Laxapana Batteries seeks to invest Rs.1.1bn to enter renewable energy biz

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

To fund the investment, the company proposes raising Rs. 540 million by way of a rights issue and also intends to lockin in long-term debt to benefit from the prevailing low-interest rate regime.

At an Extraordinary General Meeting held on 10th February 2021, the shareholders of Laxapana Batteries PLC approved the rights issue to offer 36,000,000 ordinary shares, 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 billion 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 in the nation’s total energy needs.

Despite the challenging economic environment that began with the onset of the COVID-19 pandemic, Laxapana has delivered a resilient performance in the FY2020/21 period. During these uncertain times, the company witnessed growth in Q3 FY2020/21 with a revenue increase by 14 percent, over Q3 FY2019/20 and profit before tax growing by Rs. 29.4 million. The company recorded revenue of Rs. 206.2 million and Rs. 552.7 million in Q3 FY2020/21 and nine months ended 31st December 2020 respectively. These are compared to the Rs. 180.4 million and Rs. 506.2 million in the corresponding periods of FY2019/20. Cumulative profit before tax of Rs. 100.4 million for the nine months ended 31st December 2020 is a notable year-on-year increase of 113 percent over Rs. 47.2 million recorded for last year’s 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.

Laxapana Batteries PLC was the pioneer manufacturer of D size dry cell batteries in Sri Lanka. Elephant Lite Corporation Ltd was incorporated as a Public Limited Liability Company in 1956 as one of the first industrial ventures set up in the country and was quoted on the Colombo Stock Exchange in 1982.

In August 2005, the name of the company was changed to Laxapana Batteries Limited and subsequently re-registered as Laxapana Batteries PLC.