Apex Frozen Foods Ltd

We continue to benefit from our focus on RTE and this we believe, will continue to drive our growth and improvement in realisation.

We write to you after yet another challenging year for export- oriented sectors, led by recessionary trend in key economies and the ongoing geopolitical instability globally. Consequently, our major centres of demand like the USA remained subdued. India's overall exports of marine products contracted by 8.74% to $7.37 billion during 2023-24. Further, although effective in the current fiscal, the announcement by the US Department of Commerce regarding levying a Countervailing Duty on some shrimp exporting countries including India, acted as a further dampener in the overall sentiment for the sector. On the supply side too, Indian Shrimp farmers have been cautious in their approach and as a result our input costs remained firm. The logistics disruption reoccurred due to the Red Sea issue that led to higher freight costs. In a dynamic market, all participants are forced to adapt, however, the past few years have kept throwing up consecutive and concurrent challenges which has made navigating them slightly tougher.

However, we have been weathering the storm firmly and some of the recent positive developments give us the hope of improvements in the sector - During the Union Budget for 2024-25, it was announced that the government would provide financial support for setting up a network of Nucleus Breeding Centres for Shrimp Broodstock. Also, to enhance the industry's competitiveness, the Basic Customs Duty on Broodstock, Polychaete worms, Shrimp and Fish Feed was reduced to 5% and exempt customs duty on various inputs for manufacturing Shrimp and Fish Feed. This we believe should encourage the primary producers or shrimp farmers to enhance stocking in the upcoming seasons. Further, with a stable government at the centre, we are also hopeful that the ongoing discussions on the FTA with Europe and the UK will progress well. This should also provide a fillip to all export-oriented sectors, and in particular the frozen shrimp sector where the EU market holds huge potential. Specifically for Apex, we will be able to sell our RTE products which will be the company's next leg of growth, currently, we are only able to sell our RTC products in the European Union as we await these regulatory approvals.

We are grateful for the forbearance of our stakeholders including our customers, suppliers and employees as we navigated through a challenging year.

At Apex, we have continuously adapted our strategies and operations to align with the evolving market dynamics and shifting consumer preferences. We have deployed an additional 5,000 MTPA capacity towards RTE and are hopeful that upon resumption of demand from the USA and opening up of the EU markets, the incremental RTE business will definitely help in improving our margins. We now have an annual capacity of 10,000 MTPA for RTE and 24,240 MTPA for RTC with 3,500 MT of cold storage. With this capacity, we are well positioned to capitalise on growth in the sector. We continue our efforts to strengthen our balance sheet towards which, gross debt reduced by Rs 599 Mn from to Rs 1,069 Mn as of 31-Mar-24.

As we look to the future, our focus remains laser-sharp on delivering robust financial results and enhancing our performance. We are cautiously optimistic about the prospects that lie ahead, as our major markets show signs of recovery and growth.

At the end of Fiscal 2024, our total debt to equity remains at a comfortable level of 0.22 times.

The Road Ahead:

Our approach to growing our business will require our continued focus on our three pronged strategy of:

Increasing the share of RTE by actively focusing on this segment across our existing as well as new markets

Deepening our relationship with existing customers while actively seeking new consumers across the USA, EU and MENA regions.

Working towards ensuring that operating leverage kicks in at lower levels by optimising costs and reducing leverage to help improve overall profitability.

As we look to the future, our focus remains laser-sharp on delivering robust financial results and enhancing our performance. We are cautiously optimistic about the prospects that lie ahead, as our major markets show signs of recovery and growth. We would like to express our deepest appreciation to our Board of Directors, whose sage advice and strategic guidance have been instrumental in navigating the Company. Our gratitude to our esteemed customers, trusted suppliers, dedicated employees, and loyal shareholders for continuing to repose their faith in us.

With a clear strategy, a strong foundation, and the unwavering support of our stakeholders, we are well-positioned to seize the opportunities that arise and create sustainable value for all.