Laxapana Batteries to raise Rs.540mn via rights to enter renewable energy biz

Laxapana Batteries PLC yesterday announced plans to raise Rs.540 million via a rights issue to fund its plans to enter the country’s growing renewable energy sector within next 18 months.

The company, which was a pioneer manufacturer of torch and transistor batteries, has resolved to issue 36 million shares on the basis of 12 new shares for every 13 held at Rs.15 each, subject to shareholder and regulatory approval.

Following its announcement on Wednesday evening, Laxapana Batteries’ share price fell by almost 8 percent to Rs.15 a share.

At the end of September quarter (2Q21), the company’s stated capital was Rs.138 million. The net asset value per share was Rs.6.06.

The company plans to invest over Rs.1 billion in the country’s renewable energy sector encouraged by the government’s policy to enhance the share of renewable energy in the country’s energy mix.

In addition to the right issue, Laxapana Batteries announced that the company is looking at securing long-term debt by capitalising on the prevailing low interest rate regime. 

The company doesn’t have any interest-bearing long-term loans or borrowings. It has retained earnings of 
Rs.97.1 million. 

The company’s earning rose by 78 percent year-on-year (YoY) to Rs 1.07 per share or Rs 41.7 million on revenue of Rs.346.5 million during the first six months of the current financial year.

Laxapana Batteries, listed on the Colombo Stock Exchange in 1982, was as the pioneer manufacturer of D-size dry cell batteries, namely torch and transistor batteries in Sri Lanka until the closure of operations in 2012, due to the rapid drop in demand for such batteries locally as well as globally.

However, the company continues to market Laxapana brand zinc chloride AA, AAA and 9V batteries, alkaline AA and AAA batteries, LED bulbs including emergency lamps, LED panel lights and industrial lights under its well-known brand name. 

In addition, it stepped into distributing hardware items during the last financial last year.

During the lockdown period early this year, the company benefited from its recently launched in-house distribution network, which enabled it to cater to a market segment that was previously unable to cater to.

The company also owns two investment properties above three acres in Maharagma valued at almost Rs.500 million, which is leased to its immediate parent, E.B. Creasy & Co. PLC for a period of 08 years with effect from 2015.

At the end of the second quarter, E. B. Creasy & Co. PLC held 51.6 percent of the voting shares of the company and Sri Dhaman Rajendram Arudpragasam held 12.4 stake in the company.

High -net worth investor, Dr. T. Senthilverl held over 20 percent of the company directly and through Senthilverl Holdings (Pvt) Ltd. (NF)