The economic slowdown and the tough environment in the infrastructure sector saw Lanco Infratech Ltd slash its staff strength from about 8,500 in 2010-11 to about 4,500 as of March 31, 2013.

Another 300 people have been let go in the past five months, say sources.

The layoffs have brought employee costs down by 13 per cent, from Rs 712 crore in 2011-12 to Rs 618 crore in 2012-13, according to Lanco’s latest communication to shareholders.

“…the decrease was on account of fall in total number of employees in the group due to slowdown in the development of future projects as a result of deceleration in economic activity in the country,” said the statement.

Lanco Infra’s operations have been hit in the last couple of years by inadequate supply of fuel for its gas and coal plants. In addition, high interest rates and the overall slowdown in the economy have impacted its projects, including engineering, procurement, construction (EPC) contracts, and the pace of their execution.

Debt restructuring

The company has posted losses and recently applied for a corporate debt restructuring package at the holding company level. It expects this to go through by December. Lanco has accumulated debt of over Rs 35,000 crore. The company had secured a loan syndication of about $2 billion from a consortium of Chinese bankers for projects under execution.

The restructuring of finances and coal linkages will enable Lanco to pursue stake divestments. This is expected to reduce the holding company’s debt and also that of its various special purpose vehicles.

>rishikumar.vundi@thehindu.co.in

Related Topics