The Silent Climb To The Top

The Silent Climb to the Top
http://www.lancogroup.com
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 fal en 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.
The fifth floor of Lanco House in Gurgaon is also sparsely populated. The floor that houses the board
room and offices of the top management of the company is lined with waist-high green granite. The off-
white wal s are peppered with dozens of paintings including M.F.
Husain's and Souza's. In 2009, Lanco Infratech did a King George V when it moved its corporate office
from Hyderabad to Gurgaon. It shifted 700 employees to the Mil enium City. Two years later, almost a
quarter of Lanco Infratech's 7,000 employees are based in Gurgaon. Being close to the power centre is
quite important, even if you are a power utility.
The Rs 8,000 crore-Lanco is among a clutch of companies that are investing in expanding India's power
generation capacity. It has an instal ed capacity of 3,300 MW and wil add another 6,000 MW in the next
few years. By 2015, it wil invest Rs 35,000 crore to add another 6,000 MW, raising the total capacity to
15,000 MW. By then, Lanco wil be present across 20 states and is slated to have 20,000 employees.
In contrast, in 2005-06, it was a Rs 152-crore construction company with profits of less than Rs 10 crore.
In 2010-11, profits are Rs 446 crore.
Today, Lanco is among the biggest private power companies in India. Rivals include Tata Power
(generation capacity 3,120 MW), Reliance Power (1,033 MW), Adani Power (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.
Can Lanco pul it off over the next four years? 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, Kondapal i expansion and Vidarbha.
Barring power, EPC and infrastructure, Lanco has identified two new verticals -- solar power and natural
resources. Infrastructure includes roads, 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.

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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.
Gaining Power
Lanco is in a sector where demand wil continue to rise for many years. In the 11th Plan period (2007-
12), India wil 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 global y
-- after the US, China, Japan and Russia. This should reach 300 GW by 2017, making it the third-largest
power generator global y. The private sector is slated to add 100,000 MW in the 11th and the 12th Plan
periods.
"We are bul ish on power," says Lanco Infratech chairman Madhusudan Rao. He agrees that there wil
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 gig watts.

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