Hello Sir,

Hope you are doing well.

Recently, I was going through the con-call of Apex Frozen Foods which exports processed shrimps to US, EU, China and other markets.

The demand from US continues to be low. However, things might start turning favorable for the company and the sector with the imposition of Anti-Dumping (AD) and Countervailing Duties (CVD) on Ecuador and Indonesia.

To understand the company better, we have shared notes from the Q4 FY 24 con-call of the company. Before that:


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APEX Frozen – Notes from Q4 FY 24 con-call

– Sales

  • Net revenue for Q4 FY 24 came in at Rs 162 crores lower than the revenue of Rs 212 crores in the Q4 FY 23, mainly due to the subdued demand from our key market which is USA and overall lowered global shrimp prices
  • The total volumes sold by our company stood at 2,302 MT in Q4 FY 24 as against 2,851 MT in the Q4 FY 23. However, there is a recovery from the Q3 FY 24 where the volume stood at 2,117 MT
  • The preliminary CVD imposed by the USA on Indian frozen shrimp at 4.36% also acted as an additional dampener
  • On the positive side, however, our shrimp sales to the European Union continue to do well, sales to the EU posted a growth of 31% YOY in FY 24
  • This growth is only from our Ready-to-Cook products as we still await regulatory approvals for our high value added Ready-to-Eat products in the EU market

– Capacity Utilization

  • it is 33% currently, last year it was 45%, that is overall capacity utilization
  • With regard to the RTE sale, it was 22% last year and this year it is 16%

– Growth Initiatives

  • We have been taking steps with regard to setting up our wholly-owned subsidiary in the US, mainly for support with regard to logistics and also market development in the US and the rest of North America
  • We are even looking at exploring the Scandinavian side of the European Union
  • Going into FY’25, we are exploring newer markets there too, along with a few other markets in Asia

– Shrimps Supply

  • At the global level, of course, Ecuador shrimp supply continues to add some pressure on the realizations
  • There definitely has been some conservative approach with the farmers especially towards the end of FY 24 and the beginning of FY 25, there’s been some conservative approach
  • If you see since 2013, these pretty much have been like the historically low numbers, so almost like a decade low farm gate prices were there in the year FY 24. So, that definitely had an effect a little bit on the overall farmers psychic with regard to how many of acres of farm he should be doing

– AD and CVD duties

  • The CVD rate on Ecuador preliminarily is 2.89%
  • Ecuador has also been levied an anti-dumping, this is preliminary, antidumping duty of 10.58%. Earlier, both the duties were zero
  • Indonesia on a preliminary basis has been awarded an anti-dumping duty rate of 6.3%. With regard to Indonesia, they do not have any CVD, pretty much they are at 0%
  • India has been levied a countervailing duty of 4.36%, again, which is also preliminary
  • Regarding the anti-dumping duty rate, India, it’s 1.35% which has been the case for the past four years in the case of India
  • Definitely, as the new duties come into play even to other countries like Ecuador and Indonesia, which did not have any type of duties until now, we are a bit positive that it is more of a level playing field for all supplying nations of shrimp into the US market

– Balance Sheet

  • Gross debt was reduced by Rs 60 crores from Rs 167 crores as of 31st March 2022 to Rs 107 crores as of 31st March 2024
  • We also have a significant amount of receivables pending through scripts and duty drawbacks with the Government of India, which we are likely to see those being received in Q1 FY’25, thereby which would also enable us to reduce our borrowing even further



Disclaimer: This is not a recommendation to buy/sell Apex Frozen Foods. The securities quoted are for illustration only and are not recommendatory.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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