Axis Bank takes Lanco Amarkantak to NCLT over Rs 9.2 bn loan claim

LAPL is a coal-fired power subsidiary of debt-laden infra firm Lanco Infratech, which itself is currently undergoing insolvency resolution process

Axis Bank has taken Lanco Amarkantak Power Limited (LAPL) to the National Company Law Tribunal (NCLT) seeking insolvency resolution under Section 7 of  Insolvency and Bankruptcy Code (IBC), 2016 over a claim of Rs 9.2 billion in loans.

LAPL is one of the coal-fired power subsidiaries of debt-laden infrastructure company Lanco Infratech Limited, which itself is currently undergoing the insolvency resolution process.

In an application filed before the Hyderabad bench of NCLT, Axis Bank stated that the first date of default under the sanctioned facilities was triggered on August 31, 2017 and that status remained unchanged till date.The bank had categorised LAPL's loan account as Doubtful 2 in May 2018.

The company availed the first disbursement of the loan in April 2011 and the last disbursement of the principal amount of the facilities (other than the bank guarantees) in August 2017, according to the bank. Lanco Amarkantak Power was incorporated to develop a two-stage power project near Pathadi village on Korba-Champa State Highway in Chhattishgarh.

Axis' claim forms part of nearly Rs 88 billion loans owed to banks (Rs 40.59 billion) and financial institutions (Rs 46.57 billion) by LAPL, which has 600 Mw of operational capacity besides a 1,320-Mw phase-2 project that got struck mid-way due to cost overruns, leading to the loan defaults.

Lanco Amarkantak carries the largest amount of liabilities among all the subsidiaries and associate companies, next only to its holding company, Lanco Infratech, which has a 80.96 per cent shareholding in LAPL.

It may be recalled that the consolidated debt of Lanco Group consisting of 99 holding, subsidiary and associate companies stood at about Rs 500 billion, of which Lanco Infratech has around Rs 11 billion debt. 

Last year, IDBI had dragged the holding company to NCLT. Earlier this month the committee of creditors (CoC) of Lanco Infratech rejected a revised resolution plan of a Tamil Nadu-based suitor. The hearing on a fresh interim application filed by a new company, which seeks permission to file a resolution plan for the corporate debtor, has been posted to August 13 by the Hyderabad bench.

This is the second case being pursued by Axis Bank to recover its loans from the Lanco Group. Last month it has put up Lanco Kondapalli Power, the 1,476-Mw gas power subsidiary of Lanco group, for sale by inviting expression of interest from prospective buyers. It may be recalled that Axis Bank along with other lenders had taken 51 per cent control by converting a part of loan into equity under the strategic debt restructuring(SDR) plan. Lanco Kondapalli has a debt of Rs 30 billion.