Private equity firm ChrysCapital’s founder and chief Ashish Dhawan has acquired 0.5 per cent stake in Lakshmi Energy & Foods for Rs 1.7 crore ($0.4 million), adding to his string of portfolio firms with investments out of his private money.
Lakshmi Energy & Foods is a mid-size firm with revenues of around Rs 1,200 crore and a profit of Rs 84 crore for the financial year ended September, 2010. It is into food grain business – chiefly rice, besides edible oil and cattle feed. The company also derives a small portion of revenues from renewable energy with biomass as a resource by using agricultural wastes like rice husk.
Dhawan, who has announced that he would soon hang his boots at ChrysCap, could be looking at a value play here. Lakshmi Energy & Foods has almost the same net profit margin as the largest peer in the segment REI Agro, but is valued much lower. While its annual profit is just about a third of that of REI Agro, its market cap is just about one eighth of REI Agro.
The promoter group, led by Balbir Singh Uppal, owns 45 per cent in Lakshmi Energy & Foods, but counts among its institutional investors, names like Taib Securities, Morgan Stanley and Merrill Lynch, besides others.
For Dhawan, this adds to his personal investment portfolio and given his strategy to hold 4-9 per cent stake in most listed firms, he may well be planning to stock up more shares of Lakshmi Energy & Foods soon. His other portfolio companies include Greenply Industries, Sasken Communication, Indo Asian Fusegear, Allsec Technologies, Kajaria Ceramics, Gayatri Projects and Logix Microsystems, besides a bunch of small-cap and other private firms.