IFC invests $27.5M in food additives maker Lucid Colloids

International Finance Corp (IFC), the private sector investment arm of the World Bank, has invested $27.5 million (Rs 165 crore) in Lucid Colloids Ltd, one of the top four producers of guar gum, as per a release.

This comes five months after IFC disclosed it may invest up to $30 million in Lucid through a combination of equity and long-term debt.

As per the deal, IFC is investing Rs 75 crore ($12.5 million) through compulsorily convertible debentures and the remaining Rs 90 crore ($15 million) as debt. The investment will help Lucid finance its capex of around Rs 280 crore ($47 million) for business expansion and backward integration.

Through this, the company will be able to source guar, a thickening and stabilising agent used in food products, from about 40,000 additional farmers a year in the priority state of Rajasthan, the release said.

“By expanding the market for high quality guar, this investment will increase income for a large number of guar farmers in India, many of whom are women, particularly in Rajasthan which is a priority state for IFC,” said Vipul Prakash, director for manufacturing, agribusiness and services, Asia Pacific, IFC.

The Lucid Group manufactures, markets and distributes natural, modified and derivatised hydrocolloids like guar, tamarind and cassia, gum blends, emulsifiers, food stabiliser systems, nutritional ingredients, food additives and ingredients, foodstuffs, agro commodities and fine chemicals.

Born out of the restructuring of the erstwhile Indian Gum Industries Ltd (IGI) in 1999, Lucid has since then consolidated and expanded its operations and activities. IGI was established in 1958 as a financial and technical joint venture with Cesalpinia S.p.A of Italy and then later with Hercules Inc. of the US. In 1987, IGI became a fully Indian owned and managed company.

The company has about 375 employees and a sales turnover of about $125 million. About 85 per cent of the turnover is from exports.

Lucid has a JV company with Taiyo Kagaku Co. Ltd. and CBC Co. Ltd. of Japan. The JV – Taiyo Lucid Pvt. Ltd – manufactures a water soluble dietary fibre from guar which is used as a nutritional supplement. Its product has a wide application in sectors like food, pharma & nutrition, personal care, paper, mining, explosives, paints & construction materials.

The company is setting up new projects at Bikaner, Meglasiya and Mokheri in Rajasthan and at Jhagadia in Gujarat. Lucid already has manufacturing plants at Jodhpur in Rajasthan and Aurangabad in Maharashtra. The company has marketing and sales subsidiaries in the US, the UK and UAE and sales offices in New Delhi and Bengaluru.

“As we enter the next phase of our growth, IFC’s global expertise in the agribusiness sector will help us become globally competitive, strengthen environmental and social standards, and improve corporate governance practices. IFC’s long-term financing will enable us to withstand price volatility of guar gum," said Uday Merchant, chairman & MD, Lucid Colloids.

In fiscal 2013, IFC invested over $4.5 billion across the global agribusiness supply chain—from farm to retail—to help boost production, increase liquidity, improve logistics and distribution and expand access to credit for small farmers.

(Edited by Joby Puthuparampil Johnson)

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