Mukka Proteins Limited
Company
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| Business Activity | Processing |
| Division | Aqua Feed, Animal Feed |
| Sub-class | Fish meal, Fish oil, Insect meal |
| Location | Mangaluru, Karnataka |
| Establishment Year | 2003 |
Management
| Managing Director | Kalandan Mohammed Haris |
| Educational Qualifications | Bachelor’s Degree of Business Management |
| Experience | 20 years in the industry |
| Annual Salary | 144 Lakhs |
| Total Number of Employees | 414 |
About
Mukka Proteins Limited is a leading manufacturer of fish meal, fish oil, and fish soluble paste, essential in making feed for fish, shrimp, poultry, and pets like cats and dogs.
Additionally, the company’s fish oil finds applications in pharmaceutical products, specifically in the extraction of EPA-DHA, a key ingredient in nutraceuticals, soap manufacturing, leather tanneries, and paint industries
Raw Materials:
The company sources its primary raw material, pelagic fish, from local fish catchers. Mukka Proteins procures additional fish meal, fish oil, insect meal, and insect oil for blending into their final products, adhering to customer specifications. The sourcing strategy prioritizes factors such as quality, pricing, and market availability. Furthermore, the company procures fish meal through imports from overseas suppliers, including their foreign subsidiary, Ocean Aquatic Proteins LLC.
Mukka Proteins Limited
The company owns two manufacturing facilities in Mangaluru, Karnataka.
Subsidiaries
Ocean Aquatic Proteins LLC: Located in Oman, this foreign subsidiary is 63% owned by Mukka Proteins Limited. It focuses on manufacturing fish meal, fish oil, and fish-soluble paste.
Atlantic Marine Products Private Limited: This subsidiary, with a 50.99% stake held by Mukka Proteins Limited, operates two manufacturing facilities in Jafrabad, Gujarat, specializing in fish meal production.
Haris Marine Products Private Limited: Mukka Proteins Limited holds a 98% shareholding in this subsidiary, since December 1, 2022, this facility has been leased to Mukka Proteins Limited and is now known as Mukka Manufacturing Facility II.
Ento Proteins Private Limited: Initially established as a wholly-owned subsidiary, Ento Proteins Private Limited transitioned into an associate company when Holocene Ecosolutions Private Limited acquired a 50% stake. The company specializes in manufacturing insect protein from Black Soldier Fly larvae, which are sourced from Municipal Solid Waste Management sites.
Blending Facilities:
Mukka Proteins operates three blending facilities in Baikampady (Mangaluru), Jafrabad and Porbandar, Gujarat
Storage Facilities:
The company maintains five storage facilities. Three are situated in Karnataka, Gujarat, and Maharashtra.
Clients:
Mukka Proteins operates within a business-to-business (B2B) model, primarily targeting aqua feed and animal feed manufacturers. These manufacturers utilize Mukka Proteins’ products as components in their final products, ultimately reaching the end consumers—farmers and pet owners.
Exports:
Beyond domestic markets, Mukka Proteins’ reach extends to over 10 countries through its export activities. The company’s clientele spans Bahrain, Bangladesh, Chile, Indonesia, Malaysia, Myanmar, the Philippines, China, Saudi Arabia, South Korea, Oman, Taiwan, and Vietnam.
Work Flow Chart
Revenue – Category
Revenue – Region
Audit and Legal
Related Party Transactions:
Mukka Proteins Limited and its subsidiaries have engaged in various related party transactions. The arithmetic aggregated absolute total of these transactions, excluding inter-company eliminations, represented 31.43% of the company’s revenue from operations for the half-year Sep 2023. For the FY 2023, 2022, and 2021, these transactions accounted for 35.68%, 33.68%, and 28.67% of the revenue from operations, respectively
Their scale and recurrence raise concerns about potential conflicts of interest.
Auditor’s Remarks or Qualifications:
The Statutory Auditors include no qualifications in their audit reports on the Restated Consolidated Financial Statements.
Regulatory Filings and Non-compliances:
Delays in filing e-form MGT-14 related to resolutions for loans and investments, delays in reporting overseas investments under FEMA, and the non-operational status of a joint venture in Bangladesh. The instances of secretarial non-compliance, such as delays in regulatory filings, the appointment of independent directors, and errors in board meeting minutes, raise concerns about the robustness of the company’s corporate governance practices in the past.
Criminal Case:
The Superintendent of Customs filed a private complaint against Mukka Proteins Limited, Kalandan Mohammed Haris, Kalandan Mohammed Althaf, and Riyaz Ahmed. This complaint alleges violations of Sections 135 and 140 of the Customs Act, 1962, read in conjunction with Section 34 of the IPC. The complaint pertains to allegations of customs duty evasion, false declarations of goods value, and illicit financial dealings with suppliers to manipulate invoices.
Environmental Regulations:
Writ Petition: Public Interest Litigation (PIL), filed by local residents against the company, concerns alleged environmental norms violations at Mukka Manufacturing Facility I. The petitioners claim these violations breach the Coastal Regulation Zone (CRZ) notification, jeopardizing the environment and local livelihoods.
Special Leave Petition:
The Income Tax Department filed this petition against Kalandan Mohammed Haris (Managing Director & CEO of Mukka Proteins Limited) concerning the alleged concealment of foreign assets and income. The department alleges that Haris did not disclose certain foreign assets and income in his tax returns.
The Directorate of Enforcement seized properties valued at â‚ą17.34 Crore belonging to Haris under Section 37A of the Foreign Exchange Management Act, 1999 (FEMA). Haris contests the seizure order, alleging that the transactions under scrutiny predate the implementation of Section 37A of FEMA.
Contingent Liabilities:
As of September 30, 2023, Mukka Proteins Limited has reported the following contingent liabilities:
Disputed Tax Liability: â‚ą14.96 Crore for Income Tax and 7.3 Lakhs for EPCG Liability.
Corporate Guarantees Given: â‚ą50 Crore
SWOT Analysis
Strengths
| Leading manufacturer and exporter of fish protein products. |
| Experienced Promoter Directors with extensive domain knowledge. |
| Strong and consistent financial performance. |
| Established customer base and strong relationships. |
| Strategically located processing facilities. |
Weaknesses
| The company’s reliance on seasonal fish supply, the perishable nature of its raw materials. |
| Availability of its key raw material, pelagic fish, is a major bottleneck in the entire business process resulting in under-utilization of production capacity. |
| The dependence on third-party manufacturers and a limited customer base could also pose challenges. |
| The company and its promoters are facing multiple legal cases from public and government officials alleging various kinds of irregularities. |
Opportunities
| Significant growth potential exists in expanding to new geographic markets. |
| Increase market share in the growing insect protein market. |
Threats
| The seasonal nature of raw material availability can increase the price fluctuations affecting the profitability of the company. |
| The government’s change in policy related to the Environment, fishing, and Coastal regions can negatively impact the company. |
Porter’s Five Forces1
| Threat of New Entrants | LOW |
| Mukka Proteins Limited benefits from “Entry Barriers” as MPEDA, the regulatory authority has imposed a moratorium on the registration of new fish meal and fish oil facilities and also enhancement of production capacity of the existing fish meal and oil facilities for export purposes. |
| Bargaining Power of Suppliers | MODERATE |
| Raw fish, the key raw material, is perishable and seasonal and the company is buying it from fishermen with low bargaining power but on the other hand, the company’s dependence on third-party manufacturers could contribute to supplier power. |
| Bargaining Power of Buyers | MODERATE – HIGH |
| The company’s dependence on a limited number of customers for a significant portion of revenue suggests that large buyers, such as major aqua feed manufacturers, could exert significant pressure on prices and contract terms. |
| Threat of Substitute Products or Services | MODERATE |
| While Mukka Proteins Limited is a leading provider of fish-based protein, they are grabbing the opportunity to “Increase market share in the growing insect protein market”. This indicates that insect-based protein products are a viable substitute for fish meal and fish oil. |
| Rivalry Among Existing Competitors | MODERATE – HIGH |
| The company faces Competition from other fish meal and fish oil producers in India and internationally. |
Peer Comparison
Mukka Proteins Limited states that no listed companies in India are directly comparable to its business. This is because it primarily sells to aqua-feed companies. Most of the listed companies used for the comparison manufacture aqua feed, making them customers of Mukka Proteins Limited.
Mukka Proteins Limited is the largest company in the Indian fish meal and fish oil industry based on operating revenue. In FY 2022, it had an operating revenue 3 times that of the second largest company, TJ Marine Products Private Limited.
The company’s operating revenue has also grown at a faster rate than its peers, with a CAGR of approximately 19% between the FYs 2019 and 2022.
Green Box
Investment in Ento Proteins Private Limited:
The company intends to invest in its associate company, Ento Proteins Private Limited (EPPL), to fund its working capital requirements. EPPL is involved in manufacturing insect protein, a growing sector in the animal feed industry.
Leading market position: Mukka Proteins Limited is recognized as a leading manufacturer and exporter of fish protein products. This strong market position, along with its established customer base and relationships, provides a solid foundation for future growth and profitability.
Amber Box
Mukka Proteins Limited has experienced negative cash flows from operating activities in the past, but its operating cash flow before working capital changes has been positive. The company’s operating cash flow in the past few years has been used for building higher inventory levels and receivables, aligning with its business growth
MPEDA, the regulatory authority has imposed a moratorium on enhancement of production capacity of the existing fish meal and oil facilities for export purposes.
Red Box
The Indian fish meal and fish oil industry de-grew at a CAGR of (4)- (5)% in fiscal 2018 to 2022. While in volume terms, it is estimated to have de-grown at a CAGR of (9)-(13)% in the same period.
Current Capacity Utilization: The company’s manufacturing facilities have experienced underutilization due to the limited availability of its key raw material, pelagic fish. In the six months leading up to September 30, 2023, the overall capacity utilization for its Indian manufacturing facilities was 24.02%
Images
- For Porter’s Five Forces, the force value of “LOW” is considered good. ↩︎
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