Lanco Infra Looking To Sell Stake

The Hyderabad-based infra and power major Lanco Infra is looking to sell stake in three of its power plants to Genting Bhd. As per media reports, the three power plants talked about are Amarkantak (Chhattisgarh), Baband (Odisha) and Anpara (Uttar Pradesh).

Anpara is one of its two largest operating power projects. It has a capacity of 1200 MW and is a coal plant with assured PPAs. Amarkantak is also an operating coal fire power plant with a 600 MW capacity and has signed PPAs.

Babandh on the other hand is under construction with a capacity of 1320 MW. It has partly captive coal assurance. This project is expected to be commissioned in 2015.

During the third quarter, Lanco's Anpara reported a plant load factor (PLF) of 52% while the two units of Amarkantak reported PLFs of 56% and 60%. The company added 24% to Lanco's power segment topline and 13% to the segmental EBITDA in the quarter. Amarkantak on the other hand added 10% in the segmental topline and just 5% in the EBITDA of the segment. Both the projects have reported margins of 16-17%, which are very low compared to the 42% margins reported by its coal fired project Udupi at 42%.

The company was recently in news regarding the sale of its power plant Udupi (1200 MW) and as per media reports, it had received some interest from JSW Energy and Adani Power. The company however had declined this. The Udupi project is a top revenue driver of the company contributing 48% to the topline of the company and 67% in its EBITDA.

According to media reports, Lanco had not been able to sell its stake in the power projects to private equity players, as a result of which it now has moved to Genting which already has a 35% stake in Lanco’s gas fired Kondapalli power plant.

The company is carrying a debt of Rs 34500 crore which is why it is under pressure to raise funds. Power being a big drag on its financials due to the subdued performance it is trying to raise money to improve its financials. Considering the problems faced in fund raising by the power companies, how the company performs remains to be seen.