Lanco Infratech has sold its 1,200 MW Udupi Power plant in Karnataka to Adani Power for over ₹6,000 crore. The company will use the proceeds to retire a part of its consolidated debt of around ₹35,000 crore.

The power plant, with an installed capacity of 1,200 MW, can be ramped up by another 1,320 MW. Lanco has already signed an agreement with the Karnataka Government for further expansion of 1,320 MW, which the Adani Group can take up, subject to securing fuel linkages.

The power project had a couple of other suitors, including JSW Energy and a Malaysian company. However, the Adani arm managed to pip them.

The imported-coal based thermal plant supplies 90 per cent of the power generated to Karnataka and 10 per cent to Punjab.

This is the first independent power project in the country based on 100 per cent imported coal with a captive jetty of four million tonnes per annum capacity in the New Mangalore Port Trust and an external coal-handling system.

If required, the capacity can be expanded to handle another four million tonnes.

According to a senior Lanco official, the transaction “will support the company in reducing its debt and enable it to receive about ₹2,000 crore as cash, adding to liquidity. Additionally, Adani Power will take out Udupi Power’s long-term debt of around ₹4,000 crore.”

Consolidation mode Lanco, a diversified construction and infrastructure company, is in the process of consolidation and is divesting some of its mature assets to reduce mounting debt.

While it has initiated parleys to rope in strategic investors in the holding company, Lanco has taken up several measures, including sale of assets, to trim its huge debt level.

The company had also restructured its corporate debt at the holding company level.

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