Laxapana Batteries to invest Rs 1.1 b in solar energy projects

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Laxapana Batteries to invest Rs 1.1 b in solar energy projects

March 9, 2021 Anand Gupta

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Laxapana Batteries PLC is entering the renewable energy business. Having evaluated prospects in this space, the company plans to invest over Rs. 1 billion in generating renewable energy from rooftop solar projects.

To fund the investment, the company proposes raising Rs. 540 m through a Rights Issue and also plans to lock-in in long-term debt to benefit from the prevailing low-interest rate regime. At an Extraordinary General Meeting held on February 10, the shareholders of Laxapana Batteries approved the Rights Issue to offer 36,000,000 ordinary shares, which is in the proportion of 12 new ordinary shares for every 13 existing ordinary shares held at Rs 15 per share.

With a Rs. 1.1 bn investment to develop rooftop solar projects, Laxapana is well positioned with a sustainable business model to contribute towards the government’s policy of increasing the share of renewable energy production.

Laxapana has delivered a resilient performance in the FY2020/21 period. The Company recorded growth in Q3 FY2020/21 with a revenue increase by 14%, over Q3 FY2019/20 and profit before tax growing by Rs. 29.4 mn. It recorded a revenue of Rs. 206.2 mn and Rs. 552.7 mn in Q3 FY2020/21 and nine months ended December 31, 2020.

These compare to Rs. 180.4 mn and Rs. 506.2 mn to corresponding periods in FY2019/20. Cumulative profit before tax of Rs. 100.4 mn for the nine months ended December 31, 2020 is a notable year-on-year increase of 113% over Rs. 47.2 mn recorded last year nine months despite numerous challenges encountered in the business environment.

The new investment initiative further diversifies the company’s business portfolio and is expected to contribute positively to earnings going forward.

The management believes that revenues from its trading businesses will continue to remain strong with Laxapana branded products experiencing strong market demand. With this in mind, the present trend of improving profitability is expected to continue.