Strategic tie-ups

Earlier, on 15 April, 2024, it had entered into a strategic partnership with the National Dairy Development Board (NDDB) Dairy Services. NDDB Dairy Services is a pivotal entity in India's dairy industry. With 170 milk unions operating across 285 districts and encompassing approximately 96,000 villages, they play a crucial role in the livelihoods of over 10.7 million farmers and labourers who are integral members of its network.

Last year, in June 2023, the company entered into a pilot moringa farming project in Rajasthan. It is in the process of acquiring land for its own seed production to meet its future requirement of seeds for phase-wise commercial cultivation of moringa on 200 hectares of land, subject to successful trials of pilot-scale farming on 10 hectares of land, validation of processes, and availability of required funds.

The moringa farming project is expected to produce moringa mash, bio-coal, oil, carbon credits, and seed cake, and it is anticipated to generate profit margins of approximately 20 per cent. The project aims to improve animal productivity, reduce global warming, and enhance farmers' income.

Expansion plans

Ajooni Biotech has launched its rights issue with the aim of raising Rs43.81 crore from existing shareholders. It will offer 8.76 lakh fully paid-up equity shares with a face value of Rs2 each at a price of Rs5 per equity share. Interestingly, the promoter group is also participating in the rights issue. Rating agency CRISIL has raised the company's long-term credit facilities rating to ‘CRISIL BB+/Stable’. The funds raised through the issue will be utilised to finance expenditure towards the acquisition of land, site development, civil work, acquisition of plant and machinery, part financing of working capital requirements, and corporate purposes.

The company is setting up a new plant with an investment of Rs16.50 crore in Khanna, Punjab. This unit, adjacent to their existing plant, spans 87,000 sq ft. The new unit will be entitled to incentives, including three per cent interest subvention, a capital subsidy of Rs50 lakh offered by the Government of India, 100 per cent GST reimbursement, and 100 per cent stamp duty reimbursement, among many others.

Singh adds: "We propose to utilise up to Rs8.06 crore out of issue proceeds to meet the expenditure towards the acquisition of land, site development, and other civil work. The installed production capacity of this new unit would be 75,000 MT per annum, which is likely to increase in subsequent years. However, the actual utilisation is expected to be 50 per cent in the first year, 70 per cent in the second year, and 80 per cent in the third year, with approximately 90 per cent and above in future years."

Great potential

According to Expert Market Research Forecasts from 2023 to 2028, “the Indian animal feed market size reached Rs95,670 crore in 2022. It is expected that the market will reach Rs1,57,820 crore by 2028, exhibiting a CAGR of 8.7 per cent during this period.”

As it happens, India currently represents one of the largest feed producers in the world. Animal feed includes various raw, processed and semi-processed products that are fed to livestock. Some of the most common feeds include pasture grasses, cereal grains, hay and silage crops, and other by-products of food crops, such as brewers’ grains, pineapple bran and sugar beet pulp.

Moringa is regarded as a miraculous tree. The moringa farming project is expected to produce moringa-mash, bio-coal, oil, carbon credits, and seed cake and expected to generate profit margins of approximately 20 per cent. ABL’s moringa project is aimed at improving animal productivity, reducing global warming, and enhancing farmers' income.

The company expects the project to be a win-win for all stakeholders. Moringa has the potential of doubling farmers' income over a period of time. Biodiesel made from moringa and intercrop of camelina oil and sustainable aviation fuel from camelina will help bring energy security and reduce the outflow of foreign exchange.

Improving financials

In FY2023-24, the company reported a 7.55 per cent rise in turnover compared to FY2022-23. It is expecting a substantial increase in turnover and additional margin from this MOU. It reported a 45 per cent rise in EBITDA at Rs4.43 crore and a 94 per cent rise in net profit at Rs2.20 crore. Furthermore, it has secured an export order from Avon Animal Health, Bangladesh, to deliver animal health products and educate farmers on their efficacy. Additionally, it is working on expanding into the B2C market by appointing over 100 dealers across India. It plans to surpass 300 distribution touchpoints and aims to strengthen its market presence and offer innovative products directly to consumers.

Apart from pure vegetable cattle feed and supplements, Ajooni Biotech is focusing on the commercial production of moringa, which is set to commence in FY26. It has leased 64,000 sq yards of land in Derabassi, Punjab, for the cultivation of a moringa nursery and plantation. The company expects a turnover of Rs250-270 crore by FY2026-27 from the pure vegetable cattle feed and supplement category, with a PAT margin of around 5-6 per cent. It further anticipates generating additional annual revenue of Rs150-200 crore from its moringa operations, with projected profit margins of 40-50 per cent from FY2025-26 onwards.