Shrimp exporters expect 8-10% revenue growth this fiscal year

The demand for shrimps from key importing nations is increasing and realizations are also improving. Higher revenues and lower procurement costs will help sustain an operating margin of around 7%, CRISIL noted.

Indian shrimp exporters are expected to see revenue growth of 8-10% this fiscal year as demand from key importing nations recovers and realizations improve, according to Crisil Ratings. This growth will occur despite higher duties for Indian exporters in the United States and locational advantages held by key competing nations. 

Crisil noted that higher revenues and lower procurement costs will help sustain an operating margin of around 7%, despite supply chain disruptions and higher logistics costs due to geopolitical uncertainties.

Himank Sharma, Director, CRISIL Ratings stated, “Indian shrimp exporters stand to benefit as demand improves for two reasons. First, lower channel inventories at importers’ end, who had reduced purchases in the past few months, will need to be replenished. Second, higher spending on discretionary and food items, as the economic outlook improves for Western economies (the key consumers), will drive-up volume and realisations for exporters. Volume and realisations of Indian shrimp exporters will go up in tandem by 4-5% each, driving the revenue growth.” 

Crisil’s analysis covered 69 shrimp exporters, representing nearly two-thirds of the industry’s revenues. India, Ecuador, and Vietnam are major players in the global shrimp market, accounting for about two-thirds of global exports, while the US, China, and Japan are major consumers, taking in more than half of the global produce. In the past two fiscals, Ecuador has overtaken India as the largest shrimp exporter, benefiting from higher acreage, favorable climate, and significant investments in improving brood stock genetics. Additionally, Ecuador’s proximity to the US and the European Union has been advantageous as Asian exporters have faced higher logistics costs amid container shortages.

However, current investigations by the US Department of Commerce into countervailing duties (CVD) and anti-dumping duties (ADD) on shrimp exporting nations could influence competitiveness. Indian exporters, along with their counterparts from competing nations, are closely monitoring the final determinations of these investigations. A higher ADD on competing countries like Ecuador and Indonesia could benefit Indian exporters.

Crisil also pointed out that procurement costs for Indian shrimp are expected to decrease this fiscal year due to better production, compared to the previous fiscal year when the summer crop was negatively impacted by an early rise in temperatures. This reduction in purchase costs will moderate working capital requirements. Additionally, surplus processing capacities among Indian exporters will limit capital expenditures, reducing reliance on external borrowing.