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Four Indian seafood companies line up IPOs.

Date: 09-05-2018
Subject: Four Indian seafood companies line up IPOs
Four Indian seafood companies are trying to cash in on the booming shrimp exports by going for an IPO. In last few years, Indian seafood exports have been recouping losses suffered due to the punitive tariff imposed by the US in 2004 and the decline in capture fisheries with the help of vannamei shrimp production, which is cheaper than the traditional black tiger.

According to trade sources, Indian aquaculture production is estimated to touch a record seven lakh tonne during the current fiscal and reach one million tonne by 2020.

Nekkanti Sea Foods, Devi Seafoods and Sandhya Marines have filed draft prospectuses with capital markets regulator Sebi. Another company,Devi Fisheries , is also reported to be planning for a public listing. Most of the leading shrimp exporters are based in Andhra Pradesh where majority of the farms are located.

Devi Seafoods plans to raise `900 crore through an initial public offering while Sandhya Marines is looking to raise around Rs 500-600 crore. Nekkanti plans fresh issuance of shares worth `250 crore, besides an offer for sale of up to 80 lakh equity shares by the existing shareholders.

Nekkanti Venkat Rao, managing director of Nekkanti Sea Foods told FE that it makes sense to go public as the industry is worth more than Rs 30,000 crore .

“India is moving towards the second phase of growth which will be driven more by value addition. As we move from a commodity driven business to more of a value added business it is easy for a listed company ,which is more transparent and has better corporate governance, to do business with leading global companies,” he added.

He feels that India can be the shrimp capital of the world just like Norway is for Atlantic Salmon. “As the country grows, it becomes a natural supplier for the species and the whole demand gravitates towards that particular country. India has already 20-22% of the world shrimp trade. There are multiple factors that are driving India’s growth,” he added.

Nekkanti Sea Foods is among India’s leading processors and exporters of processed frozen shrimp products with over three decades of operations. In fiscal 2017, they had a volume share in the Indian shrimp industry of 2.49% with a value share of 3.31% of the total exports in such periods ,according to a Crisil report.

Devi Sea Foods was the second-largest exporter (in value terms) of seafood as well as for frozen shrimps from India during financial year 2016-2017.

However, entry of new players and countries in the supply chain has led to a glut in the market with shrimp prices in free fall. Some of the Indian farmers have not seeded their farms after incurring huge losses in the first quarter harvest.

Venkat Rao says that the potential is still huge as the country exports a large share of its production to countries like Vietnam for re-export after value addition. He believes that consolidation and moving up the value chain would help Indian processors garner more market share in the coming days.

Seafood exports during the first ten months of the last fiscal registered a year-on-year growth of 13.7% in volume and 10.1% in value largely due to higher exports of frozen shrimps, state-run Marine Products Exports Development Authority (MPEDA) said recently.

Frozen shrimp continued as the top export item of marine products basket, with a share of 42.05% in volume and 69.95% of the total earnings in dollar. The overall exports of shrimp, which was to the tune of 4,56,404 tonne as against 3,78,355 tonne in the previous fiscal valued at $3,946.30 million, grew by 20.63% in quantity and 21.61% in dollar terms.

“India’s exports of seafood remained on the upward curve despite a fall in global shrimp prices triggered by oversupply from the major shrimp-producing countries and more stringent test regimes imposed by the EU to detect antibiotic residues in frozen shrimp consignments. Also, we had to face competition from countries like Ecuador and Argentina,” said MPEDA chairman A Jayathilak.

“Still, we were able to sustain the growth momentum on export front, which is a proof of the resilience of India’s seafood sector. We have initiated steps for export-oriented organic shrimp production, and launched new strategies to boost aquaculture and improve vigilance to stop faulty consignments,” he noted.

Source: financialexpress.com

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