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How Avanti Feeds has leveraged growth in shrimp demand

How Avanti Feeds has leveraged growth in shrimp demand

What sets the company apart from competition? "It is our continuous focus and R&D on feed formulation. We are constantly working on improvements,"  says Alluri Indra Kumar, chairman and managing director of the company.

Alluri Indra Kumar, Chairman and Managing Director, Avanti Seeds (Photo: Vivan Mehra) Alluri Indra Kumar, Chairman and Managing Director, Avanti Seeds (Photo: Vivan Mehra)

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In five years from now, we hope to become a billion-dollar player," says Alluri Indra Kumar, the 53-year-old Chairman and Managing Director of Avanti Feeds, a manufacturer of prawn and fish feed and a shrimp processor and exporter.

Kumar says Avanti - which has around 39 per cent share of the Indian fish and prawn feed market - is planning to invest Rs 300 crore over the next one year to increase capacity. At present, it is unable to meet demand from farmers.

"Not only will we expand our current line of activity in feed manufacturing, we are also setting up a hatchery as backward integration with our shrimp processing business apart from building a state-of-the-art shrimp processing plant in Andhra Pradesh over the next one year," Kumar tells Business Today sitting in his functional office at Somajiguda in Hyderabad. Avanti is building these with its collaborator, Thai Union, the $5-billion Thailand-based frozen seafood company that owns a 25 per cent stake in Avanti.

Rs 1,135.12 crore

Rs 69.69 crore



Kumar is fishing around shrimps for a reason. "For the fourth year in a row, there has been an increase in shrimp culture in terms of both water spread and stocking density. This has been mainly due to the success of Vannamei, a high-yield shrimp variety the government cleared for production in 2009," he says.

In the fish and prawn feed market, the market leader in India is Thailand-based CP (Charoen Pokphand) Group. It would have around 41 per cent market share, he says. "We are a close second. One of the reasons we are expanding is that at times we are not able to meet demand for our products," he says. Avanti earns 70 per cent revenue from the feed business. The rest comes from shrimp exports. "We want to earn 60 per cent from feed and the rest from exports in another three years," he says.

Avanti produces shrimp for markets in the US, Europe, Southeast Asia and West Asia. It has a shrimp processing and export unit in Gopalapuram near Ravulapalem in East Godavari District of Andhra Pradesh.

Kumar, who lives on the campus of one of his three feed units in Kovvur in West Godavari District (the fourth is in Valsad in Gujarat), says he has invested and planned systematically since 2007. "In the last four years, we have doubled our feed capacity to three lakh tonnes per annum," he says. That is a long way from the 12,000 tonnes that Kumar, a chemical engineer, started out with in 1992. The next year Avanti's shares started trading on exchanges. In terms of manpower, says Kumar, the company is 2,000-people strong as against 100 to 150 people it started out with.

But the journey has been anything but smooth. "Soon after we started, the aquaculture sector had a shock. Over the years, many big corporate players collapsed. We survived as we were working with smaller farmers too. During bad times, we worked very hard. For example, it was during this time that we did a lot of extension work with farmers, providing them training and explaining the best practices, which we do even now."

In 2002, Avanti began collaborating with Thai Union, which also took a stake in the company. Its revenue was Rs 73 crore in 2008/09. The next year, it touched Rs 102 crore. Since then, it has been growing rapidly. "We have been growing at least 30 per cent every year since 2009," says Kumar. The company ended 2014/15 with revenue of Rs 1,785.27 crore, compared with Rs 1,135.12 crore in the previous year.

In the last four years, the company has been building on its strengths in quality. "Today no product is sent out even after the quality control department clears it as it also has to be okayed by a separate audit group, a kind of external team that has representatives from different departments," says Kumar.

What sets the company apart from competition? "It is our continuous focus and R&D on feed formulation. We are constantly working on improvements," he says.

Kumar says he still monitors formulation, production and other operations. "Hyderabad, where we have our corporate office, has now become a transit point for me. I was in Kovvur yesterday, in Hyderabad today and will go to Gujarat tomorrow," he says. On why he remains in the plant and closely monitors operations, he says, "I just want to ensure that in case there is a problem it is addressed quickly."

Pick-up in the shrimp business, investment in capacity addition to prepare for likely rise in demand

Strong partnership with a global leader, R&D and focus on feed formulation

To expand feed operations, invest in state-of-the-art shrimp processing and set up a hatchery

To become a billion-dollar company in five years

Those at Avanti say the sector is still facing challenges, especially on account of inadequate infrastructure such as power supply to farmers and cold store chains. An added concern is that despite being similar to agriculture, it does not get the same treatment from the government. Also, in spite of technical advancement and development of specific pathogen-free seeds, the possibility of shrimps getting affected by viruses and diseases such as white spot disease and EMS (early mortality syndrome) still cannot be ruled out. "As a company, therefore, working towards ensuring sustainability and reliability of aquaculture is important to us so that farmers do not take short cuts," says Kumar.

People who know Kumar closely vouch for his hard work. "He is a prime example of an entrepreneur picking up opportunities in a space that has multinationals operating in it. Being a food business, it is challenging. If he is able to export to tightly-regulated markets of the US and Europe, it means he has a good grip on quality systems," says C. Suresh Rayudu, the chairman of the Andhra Pradesh chapter of the Confederation of Indian Industry and Vice Chairman and Managing Director of Srinivasa Hatcheries, a leading poultry company.

Abraham J. Tharakan, President of the Seafood Exporters Association of India, and Chairman of Amalgam Foods, says: "Avanti is on a roll. It has been doing extremely well. Its products are well accepted by farmers. As the aquaculture sector expands, the demand for feed will only grow."

But he adds a note of caution. "The challenge will be to ensure adequate supply of high-grade fish meal. Fish meal is still largely imported. Going forward, this will lead to pressure as oceans the world over are overfished," he says.

Published on: Jul 12, 2015, 5:22 PM IST
Posted by: Gaytri Madhura, Jul 12, 2015, 5:22 PM IST