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NEW DELHI: <keyword id="45417" type="COMPANY" weightage="20" keywordseo="Adani-Power">Adani Power</keyword> has acquired <keyword id="192578" type="CITY" weightage="20" keywordseo="Lanco-Infratech">Lanco Infratech</keyword>’s 1,200 mw Udupi thermal power plant in a Rs 6,000-crore transaction, marking the second mega deal in twoand-a-half weeks for the sector that is seeing a spurt of fund-raising and M&amp;A activity after being down in the dumps for years. 
 The deal, the largest in thermal power in terms of value and capacity, catapults the <keyword id="6367820" type="COMPANY" weightage="20" keywordseo="Adani-Group">Adani Group</keyword>, already India’s biggest private sector power producer, to a bigger league with a capacity of nearly 10,000 mw while helping Lanco reduce debt. 
 
Lanco Infratech, which has a market capitalisation of Rs 2,054 crore, said it will receive Rs 2,000 crore in cash and transfer debt of about Rs 4,000 crore to Adani. 
 Adani pipped other bidders including Mumbai-based <keyword id="83507" type="PERSON" weightage="20" keywordseo="Sajjan-Jindal">Sajjan Jindal</keyword> in the acquisition of the Udupi plant, which runs on imported coal and sells 90 per cent of the power to Karnataka and 10 per cent to Punjab. 
 Adani was also in the race for the Jaypee group’s hydropower portfolio, India’s largest, but lost out to <keyword id="9171" type="PERSON" weightage="20" keywordseo="Anil-Ambani">Anil Ambani</keyword>’s <keyword id="6360089" type="COMPANY" weightage="20" keywordseo="Reliance-Power">Reliance Power</keyword> which signed the initial pact for the Rs 12,000-crore deal. After the Jaypee deal, ET had reported that Adani was aiming to acquire 5,000 mw of capacity. 
 
The sellers, in both cases, were driven by the need to pare debt that had ballooned in recent years when the power sector was in deep trouble, with many plants stranded due to lack of fuel, low tariffs and distribution bottlenecks. 
 
However, the sector’s outlook has improved significantly after the change in government in May this year, increasing the appetite of potential buyers and prompting some sellers to seek higher valuation for their assets. 
 
In recent months, infrastructure firms raised about Rs 5,000 crore from qualified institutional placement (QIP), or share sales to institutional buyers. The flurry of transactions augur well for the sector and is expected to breathe life into so-called stranded assets -- power plants that are running below capacity on account of fuel shortages -- and repair distressed balance sheets of sellers. 
 Lanco and Adani said in a statement that the deal is valued at more than Rs 6,000 crore. Even before the transaction, Lanco had signed an agreement with the <keyword id="58906" type="ORGANIZATION" weightage="20" keywordseo="Karnataka-government">Karnataka government</keyword> to expand capacity by a further 1,320 mw, to a total of 2,500 mw. 
 
Udupi is India’s first independent power project in the country based on 100 per cent imported coal with a captive jetty of 4 million tonnes per annum and an external coal-handling system located at Mangalore Port. The capacity can be expanded to handle another 4 million tonnes, Lanco said. 
 
"For Lanco Infratech, this transaction will support the company in reducing its debt and will enable Lanco to receive about Rs 2,000 crore as cash and additionally, Adani Power will take Udupi Power’s long-time debt of around Rs 4,000 crore," the statement said. 
 
As reported by ET, experts and industry players expect infrastructure companies to raise Rs 8,000-10,000 crore more through QIPs, initial public offering (IPO) and other equity sale. They also believe more deals in the renewable energy, thermal power and road sectors are in the pipeline as highly leveraged companies have been looking to sell stake in projects.

Adani Power Buys Lanco Infratech’s Udupi Thermal Power Plant

Lenders to Lanco <keyword id="2993348" type="UNKNOWN" weightage="80" keywordseo="Teesta-Hydro-Power">Teesta Hydro Power</keyword> would convert part of their Rs 2,400-crore loans to the company into 51% <a href="http://www.businessinsider.in/searchresult.cms?query=equity+">equity</a> after the <a href="http://www.businessinsider.in/searchresult.cms?query=Reserve+Bank+of+India+">Reserve Bank of India</a> (RBI) allowed such conversions. 
 
The measure allows bankers to take steps against truant <a href="http://www.businessinsider.in/searchresult.cms?query=borrowers">borrowers</a>. The new rule would help them find buyers for stressed assets, reported the Economic Times. 
 
Lanco Teesta <a href="http://www.businessinsider.in/searchresult.cms?query=Hydro+Power+">Hydro Power</a> is fully held by Lanco InfraTech. Lanco Teesta's project, cost for the 500-MW hydro power project located in <keyword id="48118" type="CITY" weightage="60" keywordseo="Sikkim">Sikkim</keyword>, is about Rs 3,283 crore. 
 
India's banks face a burgeoning debt burden that's often cited as a key risk to the country's financial health. 
 
A senior bank official said on the condition of anonymity: "Lenders have authorised the lead bank to start the process of acquiring a majority stake in the company and looking for a buyer." 
 
The official said: "Debt would be converted only to the extent of banks acquiring 51% shareholding," he said. 
 
<a href="http://www.businessinsider.in/searchresult.cms?query=Strategic+Debt+Restructuring+">Strategic Debt Restructuring (SDR)</a> gives banks controlling power 
This will be the second such instance of a bank exercising its right to acquire a majority stake in an ailing company. A fortnight ago, banks had planned to take control of Electrosteel Steels, which could not repay its dues. 
 
Banks have lent the company about Rs 9,500 crore. The SDR programme by RBI allows banks to acquire a controlling 51% in a financially troubled company by converting part of its debt into equity. 
 A consortium of lenders, including some large private and public sector banks, agreed to convert part of their loans to Lanco Teesta into equity at a recent meeting. Senior executives at a large <keyword id="174493" type="COMPANY" weightage="60" keywordseo="Commercial-Bank">commercial bank</keyword> said that close to Rs 780 crore will be converted into equity under the <keyword id="6357264" type="ORGANIZATION" weightage="60" keywordseo="capital-market">capital market</keyword> regulator's formula for this. 
 
It is important to know that as per the SDR scheme, a bank can convert its debt into equity only after the project has failed to meet some critical milestones. 
 
Experts are of the opinion that stake conversion could saddle banks with assets they have no ability to manage unless these are disposed of quickly. Others say drastic measures are needed to resolve a situation that's worsening. 
 
"There has been a delay in completing project and lenders are fearing there could be a cost overrun. This has prompted lenders to act," said a senior bank executive. 
 
Banks are taking such measures to curb the sharp spike in dodgy loans. ETIG data shows that in the past two years, there has been a 158% jump in loans where borrowers have not paid dues. Gross non-performing assets stood at Rs 3.1 lakh crore in FY15 against Rs 1.85 lakh crore in FY13 for all listed banks. 
 
(Image: Indiatimes)

Lanco lenders to acquire Teesta Hydro Power

Indian markets brushed aside the tepid Railway Budget presented by Minister Suresh Prabhu and continued their downward trajectory as analysts were unable to find anything bullish for stocks at first glance. 
 
The Nifty crashed below the crucial 7,000-point support in afternoon trade and quoted at 6,976, down 41 points. The end of the monthly expiry of derivatives contracts also put intense pressure on stocks. 
 
Analysts said the budget's targets looked ambitious against the backdrop of meagre revenue picture of the Railways. 
 
Meanwhile, Prabhu told Parliament the Railways had planned for the following goals in the year to March 2017: 
 
* Operating Ratio of 92 percent. 
* Capacity expansion plan of 1.21 lakh crore rupees. 
* Life Insurance Corp to invest 1.5 lakh crore rupees in Railways over 5 years. 
* Track electrification of 2,000 km. 
* To set up 2 locomotive factories with an order book of 40,000 crore rupees. 
* Two new freight corridors to be set up 
* To lay more emphasis on existing corridors being constructed. 
* Announced 44 new projects 
* Prabhu remained quiet on a possible hike in passenger fares. 
 
Stocks of companies dealing with the Railways across its spectrum fell sharply. Wagon makers Titagarh, Kalindee and Tex Rail dropped 5 percent each. Electrical equipment makers Siemens and BEML edged lower. Railway Infrastructure providers GMR Infra and Lanco Infratech slipped in trade as well. 
 
(Image: Indiatimes)

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Adani Power Buys Lanco Infratech’s Udupi Thermal Power Plant

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