Lanco Infratech shelves asset sale plan for now

HYDERABAD: Debt-ridden infrastructure firm Lanco Infratech has temporarily shelved its asset disposal plans, but said it would sell at least 3,000 MW of power assets with an enterprise value of about Rs 25,000 crore in fiscal 2018 and retire aroundRs 18,000 crore of debt.

Speaking on the sidelines of the company’s annual general meeting on Monday, chairman L Madhusudhan Rao said the appetite among buyers to absorb large assets was currently low owing to various constraints in the Indian power sector.

"There are reforms pertaining power distribution companies that need to be aggressively pushed. Power transmission infrastructure needs to be strengthened and constraints in fuel supply and rail network need to be addressed," said Rao. "Multinational investors are very cautious and waiting for the government to address most of these issues. We hope these issues to be addressed over the next 18-24 months thanks to various initiatives taken up by the government."

A day after disclosing to ET a respite received from its lenders in the form of approval for cost overruns for 4,036 MW of power projects, which together involved investment of Rs 33,000 crore, Rao said the company’s revival was linked to the successful execution of projects under construction.

Lanco Infratech, which currently has 3,460 MW of operating power assets, is building 4,636 MW of projects that would take its total operating capacity to more than 8,000 MW by FY18, said Rao. "It will also take the consolidated debt burden to around Rs 45,000 crore from the current level of around Rs 34,000 crore,” he said.

The firm with interests in power, roads, resources and EPC businesses had sold its 1,200 MW Udupi thermal power project in April and 70 MW Budhil hydropower project last year, helping it reduce debt and infuse equity in projects under execution. Rao said Lanco expects to operationalise 2,720 MW of power assets in FY17 and another 1,320 MW the following year.