Citigroup Venture Capital is considering investing in KS Oils. CEO at KS Oils, Sanjay Agarwal, says that the company's guidance for sales and profit for FY07 are on line and on target. Citi to add value in terms of marketing, branding and FMCG network to KS Oils, reports CNBC-TV18.

Excerpts from CNBC-TV18's exclusive interview with Sanjay Agarwal:

Q: We are given to understand that Citigroup is looking at picking up 14.9% from your company, you also made a warrants allotment, so in totality how much dilution, will this lead to and this 14.9% is it going to be fresh equity or is it existing equity which has exchanged hands?

A: The Citi venture is coming forward with a 32.92 lakh equity share in our company and further 17.08 lakh shares at a price of 180. So the total dilution for Citi is 15 lakh warrants. So it is 20% of our total equity and this is a fresh issue that we are providing to them.

Q: You have recently hiked your FII limit to 49%, what is the current FII holding in the company?

A: Currently we are having 5% FII holding in the company.

Q: How much to you hope to target on the FII segment?

A: We don?t have any target at such. We have given 14.9% stake to Citigroup and 5%, which is there, so now it comes to 20%.

Q: What is the rationale behind Citigroup coming in with this investment? Is there a case for them actually going in for open offer in times to come?

A: Citi is coming because we have our plan of acquiring new manufacturing facilities in major oil fields in the Indian belt alongside the extension of our existing units, as well as extending our distribution and marketing network.

In this regard we had talks with various fund managers and we found that Citi is showing immense interest in our business model. We also find that Citi would add a lot of value for us in terms of our marketing, branding and FMCG network. So it is a fruitful situation for the company as well.

Q: Is this move in line with your enabling provision that you had come out with where you had promised to raise USD 20 million or will that be a separate provision where you look to raise additional USD 20 million?

A: This USD 20 million we have proposed and Rs 60 crore is coming by way of equity and the remaining warrant is being purchased by Citigroup.

Q: What is the objective behind this issue, you are looking at acquisitions in the near future, have you zeroed in on any party as of now?

A: We have identified various acquisitions and we have active negotiations with these parties. We are looking for them in the states of Madhya Pradesh, Rajasthan, Uttar Pradesh and Punjab. We are looking at those areas where our basic raw material oil seeds are available in abundance and we will do backward and forward integrations there.

Q: How many acquisitions will you be targeting?

A: We are targeting 2 to 3 acquisitions for this financial year.

Q: With regards to your plans to expand solvent extraction capacity and you had an extra Rs 25 crore worth of capex on the horizon, are those on track and by when will those be completed?

A: That is in the process now and we will be able to complete it in next month.

Q: Are you on track to achieve the guidance that you came up for sales and profits in terms of Rs 1,100-1,200 cr. for ?07 on the topline and Rs 45-50 crs. on the bottomline?

A: We will definitely achieve that target.