We are in talks with multiple PE players and strategic investors for stake divestment to infuse equity. — T. Adibabu, Chief Operating Officer, Finance, Lanco Infratech.

Lanco Infratech Ltd has adopted a multi-pronged strategy to address the liquidity crunch faced by the company due to delay in receivables. The company posted a loss of Rs 135.9 crore during the second quarter ended September 30, in spite of its revenues going up by 68 per cent during the quarter to Rs 3184.8 crore against Rs 1896.3 crore.

It logged a forex gain of Rs 212 crore and yet things are not all that well as the company is saddled with a debt of Rs 33,000 crore and has piled up receivables of Rs 3,300 crore from utilities.

The diversified infra company has an order book of Rs 28,500 crore, which includes orders from internal projects. It is at advanced stage of infusing equity by roping in partners at holding company and special purpose vehicle levels.

In a conversation with Business Line, T. Adibabu, Chief Operating Officer, Finance, said the economic environment is tough for all infra companies. It will take time for the situation to turn around.

He expressed confidence that in the next two quarters, things will turn around. Excerpts.

Lanco has posted a loss again and when do you see the turn around for the company?

The market conditions are quite unfavourable. The sentiment is impacted. There are delays in securing clearances and even the announcements made have not been implemented.

We are not too happy as we believe that we could do better. There are two-three key issues for such a performance. The realisations have not materialised, even though interim relief has been provided with hike in tariffs for Udipi project and Anpara.

The Karnataka Appellate Authority has ruled in our favour and we hope by month-end issues will be sorted out.

What is the due and by when do you see these coming through?

The total dues from utilities are close to Rs 3,300 crore that is without interest component. Karnataka has overdue of close to Rs 1,500 crore and Uttar Pradesh owes us Rs 800 crore. Likewise, there are dues from some other States. Most of the issues have been resolved and we hope month end we will begin to get dues.

Since the dues did not come through, we had to pledge receivables and raise Rs 1,000 crore. The liquidity has been hit resulting in some slippages of payment of dues.

Even the power division seems to be under severe pressure?

The plant load factor (PLF) for the quarter was 44 per cent. Imagine what it would have been had we averaged over 70-80 per cent and above. In fact, it could go up to 85 per cent in coal plants. However, in gas plants, there is concern.

Anpara unit functioned only at 27 per cent PLF due to coal issues. These are being addressed. Due to this, we lost about Rs 250 crore. We are confident we will sort this out by December.

The gas plants too, are functioning at low PLF due to gas shortage. Soon LNG arrangements are being made. By next year-end, we may also have access to imported fuel as new terminal is coming up.

The Griffin project also seems to be a mater of concern?

Yes, we lost about Rs 250 crore as there were delays in ramping up production of coal from the mine in Australia. As per plan, we expect to increase the output from 3.6 million tonnes to five mt by March. Things will get better.

What is the current power generation capacity and where are you heading?

The installed capacity is 4,734 MW. The 734-MWS unit 3 of Kondapalli is close to commissioning but needs gas. Of the 4,000-MW, the PLF has been impacted due to fuel supplies. We are executing more projects at Amarkantak, Babandh, Vidharbha and Teesta.

When do you see the liquidity situation getting better?

This has two components. One is when receivables come through, which is likely by next month, things will totally ease up. We are also in the process of addressing the debt equity ratio, which has gone up to 4.64:1. This ratio will get better by infusing equity.

We are in talks with multiple PE players and strategic investors for stake divestment to infuse equity. This will also help reduce debt. By December you will hear about the developments.


(This article was published on November 12, 2012)
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