Rabo PE-funded LT Foods Limited, formerly known as LT Overseas, a leading processor and exporter of packaged rice under the flagship brand Daawat, plans to enter into renewable energy with an investment of Rs 100 crore.
The company has announced its plans to diversify into renewable energy sector with a biomass project at a 70:30 debt-equity ratio. The plant is slated to be operational by September 2011.
In a press statement, Vijay Kumar Arora, CMD, LT Foods Ltd, said, “In the wake of increasing demand in power sector, we are happy to announce our venture into renewable energy thereby helping in reduction of carbon foot print. By producing our own power we will not only become self sufficient in meeting our power demands but we will also see this reflect in healthier bottom lines for LT Foods’ in the coming years”.
The renewable energy project is still in the nascent stage and various options around funding and execution are still being explored. Monica Jaggia, company secretary, LT Foods told VCCircle that the discussions are still at a nascent stage and “ it all depends upon the feasibility report to be submitted by Deloitte”.
She added that this is a part of a forward integration plan for the company. According to ricehuskash.com, rice milling generates a by-product known as husk surrounding the paddy grain. For every 1000 kgs of paddy milled, about 220 kgs (22%) of husk is produced , and when this husk is burnt in the boilers, it forms the input for producing power.
The captive power generation plant will be located at Hoshiarpur district in Punjab and will generate 5MW biomass-based power which will be used for captive and commercial purpose. In a recent interview to PTI, LT Foods Managing Director V K Arora told the news wires that the land acquisition is likely to be completed in the next three months and the plants might go on stream by next September.
The BSE-listed LT Foods has more than six subsidiaries which are vertically integrated.
Rabo Equity Advisors, the private equity arm of Rabobank, invested $10 million in LT Foods and one of its subsidiaries. The PE firm, through Indian Agri Business Fund and Real Trust, picked up a 14.7% stake in LT Foods for Rs 25.4 crore in a preferential issue. The remaining amount has been invested in its subsidiary Daawat Foods Ltd for a 26.2% stake.
In the first of its kind acquisition of a foreign foods firm by an Indian company, LT Overseas bought the US-based Kusha Inc.