Thai Union Group to acquire 40 per cent holding of shrimp processor in India

The primary objectives of the investment are to diversify the group’s shrimp sourcing and operational risks and add production capacity to meet growing demand for TU’s products.
It should help compensate for the current raw-material shortfall in Thailand. India’s shrimp-farming sector has not been affected by serious disease outbreaks such as early mortality syndrome (EMS). Despite recovery in 2015, Thai shrimp output is still less than half of the level seen before 2013, said Thiraphong Chansiri, president and chief executive officer of Thai Union Group.
AFFPL was set up last year by Avanti Feeds to focus on shrimp processing in India for the export and domestic markets. In November, AFFPL acquired the existing shrimp-processing operations of its parent.
AFFPL is in the process of building a new facility at Yerravaram in East Godavari district, Andra Pradesh, about 80 kilometres from the existing shrimp-processing plant at Gopalapuram in the same Indian state. With existing capacity of about 25 tonnes per day, the new one will add another 50 tonnes, for a total to 75 tonnes per day.
Because of its existing profitable operations and customer base, AFFPL is expected to be immediately profitable in its first year. The existing factory has a workforce of 750. The new plant, once completed and up and running, will raise this figure to 2,250.
For now, the shrimp-processing business is mainly for export markets, such as the United States, major European markets, and Japan. The company’s main customers will be major seafood importers in these markets.
However, China is also becoming a net seafood importer and a market with strong potential in the near future. Moreover, with India’s growing economy and sizeable population, this joint venture is ready to tap into the growing shrimp consumption in its domestic market.
The completion of this joint venture will be subject to the satisfaction of all regulatory requirements and customary closing conditions.
The valuation of this investment is based on a combination of an independent market assessment of the existing shrimp-processing business of AFFPL that was carved out from Avanti Feeds and the investment cost of a new plant that is under construction, due for opening in the second half of 2016.