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Lanco Infratech, the diversified infrastructure player, expects a better year this time with gas supply concerns partially sorted out in the recent gas pooling bids and the company securing approval from lenders for cost overrun of some of the power projects.
The company plans to take up the installed capacity to 8,000 MW within three years. This would help it improve the performance of the power projects and the EPC arm.
Lanco’s Kondapalli gas–fired project, with an installed capacity of 1,108 MW, has been one of the successful bidders in the gas pooling bids called by the Government for financial years 2016 and 2017.
This would enable the company to run the plants for four months starting this month.
The project will receive power system development fund support of ₹1.42 per unit.
According to T Adi Babu, Chief Operating Officer: “The company secured lender’s approval of cost overrun proposals of its under-construction power projects. This would enable Lanco to install additional power generation capacity of 3,960 MW. This would also boost the company’s EPC business.”
The 1,320 MW projects each at Amarkantak, Babandh and Vidarbha are expected to be completed by Q4 2016-17, Q2 2017-18 and Q3 2017-18, respectively.
With the improving macroeconomic situation and power project sector in specific, the consolidated operating capacity of more than 8,000 MW by 2018 is expected to strengthen its position in the power sector.
The solar division of the company, especially its EPC arm, expects to further consolidate having recently bagged a 50 MW solar PV contract from NTPC worth over ₹300 crore.
Given the recent flexibility provided by the lenders, the company expects to execute its order book of ₹28,063 crore (as of March 31, 2015) over the next three years.
This is seen to significantly enhance company’s standalone EPC and construction revenues as well and enable it to turn around.
The company, which has been facing cash crunch and huge debt service obligations due to mounting debt, had recently completed the sale of Udipi thermal power project at an enterprise value of ₹6,300 crore to the Adani group, divesting the entire 100 per cent stake in the 1,200 MW plant.
This has enabled the company, which had earlier restructured its loan portfolio with a clutch of 25 bankers, to reduce its consolidated debt and also infuse required equity for the projects under construction.
The company had also concluded sale of its Budhil hydel project of 70 MW to Greenko during 2014-15.
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