Lanco Infratech (LITL) lost R3,294-crore orders to build two 300MW power plants for Gujarat Industries Power Company (GIPCL) on Thursday for failure to provide a 10% contract performance bank guarantee.
“GIPCL has now informed the BSE that due to the inability on the part of LITL to furnish the required 10% contract performance bank guarantee as per the stipulated time period and thus committing breach and violation of EPC tender conditions, GIPCL has cancelled the letters of intent for EPC contracts dated June 1, 2013, issued to LITL in respect of implementation of two 300MW lignite-based expansion power project,” the Gujarat-based company said in a statement to the BSE.
The contract win from GIPCL was announced on June 3. The contract was for off-shore and on-shore supplies, civil and structuring works and on-shore services contract on engineering, procurement and construction basis. GIPCL was undertaking expansion of its power project near Dungri Village in Surat adjacent to the Surat Lignite Power Plant. It had said that the project was expected to be commissioned by the end of Q3 of 2017 fiscal.
Lanco Infratech had on July 27 informed the stock exchanges that it had initiated the process of corporate debt restructuring (CDR) for R7,500 crore. The company is part of the debt ridden Lanco Group, which had a debt of R34,249 crore as of March 31, 2013. The debt was the total of 21 companies in the group.
The CDR mechanism gives companies that are viable more time to meet their debt obligations subject to certain conditions. Lanco Infratech had not revealed the size of debt for which CDR was sought.
Lanco Infratech is also seeking to sell a minority stake in the thermal power project and coal block won from Mahatamil Collieries (MCTL) in Chattisgarh to reduce its debt. Lanco had won a contract to operate and develop MCTL’s Gare Pelma-II coal block and a 2,000MW thermal power plant in Chattisgarh’s Raigarh district at an estimated investment of R12,000-13,000 crore. Lanco’s equity contribution to the project was to be around R3,500-4,000 crore.
Lanco said that the CDR project will enable timely completion of all its ongoing power plants. On Friday, Lanco Infratech’s share price closed 2.20% higher on the BSE at R6.03.