The Telegraph
Tuesday , November 27 , 2012
Since 1st March, 1999
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Lanco gets $2bn Chinese loan

New Delhi, Nov. 26: A group of Chinese banks, led by the China Development Bank, today gave a loan of $2 billion to debt-laden Lanco Infratech for two of its projects.

The China Development Bank (CDB), owned by the Chinese government, will arrange loans for the group’s two projects in Uttar Pradesh — Anpara Phase II and Himavat — each having a power generation capacity of 1,320 MW.

“Of the total amount of $2 billion required to be raised, $600 million will be contributed by the CDB and the CDB will syndicate the balance from Chinese banks and financial institutions,” Lanco said in a statement.

“This is going to help us in improving the economies of the project and shall help us in completing them within the stipulated time,” Lanco Infratech chairman L. Madhusudhan Rao said.

The loan is seen as an attempt by Beijing to garner a bigger share in the power equipment sector, where India levies a 21 per cent duty on foreign equipment to protect domestic makers.

Sharad Jhingan, chief operating officer, head-structured finance, said, “Typically we procure equipment from China for our projects.”

Lanco Infratech is selling its non-core assets to reduce the burgeoning debt on its books. The firm had put its hydropower, road and windpower assets on the block and was even seeking buyers for its real estate business.

Rating agency Crisil last month had downgraded its rating on the bank facilities after it delayed a repayment obligation of Rs 250 crore due in October. Banks have an exposure of over Rs 9,000 crore on the company.

Lanco is also in the process of addressing the debt-equity ratio, Rao added. Lanco’s debt burden stood at nearly Rs 32,000 crore at end of the June quarter.

The China Development Bank has already sanctioned $200 million buyers credit for Amarkantak 3 & 4 (Chhattisgarh), Babandh (Odisha) and Vidarbha (Maharastra) power projects of the firm.

The bank has sanctioned over $7 billion to Indian companies, the statement said.

Reliance Power

Reliance Power today signed an agreement with Guangdong Mingyang Wind Power Industry Group Ltd and the China Development Bank Corp to bankroll its foray into renewable energy projects, including wind power.

Back in July, the Anil Ambani group company had signed a deal with Ming Yang Wind Power Group Ltd, a leading wind turbine manufacturer in China, to co-develop up to 2,500 MW renewable energy projects in India within three years.

Under the agreement, Ming Yang is expected to provide total engineering, procurement and construction solutions.

Reliance Power is expected to play a supporting role in facilitating the projects in addition to providing local market support.

Guangdong Mingyang Wind Power Industry Group is a subsidiary of Ming Yang.

The China Development Bank will act as the lead arranger of the financing facilities to Reliance Power. The amount, terms and conditions of the financing facilities will be subject to the potential lenders’ internal approval procedures and further assessment of the projects.