Lanco Infratech is among the top few private power players in India, and has big plans to maintain that position. The control room of the 600-MW Udupi Power Corporation in south Karnataka has a staff of just 20. With the monsoon hitting the Konkan coast, demand for power in the region has fallen sharply. The imported coal-based plant of power and engineering, procurement and construction (EPC) major Lanco Infratech is generating only a little over 400 MW. It has also synchronised its second 600-MW unit, which is expected to start commercial operations once the transmission link is ready by end-2011.
Lanco is at Rs 8,000 crore, among a clutch of companies that are investing in expanding India’s power generation capacity. It has 3,300 MW installed capacity and will add another 6,000 MW in the next few years. By 2015, it will invest Rs 35,000 crore to add another 6,000 MW, raising the total capacity to 15,000 MW. By then, Lanco will be present across 20 states and is slated to have 20,000 employees.
In contrast, in 2005-06, it was a small value (Rs 152-crore) construction company with profits of less than Rs 10 crore. By 2010-11, profits is Rs 446 crore. Now, Lanco is one of the biggest private power companies in India. Rivals include Tata Power with generation capacity 3,120 MW, Reliance Power (1,033 MW), Adani (1,980 MW) and Jindal Power (1,000 MW). State-owned NTPC leads with close to 35,000 MW capacity. Lanco, however, believes that for its private sector rivals, power is just another business, while it is focused on the entire power value-chain.
It has incurred a net debt of Rs 23,733 crore. Around 85 per cent of the debt is long-term and repayable over 15 years. It is currently setting up eight power plants including at Amarkantak, Anpara, Kondapalli expansion and Vidarbha. Can Lanco pull it off over the next four years? Yes. Barring power, EPC and infrastructure, Lanco has identified two new verticals like solar power and natural resources. Infrastructure includes roads Infrastructure, metro rail and port projects. It also plans to enter power equipment manufacturing to counter the restrictions on import of power equipment, and is identifying an international partner for the venture, as have many others.
Lanco also plans to enter Bangladesh, Indonesia and West Asia. It has just bagged an EPC order for an Iraqi power plant. It is also looking at projects in Nigeria, Ghana, the Philippines and South Africa. Lanco is in a sector where demand will continue to rise for many years. In the 11th Plan period (2007-12), India will add around 55,000 MW capacity. That is more than double the 21,000 MW added in the 10th Plan. At 174 gigawatts (174,631 MW), India has the fifth largest power generation capacity globally – after the US, China, Japan and Russia. This should reach 300 GW by 2017, making it the third-largest power generator globally. The private sector is slated to add 100,000 MW in the 11th and the 12th Plan periods.
“We are bullish on power,” says Lanco Infratech chairman Madhusudan Rao. He agrees that there will be ups and downs, but a country that is growing at 8 per cent needs a sustained increase in its power generation. Despite increase in capacity, India is way behind China that already has 900 GW capacity. In the past six years alone, China added 400 gigawatts. Lanco MD G Venkatesh Babu is the men behined to make all this happen.