Lanco says impacted by low power demand, slow fund disbursal

Says impacted by low power demand, slow fund disbursal

Lack of power demand and slow disbursal of funds by banks have impacted Lanco Infratech’s performance in the second quarter ended September 30, 2016. The company said it was operating power plants at an average plant load factor of 57 per cent, with states asking it to bring down generation capacity. Speaking to Business Standard, T Adi Babu, chief operating officer-finance, Lanco Infratech, said, “A lot of order book in the EPC (engineering, procurement and construction) segment is available but disbursements from banks are becoming a challenge. Decision-making is slow. Earlier, it would take a week to get funds but now it could take a month or more.”

Lanco on Saturday reported a 321 per cent fall in its profit after tax by recording a loss of Rs 258 crore for quarter ended September 2017. Its cash loss stood at Rs 140 crore against a profit of Rs 569 crore. This is the fourth consecutive quarter the company has recorded a loss after it turned around with a net profit of Rs 98.98 crore in the second quarter of 2015-16, after a gap of three years. Going forward, the company expects to perform better in both EPC and power sectors in the fourth quarter. 

“As infrastructure activity increases in the country and Make in India is implemented, demand is likely to improve,” he said. In power sector, agriculture demand usually picks up in mid-February. The company has an installed power generation capacity of 3,465 Megawatt (Mw) and another 5,956 Mw under various stages of construction and development. Its operational plant worked at 57 per cent capacity, with Kondapalli 2 unit working at just 16 per cent PLF during the three months ended September 30, 2016.

The company supplies power to Andhra Pradesh, Telangana, Madhya Pradesh, Uttar Pradesh and Tamil Nadu but has been asked by state government-owned distribution companies to operate at lower capacity, Babu said. 

 

“Earlier, fuel supply was a concern but now both coal and natural gas are available. The power demand is low and, therefore, capacity is totally underutilised.” Babu said all put together, they had around 40 lenders for their three EPC projects. Lanco is constructing power projects worth Rs 6,000 crore for Moser Baer, Maharashtra and Tamil Nadu generation companies. Including these projects, the EPC division of the company is executing orders worth more than Rs 26,316 crore. In July-September 2016 quarter, Lanco was able to get debt of around Rs 400 crore, against a requirement of Rs 1,000 crore, said Babu.