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Good evening, ladies and gentlemen. I'm Momita, moderator for the conference call. Welcome to the Avanti Feeds Limited Q4 FY '22 Results Conference Call hosted by KFin Technologies Private Limited. We have with us today from the management, Mr. C. Ramachandra Rao, Joint Managing Director; Mr. A. Venkata Sanjeev, Executive Director; Mr. Alluri Nikhilesh, Executive Director, Avanti Frozen Foods Private Limited; and Ms. Lakshmi Sharma, Company Secretary, Avanti Frozen Foods Private Limited. [Operator Instructions] Please note, this conference is recorded.
I would now like to hand over the floor to the management. Thank you, and over to you.
Good evening, ladies and gentlemen. We extend a warm welcome for this investor conference call to review the audited financial results for Q4 FY '22 as well as the audited financial results for the financial year 2022. Mr. Venkata Sanjeev and Mr. Nikhilesh, Executive Directors, are joining from their respective factories. Along with me here are Lakshmi Sharma and other teams [indiscernible]. The results of Q4 FY '22 unaudited financial results for FY '22 are already with you for some time now, and we are dure that you would have gone through them. However, I would like to share with you some of the key indicators relevant for our discussion today. Firstly, let me take up the consolidated financial results for Q4 FY '22. The comparative performance of Q4 FY '22 with that of Q3 FY '22 and Q4 FY '21 has been given in the presentations already circulated to you all. Gross income in Q4 FY '22 is INR 1,348 crores as compared to INR 1,088 crores in the previous quarter Q3 FY '22, an increase of INR 260 crores by 22%. Compared to Q4 FY '21, gross income of INR 1,116 crores, there is increase of INR 232 crores by 21%. The PBT is INR 121 crores in Q4 FY '22 as compared to the INR 66 crores in Q3 FY '22, an increase of INR 55 crores by 83% when compared to Q4 FY '21 PBT of INR 93 crores. There is an increase of INR 28 crores by 30%. The consolidated results indicate net impact of several factors such as increase -- decrease in income, expenditure and exceptional items, et cetera, relating to Feed and Frozen divisions, which have been discussed separately in the divisional performance of these units. Let me first set up the stand-alone financial results of Feed division Q4 FY '22 results. The gross income for Q4 FY '22 is INR 1,050 crores as compared to INR 819 crores in the previous quarter of Q3 FY '22, increased by INR 231 crores by 28%, mainly increase in feed sales due to February and January season for aquaculture. The gross income in Q4 FY '22 increased to INR 1,050 crores from INR 900 crores in the corresponding quarter of Q4 FY '21, increased by INR 150 crores by 17%, mainly due to increase in sales volume and sales price.
The PBT for the Q4 FY '22 is INR 102 crores as compared to INR 50 crores in Q3 FY '22, an increase of INR 52 crores by 104%. The PBT in Q4 FY '22 increased to INR 102 crores from INR 91 crores in the corresponding quarter Q4 FY '20, increased by 12%. The significant increase in PBT is due to increase in volume of feed sales, coupled with increase of feed price. Here in 31st March '22, registered gross income of INR 4,108 crores as compared to INR 3,307 crores in the previous year, an increase by 24%. Increase is on account of increase in sales volume by 67,439 metric tonnes, an increase in sales price during FY '22. However, the PBT for the FY '22 is INR 264 as compared to INR 400 crores in FY '22, a decrease by INR 140 crores by 35%.
You may observe that in spite of increase in gross income due to increase in volume of feed sales and the feed price, the PBT has come down by 35% compared to the previous year due to steep increase in raw material prices. As you know, there are 3 major raw materials: the fish meal, soya bean meal and wheat flour, which significantly impact the RM cost of the feed. During FY '21, the fish meal average price was INR 93 per kg, went up to INR 101 per kg in FY '22. The main reason appears to be shortage in fish catches coupled with large export demand, pushing the price upwards. Similarly, the prices of soya bean meal also increased steeply in the past 1 year of FY '22 compared to FY '21. In spite of several steps initiated by the government, such as permitting import of soya bean meal for a short span to check the elevated increase of soya, suspending trading of soya in NCDEX, even with a good crop, the prices are not coming under control. Again, government is permitting import of soya bean meal from 2nd May '22 to 30/09/22 at the extent of 5,50,000 metric tonnes. The average soya bean meal price has been INR 67 per kg during FY '22 compared to INR 43 in FY '21. Average wheat floor price also increased to INR 34 from INR 22 per kg during FY '22 compared to FY '21. However, of late, wheat prices have been going up steeply due to Ukraine war creating global shortage of wheat, an increase in demand export for Indian wheat. The prices of wheat flour went up to INR 29 per kg, prompting the government to ban export of wheat, the wheat from India, took effect from 13th of May '22. Presently, the price of wheat still remains -- wheat cost still remains at INR 28 per kg with no much expectation of a significant fall in prices of wheat. Increase in sales price of feed. In spite of increase in the average feed price, realization by INR 6.44 in FY '22 4x increased, INR 2 once, INR 3.15 once, INR 4.25 [indiscernible]. Due to a steep increase in raw material prices, the raw material cost increased by INR 10.58 per kg, leaving a difference of INR 4.14 unabsorbed.
However, in [indiscernible] during the year, the prices of fish meal, soya bean meal and wheat flour are expected to stabilize with the marginal increase due to our actions initiated by the government in respect of soya bean meal and wheat flour. Now coming to the shrimp processing division. Q4 -- the gross income for Q4 FY '22 is INR 300 crores as compared to INR 270 crores in Q3 FY '22, registering a growth by INR 30 crores at 11%. The gross income in Q4 FY '22 increased INR 300 crores from INR 218 crores compared to corresponding quarter Q4 FY '21, an increase by 28%, mainly due to increase in sales volume by 21% and recognition of RoDTEP income of INR 16 crores pertaining to January '21 to March '22, 15 months. However, for the year ended 31st March '22, gross income registered an increase of 15% to INR 1,017 crores as compared to INR 888 crores in the previous year. The increase is mainly due to increase in sales volume by 1,318 metric tonnes from 11,518 metric tonnes to 12,836 metric tonnes. The PBT for Q4 FY '22 is INR 21 crores as compared to INR 26 crores in Q3 FY '22, a decrease by INR 5 crores represents 20%, mainly due to increase in RM cost and marginal increase in portion price. The PBT in Q4 FY '22 is INR 21 crores, increased from INR 1.48 crores in the corresponding quarter of Q4 FY '21. In fact, the PBT in Q4 '22 of INR 21 crores inclusive of INR 13.17 crores of RoDTEP pertaining to earlier period, leaving effective profit from the quarter at INR 7.8 crores in Q4 FY '21. Let me tell you to the extent of INR 12 crores was reversed, resulting in an effective profit of INR 13.48. crores Therefore, effectively, the PBT has marginally decreased by INR 5.65 crores. However, for the year ended 31st March '22, the unit registered a PBT of INR 100 crores as compared to INR 188 crores in the previous year, a decrease by 7%, mainly due to increase in the ocean price rates. Status of refund of products by Frozen Foods division. As you are aware, the company had to recall some of the consignments of cooked shrimp products found to be with Salmonella contamination by U.S. FDA and CDC in the recalled products. The recall had to be made twice in June '21 initial and August '21 expanded. The recalled products are not allowed to be brought back to India, and they had to be destroyed in U.S. itself. As a result, the company is liable to compensate newest customers for recalled products and related expenses of destruction -- the expenses of destruction charges, etc., to the extent of the products returned and destroyed. The company is also liable for reimbursement of medical and related expenses to the consumers who fell sick and underwent treatment after consuming the recalled products. Insurance coverage. The company has product liability insurance covering the medical and related expenditures mentioned above. However, there is no insurance coverage in respect of reinvestment of products, returned and destroyed and also other related expenses such as product destruction charges, call center charges, storage expenses, et cetera. This cost has to be made by the company. Provisions in the financial statements. In FY '22 accounts, provision has been made for a sum of INR 27.50 crores, that is by the first quarter Q1 of FY '22 to INR 4 crores 10 lakh. In Q2 FY '22, INR 17 crores 15 lakh and Q3 FY '22 INR 6.25 crores as an exceptional item towards value return, destroyed products and other related expenses on an actual basis. And as and when the claims are received on a quarterly basis out of the set provision, an amount of INR 9.02 crores has been refunded to the customers in FY '22. The provision in the financial statement has been made on the basis of returned and destroyed value of the products together with the related expenditure as stated above, which has come to INR 27.5 crores.
As regards to claims for bodily injury caused by the consuming company's contaminated products under recall, the company's insurer, the new India Assurance company, has appointed a survey for processing the claims. So far, the company has received 13 claims towards bodily injury, which have been forwarded to the internal surveyor for processing. Since the liability has been covered under the commercial general liability insurance policy, no provision has been made in the financial statement. The extent of claim in financial terms is yet to be ascertained by the subject.
The present status of termination of recall and reinstating a green list status, the company received communication from U.S. FDA stating that all the information and documentation required from the company have been received by them and it will take some time to terminate the recall, which will be informed in an automated e-mail. The company has shipped out 5 containers of cooked shrimps. And on clearance of these containers by U.S. FDA, the green list will be restored, lifting the red alert, which is expected in due course. Once the red alert is lifted, the company will be in a position to accelerate export of cooked shrimps. Industry overview future outlook. The recovery from the impact of COVID-19, which affected global economy during the past 2 years has significantly improved, which is foreseeable in the growth of the global economy. You may notice that the performance of the calendar year 2021 was much better than calendar year 2020, and is expected to be still better in calendar year 2022. At the start of this year, '22, the environment for shrimp culture in the country started favorably, and the shrimp culture commenced promisingly, registering a growth of 3% during Q4 FY '22. Significant growth is expected in FY '23 in terms of feed sales and production of shrimps in the country as the culture progresses in the rest of the period this year. The total production of the shrimp is expected to increase as the farm gate prices are at all-time high and the remunerative and climate conditions are favorable. The company estimates that India should be able to produce 8.5 lakh metric tons of shrimps with all estimated -- with an estimated consumption of about 13 to 14 lakh metric tons of shrimp feed, shrimp production and feed consumption in FY '22 and company plans for '23 -- FY '23. The shrimp feed consumption in India increased 12 metric tons in FY '22 as compared to 10.5 lakh metric tons in FY '22. It is expected that consumption would further increase to 14 lakh metric tons in FY '23 and increase by 17%. The company's feed sales during FY '22 was about 5.41 lakh metric tons as compared to 4.70 lakh metric tonnes in FY '21. It is expected for FY '23 would be around 5.8 lakh metric tons, an increased by 7%. The company is expected to maintain its market share at about 50%.
As the demand for shrimp feed is expected to increase, the company has almost completed setting up new shrimp feed manufacturing facility at Bandapuram with annual installed capacity of 1,75,000 metric tons with a CapEx of 125. The new facility is due to commence commercial production in June '22. That's next month. Shrimp processing and exports. The shrimp production and export from India increased to 7.5 lakh metric ton in FY '22 as compared to 6.5 lakh metric tons in FY '21. It is expected that the shrimp production would further increase [ 8.5 ] lakh metric ton in FY '22 and increased by 13%. The company's shrimp exports during FY '22 was about 12,836 metric tons as compared to 11,518 metric tons in FY '21. It is expected for -- is that for '23 -- FY '23 would be around 14,500 metric tons, an increase of 13%. Avanti Frozen is in the process of expanding preprocessing, main processing and cold storage as detailed below. Number one, preprocessing facility in Gopalapuram, an existing processing plant, adjusting to the processing plant, completed and awaiting final approval to start preprocessing with a CapEx of INR 11.43 crores, a new cold storage at [indiscernible] processing plant with 2,000 metric tons capacity. [indiscernible] is in progress and estimated cost of about INR 17.6 crores. The new processing plant and cold storage in [indiscernible] is with a capacity of 7,000 metric tons per annum, land acquired, [indiscernible] to be commenced. Expected cost is about INR 49 crores. I think I would like to conclude with a positive note that aquaculture industry is poised for a relatively improved performance in '22 calendar year compared to '21. With this, I conclude. And now we will take up the questions.
[Operator Instructions] Our first question from Mr. Nitin Awasthi from InCred Research.
My first question would be related to the incentives that got passed by the Board. So now the incentive to the management can be up to 15%. However, there is a question in most minds, whether we are -- the nonexecutive directors have been capped at INR 1 crore, whereas the remaining executive directors, there is no cap. Hence, if you have to go by this, the remaining percentage, Avanti's management executive payroll could have -- could become the highest paid Executive Director Board in the country. So why not to put a cap to it? And let's say an absolute number, like you have put for the nonexecutive directors.
That's all your question, Nitin?
That's the first question, sir.
First question, okay. Right. Okay. Yes, next question? So you want me to answer that question and go to the next question or how is that?
No, you can answer the question. You can answer the question then we move to the next question.
Okay. Yes. So Nitin, let me tell you. See, this manager remuneration, the topic has come earlier in the extraordinary general meeting, and it has been approved. So the -- it is inclusive of 2 components. One is the fixed salary. I think also the commission on profits. So as far as the fixed charge is concerned, it is on par with what is in the cost of living, et cetera, and other things for the hard work that the executive whole time directors are working, that is fixed according to the standards of living and also to the general cost of living. And this is for 5 years. That is one part. The second part is the commission, though we call it a certain percentage is fixed in the solution, but the overall cap is therefore up to 15%, which includes 3 directors -- sorry, 3 whole time directors. So I would say, I think the -- what the apprehension or whatever the concern about the -- what you expressed, now seems to be that if it is INR 400 crores or INR 500 crores, it will go up to INR 30 crores, INR 60 crores or INR 70 crores like that. So let me tell you one thing. See, as far as the fixed -- the remuneration is concerned, it has to be given, is it not? Because they are working as a whole time employment of the company. Okay, that will be given on par with the -- so if you look at the resolution, which we have passed last time, the increase that is given to the directors was much less than the average increase that is given to any senior executive of the company. See, the senior executive gets an ad increment of 15%, whereas we have given only worth 5% to 6%. The average increase is given. So the -- as it goes, naturally, the fixed expenses goes, but the cap remains. Whatever the 5% -- the 15%, what we have fixed is among the 3 directors. That is inclusive of this amount. So if you say that, if you -- a company makes INR 500 crores profit, naturally, what should be the top line of the company, what should be the activity? Let us say, if you take 15% into INR 500 crores, which has to be INR 8,000 crores. Is it not? INR 7,500 crores, it should be the top line to get a profit. So does it happen just like that? So the director gets the percentage of commission only when there is a profit. They increase in profit only. Otherwise, we will not get it. But see, whatever is left out in the cash, only to that extent, we can. Just because the resolution says that the directors and tax is 4% commission, it does not mean that it is 4% is paid on the profits. The 4% is the total. They take the total, consider the salary [indiscernible] plus the commission and restrict it to 4%. I mean, really, I see this as we have discussed several times. And I have also given the reasoning for that. I have really -- I don't know the reason why you were so much concerned about it.
Okay. So fair enough. I'll move to my next question. My next question was on the inventory part. The inventory this time reported between around close to [ INR 1,000 crores ]. So if you could give us a breakup of what the inventory holds.
Yes, I'll do that. The inventory, I think, Nitin, the basic -- the major -- the inventory items are fish meal and soya bean meal. As you know, the raw material prices have been going up very steeply. So we decided that for the next season, which will start from April, May, June, in fact, it started early this year within the February month itself and January, so we started procuring raw materials to soya bean meal, particularly soya bean meal and also fish meal as and when it is available, because the trend was the price going up. So as much we store the -- keep the stocks, the advantage would be there. That is number one. So that we started -- I'll just give you the quantity and the values that we had -- if you compare with the 30th March -- 31st March '21, we had fish meal of 12,514 metric tons or INR 117.78 crores. As against that, in '22 this year, we had -- we have 22,514 metric tons with value of INR 241.99 crores.
Then coming to the soya bean meal, there is INR 10,274 crores was 31/3/21 stock with a value of INR 53 crores. And the current year, the 31st March 22, we had 28,568, INR 197 crores. See, these 2 items themselves together give an additional inventory of INR 270 crores. So this is very, very important because if we can control the -- you can -- raw material costs can be taken on an average basis. The impact of the increase in -- will be minimal on the company. That was the policy we have taken, and we have brought it. That's the reason why your balance sheet shows the higher inventory levels.
Got it. Sir, last question from my side, export incentives have been booked for the quarter. And if not, what is the current outstanding extraordinary for the export incentive? And what was the export incentive for the last quarter?
The export incentive -- see, what has happened is, Nitin, these export incentives, because of uncertainties, the accounting part of it had to be adjusted in accordance with the developments that are taking place that, for instance, RoDTEP, [indiscernible] declared it did not really come on to the effectiveness, and the claims were not accepted for a long time. So later on -- so we decided that only when the government starts releasing the scripts RoDTEP, then only we will take into consideration. That was the stand taken by us in consultation with auditors. That's how we have done it. So the -- let me read out -- just read out -- my colleague will read out the -- how much this thing, the RoDTEP.
For Q4, the total incentives recorded was INR 23.47 crores, out of which INR 16.29 crores is RoDTEP income, pertaining to 15-period month -- 15-month period, and INR 7.18 crores is due to drawback. So in Q4 FY '21, it was minus 6.24 because we reversed crores incentive pertaining to FY '21 up to [indiscernible] September. Because there was uncertainty of getting the amount, so we -- the origination of revenue was postponed and which was realized in the FY '22, and we have recognized the same in the Q2 of FY '22.
How much is the total amount of RoDTEP yet to be recognized?
Up to 31st March, entirely recognized. I tell the amount. Yes, it is INR 16.29 crores. INR 16.29 crores, Nitin. See, that's what the accounting something was -- whatever the -- when they started only, we started accounting it as cash. At 31st March, it is only INR 16.29 crores, which pertains to the FY '22.
The next question is from [ Mr. Onkar Gogantre ], [indiscernible] Investment.
Do you have a new plant, which you told just now, that will be commissioned next month? So what would be the -- yes, so just wanted to know, to start with, what would be the capacity utilization for that plant for the full year you are expecting? And what would be the peak capacity at 100% capacity utilization? What kind of sales it can generate?
See, the capacity -- installed capacity is 1,75,000 metric tons per annum. So see, as far as the utilization is concerned, we expect going by the demand that we are having today. We should be able to 100% utilize the capacity in this year itself. So because we have -- now we are facing a lot of shortage of supplies to our farmers. So there has been a lot of pressure to us. So we are just -- the project got a bit delayed, a month delayed. So we originally thought that we should be able to catch it to the demand for the May itself, but the month peak season. But unfortunately, there was logistic delays. And getting the capital imported machinery from Taiwan, it was delayed. And now everything is in place, and we should be able to start June -- in month of June. So what we expect is that month-wise, if you look at the CapEx utilization -- sorry, the capacity utilization will be 100% going by the demand. We should be able to fully utilize the capacity. In fact, we may even -- by next year, there might be some shortage also. That's what our expectation as of now.
Okay. And what about the shrimp feed capacity? I mean, the value-added shrimp capacity, which you just told? What about that, which you are expanding?
That's what the capacity which we are expanding the feed capacity, it is 1.75,000.
Yes. Sir, I got that. I was asking about the frozen shrimp.
Frozen shrimp, there are -- see, we are going -- the expansion in 3 as explained to you just now. One is the preprocessing facility in our earlier plant, Gopalapuram whole plant. There, by the side of that, we have started a preprocessing plant with an investment of INR 11.40 crores. That should be -- actually, we have -- everything is ready. We are just waiting for the clearance of government agencies. We should be able to get it, and we will start with that. That is a preprocessing capacity. So that facilitates the faster -- the processing of the main -- processing procedures at work. I think, Nikhilesh, are you there?
Yes.
Can you please explain these 3, particularly the facility when we start -- we should be able to add up to our processing capacity also in Gopalapuram once we speed up the pre-processing facility. Is it not?
Yes, sir. So basically -- first, investment is the preprocessing facility. So just because the Gopalapuram factory is almost -- it was built in 1997. I mean it was acquired in 1997. So it's been almost 20, 25 years since we got it. So we needed to build a new preprocessing area to, first, comply with some of the customers' requirements. And also second, enhance our preprocessing capacity. . So the preprocessing capacity, when you're looking at the capacity utilization, it is a freezer capacity. So to utilize more of the freezer capacity, we have to enhance the preprocessing capacity, which was done. So Gopalapuram now, from this year April to -- we're able to run almost at 100% capacity in the season, which is the high season, okay?
Understood.
Second, at AFFPL cold store at Yerravaram at our new processing facility, we're just expanding the cold store since we are spending a lot of money to hold our finished products or raw materials in third-party cold stores where they might compromise the cold chain, especially with the high fuel prices. They might compromise on the cold chain and also to have more capacity to hold raw material for the off-season days. It's more like -- the cold store, it's more like the warehouse in the processing business.
And the third one is we're building a new facility in Krishnapuram. The land acquisition has been completed. This will be -- as you are aware, Avanti Frozen has been selected by the government for the PLI scheme. Under the scheme, we are building this facility. The total outlay as of now, as Mr. Rao has stated, is about INR 50 crores. So we're going to start the construction soon. We're just looking for the government permissions to start the construction. So this will enable us to further increase our capacity and also increase our exports, focus on some of the products that we have not been able to deliver to the customers, and also enable us to get additional green ticket to help us with the regulatory process with FDA.
Okay. The second question is on the of cash, which you are holding on the balance sheet. Earlier, you said that you are working seriously on fish feed this time. So what's the status on that? And apart from fish feed, how do you plan to utilize the rest of the cash apart from buying in advance the raw materials?
Yes. See, thing is, again, this question was repeated last. But anyway, we have to always take into consideration the 2 important aspects, Mr. Omkar. One is that the expansions which we are thinking, we thought of this fish feed long back, but we are ready with all the technology and everything. In fact, we wanted to start simultaneously with this Bandapuram expansion. But somehow, we thought, with the speed which still this COVID effect was there, we have not been able to really plan it. Now we are again going for this plan very vigorously. We are working. And we are looking at another -- a couple of other projects also. Animal feed only. But I would like to disclose this as and when we are with the concrete numbers, we will -- definitely, there will be some expansion programs happening in the year as we progress. That's number one.
Number two, coming to the cash, the available cash. Certainly, the working capital, what we consider is a very, very timely funds availability for us at the time of real crisis, let me tell you. So you may say anything because the long-term fund should be used for long-term investment and all is fine. But in a situation like this, what we are going, today, raising about INR 50 crores or INR 100 crores and INR 500 crores is such a big task.
So when we want INR 400 crores, INR 500 crores, what you have seen at the end of the year. But prior to that, we had invested more working capital. Because in the -- what happens is in the fund circulation, see, we have certain discount systems and turnover discounts, et cetera. All these are given in the end of the year. So what happens is we don't give them cash, we give them only credit. We will supply the feed. With the result we don't get, cash flow gets a little slow down. We don't get the cash flow. So at that time, that is a peak time when we want cash also for our working capital needs.
So that is how where we'll use it. But I -- we consider that this fund is really helping us a lot by providing the required funds available at the time of crisis. And particularly this year, we found the need of it. If you go to the bank and ask for INR 100 crores, you know how much strain it is to get INR 100 crores from them. But we are -- now comfortably, we have been able to maintain the stock levels. As compared to any other feed manufactures, our position was very comfortable. So that is one important point.
Coming to the expansion, anyway, we will come with some concrete proposals in the course of time as we are very seriously considering, as we said, the fish feed and also the animal feed which are the other opportunities that are being seen as potential. We will come with this in the course of time, okay?
Can you give a specific time line to that? Because it has been finalized...
Yes, sure. I think the question is that we will be able to give the time line once we are through with our plan. Road map has to be made. The DPR is being prepared. DPR is being prepared. Once the DPR is ready, then we'll be able to give you the timeline. That's what I said, it will take some time. Once the decision is made, they are -- definitely, it'll be shared with you.
Our next question is from [ Mr. Vinay Mehta ] from Stallion Asset.
I majorly had a question regarding the margins on the shrimp feed business. So you had -- broadly had a 7% margin last quarter and you, around February, you had said that you'll be going for a price increment broadly around March 1st week. I just wanted to understand, given the raw material prices were already up and -- like I'm not aware if they had corrected so much for the margins to expand. And what would be the trajectory of the margins going into FY '23 over the quarter, like what is the trajectory you are seeing with regards to 10% being maintained on the feed business?
Mr. Mehta, I mean, your question is really very tough to answer because there are so many uncertainties to tell you what is going to be the percentage margin for the FY '23 because today, we are in a position that none, including the government is able to tell what is going to be the prices of the products, particularly the agri products, which are well within the government's control, supposed to be in government's control. They have no clue about it.
See, I can explain to you that when we told last time, the prices would come down definitely because the wheat crop was good, the anticipation was good. And we thought that the amount of the good crop that is coming and the comfortable food storage situation in India, food security loss well above the 3 months level that is as per the Food Security Act, but 4 months, they had stocks.
And with all that, we thought that the wheat crop prices will come down. But what happened, something else happened, the Ukraine war started, there is a shortage and it shot up like anything. The price which was there at INR 22, we thought it went up to INR 24, we thought it will come back to INR 22. But it did not happen. It went from INR 22 to INR 28. The total -- and the government of India, they took a decision to export wheat. The wheat is an essential commodity, they decided to export it. They permitted it and immediately realized that wheat started exporting and again, it's going up. Thereon, I think, 13th of May, we decided to ban export of wheat, but with this clause saying that, already, which is lying in the ports is allowed to be exported.
So essentially, what happened is, those who have already purchased the first crop of wheat plant have already taken it to -- taken into their warehouses and kept it ready in the godowns for export purpose. And they are permitted. I mean, in no way that really has brought the prices of wheat down. There is no situation difference. So what we are expecting is whatever left out after cornering the stocks by the traders and exporter, whatever is left is to come into the market and it'll start.
On 13th May, I thought that the prices of the wheat flour will come down next day morning, but it has not happened. 13th is over. Today, we on 19th. Still, it is INR 28 -- INR 27, INR 28. This is the situation.
So we are only hoping that in course of time, the prices will start coming. The same thing situation with the soya bean meal. See, what happens, soya bean meal, 3 days back, it was low. INR 3 went up in 3 days. The reason, you know what it is, because the Madhya Pradesh traders, the soya bean traders, they went on a strike. The mandis are closed, because government has stopped the export of wheat. They banned it. So they want export of wheat. See, this is the kind of policy that's there in the government and how any company can say what is going to be the raw material price. We are very much dependent on wheat flour and soya bean flour. These 2 together will cost around 60% of our raw material costs.
Coming to the fish meal, the fish meal also, it depends upon the catches. And also, there's a lot of demand for -- export demand for fish meal. So there are so many uncertainties. But you should appreciate that your company has been able to plan to a great extent to contain the cost of raw materials by various steps that they are taking and trying to manage and give the returns as much as possible.
And coming to the 7% to 10% that again, we are working very hardly to see that when -- the one way by which you can go up, we cannot -- the volumes can increase so that the -- in absolute terms, the profits can increase so we can pay a better dividend to the shareholders, investors. That's why we are trying to increase the volume by having more expansion and to keep our market intact. In fact, we are adding and we are increasing our market share by 1%, 0.5% year after year.
And you know that after reaching 50%, it is very tough to go further. But yet, we have been successful to some extent by getting more and more conversions to our company. And that is one way by which the volumes or the profits will go, thereby, the shareholders will get a better dividend which we can pay. These are the measures we are taking. As far as the -- in terms of strict margin per kg or percentage point of view, that is 6%, 7%, it all depends again on the -- the pricing, as you know, the percentage determines between the price of the feed and the raw material costs.
The price of feed, we cannot go liberally by increasing the price to absorb the additional cost. There are so many regulatory agencies. The farmers are there. We should take care of the culture, aquaculture, the interest of the farmers. They should carry on the farming activity so that our sustenance depends on their sustenance, their success. So we have to be very balanced in our approach when we increase the price. And in addition to that, we have the regulatory agencies like the government which there, in the interest of farmers, they say that we cannot increase the price.
So like that, there are different forces which will -- which are working at what you would call cost currency. So we are working under that situation. And it is very difficult to comment what is going to be the '23 financials. But definitely, it is our endeavor to get the maximum return on our investments and we get a better yield returns on our investments and pay better to our stakeholders, particularly the investors' interest, okay?
Understood. Understood. Just a second question would be, are you facing any problems on the -- on procurement of these raw materials from different places. And also, is the demand -- are the farmers in all working, like there's no mismatch between the supply and demand as of now on the feed front, right?
In fact, we have got more demand than what we are able to supply. That is the situation now. That is the reason why we are speeding up and Mr. Venkata Sanjeev is on his toes to complete the project because the Chairman is after to him. CMD is after to him to complete the project. So we are getting calls from the dealers. We are getting calls from the farmers. Day in and day out, our marketing team is on call. Because there's a lot of pressure, because -- see, we have not been able to supply the feed to the farmers, the dealer. So almost 24/7, they are working now.
So once they complete that -- the target is that by end of this month, they should complete everything and start up commercial production. So they have to take the trial runs and do it. That's what they are working. Once it sets, we will be able to -- at least for the time being, we'll be able to meet the present shortage. Absolutely, see, there is no dearth of demand for our product because our product is preferred in the market as #1 product. So there is no dearth of market for our product. It is only we have to increase the production and supply.
As far as the raw material is concerned, see, as you know, that we have been very -- we have been maintaining a good relationship with our -- all our suppliers and we are prompt in our payment, but we are very strict in maintaining the standard specifications of the raw materials. So they are very happy, and we never had any problem with any of the suppliers. But natural -- like the shortage of soya bean meal, I mean, wheat flour or shortage of fish meal availability and all, we cannot help it. But certainly, we are on the forefront as far as the supply situation, raw material supply is concerned compared to other feed manufacturers.
Understood. Just one last thing. In the midst of such a strong demand for your products and everything, is it fair to assume that you will be looking at a 20% to 25% growth for the year because you're expecting full utilization and there's a lot of demand on that front?
See, there are several factors. The first thing is that there should be culture -- shrimp culture growth to that extent, then only the demand starts, okay? So if you -- the shrimp production goes up, naturally feed production goes up. See, today, enough capacities are there. We should be able to supply. There's no problem in supplying the feed -- required feed. But the only thing is the growth of the entire industry should be there, particularly the production of shrimp. Shrimp culture should go up. We are always ready to supply, whether it is even 20, 25, 30, we don't mind. We can always supply to the needs of the farmer to the market.
The next question is from Mr. Depesh Kashyap from Equirus Capital.
Sir, on processing, if you take out the incentives that you have booked in this quarter, the margins in the processing segment seem very low. So just wanted to understand the reason for the same? And how should we think about going forward?
Yes. See, I mean we'll -- and Nikhilesh will supplement whatever I say. But one thing is that the margins decrease can be attributed to -- it was sold down early for export of cooked shrimps due to recall, which we have slowed down a little. Once we pick up the shrimp production -- I mean, sorry, export of cooked shrimp, definitely, the margins will improve, number one. Number two, the raw material costs have gone up all-time high and the export prices have not gone up proportionately, thereby leaving -- there is a gap. That is one major reason. Number three is the ocean freights have almost -- it's like skyrocketing. We have not been able to control it at all.
These are the 3 major reasons what I could see. The reasons for decrease in the margins as we progress, once we are cleared, as Nikhilesh explained, that once we are through with the FDA clearance of this 5 containers and getting green. Then naturally, we are ready to push the cooked products and the value-added products, which is where have more value, more margins are there. And that is really the -- that is going to be the real cream of the entire activity. I think Nikhilesh, you may, please, supplement.
I think Mr. Rao put it out perfectly. Those are the 3 main reasons of shipping out some of the value-added products to the U.S. market, which is a permanent market. But we have an application process to be reinstated on the green list. It's a procedure. And I think in the next few months, we should be reinstated. But of course, it depends on the regulatory [indiscernible]. So that's there. But on the other -- I think bright side about this situation has been that we have focused on introducing value-added products while our cooked lines in the Yerravaram plant have been down. We are in -- we're about to launch our branded products into the U.S. market. We are starting off trial production, et cetera.
So that's going off well. The main important part, part of the cooked shrimp or the ocean freight is also the high raw material prices being driven by inflation into the raw material prices and the cost, including the ocean freights have been much higher than the price increase in the U.S. market. So that is the main driver than the cooked products, like our ocean freights are high, our packaging is very high now. Our electricity cost is very high. The AMC cost put in by the government for transportation has gone triple. So these costs have added -- have eaten into the margin, but we will continue focus on introducing more value-added products so that we can maintain our margin. And once our cooked green ticket is back online, we should be able to move out more volume at...
Got it. Second question is mainly on this new processing plant that is coming, right? So what is the timeline that you expect it to come? And secondly, Rao, sir, if you can also talk about the price hike you have taken in feed in the month of March and April. So how much of that?
So I'll answer...
Nikhilesh, complete -- yes, yes, please.
Processing plant [indiscernible] large factory like Yerravaram factory. It's a smaller facility. The main target for this is to increase capacity utilization. And the second one is also to add a line so that we have only cooked in the Yerravaram facility. So we need another plant with the cooked facility. And also, we have requirements for certain products that cannot be produced at our existing 2 facilities. So it will need a few flow. So that's what we put up in this facility.
So the time line would be within the next 1.5 years that we finish the whole project and into commercial production. The reason being, when you were talking about the food processing facilities and a lot of regulations, we need to be extremely careful, check all the water pipeline, check all the air flow, et cetera, the drain flow, to make sure there's no contamination and potential hazards in the factory. So 1.5 years is an estimated timeline.
Yes. Coming to this feed price increase. I'll start from the latest one. The latest one, which we took in the month of April is at INR 2 per kg. And earlier to that in March, we took at INR 4 per kg. These are the 2 recent listings. And earlier to that, we have took in, in August '21 at INR 4.25. In May, INR 3.15. And in April, INR 2. So totally, I would put that about INR 14 -- INR 15 we have taken. About INR 15 we have taken, but the cost is still -- it is around about another INR 4. INR 29 to INR 30 is the cost increase that has gone up in the last 1 year -- 1.5 years. So we are still -- there is a gap. We are trying to somehow by other methods, by cost reduction, productivity increase and all, we are trying to do -- to absorb that additional cost also. We'll have to see. That is the situation.
Got it, sir. Sir, also if you can give the current fish meal, soya bean prices, sir, what are they going right now?
Current share prices of the soya bean meal. The fish meal is INR 111 now. Fish meal INR 111 and soya bean meal is INR 19. Fish meal is the -- it's about INR 111 and INR 112. It is INR 19 -- soya bean meal is INR 19,000 per metric ton -- sorry, sorry, about INR 69,000 per metric tons soya bean meal.
Okay. It is same as an average by the last quarter, right? So it is similar to that?
See, we have booked -- recently, we have booked -- when the government permitted import, we have booked 14,000 tonnes, which we are expecting would cost us around INR 54. That is a very, very normal standard grade, but we don't use that grade. That grade is, today, in India, it is around INR 57, INR 58 today. It's -- the imported price is INR 54. That would be the -- but we normally use most of our product is with high protein, which will be higher by INR 5,000 per metric ton. The normal -- plus INR 5,000 crore is our cost, high protein.
Ladies and gentlemen, the next question would be the last question for this call. It comes from Mr. Ayush Mittal from Mittal Analytics.
First of all, sir, I would like to appreciate the company, that we have done pretty well at this quarter given the way the things were. And it's good to see that we have got back to a margin in feed despite so much of raw material pressure, while other peers have not been able to do well. So congrats on that.
Sir, 2 questions. So first, when we look at the balance sheet, we are having a very high inventory this time. It is almost more than double of what we have. While when you have given the expectation of growth for this year, on the feed side, you have given about 10% growth. Similarly on the processing, 10% growth. While for the industry, you're talking about a higher growth. So why is it so? Why is this mismatch there?
Yes, I think, Ayush -- I don't know, your question is like if there is a growth, there should not be inventory, is it what you are trying to...
No, no. What I'm trying to say is that we are talking about -- I think in your opening comment, you have mentioned that you're expecting 10% growth in the feed and about 10%, 12% growth in processing. Is that right? For the FY '23?
Yes.
While we are talking of a higher growth in the industry and also we have built so much of inventory. So why this mismatch there, like so much of inventory we have built up, but this is only for the seasonal nature or is it that we can do bigger volumes?
I don't know. Just let me explain to you. See, the inventory is not finished goods. The inventory consists of raw materials and finished goods. In fact, the finished goods is very, very minimal finished goods inventory. The inventory is mostly two raw materials, as I first explained. One is the fish meal and other is the soya bean meal. These 2 are scarce items in the country today. All the 3 -- because soya bean meal, whether it is a feed manufactures consumption or a human consumption, there is a shortage. Similarly, there is a shortage of fish meal for all the industries, which are making this -- using the fish meal. So these 2 items required to be stocked in huge quantities before the season starts.
So what you are seeing in the balance sheet is on the date of 31st March, which happens to be the financial year ending day, which coincides with the commencement of our season, subsequently April, May, June, okay? So that's the reason why we keep enough stocks for production in May, June -- April, May, June. But this year, we have kept more than what is required. See, normally, what we'll do when the soya bean was really available in the market, we were only storing around 15 to 20 days only. But now because there is a shortage of soya bean, we have increased the stocking levels to 1 month now.
So because the same thing, even the fish meal, we had about 20, 25 days stocking levels, minimum stocking level. There, we have increased to 1.5 months. Because of this increase in the stocking levels, then naturally, the inventory will go up. So that inventory is required for utilization in the subsequent months, April, May and June. It is not that we are keeping the inventory levels throughout the year in the same level, okay? So that is the reason.
So if you don't store it, you don't inventory -- improve the inventory level at the beginning of the season, then you will end up in paying higher cost during the main season. So for example, in the month of June, July, there is going to be the fishing ban in the western part of the country, where we are getting huge quantities of fish meal. Once there is a ban, then you will not get fish meal in month of June and July. So we need to keep this fish meal stock enough for our consumption in not only April and May, but June, July, August also. So by the time the fish meal supply starts, it will be somewhere in August 15 afterwards. So we should keep sufficient stocks, but -- and that is the main season for shrimp culture. So we need to utilize our production capacity and supply feed to the farmers.
Sir, I understand what you're saying. What I was trying to say was that as you are expecting the industry to grow at 15% to 20%, like the reason that you shared...
Not 15% to 20%. Not 15% to 20%. See, that is a wishful thinking. So if really the production of shrimp grows to 30%, 25%, definitely, we also register that growth. See, normally, 10% to 15% is a reasonable anticipation or expectation of growth, which we feel comfortably we can reach.
Okay. And sir, the cost of the inventory that we're holding, this is in line with the costs that we had in Q4 of this year?
Yes, yes. No, that is cheaper actually. What we have is cheaper than what we have now. The present prices are higher than what inventory costs that we have as on 31st March. So we are at advantageous position. If we were to buy today, it would have costed much more to us.
Ladies and gentlemen, due to the time constraint, we would like to come to the end of this conference.
On behalf of KFin Tech, we would like to thank the entire team of Avanti Feeds for giving us the opportunity to host this call, and we appreciate the interest from the investors and analysts for the participation.
Thank you. And if you need any further information, you may connect with Mr. Sahil Shah of KFin Tech at sahil.shah@kfintech.com. Thank you for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a good evening, everyone.