Lanco Infratech Ltd., aims to repay Rs 18,000 crore worth of loans by March 2018, by selling part of the electricity it would produce at its various plants...
Lanco Infratech Ltd., aims to repay Rs 18,000 crore worth of loans by March 2018, by selling part of the electricity it would produce at its various plants, L Madhusudhan Rao, Executive Chairman, Lanco Infratech Ltd. However, the company’s debt would increase to Rs 45,000 crore then from about Rs 33,000 crore now, he said.
Lanco Infratech expects to achieve an operating power capacity of about 8000 MW by 2018. Of this the company has set a target to sell 3000MW of power by FY18, Rao said after the company’s annual shareholders meeting in Hyderabad. The company has over 15 power projects – both under construction and operational – across gas, wind, solar, hydro and coal-based projects.
“These are significant developments giving clear visibility to the completion of the power projects and also to the EPC (engineering, procurement and construction) revenues of the company over the next two years. With the commissioning of these plants, the company will have a consolidated operating power capacity of around 8000 MW by FY 2018,” L Madhusudhan Rao, Executive Chairman, Lanco Infratech Ltd, said at the sidelines of the annual general meeting held today.
“Out of the 8000 MW, we plan to sell about 3000 MW depending on the value potential at a rate of about 8.5 crore per MW, which translates to an enterprise value of Rs 25000 crore. By FY2018, the debt level is expected to be Rs 45000 crore from the present level of Rs 33000 crore. However, with the selloff, we hope to retire debt of at least Rs 18,000 crore by 2018,” he added.
Rao said that the next 18-24 months “will be challenging,” but added he is “confident of the measures” which the company is undertaking at each project level with the support of the lenders. “It was a challenging time for the last three years. However, the efforts of consolidation is bearing fruit,” he said.
“With the commissioning of power plants, we hope to have an operating power portfolio of 3460 MW spanning coal, gas, hydro and solar, under construction power projects of 4636 MW and an EPC order book including power and solar projects of Rs. 28,158 crore,” Rao said further. Last week, Lanco Infratech has signed power purchase agreements (PPAs) with both Telangana and Andhra Pradesh distribution companies and restructured financials for three more power projects of its step-down subsidiaries.
“We have secured lenders’ approval of cost overrun proposals for four under-construction projects which include the coal-based Amarkantak Phase II, Babandh and Vidarbha power projects each of 1320 MW capacity, and the 76 MW Mandakini hydro power project, with total investment of almost Rs. 33,000 crore. In addition, the consortium of lenders to the 500 MW Teesta Hydro power project has decided to convert part of their loans in the project into equity under the Strategic Debt Restructuring mechanism as an interim measure pending the induction of a strategic investor into the project,” he said.
At end of last fiscal that ended March 2015, Lanco Infratech’s installed power capacity stood at 4,660 MW including Udupi 1200 MW and Kondapalli Phase III 742 MW getting ready for operations and capacity under construction stood at 4,636 MW. Revenues for the power vertical for the year 2014-15 were Rs. 7,525 crore.
“Although there has been an improvement in the performance of the power vertical, a significant portion of the installed capacity was affected by issues such as fuel unavailability and regulatory matters thereby leading to less than optimal performance level of the vertical. The company is actively engaged in resolving these issues,” he explained.
The total EPC order book including power and solar projects grew 7% from a year earlier to Rs. 28,063 crore at end of March 2015, he said.
Lanco Infratech may also look at selling off its road portfolio assets “on market conditions” by 2018, Rao added.