Avanti Feeds Ltd

NSE:AVANTIFEED

Q2-2026 Earnings Call

[Operator]

Good afternoon, ladies and gentlemen. I'm Akash, moderator for the conference call. Welcome to Avanti Feeds Limited Q2 FY '26 Investors Conference Call.

We have with us today Mr. C. Ramachandra Rao, Joint Managing Director; Mr. A. Venkata Sanjeev, Executive Director; Mr. A. Nikhilesh, Director of Avanti Feeds and Executive Director of Avanti Frozen Foods Private Limited; Ms. Santhi Latha, GM, Finance and Accounts, Avanti Feeds Limited; Mr. D. V. S. Satyanarayana, CFO, Avanti Frozen Foods Private Limited; and Mr. K. S. Reddy, CFO, Avanti Pet Care Private Limited. [Operator Instructions] Please note this conference is recorded.

I would now like to hand over the floor to Mr. C. Ramachandra Rao. Thank you and over to you, sir.

[C. Rao, executive]

Good evening, ladies and gentlemen. I am pleased to extend a warm welcome to all of you for this investors conference call to review the unaudited financial results for Q2 FY '26 and for the period ended 30th September 2025. Mr. A. Venkata Sanjeev, Executive Director Avanti Feeds Limited is joining from the factory; and Mr. Nikhilesh, ED from Avanti will be joining from factory. Along with me are Ms. Santhi Latha, GM Finance and Accounts of Avanti Feeds Limited; Mr. D. V. S. Satyanarayana, CFO of Avanti Frozen Private Limited; and Mr. K. Srinivas Reddy, CFO of Avanti Pet Care Private Limited.

To begin with, Ms. Santhi Latha will present highlights of the financial results for the quarter ended 30th September 2025 shrimp feed division and also consolidated financial statements of the company for the same period. Thereafter, Mr. D. V. S. Satyanarayana will present the financial highlights of shrimp processing and export division. Thereafter, Mr. K. Srinivas Reddy will present the status of pet care project. After presentation by all of them, we will take question and answer session.

Now I hand over to Santhi Latha to give her presentation of Avanti Feeds performance.

[Santhi Latha, executive]

Thank you, sir. Good evening. Now I will take you through the consolidated and stand-alone financial performance highlights for the quarter ended 30th September and the period ended 30th September 2025.

So the comparative performance of Q2 FY '26 with that of Q1 FY '26 and Q2 FY '25, along with the comparative performance for 6 months ended 30th September '25 with that of 30th September '24 have been given in the presentation already circulated.

First, we will review the consolidated financial results for Q2 FY '26. The gross income in Q2 FY '26 is INR 1,659 crores as compared to INR 1,657 crores in the previous quarter of Q1 FY '26, an increase of INR 2 crores by about 0.12%. Compared to Q2 FY '25, gross income of INR 1,397 crores, there is an increase of INR 262 crores by 18.75%. The PBT is INR 227 crores in Q2 FY '26 as compared to INR 249 crores in Q1 FY '26, a decrease of INR 22 crores by 8.83% and compared to Q2 FY '25 PBT of INR 162 crores, there is an increase of INR 65 crores by about 40.12%.

Comparison of performance for 6 months ended 30th September 2025 with that of 6 months ended 30th September 2024. Gross income during 6 months ended 30th September '25 is INR 3,316 crores as compared to INR 2,932 crores in 6 months ended September '24, an increase of INR 384 crores by about 13.1%. The PBT for the 6 months period '26 is INR 476 crores as compared to INR 342 crores in 6 months period of FY '25, an increase of INR 134 crores by 39.18%.

The consolidated results indicate net impact of several factors, such as increase or decrease in income expenditure and exceptional item relating to feed, frozen and pet care divisions, which have been discussed in the following divisional performance of these units individually.

The stand-alone financial results of feed division. Q2 FY '26 results. The gross income of Q2 FY '26 is INR 1,200 crores as compared to INR 1,279 crores in the previous quarter of Q1 FY '26, a decrease of INR 79 crores is due to decrease in quantity of feed sold by 10,920 MT and also that being the main season, the Q1, the sales will be more.

The gross income in Q2 FY '26 increased to INR 1,200 crores from INR 1,113 crores in the corresponding quarter of Q2 FY '25, an increase by INR 87 crores due to increase in sales quantity by 19,747 MT. The PBT for Q2 FY '26 is INR 180 crores as compared to INR 224 crores in Q1, a decrease of INR 42 crores by 19.64%.

When compared to Q2 FY '25, PBT of INR 145 crores, there is an increase of INR 35 crores by about 24.14%, due to increase in quantity sold, decrease in raw material costs and better overhead absorption. The feed sales decreased to 154,644 MT in Q2 FY '26 as compared to 165,564 MT in FY '26 and increased from 134,897 MT in Q2 FY '25.

Comparison of performance for 6 months ended 30th September '25 with that of 6 months ended 30th September 2024. Gross income in 6 months ended FY '26 is INR 2,479 crores as compared to INR 2,410 crores in 6 months FY '25, an increase of INR 69 crores by 2.86%.

The PBT is INR 404 crores in 6 months FY '26 as compared to INR 298 crores in 6 months FY '25, an increase of INR 106 crores by about 35.57%. The feed sales increased to 320,208 MT in 6 months FY '26 as compared to 293,488 MT in 6 months FY '25.

The major raw materials in the feed are fish meal, soya bean meal and wheat flour. The noticeable development in this quarter is increasing trend of 2 major raw materials that is fish meal and soya bean meal, resulting in profitability when compared with previous quarter. The prices of these raw materials keep fluctuating since their production is based on agriculture and fish catches from the ocean.

The price of fish meal increased to INR 97 in Q2 FY '26 from INR 93 in Q1 FY '26 and decreased from INR 105 in Q2 FY '25. In case of soya bean meal, their prices increased to INR 42 per kg in Q2 FY '26 from INR 38 in Q1 FY '26 and decreased from INR 49 in Q2 FY '25. However, the wheat flour price increased to INR 33 per kg in Q2 FY '26 from INR 31 in Q1 FY '26 and INR 32 in Q2 FY '25.

The present purchase price of fish meal is INR 125 per kg, soya bean meal -- the high-grade soya bean meal, which we procure is around INR 47 per kg and wheat flour is between [ INR 32.500 ] to INR 33 per kg. While on one hand, the raw material prices are instrumental in determining the margins, on the other hand, the status of aquaculture activity, conditions such as climatic changes, diseases, et cetera, determine the consumption of feed in terms of volume, which will have an impact on the overall performance of the company.

As you noticed, the 9 months of calendar year 2025 has been a good profitable period. However, the forecast for the next 3 months of this year is challenging, due to factors like gradual increase of raw material prices and threat of reciprocal tariffs by U.S.

To sum up, in general, FY '25-'26 is expected to be a mix of favorable and challenging season for the aquaculture industry, both in respect of shrimp production as well as exports from India and global demand for shrimp exports.

Update on fish feed. As reported in earlier con call, the company is in the process of importing fish feed from Thai Union Feedmill Company Limited and is conducting trials under Indian conditions and also commercial viability. Once the product performance is proved and viable, the production in India will be taken up for domestic sales.

Shrimp feed consumption -- production and feed consumption in FY '25 and company plans for '26. Shrimp feed consumption. On the basis of estimated shrimp production of about 7 lakh to 8 lakh metric tonnes in current year -- in calendar year 2025, the feed consumption is estimated to be about 12 lakh to 13 lakh MT. The company feed sales during the 6 months FY '26 is 320,208 MT against 293,487 MT in 6 months FY '25. It is estimated that the feed sales during FY '26 would be around 575,000 metric tonnes.

Shrimp processing and export. The export of frozen shrimps during '24-'25 was to the tune of [ 741,529 MT ], worth USD 5,177 million. USA is the largest importer with 311,948 MT of frozen shrimp; followed by China 136,164; European Union, 9,310 MT; Southeast Asia, 58,003 MT; Japan 38,917 MT; Middle East 32,784 MT and other countries, 64,403 MT.

Frozen shrimp continue to be the major item of export in terms of quantity and value, accounting for a share of 43.6% in quantity and 69.46% of the total U.S. dollar earnings. Frozen shrimp exports during '24-'25 increased by 8.3% in value terms and 6.06% in U.S. dollar terms and 3.56% by volume. The company's shrimp exports during the FY '25 was 14,149 MT as compared to 13,444 MT in FY '24 and increased by 682 MT. It is estimated that the exports during FY '26 will be around 17,000 MT.

Now I hand over to Mr. D. V. S. Satyanarayana to present highlights of shrimp processing and export division.

[D. V. Satyanarayana, executive]

Thank you, ma'am. Good evening, everyone. Now I would like to take you through the financial highlights of shrimp processing and export divisions. Shrimp processing division, Q2 FY '26 results.

The gross income for Q2 FY '26 is INR 462 crores as compared to INR 378 crores in Q1 FY 2026, an increase by INR 84 crores, which is about 22% growth, mainly due to increase in sales quantity by about 639 metric tonnes, which represents 15% growth.

The gross income in Q2 FY 2026 increased to INR 462 crores from INR 284 crores during Q2 FY 2025, an increase of INR 178 crores, representing 62% year-over-year growth. The sales volume during Q2 FY '26 increased to 4,862 metric tonnes from 3,423 metric tonnes in Q2 FY 2025, an increase of 1,439 metric tonnes. Higher sales in Q2 FY '26 was driven by majorly volume growth, an increase in average selling price realization and favorable foreign exchange rates.

The profit before tax before exceptional items for Q2 FY '26 stood at INR 53 crores from INR 25 crores in Q1 FY 2026 due to higher sales volume, increase in average sales price realization and there was a marginal decrease in ocean freight rates as well. The profit before tax in Q2 FY '26 was INR 53 crores, an increase from INR 23 crores in the corresponding quarter, that is Q2 FY 2025, primarily due to higher volumes, better sales price realization, favorable foreign exchange rates and also there was a decrease in ocean freight rates.

Comparison of performance for 6 months ended 30th September 2025 with 6 months ended 30th September 2024. The gross income for 6 months during FY '26 was INR 841 crores as compared to INR 527 crores in the corresponding 6 months period of previous year, that is FY 2025. An increase of INR 314 crores in the gross income during the 6 months of FY '26 was mainly due to increase in sales quantity by about 2,880 metric tonnes, which represents 46% growth.

The PBT in 6 months FY '26 was INR 78 crores as compared to INR 49 crores in 6 months FY 2025. An increase in PBT by INR 29 crores is mainly on account of higher sales volume, better sales price realization, favorable FX rates and also there was a decrease in ocean freight rates.

So with this, Avanti Frozen results are completed. So now I would like to hand over to Mr. K. Srinivas Reddy to update the status of pet food project. Thank you.

[Kandhadi Reddy, executive]

Thank you, Mr. D. V. Satyanarayana. Now I would like to update the pet food project. As already informed, the company commenced trading in cat food from January 2025 in first product range under Avanti Pet Care brand, that is Avant Furst in cat food ocean fish flavor.

In July 2025, company expanded its cat food portfolio with addition of second flavor, tuna. In August 2025, the company launched a dog food, which constitutes the largest share of the pet food industry at around 65 percentage, starting with chicken and vegetable flavor and more flavors will be planned in the due course. The response from the pet owners from both cat and dog food has been highly positive and market acceptance across all regions.

During Q2 FY 2026, the company recorded a sales of INR 95.08 lakhs, reflecting a strong growth from the INR 38.17 lakhs in Q1 FY '26. The sales movement was driven by the continued increase in per tonnage to our cat food products as well as newly launched dog food segment.

On the market expansion, company continued to strengthen its presence in Tier 2 cities and has initiated expansion into Tier 2 and Tier 3 markets. E-commerce operations have now commenced. Our products available on the Supertails platform. Additionally, the company is ready to start trading on Amazon, targeting go-live before end of November 2025.

The company continues to focus on building a strong brand visibility for Avant Furst through the ongoing digital marketing campaigns on Instagram and Facebook. The idea is Avant Furst, enhancing consumer awareness and brand engagement across our target audience.

As informed in the previous con call, the company has purchased the land and converted from agriculture to non-agriculture approximately 30 acres near Hyderabad for setting up state-of-the-art manufacturing facility. Presently, project technical works are discussing with Bluefalo team and land development works are in progress. Upon receiving a required technical inputs, the detailed project report will be prepared and obtain necessary government approvals to commence the construction.

This is about the pet care project. Now I hand over to JMD sir for closing remarks.

[C. Rao, executive]

Thank you, Mr. K. S. Reddy. I am sure that the investors are all happy with the performance of all the 3 units feed, frozen products and also pet care during this period financial year so far. And with that, I would like to just throw some light on the recent developments in this sector so that it will be updated on the future performance of the company.

As you know, in spite of the recent challenges, including major setback caused by U.S. tariff, the aquaculture industry continues to be -- continues to demonstrate strong and sustainable growth. This stability is supported by several key factors. The first and foremost is the market diversification, producers are actively expanding into new geographies and reducing dependence on a single market, which helps stabilize demand and mitigate external risks dependence on one market.

The second one is the consistent global demand for shrimps. Shrimp remains a high-demand protein worldwide, supported by steady consumption trends in both established and emerging markets. The third one is about value-added products and sustainability initiatives. The ongoing shift towards value-added products and sustainable farming practices enhances the competitiveness, improves the margins and strengthens long-term industry viability. As all of you know, our company, Avanti Feeds has been focusing more on the value-added products so that we would be able to take the advantage of the emerging markets favoring value-added products where the margins are high.

The fourth and of course last but not the least, encouraging domestic market by the Government of India. Recently, the union's cabinet on 12th November '25, very recently, Wednesday, they announced the long pending export promotion mission for 5 years with a total outlay of about INR 25,000 crores to help exporters deal with U.S. reciprocal tariff and increase their competitiveness in the turbulent global market.

Under the EPM, [ pre-hierarchy ] support will be extended to sectors impacted by the reciprocal tariff escalations such as textile, leather, gems and jewelry, engineering goods and Marine products. The intervention will help sustain export orders, protect jobs and support diversification and also help the promotion in the new geographies. Further, Honorable Prime Minister Modi, Modi government is promoting domestic shrimp consumption to support farmers and create a stable market driven by rising export tariffs from countries like U.S.

Key initiatives include Government Committee and the National Fisheries Development Board, NFDB, to develop a robust local market suggestion to integrate shrimp into government food supply chains like military and also a proposal from promoting shrimp as a healthy lean protein through nationwide initiatives.

The reciprocal tariff situation is expected to stabilize in due course, as the United States and India are making tangible progress in their long-awaited trade negotiations, particularly around tariff structures and oil imports. We have recently seen the U.S. proposing to reduce some of the food items, dairy products, reducing the tariff almost to 0. So we expect that in course of time, the aquaculture sector also will be taken care of in time -- in respect of tariff balancing it.

And this positive momentum provides optimism that current tariff challenges will ease over time, supporting smoother trade flows and greater market stability. We expect demand for shrimp to continue growing and remain sustainable across both global and domestic markets. Consumption trends remain strong, supported by shrimp's position as a versatile, affordable and widely accepted protein. Additionally, rising health awareness, expansion of retail and food services channels and increasing preferences for value-added seafood products are further driving demand. These factors collectively reinforce a positive outlook for sustained market growth in the near- and long-term sustainability of the sector.

With this my remarks, I would like now to take the question and answer session. And I request the investors to give their questions.

[Operator]

[Operator Instructions] The first question comes from [ Mr. Akhilesh Rawat from Ridhanta Vision Private Limited ].

[Unknown Analyst]

Am I audible?

[C. Rao, executive]

Yes, yes.

[Unknown Analyst]

Yes. So first of all, I'd like to congratulate management for such great results in this turbulent environment. And I have 2 set of questions. So my first question is, if the 50% reciprocal U.S. tariff continues through quarter 4, so what is your quantified expected impact on financial year '26 processing volume and EBITDA versus -- as you mentioned that 17,000 metric tonne guidance for shrimp processing. So like what is -- what impact you will see in terms of margin and volume?

[C. Rao, executive]

I think Nikhilesh, will you take up this question?

[Alluri Nikhilesh, executive]

Yes, sir. Thank you for the question. Just you're asking for the full year, right, full year '26, what would be the impact?

[Unknown Analyst]

Yes.

[Alluri Nikhilesh, executive]

So as of now, we're in Q3. So the first few quarters continued to be good. The performance has been good. And for the rest of the year, we're actively working on diversifying into other markets. However, if it doesn't, things don't normalize on the duty front from January, then we might relook into the outlook for the year. Right now, we continue to have it stable, hoping that everything falls into place.

[Unknown Analyst]

Okay. So can you give a number or like kind of volume reduction if things don't stay same like the tariffs are where they are?

[Alluri Nikhilesh, executive]

It's difficult. It's very speculative and like it's everyone's own opinion, right? So what we've given is 17,000 is going to be the -- is the current forecast. So that would be what we'll stick with.

[Unknown Analyst]

Okay. Okay. Okay. So my second question is, as you mentioned in the Q2 financial '26 presentation that EBIT improvement was supported by higher other income. So could you break down the key component of this other income? And importantly, like how much of it is recurring or sustainable going forward?

[C. Rao, executive]

Yes, the breakup, we will -- the other income and to -- P&L account is the breakup...

[Santhi Latha, executive]

Breakup plus other income.

[C. Rao, executive]

What is the operational income and what is the other income.

[Santhi Latha, executive]

No, he is asking the breakup of other income, is that what you're asking?

[Unknown Analyst]

Yes, yes, yes. Like where is that income coming from? Like what are the sources?

[C. Rao, executive]

So the major is that the exchange -- the major income is on the 2 fronts. One is in respect of feed, we have deposits on that we are getting income on mutual funds, FDs and various portfolios that we are investing, the reserves, that is giving the income that is treated as the other income. And as far as the frozen is concerned, it is the foreign exchange gain that by booking the forward contracts, we have been able to make significant income out of the fluctuation foreign exchange. That is the other income that is shown in the frozen division.

[Operator]

The next question comes from Mr. Ronak Shah from Equirus Securities.

[Ronak Shah, analyst]

Sir, my first question is regarding just a clarification that in the earlier comment when sir was highlighting that CY '25 overall feed consumption can be in the range of 12 lakh to 13 lakh odd metric tonnes. And we are guiding FY '26 overseas feed sales into the range of 5.75 lakh metric tonnes. Are we expecting a decline into the CY '26 considering our 50-odd percent market share?

[C. Rao, executive]

No, it's not like that. See, what happens is whatever the consumption that has been there during Q1, Q2; Q3, Q4 gradually reduces because of the seasonality. So what we estimate is that it will not be on the same level as in Q1 and Q2. So that is the reason why we are estimating at 5.75, which is significantly better than last year's consumption and also our sales. As far as the market share is concerned, definitely, we are above 50%. It is ranging from 51% to 53% -- 51%, 52%, that is the range which we are now operating. And I think we will continue to hold that position at 52%, 53% in future also.

[Ronak Shah, analyst]

Yes, sir. Sir, my second question is regarding the -- how the market is responding because the upcoming cultivation season, which will start from the January end or February. so what are your sense is based on the on-ground feedback, how the farmers are taking all this tariff situation?

[C. Rao, executive]

Yes. See, it's a good question because as you -- generally, the feeling is that the farmers are very much worried about this tariff, but the situation is not that. The farmers are very confident because they have been able to get the farm gate prices comfortably and they are making money. And more so, the tariff has not really -- over a period of time, slowly the situation is getting adjusted to the market corrections, what we can say. See, if not U.S. market, why not other markets. So as we explained in our note earlier that we are diversifying into other markets as well as we are focusing more on value-added products. And also, we are going for the domestic markets. The government is giving support to that.

So with all that, the demand for shrimps continues to be growing sustainably. It is not that suddenly there will be a drop. So that is the reason why we do not -- see, we have not seen rather, I would say that in the last maybe 6 months or so, more than that, since the tariff has come into force, there has not been a big difference in attitude of the farmers, though there was a knee-jerk reaction on the farmers apprehending for the fall in the prices and all. But that is no longer there. They are very confident of that and the prices are also good. And we don't see any -- there has not been any fall in the -- as far as the aquaculture is concerned, the farmers are pretty confident of continuing the situation for the next year also, '26 also.

[Ronak Shah, analyst]

Got it, sir. Got it. Sir, my next question is regarding the diversification strategy. So when we are saying that we are trying to diversify, but when I see our presentation, our saliency for the North America was around 66.4% in 2Q FY '25, which is largely similar or rather increased to 66.9% in Q2 FY '26. So can you elaborate the strategy how...

[Alluri Nikhilesh, executive]

I'll make that very easy. North America as a country, as we just diversify that way, but U.S. in general, our total share volume is coming down.

[Ronak Shah, analyst]

Okay. Okay. Got it. Got it. And sir, last question regarding the processing division. So the 2Q very solid numbers in terms of the 40-odd percent plus kind of the growth, but I assume there is some pre-shipment considering the tariff situation. Now when we are seeing around 17-odd thousand metric tonne target for FY '26, are we assuming that in base case that the tariff is likely to go out in the fourth quarter of FY '26?

[Alluri Nikhilesh, executive]

So there was some front loading, but like the tariff is already out like starting from April, there were multiple revisions, the last one coming probably September. So it's been some time, but we continue to ship across our customers all across the world. And the 17,000, we just made like a scenario on where we felt we would end. But frankly, speaking, right now, the momentum continues to be strong as it was in the earlier 2 quarters.

[Ronak Shah, analyst]

Okay. Okay. And sir, last question regarding the recent policy, which you are highlighting. So can you quantify how the -- in terms of quantum, how it can positively impact the O&P or the shrimp industry? That's the last question from my end.

[C. Rao, executive]

Yes. This has been announced very recently that they are yet to formulate the mechanism, how they would like to give this support, the INR 25,000 crores set apart in the budget for this expenditure. And we are expecting sometime in maybe next couple of months, 1 or 2 months, we should be able to get the -- which will be, I think, coincide with the next season, next '26, that will be helpful for us to make -- avail the benefits, whatever that is going to be announced by the government. Okay.

[Operator]

So the next question comes from Mr. Kamal Sharma, an individual investor.

[Unknown Attendee]

Congratulations on the amazing performance. I have a very quick question. We just heard from the Supreme Court of U.S. I think they are also reviewing the petition. And in case they find or declare that the tariffs were invalid or illegal, are you going to get any kind of refund in that case at all? I mean if that is the final verdict from the U.S. Supreme Court.

[C. Rao, executive]

Nikhilesh, would you like to take this question.

[Alluri Nikhilesh, executive]

I think -- yes, this is quite speculative to be very frank. So we -- nobody really knows where this is going. In terms of refund, see, as Avanti, we've been able to pass on the tariff. So whether getting the refund, I'm not sure. I don't think we'll actually get the refund. We have to give it back to the customer, I guess.

[C. Rao, executive]

Yes. Unless -- I can add just that unless these -- whatever that illegal or whatever it is with a retrospective effect, whatever is done already, very difficult to regulate that. As Mr. Nikhilesh said, it's very difficult. It's a remote possibility.

[Alluri Nikhilesh, executive]

And maybe I'll just rephrase my answer. See it's quite speculative, and we need to see what happens because right now, there's not enough information on whether -- how it's going to go forward. Once it does, then the government -- the U.S. government itself will give directions first that we need to go with. So we need to wait and watch. So it's too early to speculate right now.

[Operator]

We have a follow-up question from Mr. Ronak Shah.

[Ronak Shah, analyst]

Sir, my question is regarding the CVD or the anti-dumping duty. So first, I want to know the update on what is the current prevailing rate based on India and the relative larger competitors.

And second question is regarding how we are realigning our COGS. So from the numbers, I can see that EBITDA per kg has improved significantly over the last 4-odd quarters, which shows that we have passed on certain part of that to the end consumer. So can you clarify on that part as well?

[Alluri Nikhilesh, executive]

Okay. I'll take this question. So on the first point, I think this information is quite publicly available, what are the CVD rates of India versus the other countries. So a simple Google search or ChatGPT can help out on how we figure and it will give you the demarcation for AVD and CVD and the total, et cetera. So the...

[Ronak Shah, analyst]

Sir, my question is regarding that. Is there any update because the government is likely to review the rate, so on that part?

[Alluri Nikhilesh, executive]

Yes. No update right now to give. There's no -- only preliminary assessments done. So the final review hasn't come out yet.

[Ronak Shah, analyst]

Okay. And from our end, how we have adjusted or the passed on to the end consumer? Can you highlight that?

[Alluri Nikhilesh, executive]

So to the end consumer, so the duty itself, 50% is too high. So it's not possible or the supply chain to absorb so much percentage. So essentially, we've been able to pass on the cost to the consumer till now. We just are waiting and reviewing how it affects the consumption.

[Ronak Shah, analyst]

So sir, just to build upon that, can you highlight how the order process goes on? So for example, for the third quarter and the fourth quarter, whether the U.S.-based customer has placed order or if yes, then how the pricing has set up? So the final and the whole tariff part has been embedded into the order cost or how it works?

[Alluri Nikhilesh, executive]

Yes, that's essentially how we did it. So whatever orders we had on our books and so we worked with our customers to add on the tariff rate. And whatever new orders that we've confirmed since the tariff were on the rates that the U.S. government kind of levied. So that we did not -- like in general, everything that we priced was including the tariffs.

[Ronak Shah, analyst]

Okay. Understood. Understood. And sir, last question is on...

[Operator]

Ronak, sir, sorry to interrupt you. Request you to join the queue again for more questions, sir.

[Ronak Shah, analyst]

Just the last question, if permit.

[Operator]

Please go ahead, sir.

[Ronak Shah, analyst]

Yes, sir. Sir, last question is regarding our ventures into the fish and the pet feed part. So sir, in terms of the quantitative terms, can you highlight because it's been a few quarters since we are evaluating the market. Have we got certain feedback from the market or the research reports which you are evaluating what is the market, how large is the market and how we can position ourselves?

[C. Rao, executive]

Yes. See, the first point is about fish feed because the fish feed is a bit challenging area because the sector -- because the fish feed keeps -- the prices keep fluctuating and there are different species and the feed also differs for each species. So we'll have to keep trying and see the areas, which type of fish is being real cultured. We have to give the feed according to that. So there are a lot of efforts are being made by importing the feed from Thai Union and making trials here to find out which suits the Indian market. That is number one.

Coming to the pet food, see, the pet food is a very challenging market. And we have started, I would say that with a very good beginning because first we launched our cat food with the face, which has been accepted by the market right from the day 1. So we have got very good response. And as you know that these are the products which take time. And there are very strong players, long-term players in this like mass, which is Pedigree and Drools, these markets, these players are very strong. And it takes time for us to really build the market -- and because we are making all efforts at different types. So we could do about 7 to 8 months of cat food. And then later on, we started with dog food and dog food has also very good response.

And there are several channels, marketing channels that we are now trying to explore each and everyone, not only the simple distributors, but e-commerce and the different types, yes. All those things that we are working out on that. And so we are very confident that the -- though the initial expenditure is more and we gradually increase the sales volume. And also when -- by the time we start our manufacturing unit by end of '27 -- FY '27, so we should be able to fully have the market under a substantial market to our company. And this is a time-taking process. I think initially, we'll have to do a lot of work for marketing our products withstanding the competition from the long-term players.

[Operator]

[Operator Instructions] We have another follow-up question from Mr. Akhilesh Rawat from Ridhanta Vision Private Limited.

[Unknown Analyst]

So my question is like as we have seen that fish meal, SPM and wheat prices -- raw material prices are rising after quarter 1. So can you quantify the feed margin sensitivity like for every 1 kg increase in key raw material prices. So based on like current raw material levels, should we expect like our financial year '26 feed EBIT margins to revert towards historical 10%, 12% or remain closer to H1 levels?

[C. Rao, executive]

See, it will be around -- see, it's very difficult to tell for the next Q4 -- Q3 and Q4 because the prices of these raw materials are increasing very significantly for various reasons. See, for example, fish meal is going up because the Peru has very less catches this year and even the Chile. So when these countries, Chile and Peru are the major countries supplying the fish meal, so when their production reduces, automatically global fish meal rate increases and the demand for Indian fish meal for export increases.

So the Indian fish meal manufacturers prefer to export because they get a better price. For example, the fish meal, locally 60% protein is being sold at 125, 130, whereas they are able to get 175, 160, 175 rates they are able to get. Moreover, they get some incentives also for exports. But this is -- they are tempted to export than to supply to the domestic market. And we expect that -- Chile has not yet announced its total quota available for the export. Once it comes, I think we are expecting that prices get stabilized around -- it will not be less than about INR 25, INR 125, INR 130. That is the fish meal situation.

Coming to the soya, soya has 2 phase impact. One is that this year, because of the excess rains, the production has come down by about 10%. So that is the one reason there is likely to be a slight shortage of soya production, soya seed production. At the same time, the Government of India has announced increase in minimum support price by about INR 3 per kg. So these 2 factors have really influenced to increase the prices to go up. And particularly the states like Maharashtra, they have made it a mandatory thing for all the processes, soya processes to buy from the farmer only at the MSP, and they are not allowed to buy less than MSP. So that is an impact.

So we see that soya now, for example, the best quality, which we use is about INR 46,500 per metric tonne, which was around INR 42,000, INR 43,000 has gone up to INR 46,500. Similarly, normal soya as well as hi-pro, all the prices have gone up. And we'll have to see how -- now the government will start procurement from now on. So the -- so when there is a procurement, definitely, the market availability -- open market availability of soya will be less.

So when the government procures for their food security, then naturally, the prices will go up. So we can expect the next couple of months, the prices will keep on the high side. And thereafter, we'll have to see once the government exhaust this quota of purchase, the prices also may likely to stabilize, and we'll have to wait for that from the -- maybe around February, March. That's what we are expecting. And similarly, the soya dependent market like products like soya lecithin will also go along with the price.

And coming to the wheat flour, the wheat flour also is having the same situation because normally the wheat -- the crop comes in the month of February, March. So we'll have to see. But as of now, there is a lot of the expectation of a high production of wheat this year. But very recently, in fact, a couple of days back, the government has in principle permitted 1 million tonnes of wheat products for export. So till now, it was banned. The wheat and wheat products are banned for export. But a couple of days back, the Government of India, the Agricultural Department has permitted in principle 1 million tonnes and the Director General of Foreign Trade to prescribe the procedure for export of these products.

So as we know, once you start the production exports, then the prices again will go up. So we are now around INR 32,000 to INR 33,000 per metric tonne. And we'll have to wait and see what is going to be the impact of this export permission given by the Government of India. So cumulatively, we see that these things will definitely increase the price of the raw material. But at the same time, the chances of increasing the feed price is not there. It's very remote. It's not -- generally, it's not possible to increase the price of the feed. So the margins are -- naturally, it's likely to come down to maybe around -- we are expecting around it would be 9 and 10. So 10 is a good achievable profitability for this current year overall. Now that till now we have been doing very well, but we'll have to see the next 2 quarters and see how the profitability would be depending upon the raw material prices.

[Operator]

There are no other further questions, sir.

Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for your using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a pleasant day.