The flagship of Hyderabad-based Lanco Group, Lanco Infratech, will reassess its plan to venture into new businesses including solar and wind energy. The Rs 3,336.55-crore (2007-08) infrastructure company involved in power generation, construction and property development, will move cautiously in making investments in capital intensive projects till the effect of recession wears off from the market.
The company had earlier planned to foray into solar modules manufacturing and solar power generation and was looking at three sites in the country to house the facility. It had done preliminary studies and estimated the investment to be $1 billion. Lanco was also planning to set up a wind turbine manufacturing facility with an installed capacity of 500 units of 2mw turbine each a year at an investment of close to Rs 500 crore. The company had started work on the wind turbine manufacturing facility and was looking at commercial launch of turbines by September 2009.
Speaking to FE, L Madhusudan Rao, chairman, Lanco Infratech, said, ? The effect of the recession that we are feeling today in India has forced us to relook at our plans to venture into the wind and solar energy sector. The company is looking at two options?postponement of the plan and downsizing the project. Discussions are on, but we will wait at least another three to four months before coming out with a concrete roadmap.?
?Recession in the global market, according to me, will be felt in the Indian banking system for the next six to nine months in the minimum. Bankers will not come forward to lend money unless they are convinced about the asset, the credibility of the borrower and the viability of the project itself. Lanco, therefore, feels that that it needs to be much more selective in its approach as the solar and wind energy projects are highly capital intensive,? he said adding ? we will not scrap the ideas but will go a little easy on them.?
Lanco was looking aggressively at the infrastructure and realty space too. Unfortunately, not much of investment is flowing into the sector at the moment. ?We expected significant business opportunity from the infra and realty space; but since liquidity has become an issue, we might have to redefine our goals,? Rao said.
Talking about the Rs 7,200-crore Lanco Hills project being developed by the company, Rao said, ? We are confident of the project because of the location and concept. So, we are going ahead with it. The company already has decent financial tie-ups in place and has seen good customer bookings. However, we might scale down the project to some extent, though a lot of construction is on at the site.?