Lanco Infratech, one of the most leveraged company in the Indian power sector, may soon see its imported equipment getting auctioned by Mumbai Port.
Since past seven months, Lanco has not lifted boiler, turbine and generator (BTG) imported from China/Singapore from the port. The equipment is for Lanco’s 1,320 mw Wardha power project in Maharashtra.
A Mumbai port official said Lanco had neither paid custom duty nor port charges for past many months, which had forced the port to initiate steps for auctioning the equipment.
Interestingly, the Wardha project was slated to be commissioned by September 2012 and experts said with the equipment still at the port the commissioning date seemed uncertain.
Through a newspaper notice on January 20, Mumbai Port had invited bids for auction of the unclaimed cargo to recover its dues.
The goods consist of 12 lots of BTG plant and equipment, including ESP and its auxillaries. The tender document will be available for sale from February 20 and offers can be submitted from March 4 to March 13, according to the notice.
Lanco officials could not be reached for comments.
The Lanco plant is coming up at Mandava in Wardha and Lanco has signed a Power Purchase agreement (PPA) of `2.70 per unit for it with Maharashtra State Electricity Distribution Corporation Ltd (MSEDCL).
As per the PPA, the scheduled commissioning of date of the Wardha plant was September 4, 2012.
DNA Money could not ascertain whether PPA agreement allows MSEDCL to levy penalty on Lanco for the project delay.
Lanco’s market cap has declined 69% in the last two years on account of rising debt and interest costs, large number of ongoing infra projects, pending recovery of over `4,000 crore dues from state discoms.
As per closing price of February 23, Lanco market cap stood at `2,788 crore against `9,126 crore two years ago.
Its gross debt touched a huge `34,500 crore in five years, debt:equity ratio rose 360% and leverage climbed up to 4.3 at the end of fiscal 2012 from 0.93 in fiscal 2007 as the company took up a large number of infra projects.
For the past many months, Lanco is trying to partially dilute its stake in its power stations and has shown interest in completely exiting build-operate-transfer space, but has not met success as it is asking for a very high premium for its assets, market sources said.