Thai Union to buy 40% in Avanti Feeds shrimp plant venture for $18m
Thai Union Group is to invest INR 1.25 billion ($18 million) into buying a 40% stake the newly-spun off frozen food business of Avanti Feeds.
Hyderabadbased Avanti said wholly owned unit Avanti Frozen Foods will issue fresh shares to Thai Union. Avanti had created the unit last year and moved part of its existing business into the new venture, reports VCCircle.
It didn’t share details of the stake but the foreign partner is likely to own around 40% of the new firm, as per VCCircle estimates.
Last year, Avanti had decided to transfer its shrimp processing facilities at Ravulapalem, in Andhra Pradesh’s East Godavari district, to Avanti Frozen.
Rittirong Boonmechote, head of Thai Union's shrimp business, told Undercurrent News of the plans last year.
The company said on Wednesday that, as per the joint venture agreement, Thai Union will nominate two board members of the unit while the Indian partner will have three board members.
Avanti is engaged in processing shrimp besides shrimp feed. It exports shrimps to the US, Japan, Australia and the UK. The bulk of its revenue, however, comes from shrimp feed.
Avanti has three shrimp and one fish feed manufacturing unit, in Kovvur, Vemuluru in West Godavari District, Andhra Pradesh and Pardi in Valsad District, Gujarat, with a capacity of 90,000 metric tons per annum.
Thai Union separately owns a 25.12% stake in Avanti Feeds.
In February, Avanti reported that increased sales saw an 8% higher net profit in the third quarter of its financial year.
Net income from all operations was up 7.3% to INR 4.13bn ($60.85m) compared to the third quarter of 2014, though down 22% from the second quarter of 2015.
While domestic sales were marginally down year-on-year, export sales saw a strong increase, up 62% to INR 721.3m -- though clearly these exports remain the minor part of the overall business.
The major part of the export business is the shrimp processing side, which contributed this hike in sales. During Q3 the firm divested this shrimp processing and export division to its wholly-owned subsidiary, Avanti Frozen Foods, by way of a slump sale.
Net profit for Q3 was up 8% y-o-y, to INR 371.8m. However, quarter-on-quarter this was down from INR 443.2m.
Over the nine months ended Dec. 31 2015 Avanti is seeing a much stronger year, with net profit up 35% to INR 1.26bn, on revenues which were up 11% to INR 15.49bn.
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- Thai Union to buy 40% in Avanti Feeds shrimp plant venture for $18m