In the light of the current global meltdown, Lanco Infratech Limited (LIL), the flagship company of Hyderabad-based Lanco group, has decided to focus on power generation and go slow on its other activities like construction, infrastructure and property development.
The company has already shelved its plan to set up wind turbine manufacturing facilities. It had earlier proposed to launch a 2Mw wind turbine during this month.
LIL posted a turnover of Rs 1,605.70 crore and a net profit of Rs 354.10 crore in 2007-08.
“The focus will be more on the power business, which is not affected by the current recession,” Lanco group chairman, L Madhusudhan Rao, told Business Standard.
According to Rao, LIL is well on course to achieve the targeted production of 15,000 Mw of power by 2015. The company has already achieved financial closure for 4,000 Mw, of which 2,000 Mw capacity will be operational in the next two months.
“We are already generating 500 Mw of power and with the addition of this 2,000 Mw, we will emerge as the largest private power producer in the country,” Rao said.
In the current financial year, he said, LIL was looking at financial closure of 2,640 Mw of additional projects involving a capital outlay of Rs 15,000 crore. The projects are located in Orissa, Chhattisgarh and Maharashtra.
This apart, LIL emerged as the lowest bidder for a 1,320-Mw power project at Rajpura in Punjab and for a 1,600 Mw project in Dopovi in Maharashtra. The two projects are yet to be awarded to the company. “We expect that these two power projects will also give about Rs 12,000 crore orders for our construction business,” Rao said.
Stating that LIL would go slow on its real estate activity, he said the second phase of Lanco Hills project in Hyderabad would start only when the market conditions improved.
Lanco Hills, a special purpose vehicle of LIL, has planned to develop 30 million sft of built up space. The Rs 7,200 crore project includes residential area, IT towers in a special economic zone, retail and hospitality and a non-SEz area.
The construction on Phase I of the project, involving an investment of Rs 2,500 crore, is expected to be completed by March 2010. The first phase consists of 12 residential towers, one office tower and a 350,500 lakh sft shopping mall. On the whole 1,300 residential units are under construction.
"Around 50 per cent of these towers are booked. We don't expect any more bookings in the next few months. However, we are confident of selling all the 1,300 units after the completion of Phase I,” Rao said, adding the company would not reduce the price of the units as they were premium products and the construction cost was high. The unit are being sold at an average rate of Rs 5,000 per sft.
LIL is shifting its corporate office from here to the National Capital Region in a couple of months. “Our main business is in the northern part of India and it is better to be close to our customers and also policy makers,” Rao said.
