Few more points:
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In India, the peak season for fishing is August-December and the slack season is January-May. Fishing is not allowed in Indian waters during June-July, as it is the monsoon season. Fish meal and fish oil production follows the same season as fishing. The output is stocked to cater to the demand of domestic and exports market.
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Industry is dependent on fish landings in marine ecosystem (salt-water) and if there is any natural phenomenon (like typhoons) causing less fish landing then the industry struggles. There doesn’t seem to be any pricing power in case of supply shortage as the customers are businesses who sell to low-income aquaculture farmers
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It is vital to note that, unavailability of raw materials i.e, fish species required to produce fish meal and fish oil acts as the major constraints in the fish meal and fish oil industry rather the production capacities available. Company is operating at ~10% capacity currently due to lower fish landings compared to 5 years back.
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Company has lost a lot of market share in both exports (50-60% to 9%) and domestic market as well (50% to 30%). Major concern on sales here
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Due to all these reasons, the company has opted to enter into insect protein as an alternative to fish meal. But the scale is low (~1% sales), company just has a 1 year tender with 1 municipal authority to farm BSFs on their waste dump. No idea if this get renewed. Could be a game-changer but this it would be speculation at this stage as there’s no visibility on winning more tenders
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Customer concentration risk: Top 2 (two) customers as on September 30, 2023 are associated with us for over 5 (five) years and contributes 42.17% of our revenue from operations
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According to WPI data, marine fish prices keep increasing since Jan 24 which will adversely impact them.
I might be looking to change my end even on my smallish investment
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