Lakshmi Energy set to finish Rs 260 cr spread

Chandigarh-based Lakshmi Energy and Foods Ltd, formerly known as Lakshmi Overseas Ltd, is all set to complete the phase one of its expansion plan. The company is undertaking an expansion of Rs 260 crore in phase one.

The integrated rice processing unit has diversified into power generation with an investment of Rs 110 crore and has put up a 30-Mw bio mass-based power plant in Punjab. The construction work at the power plant has started and power generation will start by the end of the financial year.

A company official told Business Standard that the company would consume only 10 per cent of the power and the balance 90 per cent would be sold to the Punjab State Electricity Board at a rate of Rs 3.48 per unit.

He added that due to the diversification towards the energy generation the company had been renamed as the Lakshmi Overseas and Foods Ltd, and this would be announced tomorrow with the provisional annual financial results.

The company plans to put up three more non-basmati paddy processing units at different locations in Punjab in the phase two of expansion. A capacity of 75 Mw would be added in the second phase, the details of which are yet to be finalised.

The company has diversified into wheat processing in phase one and the plant will be operational by the year end. The plant, which is coming up with an investment of Rs 11 crore in the existing premises, will have the capacity of 27,500 kilo gram per day and will mainly cater to the domestic market.

The company would sell to bulk buyers in the first year but eventually float its own brand in the retail market, said the official. "The big plants are run on high speed machines so we get wheat flour, suji, pasta etc simultaneously", said the source.

The company sells the entire output of non-basmati rice to FCI (Food Corporation of India).

He said around 1,000 persons were getting direct employment and this number would increase four folds once the entire expansion is completed.

The expansion is partly funded by debt and partly through fresh buying of funds by the promoters. The promoters will pump in Rs 70 crore in two series and have taken warrants at rate of Rs 600 per share in series I and at rate of Rs 650 for series II. After this the promoters' share will stand close to 50 per cent of the total equity.

Talking about the farmers resenting the returns on agricultural produce in the market, the source said the demand for foodgrains had increased due to the transparency in the mechanism and due to the futures trading and participation of common people in commodities buying. He added that this would benefit the farmers.

He said since the large players were already going in for contract farming so it would not hurt the large food processing units substantially.