Report By:- Apeksha Shetty

Apex Frozen Foods Ltd. is one of the integrated producer and exporter of shelf stable quality aquaculture products. The company has grown at a CAGR of 29.10% over the last five years aided by rising demand for aquaculture products globally especially from USA and European Union. The company is all set to go public through a mixture of IPO and OFS (Offer for Sale) and raise 152.25 Cr.

The in-depth analysis of the IPO is presented below:

Offer Details

Issue Size: 8,700,000 shares aggregating up to 152.25 Cr

  • Fresh Issue of 72,50,000 shares aggregating up to 127 Cr
  • Offer for Sale of 14,50,000 shares aggregating up to 25 Cr

Opening Issue Date:  Aug 22, 2017

Closing Issue Date: Aug 24, 2017

Issue Price Range: Rs. 171 to Rs. 175

Lot Size: 80 equity shares

Face Value: Rs.10 per share

Merchant Banker: Karvy Investor Services Limited


Global Overview

Seafood is an important source of nutrition for human population and it also provides livelihood for millions of people around the globe. Improved fisheries management coupled with sharp growth in aquaculture over the past few decades has significantly improved per capita seafood consumption from 15 kgs in 1995 to over 20 kgs in 2015.

Consequently, global seafood consumption, which stood at 151 million tonnes in 2015, has grown at a relatively faster CAGR of 3% over the past decade. Based on the type of sourcing, seafood products can be classified as – capture fisheries and aquaculture. In 2015, the share of capture fisheries and aquaculture stood at 55% and 45%, respectively. Twenty years ago, the share was 80% for capture fisheries while the share of aquaculture was relatively low at 20%. Aquaculture has played a very important role in meeting rising global demand even as capture fisheries production has saturated.



Indian Aquaculture market

 Indian aquaculture production witnessed a 6% CAGR from 1995 to 2015. The share of the seafood industry in the overall agricultural gross domestic product (GDP) grew steadily to reach 5.3% in 2015-16 from 4.4% in 2010-11.


Domestic market size

 India’s seafood industry turnover close to Rs 1,100 billion in FY16

The size of export market for shrimp stood at $ 3.1 billion in 2015-16. The overall shrimp exports grew at a robust CAGR of 33% between 2009-10 and 2014-15. Volumes grew by 22% while realisations by 11%. In first half of 2016-17, shrimp exports recorded a growth of 18% on-year in value terms, and 14% on-year in volume terms.


About The Company

The company supplies ready-to-cook products to a diversified customer base consisting of food companies, retail chains, restaurants, club stores and distributors spread across the developed markets of USA, UK and various European countries.

The output majorly comprises of variants of processed Vannamei shrimp (White shrimp) and are sold under the brands owned by the customers and also through the company’s brands namely Bay fresh, Bay Harvest and Bay Premium. The company strategically focuses on the market of USA, which is the largest importer of aquaculture products in the world.

The integrated operations comprise of hatchery, farming, pre-processing, processing and exporting of aquaculture products. The products and processes comply with stringent quality standards set by the developed markets served.

The Company operates out of Andhra Pradesh, which is the most favourable state in India for aquaculture business. The integrated operations span across our hatchery and farming on 1,337.69 acres of land and currently processing of approximately over 9,240 MTPA of finished products at our facility located at Kakinada. The facility is approved by the Export Inspection Council for export to all countries excluding Australia and Custom Union. The facility is also certified with BRC Food Grade, Best Aqua Culture Practices, HACCP and ASC.


Objects of the Issue

The Company proposes to utilise the Net Proceeds from the Fresh Issue towards the following objects:

  1. Setting up a new shrimp processing unit with a proposed capacity of 20,000 MTPA at East Godavari District, Andhra Pradesh (“Project”);
  2. General Corporate purposes

In addition, the company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges, enhancement of The Company’s brand name and creation of a public market for The Equity Shares in India.

Utilization of Net Proceeds

The Net Proceeds are proposed to be used in accordance with the details provided in the following table:

To be determined on finalisation of the Issue Price and updated in the Prospectus prior to the filing with the Registrar of Companies.

Schedule of Implementation and Deployment of Net proceeds


  • The following table provides the estimated expenses related to setting up a new processing facility:

(in Rs. Mn)

  • Economies of scale on account of integrated operations
  • Strategically located processing plant
  • Established Customer Relationships
  • Focus on quality control measures and research & development initiative
  • Procurement of raw materials from The farms


Growth strategies
  • Setting up a new processing facility
  • Increase the value-added products portfolio
  • Further expand the global footprints
  • Continue to focus on strengthening the goodwill of the name
  • Augment the area under cultivation
  • Improve the technology and research & development platform
Risk factors
  • Company generates majority of its revenues through export of shrimp to United States of America, United Kingdom and a few countries in European Union. Any adverse developments or changes in these markets may adversely impact the business.

  • The company has not entered into long term contracts with the suppliers and in the absence of which the Company is exposed to volatility in the prices of raw materials thereby adversely impact the overall profitability and financial performance of the business and may also adversely impact the pricing and supply of the products and have an adverse effect on The business


The top five suppliers’ contribution for the financial year ended March 31, 2017, March 31, 2016 and March 31, 2015 was 19.74%, 12.82% and 11.78% of the total purchases respectively.


  • The aquaculture farms operate in an environment sensitive industry. The company does not possess any control on the bio security measures employed at different level of operations. Improper measures may lead to risk of development of new infections/ diseases and the shrimp it produces may be prone to certain diseases, epidemic, bacteria and viruses spread in the environment.


  • A significant portion of the revenue is driven from a few customers. The company does not have long term contractual arrangements with most of them, and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for the products could adversely affect the business.

Percentage of Revenue arising from top  customers


  • The Company is involved in a legal proceeding. Any adverse decision in such proceeding may adversely affect the business.

The Company is currently involved in a legal proceeding before the United States Court of International Trade, United States of America pertaining to levy of anti-dumping duties on various Indian companies exporting shrimp to the USA. There can be no assurance that the proceeding will not be determined against the company.

  • The hatchery situated at Annayyapeta and a considerable amount of the farming operations are located on leased locations.

Almost more than 90% of the farming lands are on properties owned by third parties and the farming process is been operated based on lease arrangements with such third parties for the usage of the land.


  • The company has certain contingent liabilities, which, if materialised, may adversely affect the financial condition.








  • The company’s total revenue has grown at a CAGR of 29.10 from FY 2013 to FY 2017 and the PAT has grown at a CAGR of 26.89%.
  • The Debt/Equity ratio has slipped to 0.49% in FY 2017 from the high of 2.52% in FY 2013. This is mainly due to the increase in Reserves and surplus every single year.
  • There is positive growth in PAT for the last five years. This has increased the EPS and the P/E ratio decreased from a high of 27.88 in FY 2013 to a 22.41 in FY 2017.
  • EBIDTA and PAT Margins are hovering in the same zone for the last 5 years. There is no significant improvement on that front.
  • The cash flow is negative for FY 2017 and FY 2013. Cash flow from investing activities is negative for all the 5 years. The company has invested on purchase of Fixed Asset every year. The highest investment was in FY 2017 of Rs. 267.40 million.


Peer Comparison



Authors Note

Apex Frozen Food Ltd. is a profitable integrated producer & exporter of shelf stable quality aquaculture products. The global seafood consumption is estimated to reach 170-175 million tonne by FY21 and hence we can expect growth in the revenue of the company.

The IPO will enable Apex to more than double shrimp processing capability. This is a good opportunity as current capacity utilization is in the 80-90% range. With the exports focus, demand may not be a constraint, so Apex should be able to grow fast after new capacity commissioning.

On the valuation front, the issue looks attractive because among all the peers Apex Frozen Foods Ltd. has the lowest P/E plus growing PAT.

In spite of the positive factors, any changes in the International Laws may affect the business of the company. By having a 360 degree overview of the issue, I would give a positive recommendation for the issue.  It is a good bet for long term investment by analysing the growth prospects of the company.

PS: Since issue size is about Rs. 152.25Cr. Apex is going to list in the T group.