Hyderabad-based Lanco Infratec’s Malaysian partner Genting Bhd is exiting its power business globally. It is, therefore, set to exit two operational power projects it has in India in partnership with Lanco.
Genting holds 30 per cent equity in Lanco’s largest commissioned plant 388-mw Kondapalli project. It also owns a 35 per cent equity interest in Lanco’s Aban Power Company, which operates a 120-mw power plant in Tamil Nadu. Kondaplli project was built at a cost of about
Rs 1,100 crore. With a share of 30 per cent, Genting’s equity component in the project was about Rs 100 crore. In the Aban project that was set up at a cost of Rs 408 crore, Genting had put in 35 per cent equity at about Rs 45 crore. Both the projects are fired on gas.
It could also be second time unlucky for Lanco Infratech in its bid to win an ultra mega power project (UMPP). Lanco’s consortium with Genting had qualified in the preliminary bidding for the 4,000-mw UMPP at Tilaiya in Jharkhand.
The project entails an investment of over Rs 16,000 crore. Last year, Lanco lost the Sasan UMPP to Anil Ambani's Reliance Power after winning the project bidding the lowest tariff of Rs 1.19 per unit. This was because its erstwhile foreign partner in that bid Globeleq walked away.
The government decided reject the Lanco bid even after it had tied up with Jindal Steel and Power which had taken control of Globeleq’s assets.
"We look at it (Genting decision to quit power business) as more of a restructuring plan. I am very confident that Genting will be with us through the bidding process", Lanco group chairman L Madhusudhan Rao told Financial Chronicle on Thursday.
An e-mail request for comments made to Genting remained unreplied.
Lanco Infratech, which reported a net profit of Rs 484 crore for 2007-08, saw its scrip close 4.19 per cent down at Rs 291.70 per cent on Thursday on the Bombay Stock Exchange.

The tariff bids for the Tilaiya project will be called sometime in November before which the consortium would have to resolve the issue.
According to data available at Genting's website, the group's power division is steered by its 58.6 per cent owned subsidiary - Genting Sanyen Power Sdn Bhd. The division owns a 720-mw gas fired combined cycle power plant in Malaysia - Genting Sanyen Kuala Langat power station – as also equity interest in several projects in China.
When contacted, Lanco joint managing director DV Rao said, "Though we have been hearing reports that Genting is exiting their power business, we have not been approached by them. Even if they walk away, Lanco will not partner any other firm for participating in bidding. We will rather leverage on our own EPC (engineering, procurement and construction) abilities. We are now in a position to raise funds on our own."
According to UMPP norms, companies with net worth of Rs 1,000 crore and an annual turnover of Rs 25,000 crore are qualified to bid for a project. Further, in case of a consortium at least one member should have a proven experience of 10 years.
On what kind of impact Genting's exit would have on Lanco's qualification for Tilaiya, N D Tyagi, chairman, PFC Consulting, said, "The issue of a partner walking out of the consortium has to be considered on case-to-case basis." The company has been entrusted with the task of bidding for UMPPs.