Lanco to sell 3,000 MW assets to pare debt

Power and infrastucture player Lanco plans to sell 3000 MW of assets to raise Rs 5,000 crores cash to reduce its debt, the company said.

“Since last one year, we have been working on each of the projects to settle the issues and bring back viability. With all these measures as well as in the background of CDR approval and various meetings with bankers and strategic partners, we are confident of driving the Group into same level of profitability again,” it said in a statement.

Lanco, which focuses on infrastructure sectors such as construction, entered power sector during the period 2000 – 2012 and has completed various projects successfully across Gas, Coal, Hydro and Solar. By 2012, the Group has emerged as one of the top private power developers with its presence in 12 states in India with 4732 MW under operation, 4636 under construction and around 9000 MW at various stages of development.

With the generating capacity of 1000 MW in the FY 2011-12 Lanco had a profit of Rs.740 Crores but, by FY 2013 – 14 despite enhancing the capacity by five folds to 4732 MW it has incurred a loss of Rs. 671 Crores.

“The high confidence that the investors in the power sector had during 2006-2011 was subsequently damaged and diminished. Since two years, the power sector has not been able to perform due to various major challenges such as transmission issues, and fuel issues besides deteriorated financial conditions of Discoms. These major issues have distanced the investors from the sector as investment into power sector should be looked at long term and not short term since value to the investment can be realized in 25 to 30 years irrespective of PPAs,” the company said.

Further, due to the damaged macro-economic environment since three years, funds could not be raised through IPO or QIP, it added.

“In our opinion, the health of Discoms (distribution companies) have to be restored to bring back the confidence of investors into power sector,” it said.

Lanco said it was hopeful that initiative of the Govt. to produce one billion tons of coal by the year 2019 will fuel the power sector.