Lanco Infratech

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   Lanco
Infratech Limited claims that it is directly in the business of
Infrastructure Development & indirectly into Power Generation,
Power Trading & Property Development through various operating
subsidiaries. But if one observes the revenue flow & business
progress in the last 2 years, it is very clear that the company’s
business revolves around its many Power Generation Projects, either
already operational or being implemented. Through its subsidiaries,
Lanco Infratech is currently having an operational Power Generation
capacity around 525 MW (Mega Watt). Another 3900 MW of capacity will be
added by March’2012, for which construction is underway. Out of this, a
little over 2000 MW is expected to be commissioned by March’2010. Apart
from this, Lanco Infratech has another 4000 MW capacity under planning
& fund-raising currently & the same shall be ready for
operation by 2014-15. So, in all, Lanco Infratech has about 8000 MW
under various stages of implementation. 

The
EPC cost, i.e. Engineering, Procurement & Commissioning cost for a
Power Generation company is between Rs.4.5 – 5 crores per MW. That
means, the subsidiaries of Lanco Infratech involved in Power
Generation, are expected to give EPC contracts worth between Rs.36,000
– Rs.40,000 crores between the year 2007 & 2014. A small part of
this already underway & the remaining will be executed in phases.
All these contracts are being given to the main company, i.e. Lanco
Infratech. That means, the holding company is executing all the EPC
contracts of its subsidiaries involved in Power Generation. It makes
good business sense for a Power Generation Company to have an in-house
EPC division, because it helps to keep costs & schedules under
control and since the work is being done for their own company, the
quality level is also the best. Even other Power Companies like
Reliance Power & Tata Power are handling their EPC work by
themselves. Expansion of capacity will be a regular feature for all
Power Generation Companies because India is currently short of Power by
a huge margin & is expected to remain so for atleast another decade.
Apart
from EPC & Power Generation, Lanco Infratech has also won a couple
of Highway construction projects under the Build-Operate-Transfer
Scheme, for which the company will build the highway for the stretch
awarded & then collect Toll for the same for a period of around 20
years. The company has also been awarded the contract to build a
trans-shipment Port in Kerala. Lanco Infratech is also into real estate
development with one major project called Lanco Hills at Hyderabad. It
is developing 4 million sq-ft of residential space, 1 million sq-ft of
IT SEZ office space, another 0.5 million of office space & one
Luxury Hotel for which it has tied up with Gran Hyatt. The company is
not expected to aggressively expand more into the real estate space,
especially after the recent decrease in demand. Also, the company has
its hands full for the next 5-6 years with the in-house projects and
the already awarded ones.