Lanco to sell 3,000-Mw capacity, raise Rs 5,000 cr

The company, however, has not specifically identified the assets to be sold

Lanco Infratech is planning to sell 3,000 Mw of capacity to raise Rs 5,000 crore. The funds raised will be used to reduce the company’s debt, currently about Rs 35,000 crore.

Last month, the company had sold a 1,200-Mw thermal plant in Udupi to Adani Power for Rs 6,000 crore.

Speaking to Business Standard, a Lanco spokesperson said the company hadn’t identified the assets to be sold, adding these projects could either be those already operational or the ones under various stages of development. Lanco has 4,732 Mw of operational capacity, 4,636 Mw under construction and 9,000 Mw under development.

The company had stepped into the power sector in 2000. By 2011-12, its generating capacity stood at 1,000 Mw; for that year, it posted a profit of Rs 740 crore. For 2013-14, it incurred a loss of Rs 671 crore, despite increasing capacity fivefold to 4,732 Mw.

The company says since the past two years, the power sector hasn’t fared well, owing to challenges such as issues relating to transmission and fuel, besides the dismal financials of distribution companies.

On Tuesday, the company said due to the adverse macroeconomic environment, raising funds through initial public offerings or qualified institutional placements wasn’t possible. As a result, it had decided to sell its power assets to reduce debt.

Lanco is, however, hopeful the situation in the power sector will improve in the next 15-18 months, as the National Democratic Alliance government at the Centre was taking initiatives to address issues in the power and infrastructure sectors.

“Through the past year, we have been working on each of the projects to settle issues and bring back viability. With all these measures, as well as the approval for corporate debt restructuring and various meetings with bankers and strategic partners, we are confident of driving the group into same level of profitability again,” Lanco said.

In December 2013, the company had opted for corporate debt restructuring of Rs 7,000 crore.