Essex Marine IPO

The company claims that its processing facility is equipped with advanced machinery and holds several certifications, such as Food Safety System Certification version 5.1 (FSSC V5.1), British Retail Consortium (BRC) global standard for food safety, and hazard analysis and critical control points (HACCP).

The company claims to have a quality control system which is supported by quality assurance and control teams. The company further states that these teams carry out various tests in an in-house laboratory to monitor both raw materials and finished products through the different stages of processing.

As per Essex Marine, its customer base includes both Indian and international companies, such as merchant exporters, distributors, and warehouse chains. It further claims to have received repeat orders over time. This reflects long-term business relationships built on consistency, experience, and cost-effective services.

The company states that it has implemented several measures to ensure timely order fulfilment and cost efficiency at its processing unit. These include sourcing high-quality raw fish and shrimp, maintaining effective quality checks, fostering good labour relations, using a streamlined production system, and maintaining strong ties with raw material suppliers.

The company observed a consistent decrease in its revenue from operations. It decreased from Rs 59.80 crore in FY22 to Rs 21.90 crore in FY23 and Rs 19.15 crore in FY24.

The company operates in a sector that is highly sensitive to environmental and biosecurity risks. If such risks arise at shrimp farms, hatcheries, landing sites, processing units, or during the transportation of both raw and processed seafood, they could adversely affect the company’s business operations and financial performance.

The company derives a significant portion of its revenue from the sales of 2 products – aquaculture vannamei shrimp and marine fish. The aquaculture vannamei shrimp was the larger contributor of the two in FY24 and FY23. It accounted for Rs 12.93 crore (63.25 percent) of the company’s total revenue in the nine months ending December 31, 2024, Rs 4.88 crore (98.89 percent) in FY24, Rs 5.09 crore (78.96 percent) in FY23 and Rs 18.65 crore (37.63 percent) in FY22. Marine fish accounted for Rs 7.52 crore (36.75 percent) of the company’s total revenue in the nine months ending December 31, 2024, Rs 0.05 crore (1.11 percent) in FY24, Rs 1.36 crore (21.04 percent) in FY23 and Rs 30.07 crore (60.67 percent) in FY22. Any sudden decrease in the demand for these products or a failure to expand the product portfolio could adversely affect the company’s finances and operations.

The company’s top 5 customers accounted for Rs 14.93 crore (53.30 percent) of the company’s total revenue in the nine months ending December 31, 2024, Rs 17.34 crore (90.53 percent) in FY24, Rs 17.65 crore (80.59 percent) in FY23 and Rs 36.18 crore (60.50 percent) in FY22. Any failure to retain these key customers, expand the customer base, or a loss of business from these clients can adversely affect the company’s business and financial standing.

The company derives a major portion of its revenue from repeat orders. These accounted for Rs 24.07 crore (80.62 percent) of the company’s total revenue in the nine months ending December 31, 2024, Rs 15.89 crore (75.26 percent) in FY24, Rs 16.48 crore (69.86 percent) in FY23 and Rs 50.02 crore (79.38 percent) in FY22. Any loss of repeat orders could adversely affect the company’s financial performance.

The company also derives a significant portion of its revenue from exports to countries such as China, Israel, Belgium and many others. Exports accounted for Rs 20.45 crore (73.02 percent) of the company’s total revenue in the nine months ending December 31, 2024, Rs 4.88 crore (25.48 percent) in FY24, Rs 6.33 crore (28.89 percent) in FY23 and Rs 48.95 crore (81.85 percent) in FY22. Any adverse developments in the export segments or the environment of the countries the company exports to could negatively affect the company’s operations and financial condition.

The company’s top 5 suppliers accounted for Rs 14.08 crore (81.14 percent) of the company’s total purchases in the nine months ending December 31, 2024, Rs 9.48 crore (84.71 percent) in FY24, Rs 7.62 crore (75.94 percent) in FY23 and Rs 9.66 crore (22.98 percent) in FY22. Any disruption in supplies from one or more of these suppliers could adversely affect the company’s business and finances.

The company derives a significant portion of its revenue from West Bengal. The state accounted for Rs 7.55 crore (26.98 percent) of the company’s total revenue in the nine months ending December 31, 2024, Rs 14.27 crore (74.52 percent) in FY24, Rs 15.57 crore (71.11 percent) in FY23 and Rs 10.28 crore (17.19 percent) in FY22. Any adverse political, social or economic developments in this state could negatively affect the company’s operations and finances.

The company relies heavily on shrimp for its business. Shrimp made up over 63.25 percent of the company’s total export revenue in the nine months ended December 31, 2024. Any adverse developments in this particular sector could hurt the company’s business and finances.

A significant portion of the company’s revenue in previous years has come from job work services for third-party exporters of fish and shrimp. These services accounted for Rs 4.85 crore (17.33 percent) of the company’s total revenue in the nine months ending December 31, 2024, Rs 11.10 crore (57.94 percent) in FY24, Rs 12.49 crore (57.03 percent) in FY23, and Rs 7.65 crore (12.79 percent) in FY22. However, there are usually no firm agreements with customers in this segment. If these customers decide to discontinue sourcing from the company, it could adversely impact its revenue and financial stability.

The company reported negative cash flows from operating activities amounting to Rs 2.76 crore in the nine months ending December 31, 2024. Additionally, the company reported negative cash flows from investing activities amounting to Rs 0.55 crore in the period ended December 31, 2024, Rs 0.64 crore in FY24, Rs 0.11 crore in FY23 and Rs 0.10 crore in FY22. The company also reported negative cash flows from financing activities, which amounted to Rs 5.05 crore in FY24, Rs 9.75 crore in FY23 and Rs 4.74 crore in FY22. If cash outflows continue to exceed inflows, the company may face liquidity challenges in the future.

The company reported trade receivables amounting to Rs 9.38 crore as on December 31, 2024. Any failure to collect these receivables on time or at all can negatively impact the business and its financial condition.

Some segments of the company’s business are impacted by seasonality. For instance, in shrimp processing, there is typically a dip in demand right after the New Year season. Any inability to address this fluctuation in demand could adversely affect its business and financial condition.

The company, its promoters, and directors are involved in certain legal proceedings, including some tax-related cases. Any adverse developments in any of these cases could be detrimental to the company’s business prospects.

The company’s indebtedness as of December 31, 2024, amounted to Rs 20.91 crore. Any failure to service or repay these loans can harm the company’s operations and financial position.