Avanti Feeds Ltd (NSE: AVANTIFEED) Q4 2025 Earnings Call dated Jun. 07, 2025
Corporate Participants:
Unidentified Speaker
C Ramachandra Rao — Joint Managing Director, CFO and Company Secretary
Santhi Latha — General Manager, Finance & Accounts
D. V. Satyanarayana — Chief Financial Officer
Kandhadi Reddy — CFO
Analysts:
Unidentified Participant
Ronak Shah — Analyst
Gopi Krishna — Analyst
Nitin Awasthi — Analyst
Rahul Rathi — Analyst
Presentation:
operator
Good evening ladies and gentlemen. I’m Pelshia, Moderator for the conference call. Welcome to Avanti Feeds Limited Q4 and F5 25 earnings conference call. We have with us today Mr. C. Ramachandra Rao, Joint Managing Director Mr. A. Venkata Sanjeev, Executive Director Mr. Alluri Niklesh, Director of Avanti Feeds and Executive Director, Avanti Frozen Foods Private Limited. Mr. Shanti Lata, GM Finance and Accounts Ms. Lakshmi Sharma, Senior Manager, Corporate Affairs. Mr. DBS Satya Narayana, CFO Avanti Force and Food Private Limited Mr. K IS Reddy, CFO Avanti Pet Care Private Limited As a reminder, all participants will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Need assistance during the conference call, Please signal an operator by pressing Star and then zero on your touchstone telephone. Please note this conference is being recorded. I would now like to hand over the floor to Mr. C. Ramachandra Rao, Joint Managing Director. Thank you.
C Ramachandra Rao — Joint Managing Director, CFO and Company Secretary
And over to you sir. Thank you, Pritchiya. 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 audited financial Results for Quarter Q4FY25 and for the year ended 31 March 25th. Mr. A. Niklesh, Director, Avanti Feeds Limited and Executive Director of Avanti Frozen Foods Private Limited is joining from factory at Kohu along with me Venkata Sanjeev, Executive Director, Avanti Feast Ltd. Mrs. Shanti Lata, GM Finance and Accounts of Avanti Fees Ltd. Mr. D.B.S Satyanarayna, CFO of Avanti Frozen Foods Ltd. Private Ltd. And Mr. Casey University CFO of Avanti Techcare Private Ltd.
To begin with, Mrs. Shantilaka GM Finance and Accounts Ltd. Will present highlights of financial results for the period and for the period and year ended 31st March 25th of Feed Division and also consolidated financials of the company for the same period thereafter. Mr. Satyanana will present the financial highlights of Shim Processing and Export division. After that Mr. Sinha Triddy will present the status of after presentation by all of them With a brief sum up we will take up the question and ask your question.
Santhi Latha — General Manager, Finance & Accounts
Thank you sir. Good evening everyone. I will take you through the consolidated and standalone financial performance highlights for the quarter and year ended 31st March 2025. First we will go through the consolidated financial results for the quarter ended Q4FY25. The comparative performance of Q4FY25 with that of Q3FY25 and Q4FY24 has been given in the presentation which has been already circulated. Gross income in Q4FY25 is 1435 crores as compared to 1405 crores in the previous quarter. Q3FY25 an increase of 30 crores compared to Q4FY24. Gross income of 1320 crores there is an increase of 115 crores by about 8.7%.
The PBT is 211 crores in Q4FY25 as compared to 184 in Q3FY25 an increase of 27 crores by 15% and compared to Q4FY24 PBT of 151 crores there is an increase of 60 crores by about 40% increase. Comparison of financial year 25 with that of financial year 24 Performance in FY25 the total income increased to 5778 crores from 5505 crores in FY24. The PBT in FY25 increased to 737 crores from 537 crores in previous year mainly due to increase in revenue and decrease in raw material cost and better overhead absorption. The consolidated results indicate net impact of several factors such as increase or decrease in income and expenditure relating to feed and frozen division.
Now we will discuss the individual performance of these units. Standalone Financial results of seed division so Q4FY25 result the gross income for Q4FY25 is 1070 crores as compared to 1077 crores in the previous quarter of Q3FY25 a decrease of 7 crores due to decrease of quantity sold by 2,338 metric tons. The gross income in Q4FY25 increased to 1070 from 1022 crores. In the corresponding quarter of Q4 24 an increase by 48 crores due to increase in sales quantity by 7432 crores. The PBT for the Q4FY25 is 194 crores as compared to 167 crores In Q3 an increase of 27 crores by about 16% mainly due to decrease in raw material cost and better overhead absorption.
The PBT in FY24 has increased by 75 crores from 119 crores in Q4FY24 represented by 63%. The feed sales decreased by 2,338 empty to 1 29.711mt in Q4FY25 as compared to 132 49mt in Q3FY25 and increased by 7432mt from 122 278mt when compared to Q4FY24. So comparison of performance of feed division FY24 with FY24 but 25 in FY25. The total income increased to 4563 crores from 4395 crores in FY24 due to increase in feed sales and other income. The PVT in FY25 increased to 659 crores from 497 crores in the corresponding PDF mainly due to increase in sales, other income and decrease in raw material cost and better overhead.
Expense Options the major raw materials are fish meal, soya bean meal and wheat flour. The noticeable development in this year and quarter is softening of two major raw materials, tap wheat, fish meal and soya bean meal resulting in improvement in the profitability. The prices of these raw materials keep fluctuating since their production is based on fish catches and agriculture. The prices of fish meal decreases in Q4FY20Y to 91 per kg from rupees 93 per kg in Q3FY25 and from 119 per kg in Q4FY24. In case of soya bean meal, their prices reduced to 43 per kg in Q4FY25 from 46 per kg in Q3FY25 & 52 in Q4FY24.
However, the wheat floor price increased to 36 per kg in Q4 from 35 per kg in Q3FY25, and 30 per kg in Q3FY24. While on 1 hand the raw material prices are instrumental in determining the margin, on the other hand the status of aquaculture activity. Conditions such as climate changes, diseases etc. Determine the consumption of feed in terms of volume which will have an impact on the overall performance of the company. To sum up in general, FY2425 is a challenging year for the aquaculture industry both in respect of shrimp production as well as global demand for shrimp export.
In spite of the challenging years, your company had a better capacity utilization. Now I’ll talk about shrimp production and feed consumption in FY25. Shrimp feed consumption the estimated shrimp production for 20. The shrimp production for 2024 is 10.5 to 11 lakh metric tons and when the same is estimated in 2025 also the overall shrimp production the company feed sales during FY25 is 5.55247mt against 5.31967mt in FY24. In case of shrimp processing and exports. India Seafood export statute 7,81602mt an all time high in volume during financial year 2324, frozen shrimp remained the major export item in quantity and value.
Accounting for a share of 40% in quantity and 66% of the total dollar earnings. The company’s shrimp exports during FY25 was 14,149 MTs as compared to 13,444 empties in FY24, an increase by 705 MTs. It is estimated that the exports during FY26 would be around 17,000 MT. Update on fish Feed as reported in earlier phone call, the company has imported fish feed from Thai Union Feed Mill Co. Ltd. And is conducting trails under Indian conditions. Once the product performance is approved, the production will be taken up for domestic sale. Now I will hand over to Mr.
DVS Satya Narayana to present highlights of Shrimp processing and export division.
D. V. Satyanarayana — Chief Financial Officer
Thank you madam. Good evening everyone. So now I would like to take you through the financial highlights of shrimp processing and export division. I will start with quarter results I.e. q4FY25. The gross income for Q4FY25 is 364 crores as compared to 328 crores in Q3FY25, an increase by 36 crores representing 11%. Mainly due to increase in sales quantity by 256 metric ton which represents 7%. The gross income in Q4FY25 increased to 364 crores from 297 crores during Q4FY24, an increase of 67 crore representing 22%. Year over year growth. The sales volume during Q4FY25 increased to 4100 metric tonnes from 3846 metric tonnes in the last year same quarter I.e. q4FY 2024. So there is an increase of 254 metric tons when compared to the last year same quarter. Higher sales in Q4 FY25 were driven by volume growth and increase in average selling price realization and favorable foreign exchange rate. The PBT before exceptional item for Q4FY25 stood at 18 crore unchanged from Q3FY 2025. Despite higher sales during the quarter, PBT remained flat primarily due to the full period impact of countervailing duty in Q4FY 2025. Pvt.
In Q4FY25 is 18 crore, a decrease from 32 crores in the corresponding quarter Q4FY24 primarily due to the impact of countervailing duty and increase in raw metal prices. Comparison of performance for the year ended 31st March 2025 with 31st March 2024, the gross income for the year ended 31st March 25th was 1219 crores as compared to 1,118 crore in the previous year. That is financial 2024. An increase of 101 crore in the gross income during FY 2025 is mainly due to increase in sales quantity by 682 metric tonnes representing 5%. Higher sales in FY 2025 was driven mainly by volume growth, an increase in average selling price realization and also favorable foreign exchange rates.
The PBP in FY 2025 is 86 crores as compared to 136 crores in the previous year I.e. fY 2024. The decrease in PBP by 50 crores is mainly on account of countervailing duty, higher ocean flight rate and depreciation from Krishnapuram new plant. Now I hand over to Mr. Keshe Renwas Reddy to update the status of pet food product.
Kandhadi Reddy — CFO
Thanks Mr. D.S. satyanayama. Now I would like to present updates on the status of Avanti Pet Cat Palatin, a subsidiary of the company set up for a pet care products in India. As you know, company has formed a joint venture with a Blue Pillow Co. Ltd. Thailand, a well known pet food and pet care product manufacturing company in Thailand. For a setting up joint venture company in India, the equity investment by them along with the transfer of technology, the company is in the finance sector, population of land and planning to commence the construction from September or October 25 after obtaining a government clearance for setting up of facilities.
In the meantime, company with the objective of establishing brand of the company’s product has successfully commenced trading in cash good from January 2025 in the company’s first product range under its own brand Presently the company is getting the products manufactured by the collaboration facility in Thailand and importing per trading. The brand name of the company’s product is Avant. First the product launched in Cash food ocean fish flavor in Q4FY 2425 I.e. 01-25-03-25 recorded a sales of 25.79 lakhs which is within the expectations of the initial stage. At present, company marketing products in nine key markets I.e.
mumbai, Pune, Chennai, Bangalore, Hyderabad, Solapur, Nagpur, Jaipur and Ahmedabad. Further planning to expand to more cities and build a presence in E Commerce and Q Commerce in the coming quarters. The company is also building a strong brand visibility through the digital marketing advertisement on Instagram and Facebook. The company planning to introduce other flavors in a Cash food in the coming months. The company is also planning to launch a dog food products in August 2025. It is pertinent to mention that dark food is constitute major portion of pet food. Pet food sales which is about 80% in 80% and cat food is 20%.
Now I hand over to JMD Sarkar for closing remarks.
C Ramachandra Rao — Joint Managing Director, CFO and Company Secretary
Thank you. At this stage I would like to share with you some of the developments that have taken place during the course of the year reflecting on performance of feed and processing and export business for the company. In respect of feed business, the relieving factor was more stable raw material prices and also feed sales yielding an increased profitability in the year compared to the previous year. The shrimp culture activity has also been stable. They also have been stable except for some instances of disease and premature harvest. The farm gate prices of the shrimps were stable resulting in maintaining the shrimp production levels.
The export of processed shrimp registered a growth due to increase in export quantities and also increase in average selling price realization. The favorable US dollar conversion rates also helped to enhance the profitability of the shrimp processing region. As stated by my colleagues, the company is focusing on increasing the production and export of value added products yielding better margins and less competition. The company is also focusing on developing other markets like Japan, EU etc. To reduce dependence on US market. As you are aware, the US announced a new tariff on 2 April 2025. The US imposed reciprocal tariffs on exports from all countries trading with it.
A baseline tariff of 10% on all countries came into effect on 5th April 2025 with country specific reciprocal tariffs scheduled to begin on 9th April. India the duties Various duties are like this India anti dumping duty that is add 1.35 countervailing duty 5.77 reciprocal tariffs 26% total tariff 33.12% Thailand 0 anti dumping duty 0 countervailing duty, reciprocal tariffs 36% Vietnam anti dumping duty 0 countervilling duty 2.8 and reciprocal tariff 46% total 48.8% Indonesia 3.9% is anti dumping duty, the countervailing duty is nil and 32% is reciprocal tariff and total tariff is 35.9%. Ecuador Anti Dumping duty is nil and the countervailing duty is 3.8% and the reciprocal tariff 10% and total tariffs is 13.8%.
No tariff applies to containerships before 5th April 2025 if they arrive at the US port before 27th May 2025. This is some sort of an arrangement for transition period for applicability of the reciprocal tariff. A baseline tariff applies to shipments dispatched between 5 April and 8 April 2025. On 9 April 2025 the US announced a 90 day suspension of country specific reciprocal tariff for all countries except China. Specific tariffs which I read out just now. Shipment from 9th April till a period of 90 days will continue to incur only 10% baseline tariff. We will have to see what’s going to be the future rate after 9 depending upon the announcement and the policy decision taken by the Trump government.
The Company proactively informed all US customers about the tariff changes and most of the customers have responded positively to the overall 10% price increase. Production was increased and shipments to US were expedited with most orders dispatched before 21st of May 2025. Indian and US officials are engaged in high level discussions continuously aiming to finalize an interim trade deal with us. In fact, even the US President Trump also announced very recently, a couple of days back that the negotiations with Indian government for a tariff free trade agreement is advanced stage and which may come any moment.
An announcement is expected later this month, potentially before President Trump’s July 9 deadline. India, encouraged by recent trade agreements, is carefully considering US demand, balancing economic opportunities with potential domestic impact. In addition to the tariff, the levy of CBD which is at 5.77% presently, is always an additional burden to the export of shrimps to ears, which is a major export market for the company. In this context, the Seafood Exporters association of India, with support of the Government of India, pursuing US Department of Commerce with a request to review and reconsider the levy of pvd which represents only remission of duties and taxes levied by the government.
Keeping this fact review, the endeavor of the Company is to Expand its global market to other destinations like Japan, Korea, EU and Middle East. To sum up, notwithstanding plevy of duties such as adt, CBD and the reciprocal tariff by us, the company is confident that in the course of business the market correction, balancing demand in supply and price determination do take place ensuring sustainability of agriculture industry in the long run. With this observation, I would like to keep the floor open for questions and answers. Thank you.
Questions and Answers:
operator
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on the telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one button. Ladies and gentlemen, if you have any question please press star and one on your telephone. I request the participants to restrict with two questions in the initial round and join back with you for more questions. The next question comes from Shivam Sahu and individual investors.
Please go ahead.
Unidentified Participant
Hello. Stock price has been decreased day by day. Around 15 to 16% decrease last four days.
C Ramachandra Rao
Can you please come back? Your question is not clear.
operator
Question comes from Balaji from Avanti Feet. Please go ahead.
C Ramachandra Rao
Good morning.
Unidentified Participant
Sir. My question is regarding that what is the percentage of share of each in the consumption pattern?
Santhi Latha
Raw material ingredients. Is that what you are asking? The percentage of raw material ingredients?
Unidentified Participant
Yes.
Santhi Latha
Yes ma’ am, that is our formula. We cannot disclose that.
C Ramachandra Rao
And also what our general manager said is that the combination or composition formulation depends upon different grades of products that we are making. And it is a sort of confidential information which we cannot share with anyone. Because depending upon the circumstances, region, necessity, the climatic conditions, the formulas keep changing. There is no consistent standard product mix that we are giving you.
Unidentified Participant
Yes. So now what is the cost of the raw material is in quarter one we are observing an increasing price of the citine wheat. Closer is the tender remains same or is there any increase in raw material? Another thing is insured of these raw material.
Santhi Latha
Yes, tell me sir.
C Ramachandra Rao
Yes, the raw material cost is clear from the financial statements given. Or you can see that what is the raw material cost is given separately that the raw material consumption consumed is given. You can arrive at the cost of raw material from the financial statements.
Unidentified Participant
I am asking what is the present trend?
C Ramachandra Rao
So I see it is fluctuating. Let me tell you now. Recently the government has increased the MSP of wheat, soya and all the this thing. I think just over a week back. So we are immediately the prices have gone up. So it is very difficult to see based upon the day to day market situation the prices fluctuate See after the announcement of MSP the soya bean meal price has gone up and also wheat flour prices have gone up Second thing is that you know the when we get the actually hard waste the prices decreased marginally and immediately goes up the soya bean meal crop comes from the October September end October and wheat flour wheat production for harvest comes in from March so it is a fluctuating market the prices of the raw materials keep fluctuating so we normally take an on an average we take the price.
Unidentified Participant
This is the last question.
Santhi Latha
Her voice is breaking it’s not clear.
C Ramachandra Rao
Okay.
Unidentified Participant
Impacted and how are.
C Ramachandra Rao
Nicholas, are you there?
operator
Nicholas could you repeat the question please?
Unidentified Participant
Remain safe at the higher end our shrimp feed will be affected it will.
C Ramachandra Rao
Decrease 10% or 26% the higher end is 26% so then it would be. The tariff would be as follows ecuador would be 10% India would be 26 Indonesia would be I think about 32 or 35 or something and Vietnam would be over 40% so I think generally we’ll be number two we will lose competitiveness over Ecuador but we’ll gain competitiveness again countries in Asia so I think overall it will be like average not too bad, not too good okay.
operator
Thank you the next question comes from Ronaksha from Equidistant securities Please go ahead yeah.
Ronak Shah
So I have couple of questions so my first question is regarding what is the current demand scenario for the shrimp feed into the market?
C Ramachandra Rao
It will be around.
Santhi Latha
Same like last.
C Ramachandra Rao
Year Almost same like last year it will be around 12 lakh tons per annum.
Ronak Shah
So from the 1T feeds perspective to you how we are projecting our FY26 feed consumption can it be in the range of 5.5 lakh metric pills? Yeah.
C Ramachandra Rao
Yes, yes margin is more than actually 5 lakh it will be. You should be able to make around 5 to 5 lakh to 5 lakh 10,000 10,000 no 550 to 57560 that’s.
Santhi Latha
Maybe we’ll be around the same like.
C Ramachandra Rao
Last year and we will be. Our sales would be on the same lines as last year previous years.
Ronak Shah
Okay my question, second question is regarding the competitive pricing so hence sir highlighted that there are the various tariffs and CVD which is going on so how is Indian shrimp lender cost is compared to the Ecuador visa vis other Asian countries?
C Ramachandra Rao
Nikelesh, can you take this?
C Ramachandra Rao
Yeah could you. Could you repeat the question again please?
Ronak Shah
So Nikhilesh, what is the competitive lend? So what is the landed price competitiveness which India is having compared to the Ecuador and other Asian countries specifically for the usa considering current CBD and the tariffs.
Kandhadi Reddy
See, I think that’s a good question. So I would say with the current duty structure, India currently has a lot of duty onto a country with CBD and add like two duties which we have higher compared to the other countries. But if you see the reciprocal tariff, it’s much lower than what the countries in Asia. Other countries in Asia have like Indonesia, Thailand and Vietnam. Ecuador on the other hand again has lower duty on that. So generally I would say on a whole bucket of tariffs including the reciprocal tariff, I think we fared pretty much equal to the other Asian producing countries but much, much higher on duty compared to Ecuador.
That being said, our competitive advantage against Ecuador will be reduced. But however the only silver line is that Ecuador doesn’t produce a lot of the products that we do. We do a lot of value addition, not high value but like medium value products like a cooked or a raw or a shrimp ring, tail on tail off products, pin Devane. So these things that Ecuador can’t do as much as us because just because of the population that we have in the country and the way that our companies are structured, etc. So that way, you know I would say on a whole tariff bucket where Ecuador has an advantage but we all have our own niches in the game so we need to wait and see what happens in the future.
So there are also for the tariffs, I wouldn’t say that these tariffs are permanent.
Ronak Shah
Right.
D. V. Satyanarayana
These are reviewed periodically, year on year. So these keep fluctuating and we’re quite positive that things our association of seafood members and the Indian government are working positively to ensure that the duties are reduced.
Ronak Shah
Yeah. Lastly just a follow up on this. So in last few years when you see overseas continuously focusing on capacity exposure expansion and on top of that we are saying that we are going to have 16 to 17,000 metrical kind of the export sales from the processing. But when we look at the actual number, the last three, four quarters, we always fall short of the guidance. On top of that we are having also a planned capacity expansion. So how we are seeing these all these parameters looking considering the one side we are saying that we are having competitive edge over the Ecuador in terms of the process product and the niche product.
However we are not seeing exponential or the substantial growth into the processing division. So my first question is how you are seeing these in terms of the crude terms. And secondly considering the CBD and NP dumping our profitability got goes to the TORs. So when earlier the peak division used to have lower margin processing, used to have better margin profitability, which would be the normal case, which has reversed significantly. So how overall management is seeing these two business profitability going ahead? Yeah, that’s it for my.
C Ramachandra Rao
Okay, that’s a good question. So see on the capacity addition, I think there’s no more additional capacity that’s being added right now. Whatever had to be added is completed and we needed it for multiple different reasons. Because during season, see it’s a seasonal business. Like there’s no shrimp during the monsoon season because if it rains, the shrimp comes out of the pond. Of course there is little volume that comes in. But we call it the off season. So even if we want to process at full capacity, we will not be able to. So this is something where we’re trying to process during season and trying to export as much as production as we can.
And as you know, we had two facilities, we added a third one because the first one was built in 1997 and not built, I’m sorry, acquired in 1997. It’s a very old factory, it’s over 30 years. So we want to shut it down for renovation. There’s no room for expansion. So we needed another facility with state of the art equipment, a cooked line, a value added line, etc. So that is the reason for capacity addition. And also if you see about exponential, you asked about exponential growth. I think in the last quarter the revenue increased by 22% which is quite a good revenue increase.
If you see on a year, on year basis, full year basis Also it’s about 9% in a quite, I would say it’s been quite a weak market generally with oversupply. So that’s still a good revenue growth. Both if you see for the last quarter, which has been really good and year on year also about 9% which is also, I wouldn’t say like a poor performance in terms of revenue growth in terms of the margins. See, that’s the best part of being an investor at Avanti. If the business is not doing well because of raw material prices or any competitive pressures, we also have the frozen business which is in the same industry which will give an alternate revenue source and kind of diversify revenues and profit margins.
Similarly, like you pointed out in the past, the feed wasn’t doing well, the processing was doing well. Today the feed is doing really well. The processing margins have fallen down due to. I would say the reason is purely non operational. Like you mentioned, these are from duties coming from countervailing and anti dumping. But if you see the revenue growth and the business itself, fundamentally we have been really robustly growing it. Our value added products are really increasing. The company processing division has become one of the top export houses in India. So generally things are healthy if you take out non operational factors.
And the last point I’d like to add is I had mentioned to the previous question that these duties are not permanent.
Ronak Shah
Right.
C Ramachandra Rao
These are reviewed periodically. The US Government gives opportunity to kind of like make changes to what they’re concerned about. A lot of work with the government, et cetera, on how certain tax refunds are structured, etc. So that’s like I said on the previous question, we are working along with the Indian Seafood association and also the government to address these concerns and try to roll back some parts of the D.
Ronak Shah
Yeah, okay. Okay. So just lastly. So is it. Okay, thank you.
operator
I request the participants to restrict the two questions in the initial round and contact the two for more questions. The next question comes from Gopi Krishna from JP Morgan. Please go ahead. Hi.
Gopi Krishna
We traditionally see that June quarter like the Q1 is the strongest for its because that’s where we make a lot of business, right? Traditionally if you see your accounts and I also see that in the Q3 and Q4 the margins are pretty much impressive. Now what is the expectation of Q1? Do you still see that the margins will further expand?
C Ramachandra Rao
See for this quarter there are plus and minus also as you said, the raw material prices keep stable. And on that front we do not see a big really burden on the additional burden. But as far as the sales is concerned, we already told you that we are going to be at the same levels as in the last year. But however, so recently we have reduced the price of feed. There was lot of immediately after the announcement of reciprocal tariff by us there was a lot of concern by the farmers, the government, the state government, state government and all they came and we had a series of discussions with them and to accommodate and to see that they agriculture continues, the sustainability is maintained.
We have to take a price cut by decreasing the price by three rupees per kilogram. So that will have an impactful impact also will be there in this quarter and hopefully the prices, the raw material prices stabilize and they should be able to maintain same level of profitability in Q1 of 26. Q26 so as in Q1 25 that should be the. Because normally Q1 and Q2 are the good two quarters which will make the aquaculture is very active and even now the culture is going on very well. So we expect that the performance for this year also in the same lines as in the last year and profitability also by and large it should assuming that these prices of raw materials remain stable as they are today.
So I think that we will be able to maintain the profitability for these 2/4 first quarter. Q1.
Gopi Krishna
And my second question is we see like the 75% of the business water feed business is coming to North America. Like if there are like the tariff is coming in place then equator has a clear edge over India. So are we trying to expand it to other countries? That’s one and we see that there is when there is a tariff issue. There was a lot of concern raised from the farmers of Andhra Pradesh. Was this issue been highlighted to state government. Are there any incentives, are there any kind of tax relief? Tax relief which we got is what is my last question?
C Ramachandra Rao
Will you be able to take the first question also There was generally the tariff is in the public domain whenever there is a tax and the incentives also as a now there is no such thing as announced by the government. But I think as far as the first question is concerned I think Niklesh, could you take this question?
Kandhadi Reddy
Yeah, I can say that yes the US Market particularly has been extremely volatile over the last one year. We’ve had different types of duties. A completely new duty like CBD came in and then we have reciprocal tariff which was 26 and changed to 10 and we still have no clarity not it’s not only for shrimp I guess it’s for all industries. So it has been volatile. So we are actively looking at other markets. Definitely if you look at our like PPT for the financial year FY25 the US market share has come down to about 70% from 83% the year before.
And the last we’re also so if you see that PPT it says about 70% but that also includes Canada. But our US market share has come down to the lowest that we’ve had at least in the last four quarters if I’m not wrong. So we are actively looking into other markets. We just classify the markets as North America, Europe and Asia just to make it simple. But yes we are diversifying from the US market actively just to escape this kind of volatility that happening in the country right now. Thank you.
operator
Thank you. Can we move to the next question sir? Thank you sir. The next question comes from within ourselves from increased equity. Please go ahead.
Nitin Awasthi
Hello sir, Just a few technical things I just want to understand firstly on the non tariffs which Are the older tariffs, the ADD and the cbd? These are supposed to be periodically reviewed and we were supposed to have a CBD review in mid of this year. Is that happening or because of the whole tariff situation, it’s kind of on pause.
C Ramachandra Rao
So the review is still happening right now.
Nitin Awasthi
Okay. Okay, got it. So probably in another, another month or two or by the next quarter we’ll have whatever representatives and everything. At least the statement from the committee will be out. Is that correct?
C Ramachandra Rao
Yes, yes. The final determination will be out in the next few weeks.
Nitin Awasthi
And this implication will be from April itself, right?
C Ramachandra Rao
It will be from 2023, February if I’m not wrong. It’s retrospective. So it’s the period of evaluation is not this year but the previous year what they’re evaluating.
Nitin Awasthi
Yes. The part where I was asking from is that would we. Because this duty, like you said, is the evaluation period is of course the older period. But from when will it be applicable? The applicability will of course be a few months before today. And that’s what I’m trying to get at because then that could be a swing that comes in either. Most likely what the industry is expecting is that CBD will be cut, then you have a positive swing for the refund.
C Ramachandra Rao
Okay, so I can. I’m following a question, Nitin, but I’m not able to get it completely. See, there are two different things, right. The ADD is under review right now. The CBD is closed and will open the review later. The ADD which is under review, it’s the determination. The final determination should come out in the next, I think like you said, two months or so. And the duty would be paid for the year, the entries into the US from February of 23 to March of 24.
Nitin Awasthi
Understood. And any particular time frame. And the CBD hearings would reopen.
C Ramachandra Rao
Not, I mean not, not that I know of at the moment because we are not the respondents also. So there is no direct communication with Assams done apart from industry. I can tell you that things are moving in a good direction in the sense that the government is actively working to provide our workings to the US government which we did not the last time. So it’s going in a good direction compared to what happened the last time.
Nitin Awasthi
Yes, because that was what there’s a worry about because what had happened was very unfortunate and it was a sudden surprise to the street and of course the industry is involved in this business like your good selves, because we were not expecting that CVD rate would be that high.
C Ramachandra Rao
Yes, yes, it was quite unfortunate. It was election year, so everyone was busy. But now everyone’s actively working to ensure that it’s kind of rolled back.
Nitin Awasthi
The second question was relating to the new business of pet care. The pet care division is in a jd. So the balance sheet impact and the P and L impact offset JD would just be a line item of profit from associates or loss from associates. Is that understanding correct?
Santhi Latha
It’s a line item. It’s a line item line by line consolidation. It is a subsidiary of Avanti Fee.
Nitin Awasthi
Okay, so it’s a subsidiary of Avanti Feet, not a jv, not a JV by the accounting framework is what I.
C Ramachandra Rao
Yes, yes. It’s a separate company SPV for implementation of this project and in which the substantial investment of Avanti fees is there. So the consolidation, line by line consolidation takes place in Avanti Feeds accounts.
Nitin Awasthi
Understood? Understood. So lastly on this one, this front itself, the trading, sorry, the pet care business, which is currently a trading business if I understand it correctly, which is right now we’re just trying to bump up our sales. So there would only be a few costs that we will be incurring per sale that we make and only post manufacturing will profitability kick in. Is that understanding correct?
C Ramachandra Rao
You are right. You are right because it is the initial period. Normally the expenditure on brand promotion and establishing the market and all these expenses would be more in the initial stages which will give results in later part. So as you rightly mentioned, the first quarter is that when we lose the trading. Definitely the trading may not result in as much profitability as we anticipated. But nevertheless it gives a lot of mileage to us because these products are in the market under Avanti brand. So these mileage and this brand establishment will be very, very helpful when we start production so immediately or we will have a ready market for our products and then the profitability is certainly better than much, much better than what we are in.
The trading we are making. And expenditure is also high in the initial stages, let’s say about two, three years, there will be heavy expenditure on various promotional measures, advertisements, distribution costs. All these things have to be stabilized and brought to a level of, you know, profitable sales levels. Then we’ll be able to make profit.
Nitin Awasthi
Okay, Understood sir. So lastly from my side, what is the target for on the sales side, the volume side which we have for this year for tech suite division.
C Ramachandra Rao
See the thing is that there are two feeds that we are now producing. That one is the cat food which we have launched in January 25th and we plan to launch the dog food which is really the 80% market of pet kit would be dog food. The dog food will be launched in the month of August and cat food is only 20%. So the major portion of our sales will reflect in the fourth quarter and Q1, the third and fourth quarters and Q1 of next year. That’s how we are planning initially. The acceptance by the market is also very important.
We are entering lot of expenditure and promotional things that giving free samples and getting. I think Venkat would give more about the pet kit products. So the acceptance.
D. V. Satyanarayana
As of now we’ve launched the cat.
C Ramachandra Rao
Food and we’re planning to launch a second flavor by end of this month. The dog food which is the major proportion of the cat food industry, it would be launching in August so it.
D. V. Satyanarayana
Would take some time for the market.
C Ramachandra Rao
To catch up to the brand.
D. V. Satyanarayana
But this year we are expecting 10 crores revenue. Around 10 crores revenue. That’s what our target is.
C Ramachandra Rao
I may add that the good news for the investors is that our cat food is being accepted very well by the market. That is a very, very significant event because the market is treating this as a good product which is received instantaneously by all the parents, pet parents, they say that pets are really enjoying this feed compared to others. That’s a good news for the investors. So in the future and we expect that dog food also will be having the same reception because our quality as you know amazingly always maintains the best quality products. So we maintain that also.
That’s what we can tell from our side.
Nitin Awasthi
Understood sir. Thank you for answering my question. Best of luck for the future ventures. And also I have also seen the cat food and catching craze around parts of Mumbai. The last cat event also you guys were present. So yeah, that is good thing for the whole community and congratulations on that. And that’s about going ahead.
C Ramachandra Rao
Thank you.
operator
Thank you. The next question comes from Rahul Rati from Katha. Please go ahead.
Rahul Rathi
Yeah, good afternoon. Congratulations on a great year. You know it’s lots of uncertainty and the delivery has been fantastic. So my two questions. So I’ll start with the first one. If I look at your five year return on capital employed the lowest has been 13% and this year has been 23%. And if I look at the last 10 years, 13% has been the lowest. So we are in, you know, somewhere in the early 20s. How do you all think about return on capital employed? Is there a thought process around what you all want? How do you decide? Capital allocation decisions or the business side of things?
C Ramachandra Rao
Yeah, see the. And if you look at the analysis. Definitely our profitability has been very good in the consistent maintenance of the profitability over the years. And as you know that it is something which is completely, you know, based on the nature this one and also market conditions. So what we think is that the profitability that we are getting we keep to maintain the same levels of profitability as far as the operations are concerned. Particularly the as a group we have frozen foods which is now in the mode to really expand and expand the market.
Not to the production but it is to the divesting the market from us to other countries. And also the pet care project also is going to come. So these are the things and we consider that the return on capital should be at the same level on an average around it started with as you said, 13%, 40% if you can get around 15% that we would consider as a very reasonable and good return on investment.
Rahul Rathi
Right now you are at 23%.
C Ramachandra Rao
Of course I would put it that is one of the best years that we cannot expect that every year is going to be like this year. This year. Fortunately we got the raw materials produced prices coming down and also the prices were dead. But you know what happened? After some time suddenly these came and we had to reduce the heat price by 3 rupees. So the direct impact on the profitability TLP price. So like that the unforeseen events do take place.
Rahul Rathi
No, no, I’m not worried about unforeseen. I’m just worried about management. So let’s say if I take next three, five years, so next year and three years will you have a about 20% return on capital employed or you’re looking at a lower return.
C Ramachandra Rao
We cannot give 20% assurance like that assurance expectation. Not looking for, see the value, see if can maintain 15% that would be considered desired.
Rahul Rathi
Okay, all right. The second, second point is given that you’re expecting a return on capital of 15%, you know, if I look at the last five years, you’ve almost added thousand crores plus as you know, investments plus cash on the balance sheet from what is there and it’s not been used over the last. If I look at your 10 year history, you’ve always added to cash on the balance sheet in terms of investments and cash. Any thought processes around what you plan to do with because it will be a drag on your return on capital and it will also inflate your balance sheet.
So any thoughts on capital allocation?
C Ramachandra Rao
I mean I would like look at this like this because you know if you see the balance sheet we don’t have any borrowings. Totally no borrowings, zero borrowings. You know what is the rate of working capital interest today if we don’t use where is it going? If you look at the balance sheet and profit and loss account, how we are able to maintain the inventory levels and receivables in the situation and how it is possible because the money that is generated is going into that the most portion of that. Particularly in the seasonal industry. We need money when the season for example in soya bean meal.
The season starts in October. So we buy soya bean meal in large quantities and keep it to maintain the price, let’s call it will go up. See these are all the costs which are not seen in the balance sheet and go back to principal.
Rahul Rathi
You think you will require about 1900 crores cash.
C Ramachandra Rao
We always believe that. See the management of the cash that we have should be safe and it should be giving good value to the investors. If we put some industry, okay, we want we have money or start some industry. And if we don’t get returns on that, what will happen? What is the return that we can expect today on any investment? You can’t get big returns on investment. And so many risks are involved in any new industry. So what we believe the board of directors believe that at the appropriate time we should be able to take the decision which will be in the interest of the investors.
And see earlier we were thinking that this should be used only for capital. But what we see practically is that when we use it for working capital we are able to make about 15% to 20% saving on the interest alone. Financial cost. You don’t see it in our P and L account. Are you able to see, Sir? No sir. No. That’s what they are trying to say. And your money is safe. Whatever is there. We are always conservative. We don’t believe in high yielding commercial papers and getting it as far as the our corporate funds investment is concerned we always go for triple yielding companies secured.
And at the same time we try to maintain 7% to 8% pre tax return and whatever the amount that is available after utilizing for the working capitals.
Rahul Rathi
That’s what sir, thank you very much. Thank you.
operator
Thank you. That would be the last question for the day. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha’s conference call service. You may disconnect your lines now. Thank you and have a good day.