APEX - Apex Frozen Foods Limited Share Price

1. Question: "I just wanted to understand the developments on the Europe front. Our facility itself was made for the European market... Now that India, EU seem to be on the right track for trade, have a lot of those barriers gone off?" Answer: Yes, the major barriers have been removed. Our EU market, which had stringent regulations, can now move forward after the issues were resolved. Although some standard checks for shipping remain, the significant entry barriers are gone, allowing us to focus on fulfilling additional orders, especially in the ready-to-eat segment.

2. Question: "With that in view, are the regulations currently for approving our exports to EU in line with Vietnam?" Answer: There are still differences. Vietnam benefits from a free trade agreement, allowing 0% tariffs, while we face a 4.3% tariff. Additionally, EU testing requirements for Indian shrimp consignments are currently at 50%, which we hope to address through ongoing India-EU trade talks.

3. Question: "What is the potential of the newly opened markets like Australia and Russia? Do we have any plans to export to those markets?" Answer: Yes, we are expanding into Australia, having received approvals to resume shipments after a long hiatus. For Russia, we expect to finalize approvals soon. Both markets hold significant potential; I estimate Australia could represent about 5-10% of our business in time.

4. Question: "How is the farm gate pricing trend now? Is there any improvement in the farm gate prices?" Answer: Farm gate prices have remained stable for the past 3 to 4 months, and producers are comfortable with current pricing levels. Farmers are adjusting strategies to target medium-sized shrimp, indicating confidence at the farm level, barring any significant climatic events.

5. Question: "What is the reason for the spike in other expenses this quarter?" Answer: The increase in other expenses is primarily due to the significant tariffs associated with the U.S. market, specifically the 50% tariff. Although this increased our costs, many customers have absorbed these tariffs, which is why our gross profit and EBITDA have improved compared to prior quarters.

6. Question: "Since our capacity utilization is only 30%, how are you thinking to unlock this?" Answer: We aim to increase utilization through diversification in markets and customer bases. Although we faced some operational consolidations, we expect that by ramping up orders, we can bring utilization to at least 50% over the next year as we continue to grow our customer base.

7. Question: "If this capacity utilization keeps on going up, ideally, where should our revenue be?" Answer: Upon reaching 70% capacity utilization, we would expect a corresponding revenue increase. However, revenue is also influenced by shrimp prices, tariffs, and market conditions. The focus is on increasing volume steadily while maintaining profitability through better pricing strategies.

8. Question: "What are your realizations looking forward, especially with the tariffs in place for the upcoming festive season?" Answer: Most of our sales for the festive season have already been secured. While the 50% tariffs impact us, we are diversifying to other markets to buffer any losses and maintain revenues. Our longstanding relationships with U.S. clients reassure us of future volume regrowth when tariffs are addressed.

9. Question: "Currently, are there any ongoing issues with shrimp diseases?" Answer: Thankfully, there are no specific recent issues affecting our farms. While climatic changes can lead to outbreaks, generally, disease incidence follows a predictable pattern in farming, and we are not experiencing significant problems at this moment.

10. Question: "With negotiations ongoing for U.S. tariffs, how do you see this affecting our business?"

Answer: The current tariff situation poses challenges, but we have customers willing to absorb these costs. If negotiations lead to a resolution and tariffs are reduced, we anticipate a robust recovery in our volumes, reinforcing our positions in existing and new markets simultaneously.