Dear Shareholders,
After a year that was spent on rebuilding after the global pandemic, Fiscal 2023
started with geopolitical tensions that disrupted global economies and created a
challenging environment for export-oriented sectors. Developed economies bore the brunt of
the disruption and caused both inflationary and recessionary forces to play out resulting
in lower demand in some of our key markets. We are happy to report that even in the face
of these challenges, our Company's strategic focus on value added productsallowed us to
report growth in revenues and volumes. We are grateful to our customers, suppliers,
employees, and stakeholders that continue to repose their trust and help us in
strengthening our position.
Industry trends
India's marine export saw yet another high, with US$8.1 billion of exports in Fiscal
2023. However, while overall marine export volumes increased 27% from 1.37 million tonnes
to 1.74 million tonnes, Frozen Shrimp remained flat with the key USA market seeing an
almost 20% reduction. This can primarily be attributed to the reduced discretionary spends
on account of increasing inflationary pressures in the USA. Further, while Ecuador has
also emerged as a key supplier in some of our markets, mainly USA, we believe that India
continues to have certain inherent advantages such as lower operating costs as well as an
established ecosystem for value-added products. China and the European Union are the other
large markets for India and encouragingly, these have demonstrated growth and are the
second and third largest markets, respectively, for India.
On the supply side, in Fiscal 2023 the industry faced a shortage in availability of raw
shrimp, especially in mid and large sizes, mainly on account of a conservative approach at
the primary producer level, environmental factors and small incidents of diseases. We are
hopeful that as global demand revives, we should start seeing local producers increase
their output too.
Well-calibrated Operations
At Apex, we have constantly calibrated our operations and focus to make sure that we
are well-placed to tap into the sectoral shifts that we are witnessing. Despite the blips
in our key markets, we saw an 8% volume growth and a 16% revenue growth in Fiscal 2023. On
the balance sheet side, we continued to reduce our debt with an additional Rs 760 million
repaid during the year, forming a comfortable debt-equity ratio of 0.18 times. The working
capital days that had got elevated due to Covid-19 to 123 days at the end of Fiscal 2022
reduced to 94 days at the end of Fiscal 2023. As a result, we have also seen an
improvement in our cash flow from operations.
The other key area of focus continues to be the value-added products like Ready-To-Eat
(RTE) and as a result, the share of RTE in total shrimp sales increased to 22% in Fiscal
2023 from 20% in Fiscal 2022 and 15% in Fiscal 2021. We see the potential for further
growth of this segment, especially from the currently untapped European Union market,
where we await approvals for our new facility at Ragampeta. Keeping in line with our focus
to increase RTE share in the revenue mix, we have expanded its capacity from 5,000 metric
tons to 10,000 metric tons by adding another line at the existing facility in Ragampeta,
towards the end of May 2023.
The Road Ahead:
With our expansion of the RTE production line now complete, we will reinvigorate our
focus on building a strong pipeline of customers. We will continue working on our
three-pronged approach.
Better capacity utilisation
Increasing our sales with existing and new customers within our markets as well as
newer markets to enhance the utilisation of the expanded capacity.
Better product mix
Continue to focus on higher margin value added and RTE products.
Better profitability
By continuing to work on realisations as well as our cost centres and finance costs.
The last three fiscal years have been a series of ups and downs for the industry, and
we are grateful that all our stakeholders have steadfastly stood with the Company. We
express our thanks to the Board of Directors for their guidance as well as extend our
gratitude to our customers, suppliers, employees and all our shareholders for their
efforts in helping the Company grow. The central, state and local authorities that
continue to support the industry are also very encouraging.
We remain focused on delivering strong financial results and are hopeful to improve our
performance as our major markets improve and remain committed to being a good corporate
citizen.
K Satyanarayana Murthy,
Executive Chairman