AVT Natural Products Ltd

 AVT Natural Products Ltd

Part of the A.V. Thomas Group of Companies (Ajit Thomas - Promoter)

AVTNPL’s product portfolio includes 

1. Marigold extracts,(reducing to 35-40%) -  for Eye care, Food colouring & Poultry pigmentation 
2. Spice oils and oleoresins (paprika, capsicum, pepper, etc) ( 30-40% ) -  food coloring and flavoring 
3. beverages (instant tea and decaffeinated tea) among others. ( 25-30% )
4. Rosemary extract started from 2021 

Sale Contribution	2018	2019	2020	Mar 2021
Marigold (Food Grade) Oleoresin	83	111	153	163
Spice Oleoresins	119	121	112	179
Decaffeinated teas & Instant Tea	111	82	97	127
Animal Nutrition	0	0	4.2	0.68

Mar 2022 - Marigold sale increased to 240 Cr. Others things were flatish.

Manufacturing facilities in 

1. Vazhakulam - Cochin (Kerala) and 
2. Tiptur (Karnataka). 
3. Sathyamangalam (Tamil Nadu) 

Subsidiary

1. AVT Natural Europe Ltd. (100%)
2. AVT Natural S.A. De C.v., Mexico (100%)

Reason for Good top and bottom line

• Significant improvement in bottom line in 2020-21 was achieved through a combination of improved operational performance over the year, higher price realizations for marigold & growth in new product segments (high-margin marigold extracts.)
• Despite severe weather challenges, the company achieved a 40% increase in marigold flower collection compared to previous year, brought about by an aggressive expansion in the growing areas and close coordination between all the stake holders particularly the AVT team & the growers 
• AVTNPL’s operating income grew due to volume growth in the spice oleoresins and beverages segments and introduction of new product lines
• Has entered into long-term strategic agreements with key customers, including Kemin Industries (5-year agreement ), for exclusive supply of rosemary extract. Started from 2020-21
• https://www.myrecipes.com/extracrispy/rosemary-extract-does-the-most

 

+Ve

• Major portion of the company’s working capital requirements has been funded through accruals, reducing dependence on borrowing.
• Continue to generate cash flow from operations worth ~Rs. 55-60 crore per annum over the medium term 
• R&D spend per year has increased from 2.2 Cr in 2013 to 10 Cr in 2021 for development of Hybrid seeds of Marigold with higher Xanthophyll yield. It is a continuous process.
• Promoter's salary in form of commision is upto 1.5 Cr
• Very insignificant related party transaction

 

-Ve

• High working capital intensity of the business owing to seasonality in availability of raw materials which translates into high inventory holding requirements.
• The company’s raw materials comprise agricultural commodities, which are exposed to agro-climatic risks, lending uncertainty to the business both with respect to availability and market prices. (Long experience of Promoter)
• Earnings remain sensitive to fluctuation in foreign exchange rates due to the company’s export (98%) oriented business model (forex hedging practices)
• Company’s top-3 customers accounted for ~60% of its revenues (long and established relationships with major customers coupled with exclusive supply agreements with some key customers )
• Prior to COVID marigold product faced stiff competition from China players leading to subdued margin.

2022: Hybrid seed cultivated on approximately 1000 acres during the Summer/ Monsoon season in 2021-22 The expansion planned for year 2022-23.

2020: After thorough testing and screening a new hybrid has been selected for commercial seed and flower production. This Hybrid will be cultivated on approximately 500 Ac during the Summer / Monsoon season in 2020.

2018: Invested in a new state of the art facility for marigold production. Will become more efficient and cost effective producer.

2016-17: It was a breakthrough year for the Company in the Instant Tea business. Years of development work to produce quality products at competitive prices, coupled with a focused marketing strategy, have resulted in the Company acquiring key customers during the last quarter of 2016-17.

The Decaff business will continue to do well and the Company will reaffirm its status as the largest Tea Decaff Company in the world.

2013: Very high prices of Marigold Oleoresin Feed grade meant for Poultry Pigmentation lead to very high profit

Neelamalai Agro has holding in below companies which is leading to other income of 34 Cr.