but as of now, it is not the situation as far as the soya is concerned. We’re coming to the other question, which you mentioned.
Kamal Sharma
The opportunity is coming due to the budgetary announcements.
C. Rao
Yes. Budgetary announcement is about the — the other things that are the — as far as aquaculture industry is concerned, the processing and export, we have already explained the details of the schemes that are in operation now. And other than that they are trying to encourage nucleus breeding centers for the brood stock. That is one of the major constraints that India has been facing because India does not have a proper brood stock available for agriculture. We have been importing from different countries, and each time, the quality of the brood stock varies and sometimes they will have less survival, sometimes it will have quick disease, front diseases, and all.
So the government of India would like to now encourage the Indian farmers processing units, stakeholders to start a nucleus breeding center for these brood stock. But with the support of NABARD, but so far, no infections or no schemes has been announced by NABARD. I think we’ll have to wait for some more time if they come out with the — on this proposal.
Other than that, as we have explained, the — they are encouraging the employment, so they are increasing the apprenticeship programs and also internship. And so that — so as far as the aquaculture industry is concerned, we are taking a number of apprentices in each of the shrimp culture activity, for example, in feed manufacturer culture itself, shrimp culture and processing, we are training them. So that is an advantage, which overall, if it — it is possible for Indian shrimp culture to make more economic and more competitive prices globally, it will have a very good future as the consumption of shrimp is increasing globally.
These are the impacts of budget, but government seem to be very serious about this. We are taking aquaculture, marine food products export as a one of the major trust areas for the government for adding foreign exchange and as well as also employment generation. Okay. I think I’ve answered your query.
Kamal Sharma
Yes, to a large extent. But I just wanted to know if we have any numbers also available.
C. Rao
No numbers as of now, the government schemes, it will take time. There are several schemes which announced in last budget. They were not implemented at all, so it will take some time. So when they really grow it only after a lot of pressure, they commenced these two programs, mainly which is substantially helping the industry that is the PLI and also operational green scheme. These two are good. But again, there are some constraints in that also. The government is always in a situation they announced, but when they come times up for implementation, there are a lot of bottlenecks for that. So they try to take these bottlenecks. We are trying to solve one after the other. So in course of time, we should be able to get these benefits. But to give you numbers as of now, nobody has got numbers as to what is the projected advantage of this.
Kamal Sharma
Thanks a lot.
Operator
Thank you, sir. Our next question comes from Suresh Pal from KRST Capital Limited. Please go-ahead.
Suresh Pal
Yes, sir. Thank you for the opportunity. Sir, my question is, we can see that the global shrimp prices are rising from quarter to start. I can see that from July end, til month of October, shrimp prices have risen more than 10%. So how — I would like to know how Avanti Feeds will likely to be benefited from this shrimp price rise that is happening in the last 3, 4 months.
C. Rao
Nikhilesh?
Alluri Nikhilesh
Right now, there is — I think, question — price increase. I don’t think does any such benefit for the industry because the price increase is mainly due to new duty levies. So there’s no impact as such except the revenues are first to go higher. So it’s only I guess, direct impact on to the company in the immediate term.
Suresh Pal
No. But duty might have risen 5%, 6%, right? But the price rise is more than 10%. Like if I consider 3, 4 months, it is more than 10%.
Alluri Nikhilesh
You’re talking about selling price?
Suresh Pal
Yes, selling price I’m talking about.
Alluri Nikhilesh
I don’t know it increased by 10%. There are some sizes which have increased by 8%, with one or two sizes from an average about 3% to 4%, 5%, maybe, but that’s only because the raw material price is higher. So it’s not at the market accepting higher price at the retail store and the food service store. It’s more the duty and higher raw material prices at the moment.
Suresh Pal
Okay. Thank you. That’s all from my side.
Operator
Thank you, sir. Our next question comes from Amit Kumar Rajput from Capital Craft Research. Please go-ahead.
Amit Kumar Rajput
Hi, am I audible?
C. Rao
Yes. Yes.
Operator
You’re audible, sir.
Amit Kumar Rajput
Thanks for the opportunity, sir. Sir, my first question regarding the American election and the recent policy shift you were looking for as of our majority of business is coming from America. So any sort of policy shift you will preparing for it as of — on our tariff side?
Alluri Nikhilesh
So on the U.S., I think with Donald Trump coming it is my personal opinion is that it’s more positive for India because the last term as there is nothing substantial against India or in. So — but again, we don’t know. So as the Company are diversifying our sales channels to other countries like Europe, Asia and also Canada, Middle East. So trying to get more the sales portfolio into these markets. so that we kind of diversify the market rate.
Amit Kumar Rajput
Great to know. Sir, my second question regarding the margin side. So could we see the recent trend in margin going forward in future in recently, margin has priced on a yearly basis.
C. Rao
Yes. See, the margins are rising as it is obvious because of the marginal softening of the raw material prices. So as long as we saw raw material prices remain at this level, we certainly make a profit. But — which is unfortunately it’s not in our control. So we expect the fish meal, which last year, it gave a lot of trouble to us because it was going up because of the exports. But this time, the Chile and Peru were the major suppliers of fish meal to the world, they have globally, they have their good crops, they are able to supply.
So the demand from India has drastically reduced. So the fishmeal producers in India have now look for Indian market rather than depending on the export market for higher yields. That is number one.
Number two, coming to the other two products like the soya bean meal and wheat flour, see, the soya bean meal has been the production has been continuously good. So each year, year after year, this year also crop has done very well, and we have the already harvesting has started and we expect the prices to still to soften, but we do not know how they are going to move. But it all again depends upon this soya oil. Soya oil is another factor which determines the price of soya bean meal. So these two are the balancing factors for the soya bean meal.
So we expect that the prices remain at this level for some more time, if not going down. At least it will not go up. It’s what our expectation is. So that being the case, as far as the soya bean meal is concerned, we are very comfortable as of now.
Coming to the wheat flour, it is surprising that the wheat flour prices are going up like at a great speed going up. Nobody is able to exactly tell why it is going up. See, it is an essential commodity as far as the human consumption of wheat flour is concerned. So the date at which it is going, it is impossible to even predict how it’s why it’s going, crop is good. We are getting — until March, we don’t have crop. The next crop comes on last year in March, still four months are left, but how it’s going to be in these 4 points, it is expected that after Maharashtra elections, the prices are going to a little soften. We have to wait and see how this particularly wheat flour, which no one is able to really imagine being the most highly consumed product in daily families, the wheat flour is going up like anything which is surprising.
So we will wait and see. We are expecting that after Maharashtra elections by end of this year, the prices should — the wheat flour also should come down. So if these prices remain, definitely, we’ll be able to achieve the margins what we have achieved now, and we’ll be able to maintain these margins definitely.
Amit Kumar Rajput
Okay. So my last question would be, if you could give me any sort of guidance regarding FY ’25 financial year on the margin side?
C. Rao
See, I’ll just — what happened was in the earlier this quarter, there was — as Nikhilesh said, there was unexpected rainfall, it was cyclone and all, has reduced the crop — actually, the duration of the crop the main crop reduced. And there was a forced harvest 10 accounts — sorry, 10 grams. The 100 count so that’s why the feed consumption has come down, the margins have materially come down. But the best point of that is that later on, the August, September, the climate has really improved, and it was very continuous for the shrimp culture, so the farmers have stocked it again, and it’s going well as of now. If nothing serious happens in the next 1.5 months, two months, we should be able to get the normal crop and also then the consumption will also be there.
We are expecting more or less whatever the last year’s consumption plus or minus 5%, we should be able to achieve 540,000 or something like that was the last year’s feed sales. And we are also likely to register more or less the same sales this year. And being, as I told you, because of the raw material softening, we may be able to get better margins compared to the last year. That’s what our hopeful expectations are positive expectations, and we’ll have to wait and see for another 1.5 months.
So it will result in automatically in the next FY ’25 ending on 31st March which will be reflected. Again, if the situation continues, again, the next crop will start sometime in the January end and February, beginning. Then again, there will be sales. I think it looks as of now, very promising, that is wait and see because it’s a very volatile market.
Amit Kumar Rajput
Thank you. That’s all from my side. Thank you.
Operator
Thank you, sir. [Operator Instructions] Our next question comes from Shriram R, an Individual Investor. Please go-ahead.
Shriram R
Thank you for the opportunity. I have two questions. One is on the shrimp processing. Do you import the raw shrimp or do you have a shrimp farm? Second question is, yeah, sorry, sir, go-ahead.
Alluri Nikhilesh
You may continue with your second question.
Shriram R
Yes. My second question is the budget had some provisions regarding decrease of custom duties for shrimp feed. So how has that impacted you? Are we seeing more imports now because of the duty cut?
C. Rao
Yes. First, I think Nikhilesh, can you answer the first question?
Alluri Nikhilesh
We don’t import any shrimp. India is one of the largest producers of shrimp. So we buy shrimp locally. So at Avanti, we don’t farm ourselves. We have like some contract farming, but that’s a major source of shrimp.
C. Rao
So as far as the reduction in the customs duty of some of the products relating to the shrimp culture. It’s true that there is a reduction, but it did not really have any impact on our and rather it has a negative impact — as far as the proteins premixes and milder premixes we were importing earlier, but now everything is available in India. Almost every product is available in India. And what they have done is they have decreased duty on shrimp feed, imported shrimp feed, which is a negative point for — as far as our industry is concerned, the Indian shrimp feed industry is concerned because if we reduce the price of the imported then foreign companies, they are likely to dump their products in India. So that, in fact, we have represented to the government that please bring back the same level because if you can — if you reduce the shrimp feed duty, then the neighboring countries, they’ll have the advantage of the reduced import duty, so the lump in India. But we are — so far, there has not been so much impact on account of this.
But certain advantages of this, the farmers do know that Indian shrimp feed is both fresh and they are able to get better yields and all those things. So they may not immediately go unless it is really very attractive for them to go and reduce the expected results feed. So that is one disadvantage which we found.
But as far as the other products are come concerned, we are having all the products available in India. Only one olive oil was not — olive oil was reduced. But that is, again, a substitute for fish oil, but that is a very expensive, and India has got plenty of fish oil available. So along with fish meal, we are buying locally the fish oil also sourcing it. So there is no need for practically any import of raw materials from that. So there is no impact of reduced duty on our feed cost.
Shriram R
Yes. Sir, just one question. What is the pricing difference between the imported shrimp feed and our feed?
C. Rao
It is same, there is no difference at all. So if you, in fact, look at the yields and performance of the Indian feed, it is much more. I think Mr. Venkata will be able to give more details on this.
A. Sanjeev
So as of now, the prices are almost similar to Indian feed prices. The performance of the imported feed is not as good as Indian feed like Mr. Rao said, and also the new Indian feed companies, which have taken over the market share, so it’s become very hard for the foreign players to enter and get a substantial market share.
C. Rao
See the already — most of the foreign companies are already in India. They have their plants, for example, CP, they are already there. So many foreign companies which are done in India, and there is no need for them to bring import the feed. That’s what we have represented as government they already — the foreign companies are there in this feed manufactured in India, and they are getting the feed, then why should the government of India allow a reduction in custom duty on the import of these products. So I hope — we hope that by next budget, we’ll be able to get some favorable outcome of our representation.
Shriram R
Okay, sir. Got it. Thanks for an elaborate answer, sir. Very helpful. Thank you. All the best.
Operator
Thank you, sir. Due to time constraints, that will be the last question. Now I hand over the floor to the management for closing comments.
Santhi Latha
Thank you, investors. Thank you for everyone for participating in this call. So in case of any queries, you can reach out to us by mail. Thank you.
Operator
[Operator Closing Remarks]