Waterbase Ltd

From the desk of Chairman

Deaf Shareholder,

It is always a pleasure to connect with you!

Last year, I spoke to you about our Company's Resiliency and Responsible behaviour during the peak of the COVID-19 pandemic. The steadfast dedication of our employees, who came together to support our customers and provide a consistent supply of products, despite the challenges was commendable. The current year is no different, and I'm happy to report that, despite the challenging external environment especially with high input costs, the company continues to stay resilient and shine in Fy'22 also.

Macro Economy and Industry Perspective

The past financial year was a period of recovery and new uncertainties in equal measure for the Global economies. The period saw a broad-based uptick in investments and demand revival followed by the vagaries of a global commodity shock due to war in Europe and supply chain disruptions in China. These supply-side bottlenecks and a stronger than-anticipated rebound of demand have resulted in major commodities experiencing a significant price surge during the year. Meanwhile subsequent waves of the Covid-19 pandemic continued to jitter governments and exert pressure on the healthcare systems across the globe.

For India the situation was no different as the economy started witnessing green shoots of recovery post the first wave of Covid19 pandemic. The second wave of the COVID-19 pandemic struck hard right from the beginning of 2021. However, rapid vaccination roll-out by the Government, led to upticks across a range of indicators, including the mobility index, direct tax collections, and electricity demand, reflecting positive levels of economic growth. While demand is yet to fully recover to pre-covid levels and consumer prices continue to increase steeply, RBI used its policy levers to preserve macroeconomic and financial stability while enhancing the economy's resilience.

Talking about the industry, the Indian shrimp market is projected to reach US$ 12 billion by 2027. India's long coastline and favourable geographical condition offers opportunities for the farming of healthy and disease-free shrimp, which represents one of the key factors impelling the growth of the market. The escalating demand for shrimp products at a global scale and its growing popularity at various regional and international cuisines, along with the rising health consciousness among individuals, is positively influencing the demand for shrimp products in the country. The Government of India has introduced various initiatives to encourage organic shrimp farming practices, thereby offering lucrative growth opportunities to key players operating in the country. Apart from this, the escalating demand for ready-to-eat food products on account of rapid urbanization, lifestyle changes and higher disposable incomes of individuals are facilitating the consumption of frozen and processed shrimp products in India.

Looking back at our performance

Although, we were able to mitigate much of the impact of pandemic related challenges on our business, the profitability numbers fail to reflect the true courage and positive initiatives from our side. During the current year our Revenue from Operations jumped by nearly 41% to Rs. 298 Crores but Profit Before Tax declined by nearly 98% to Rs. 36 Lakhs. This decline in profits was largely on account of external environment as rising input costs dented the margins. With inflation rising, the situation is expected to continue for some more time before it plateaus out. However, from the Company side, the management is taking stock of the situation carefully, with stringent cost controls and diversification of product offerings to improve margins. With several initiatives already undertaken, I am confident of soon regaining our growth momentum in terms of profitability.

Rising with Resilience

The age-old adage 'When the going gets tough, the tough get going' could never find a better proponent than our very own company. In the face of adversity, being challenged by a unfavourable economic environment with rising input costs, we at Waterbase have braced and fortified ourselves, and placed ourselves at a vantage point from where we can not only identify the opportunities but have also positioned ourselves to make good on them. Thereby creating our very own mantra 'Rising with Resilience'.

All of our business moves are underpinned by financial prudence: a strong balance sheet, net cash position, and access to liquidity. This gives us the confidence and ability to weather any storm.

With a clear vision and precise application, we have built a strong foundation that has laid the path to build a sustainable business. By being constantly attentive to the ever-evolving shrimp farmer's needs, we have always endeavoured in creating feed and farm-care products, that not only ensure better yield to farmers, but which are also free from any antibiotics or banned substances, that can harm our end consumer. Armed with best-in-class products with the right balance of cost, quality and technology, we have embarked on a transformational journey of excellence across the value chain in the organization. And not just in manufacturing, but we have also invested in the R&D transformation that will aid the growth of the company in the foreseeable future. Its full implementation will result in faster go-to-market, development and production efficiency, better cost competitiveness and sustainable farming practices.

Society & Waterbase

Any good business organisation will always evaluate its success alongside the progress of the society that it operates in. At the KCT Group, our ethos is that we believe, it is in giving that we shall receive, which is why the CSR initiatives monitored from the Group Level are planned around this theme, to ensure better education, healthcare support and helping the less privileged walk towards a better life, and I am confident we shall continue on this path to make a difference.

Waterbase as a company in the aqua culture space continues to focus on practices that ensure environmental sustainability, especially, in times when aqua farming is increasingly moving towards sustainable farming practices so as to provide the end user a chemical free food experience.

Sense of optimism

Looking ahead, I believe there is a significant runway for organic growth within our existing business and we will direct as much attention and resources as possible to realizing this value. We are fortunate to have a strong business foundation, proven market leadership, successful products, and a branded, value-added offering that targets the evolving and diverse needs of our farmer friends. And of course, these attributes are supported by the strength of our balance sheet and leverage ratio, which gives us the financial flexibility required to grow even under prolonged headwinds.

With a strong financial flexibility and stability we are exploring opportunities to accelerate growth through investing in shrimp processing & exports and R&D initiatives. We will be extremely prudent as we evaluate potential opportunities to ensure a strong strategic rationale, value upside and alignment with our vision and purpose.

I am extremely grateful to the Board and all our stakeholders for reposing their continued trust in us and for motivating us to keep excelling at what we do.