Lanco Infra Drops Bid Plan For Premier Coal

15 June, 2011

Construction and energy conglomerate Lanco Infratech Ltd has dropped plans to bid for Australia’s Premier Coal, owned by coal-to-retail conglomerate Wesfarmers, its executive chairman said on Wednesday.

“We were not too clear about the rules on monopoly in that region. Griffin and Premier are the only two coal mines in that part of Australia and we already own one,” L. Madhusudhan Rao told reporters.

Lanco would focus on developing Griffin and is still looking for acquisition opportunities in Australia, Indonesia and South Africa, Rao said. Lanco acquired Australia’s Griffin Coal mines for A$750 million ($760 million) in December.

Wesfarmers is looking to sell the Premier Coal mine, valued by analysts at about $400 million, The Australian newspaper has reported.

Lanco is not considering bidding for another Australian coal explorer Bandanna Energy, Rao said.

Aditya Birla Group, JSW Steel and Jindal Steel & Power are shortlisted bidders for Bandanna Energy in a potential billion-dollar-plus sale.

Lanco shares fell to their lowest since May 2009 to 30.45 rupees on Wednesday, down 0.65 percent from its previous close. Lanco, valued at $1.6 billion, has lost half its value this year, compared to a 11 per cent fall in the broader market.

Indian companies are looking to secure overseas coal supplies to fuel power plants in India, which aims to halve its nearly 14 per cent peak-hour power deficit within two years.

India’s demand for coal is forecast to grow 11 per cent a year, while imports for 2011/12 are likely to touch 135 million tonnes, according to the coal minister.

Lanco plans to raise its power generation capacity to 15,000 MW by 2015 from 3,300 MW now. It has achieved financial closure for half of the planned 12000 MW capacity addition, while financial closure for the balance would be achieved in 2-3 months, Rao said.

A total of 350 billion rupees will be required to finance 6200 MW of capacity and four-fifths of it would be raised via debt and the balance from internal accruals, Rao said.

Lanco plans to list its power unit in two years but has not decided whether it will be listed in India or overseas, Rao said. “We want to list all our verticals eventually,” Rao said.

Lanco operates five business verticals comprising power, solar, construction, natural resources and infrastructure though most of its revenue at present come from power and construction.

The company also plans to bid for India’s ultra mega power projects based on domestic coal as and when they come up for bidding.

The company is seeking to expand its footprint overseas in power generation. It has bid for 2 projects of 660 MW each in Bangladesh and plans to bid for 3 projects in Indonesia in six months, Rao said.

Power plant equipment manufacturing is an area Lanco is looking at, but has not taken a final decision yet, Rao said.

Meanwhile, Lanco’s capacity utilisation at 740 MW plant in Andhra Pradesh has been hit by lower gas availability, falling to 75-80 per cent from 90 per cent earlier, Managing Director G. Venkatesh Babu said.

Lanco’s Andhra plant depends on gas supplied by energy major Reliance Industries from KG D6 block off India’s east coast.

Reliance is now pumping about 50 million standard cubic metres a day (mscmd) from its KG D6 block — already less than the 60 mscmd it produced last year, and far off the planned peak capacity of 80 mscmd, leading to lower gas supplies to plants on India’s east coast.

 


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Lanco Infra Drops Bid Plan For Premier Coal

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