Lakshmi Energy plans retail thrust

By Arpan Mukherjee and Sourav Mishra

MUMBAI (Reuters) - Paddy processor Lakshmi Energy and Foods Ltd plans to spend 8 billion rupees over the next four years to more than double its processing capacity, and invest in retail and power plants, a senior official said.

The company, which is predominantly a non-basmati rice producer in the wholesale market, would increasingly push its products to retail shelves to cash in on the high margins, I.S. Gumber, director, told Reuters on Tuesday.

"Change has come to India over the last three years because of the mall culture," Gumber said, adding retail sales would contribute 20 percent in 2008/09 from 7 percent to 8 percent in the year to March.

Large firms, which account for less than 3 percent of India's $350 billion retail market, has been setting western-style superstores, expecting the market to double in size by 2015.

"We will enter wheat flour, pulses, spices, coffee, tea and sugar under our brand name (Lakshmi Foods)," Gumber said.

It has set up a wholly-owned subsidiary for procuring, trading and marketing agri commodities. The subsidiary, Punjab Greenfield Resources Ltd, has started exporting cotton and rice.

Lakshmi Energy, which has an annual paddy processing capacity of 1.35 million tonnes of rice, expects to increase it to 3 million tonnes by 2009/10, he said. The 8-billion-rupee spend would be funded through an equal mix of debt and internal accruals.

Revenue contribution from rice is expected to decrease to about 71 percent to 73 percent in 2008/09, from about 85 percent now, Gumber said. The balance would be from power, edible oil, cattle feed and wheat flour.