Cash-strapped infrastructure company Lanco Infratech Ltd has adopted a multi-pronged approach to revive its prospects — selling some power assets, divesting a stake in the holding company, and addressing the company’s problems asset-wise to pare debt.

“It would take two years for the company to fully turn around and get back to profitability,” L Madhusudhan Rao, Executive Chairman, told BusinessLine in an interview. Excerpts:

Any plans to raise funds?

The stake and asset divestment process is under way.

By way of sale of assets, we expect to free up about ₹5,000 crore in equity and about ₹15,000 crore in debt. Thereafter, we will go in for a QIP (qualified institutional placement) offer of about ₹750 crore in early next financial year.

We are also considering an IPO (initial public offering) for the power holding company to raise up to ₹2,000 crore by mid next year.

How do you go about addressing the current challenges?

The company’s focus is on consolidation and addressing issues faced in implementation of projects rather than taking up new projects.

The macroeconomic conditions have placed us and other companies in tough times. All infrastructure companies are facing hardship in this capital-intensive sector, where it requires about ₹6-7 crore investment per mega watt.

Completed projects do not have fuel supplies — where the Government is to be blamed. And in some cases, completed projects such as the Udupi project suffered as there was no evacuation line for 18 months.

There is no gas supply for completed projects.

What are the immediate measures you plan to take to get over these challenges?

We have a revival plan, which will take about 20 months to fully implement.

We finalised a corporate debt restructuring (CDR) package.

Asset sale was one of the important issues which we wanted to take up to immediately tackle the debt burden. But over the past 24 months, the deal making has been tough.

Investors are risk-averse as macro conditions are not conducive.

Therefore, we decided to enter into unit-wise sale and have managed to strike a deal with Adani for the Udupi project. We will do so for other projects as well.

We are working on all of our assets. In certain cases, there have been concerns with the power purchase agreements; in some there are regulatory issues and some others are under litigation. We are hopeful that all these would end positively.

What is the current capacity and how much is in the pipeline?

We have an installed capacity of 4,700 MW and about 4,900-MW projects have been stalled due to various extraneous factors.

These are highly viable projects.

We have impressed upon the banks to reason out and they have agreed to work with us. These would take about 20 months to complete.

By then, we would have about 9,000 MW capacity. However, we may have to exit some projects.

What about the EPC business?

The company has opted for a CDR package and this will assist it in bringing back the EPC operations to normal levels of business.

The company has an order book of about ₹26,178 crore.

Related Topics
comment COMMENT NOW