Lanco to sell 3,000 MW capacity to raise Rs5,000 crore

Lanco Infratech on Tuesday announced plans to sell 3,000 MW of generating capacity to raise around Rs5,000 crore ($825 million), as part of a process of asset sale to redeem its huge debt pile.

''Lanco will sell 3,000 megawatts of generating capacity assets,'' V Sreenivas, chief operating officer at Lanco Group, said in a statement. The company will use the proceeds to reduce its debts of Rs15,000 crore, Sreenivas said.

Lanco had last month sold its 1200 MW Udupi Power plant to Adani Power Limited, the power business arm of Adani Group, for a little over Rs6,000 crore (See: Adani buys Lanco's Udupi power plant in Rs6,000-crore deal).

Lanco's Udupi power plant has already signed an agreement with Karnataka government to further expand 1320 MW of generating capacity.

The company did not specify the assets to be sold in the latest round, but merely said these projects could either be those already operational or the ones under various stages of development.

Lanco has 4,732 MW of operational capacity, 4,636 MW under construction and 9,000 MW under development.

The company, which stepped into the power sector in 2000, had built 1,000 MW of generating capacity by 2011-12. It had posted a profit of Rs740 crore for that year. For 2013-14, it incurred a loss of Rs671 crore, despite increasing capacity fivefold to 4,732 MW.

Lanco, which has been negotiating with its lenders to restructure its debts since last year, has been seeking to sell assets to strengthen its balance sheet and return to profitability.

Weighed down by large debts, a slowdown in the domestic economy, delays in completing new projects, issues relating to transmission and fuel, besides the dismal financials of distribution companies prompted Lanco to sell plants to raise cash.

Lanco Infratech Limited (LITL) is an integrated infrastructure player having business verticals in EPC, power, solar, natural resources and infrastructure.