Lanco Infratech plans to sell a minority stake in its power business to raise $600 million to $750 million to fund expansion. The private sector power and EPC company said it was looking at spinning off its power business into a separate entity.
The company, which recently faced problems with its creditors, is also in discussions with the Karnataka government and bankers to avoid any default in loan for the second stage of its Udupi power plant. Terming the non-repayment of Rs 90 crore loan instalment as a delay and not default, Philip Chacko, director, investor relations, said the state distribution company owed Lanco around Rs 780 crore.
Chacko said the delay occurred since the transmission line to be set up by the government for its 600 mw second unit of Udupi power plant had been delayed. “We will be setting it right in two weeks,” Chacko told Business Standard in a telephonic interview. With environmental clearance for the transmission line coming in January, the company is expected to commission the second unit by June 2012. The company has also filed a tariff petition with the Central Electricity Regulatory Commission.
Lanco, which had net debt of Rs 31,755 crore at the end of December 2011, has hired Macquarie for the fund-raising. The company was also planning to sell its wind power business, which it considers "non-core" and plans to focus on conventional and solar energy, Chacko said. Its wind power business comprises an operational 13 MW wind farm and licences for additional 3,300 mw.
Lanco, that reported a nearly 63% dip in consolidated net profit for the quarter ended December 31, 2011, at Rs 60.92 crore on higher outgo on raw material and interest expenses, currently has 4400 mw power generation capacity. Additional 4900 mw under construction is expected to be added by 2014-15. “We have a pipeline of 4000 mw capacity beyond this but progress on it would depend on various government clearances,” he said.
Out of 4900 mw under construction, the company has tied up 40% of power sales but with remaining 60% yet to be tied up, the company is awaiting clarity on modified bidding norms that would help the companies get over increased fuel cost.
The company’s gross operating revenue grew to Rs 4,596 crore during the reporting quarter against Rs 2,910 crore a year ago. Its interest outgo went up to Rs 268.24 crore during the quarter vis-a-vis Rs 189 crore during the October-December quarter last fiscal.
Lanco Infratech generates around 95% of its gross revenue from EPC and power businesses.
