It is my pleasure to present to you an overview of the present economic & industryscenario and a summary of your Company's performance in FY 17.
Economic activity in both advanced economies and emerging and developing economies isestimated to accelerate in 2017 to 2 percent and 4.6 percent respectively. Economicgrowth has been revised for the US Japan and China. While inflation in advancedeconomies remains subdued and generally below targets; it has also been declining inseveral emerging economies such as Brazil India and Russia. Growth revisions primarilyreflect the macroeconomic implications of changes in policy assumptions by the world's twolargest economies the United States and China.
It is expected that growth in India will pick up further in 2018 in line withforecasts. Of the two major reform initiatives of the present Government we expect thetimely and effective implementation of the Goods and Services Tax (GST) would supportcompetitiveness investment and economic growth. GST will contribute to making India amore integrated market and is expected to boost competitiveness investment and jobcreation. Shrimp feed is exempt from GST however few of the Raw Materials have beenbrought under the ambit of GST which will have financial impact.
The other major reform initiative demonetization appears to have kickstarted theprocess of cleaning up the economy of black money. Growth rate for the economy was higherthan anticipated thanks to strong government spending and data revisions that showstronger momentum in the first part of the year. However aquaculture businesses whichare mostly cash driven suffered a temporary setback due to demonetization in FY17.
Global demand for shrimp is on the rise and the global prices have been stable for thepast 2 years. In view of the constricted supply of shrimp and increased demand from Asianmarkets farmgate prices in India rose to higher levels. As a result area under farmingis expected to expand further and demand for shrimp feed will continue to exhibit steadygrowth.
Your Company's continued focus on farmer education innovation and embedding bestpractices from across the industry is now starting to accrue benefits.
I am proud to tell you our revenue grew at a CAGR of 20% between FY 12 and FY 17 andstood at Rs. 323 Crore in FY17. However Profitability in the feed business was impactedin FY17 by the rise in prices of key raw materials.
I am also very pleased to inform you that your Company has received the covetedShrimp Feed Industry New Product Innovation Leadership Award' from Frost &Sullivan. This is the first time a feed company is bestowed with such a recognition fromFrost & Sullivan in India.
Going forward enhanced geographical presence coupled with good performance fromexisting markets would help in accelerating the growth. Weather conditions have beenfavorable and along with stable farm gate prices have enabled the farmers to shake off thecautious approach and increase the area under cultivation.
We have taken our first steps into the domestic market for the frozen food products.Our Phase I foray saw the soft launch of the brand Prize Catch' in Chennai in Dec2016. We launched processed shrimps and pasteurized crab meat in the HORECA segment. Thishas received good response and we will soon enter other markets in the South in Phase IIand will also expand our product range. To support this growth we have alongside embarkedon several marketing initiatives. As always our focus will remain unwavering on qualityand freshness.
The launch of the Farm Care range of products under the brand Baylife' has beenreceived with much enthusiasm thanks to the trust your Company enjoys in the farmingcommunity. This can potentially translate into good volume growth in the coming years.
Your Company's first state of the art Hatchery is nearing completion and will beavailable for farming season of 2018.
The Scheme of Amalgamation of Pinnae Feeds Ltd. which was approved by the NationalCompany Law Tribunal recently will result in better operational efficiencies as the totalproduction capacity directly available to us increases from 35000 MTPA to 110000 MTPA.The Scheme became effective on 27th November 2017 with the appointed datebeing 1st August 2015. Hence the merged audited financial statements of theCompany for the year ended 31st March 2017 is being placed before theshareholders for consideration and adoption. The Board had announced a final dividend ofRs. 1 per share for FY17. The same shall be paid as per Statutory timelines to theshareholders as on the record date subject to approval at the forthcoming Annual GeneralMeeting (AGM).
With international demand continuing to be robust and domestic demand growingsignificantly thanks to changing lifestyles and food preferences we continue to remainoptimistic about our growth and success in the industry. Geographical expansion thrust onR & D capacity addition and diversified revenue streams shall augur well for thefuture growth of your Company and thereby maximize shareholder value.
I would like to thank all our stakeholders who have reposed tremendous confidence in us- for their faith and confidence and importantly for the encouragement they have shown usin the pursuit of our goals.
I would like to specifically thank our valued employees whose contribution in thisjourney is immeasurable. I value their dedication and commitment to the tasks at handtowards the pursuit of our short and long-term goals. Last but certainly not the least Iwould like to express my wholehearted gratitude to our dealer and vendor network whosefaith and loyalty urge us forward to scale new heights. Thank you all.
With best wishes
Vikramaditya Mohan Thapar