Biofuel maker IKF Technologie Ltd close to acquisition:

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Shaleen Agarwal

Tuesday, September 09, 2008

DELHI; IKF Technologies Ltd’s privately held bio-fuel making unit is close to buying a company that has 10,000 hectare in Rajasthan under jatropha cultivation to extract bio-diesel, a company executive said.

“A deal is likely to firm up by the month end,” said Vishal Rawat, president, IKF Green Fuel Ltd. He added that the target company has an assured credit line from banks and financial institutions to provide Rs 100 crore of debt to farmers growing the crop.

The unit expects to earn Rs 3,500 crore annually by 2015-16 by producing and selling 10 lakh tonne of bio-diesel made from Jatropha plant seeds, Rawat said.

The company is eyeing an annual yield of 30 lakh tonne of jatropha seeds by 2015-16 as it is looking at bringing 5 lakh hectare under cultivation by 2011-12.

IKF Green Fuel plans to invest about Rs 1,200 crore by the year 2015-16 in acquisitions, refineries and capacities required to make bio-diesel from jatropha oil as also to buy land for cultivation, Rawat said.

“We will fund capacity building and expansion, acquisitions and buying of land through a mix of equity and debt, while we are working with banks and financial institutions to provide credit to the farmers growing Jatropha for it,” he said. The proportion between equity and debt required will be worked out later. “If we need more funds, we may go for an IPO as well. It is, however, is still in a conceptual stage,” Rawat said. He said the parent company has committed an investment of Rs 200 crore into IKF Green Fuel from the Rs 400 crore it plans to raise from issue of Global Depository Receipts in the next two months.

The company expects to have 50,000 hectare under Jatropha cultivation by year-end. With this, IKF Green intends to begin commercial operations by 2010-11, when it will initially yield about 75,000 tonne of seeds, in turn giving 25,000 tonne of oil worth about Rs 90 crore, Rawat said. “The yield will grow and stabilise at about 6-7 tonne per hectare, giving us about 3 lakh tonne of seed per year after four-five years of operations,” he said.

The newly-established IKF Green Fuels Ltd, till the end of the last year, had 5,000 hectare under cultivation, and a refinery in Udaipur to process 3,000 litre of bio-diesel per day for trial and demonstration.

The company also plans to establish refineries in Madhya Pradesh, Meghalaya, Gujarat and Maharashtra, and to expand the existing one at Udaipur, to process bio-fuel. The actual capacity building and expansion will, however, depend upon the level of crop plantation the company is able to achieve, Rawat said.

IKF Green has signed an MoU with HDFC Bank for a credit line of Rs 20 crore and has an in-priciple approval for credit line of another Rs 50 crore from Buldhana Urban Cooperative Society for cultivating about 60,000-70,000 hectare for the next two years.