Lakshmi Energy & Foods plans to hive off power business

Leading agri-food processing company Lakshmi Energy and Foods Limited (LEF) has said that it plans to hive off its energy business by floating a wholly owned subsidiary company to unlock the value of its green power business.

Besides, the company has also set ambitious plans to emerge as a strong player in basmati rice export by exploring new overseas markets to achieve Rs 500 crore of shipments in sync with its strategy to touch a Rs 1,500 crore total business mark by September 2011. The company follows October-September period.

"We have plans to hive off our green energy business and put it into a new subsidiary company which will be wholly owned by LEF," company's Executive Director I S Gumber told PTI here.

The decision regarding floating of a new subsidiary is expected to be taken next month by the Board of Directors.

After launching a new subsidiary, the company may bring in fresh funds into energy business by diluting promoters' stake to leading energy fund houses, he said. "The fresh funds will be used in expanding our green energy business," he said.

LEF, a listed entity, ventured into biomass-based energy business in 2008 by setting up 30 MW of power plant, using husk as fuel, at its factory premises located at Khamano in Punjab. It had even entered into a power purchase agreement with Power Trading Corporation for selling power.

LEF has aggressive plans to raise its power generation capacity to 105 MW in 3 years. Currently, the total asset size of the power business of LEF stands close to Rs 150 crore.

Unveiling its plans to strengthen its basmati export business, Gumber said the company is exploring new overseas markets, including the US, Europe and a few far East countries and intends to achieve basmati export of Rs 500 crore against last year's export of Rs 200 crore. "We have set up a new office in Singapore in order to consolidate our export business," he said.

Currently, the company exports basmati rice to Iran, UAE, Kuwait, Saudi Arabia and some other countries.

To meet its growing demand for basmati rice in foreign and domestic markets, the company has also decided to raise process capacity of basmati paddy (PUSA 1121 variety) from one lakh tonne to 4 lakh tonne this year.

LEF is aiming to garner total turnover of Rs 1,500 crore by September 2011 against sales of Rs 1,100 crore in the corresponding period. "We are eyeing Rs 500 crore from export, Rs 400 crore from retail, Rs 100 crore from power, Rs 150 crore from by products and Rs. 350 crore from non-basmati processing business," he said.

It is already in the process of investing Rs 200-250 crore on raising paddy processing capacity by 2.4 lakh tonne, setting up solvent extraction plant and building 2 lakh tonne of food grain storage capacities. The company currently has installed capacity of one million tonne of paddy processing.

The company had already announced its entry into retail operations with the launch of branded basmati rice in domestic market.