After the divestment of Infrastructure Development Projects (IDPL), Larsen & Toubro Limited (BSE:500510) (L&T) is looking at offloading Nabha Power Limited in Punjab to potential buyers, as well as paring its stake in L&T Metro Rail (Hyderabad) Limited to 26%. Both Nabha Power and Hyderabad Metro are subsidiaries of L&T. The objective is to reduce the INR 180,000 million debt on the books of these firms, said D K Sen, whole-time director and senior executive vice-president (development projects), L&T. The company's Lakshya 2026 roadmap had identified sub-scale businesses that the company needed to exit, and suggested concentrating its attention on high-tech manufacturing, construction and green energy projects, and increasing its share in the information technology (IT), digital services and data center space. "IDPL was one of the non-core assets identified for divestment by L&T as part of its Lakshya 2026 plan.

This has finally happened with Edelweiss Alternatives acquiring IDPL. The next stage will see us focus our attention on divesting Nabha Power in Punjab and reducing our stake in Hyderabad Metro. For this, we are working on various proposals, which we should finalise by the end of FY23," says Sen.

Nabha Power, a subsidiary of L&T, had a debt of INR 53,410 million as on March 31, 2022. Hyderabad Metro, also a subsidiary of L&T, has a debt of nearly INR 130,000 million, according to company officials. L&T hopes to reduce the debt level to around INR 80,000 million in the near term in the case of Hyderabad Metro by monetising land parcels that are part of the metro project.

The Government of Telangana has also sanctioned a INR 30,000 million loan, which will be disbursed in tranches to the company, says Sen. On Nabha Power, according to Sen, L&T is talking to potential buyers of thermal power assets for an outright sale. The company may also look to convert some of its debt into equity.

"Nabha Power is a good asset with a power-purchase agreement that runs right up to 2040. We are looking at a fair valuation for the business," Sen says.