Thai Union Group Public Company Limited (TU) has entered into a joint venture agreement to acquire a 40% equity stake of Avanti Feeds Limited’s wholly owned shrimp processing unit, Avanti Frozen Foods Private Limited 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 the firm’s products. The company says that it should help compensate the current raw material shortfall in Thailand.
Avanti Frozen Foods Private Limited (AFFPL) was set up in 2015 by its parent company Avanti Feeds Limited to focus on shrimp processing in India for the export and domestic markets. In November 2015, the company also acquired the existing shrimp processing operations of its parent company.
The subsidiary is in the process of building a new facility at Yerravaram in East Godavari District, about 80km from the existing shrimp processing plant at Gopalapuram in the state of Andra Pradesh, India. With the existing capacity of about 25 tons per day, the new facility will add another 50 tons, bringing the total to 75 tons per day.
Due to its existing profitable operations and customer base, Thai Union says that the firm will be immediately profitable in its first year. Currently, the existing factory has a workforce of 750. The new plant, once completed and up and running, will add this figure up to 2,250. At the moment, the shrimp processing business is mainly for export markets, such as the US, major European markets, and Japan. The firm’s main customers will be major seafood importers of these markets.
The completion of this joint venture will be subject to the satisfaction of all regulatory requirements and customary closing conditions.
“We aim to expand our shrimp processing network into India in order to diversify our sourcing and operational risks,” said Rittirong Boonmechote, President Global Shrimp Business Unit, Thai Union Group.
“Also, added production capacity will help accommodate growing demand for our shrimp products globally. Avanti Frozen Foods’ capacity should compensate our 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), like Thailand, China and Vietnam. I am very positive about this new investment. We believe the mutually beneficial partnership with Avanti Feeds will make us a strong player in the promising seafood sector in India.”
