The company expects to raise Rs 4,000 crore ($630 million) in two to three years by either taking the unit public or roping in a strategic partner, said T Adi Babu, chief operating officer, finance. Lanco will also sell its Australian coal mine and its toll-road business in India when it gets an acceptable price, he said.

Lanco, whose debt currently stands at about Rs 37,000 crore, has remained unprofitable for the past four years, weighed down by interest costs. Reviving the company's finances will depend on how soon Prime Minister Narendra Modi's government restarts power, road and other public works projects halted by land acquisitions and environmental delays to fulfill pledges that helped him win elections last year.

"We'd like to capitalise on the power business when all our under-construction projects are ready," Babu said. "We also hope by that time coal availability for our plants will improve and demand for power would have picked up."

Lanco has a generation capacity of 3,450 megawatt, with 4,636 megawatt under construction, according to a June presentation on its website. The company, based in Gurgaon near New Delhi, raised Rs 6,300 crore in April by selling a 1,200-megawatt power plant to Adani Power.

Lanco shares rose 1.2 per cent to Rs 4.10 at the close in Mumbai, their first increase in seven trading days. The stock has declined 32 per cent this year, compared with a 2.2 per cent gain in the benchmark S&P BSE Sensex.

A 50 per cent decline in the price of coal since Lanco bought the Australian mine in December 2010 has rendered the asset unviable. Located at Collie in Western Australia, Griffin Coal Mining has reserves of 1.1 billion metric tonne.

While Lanco has deferred an expansion plan at the mine, it is maintaining production to meet contractual obligations to customers, Babu said.

"There are buyers for the roads business and the Australian coal mine, but the prices being offered are too low," he said. "The price being offered for the roads business is Rs 100 crore, while the book value is Rs 750 crore."

Lanco is also approaching lenders to refinance debt on some operational power plants and is counting on lower borrowing costs to shore up its finances. The company's borrowing costs rose almost 11 percent in the year ended March, dragging down earnings.

Even after three reductions, India's key rate at 7.25 per cent is among the highest in Asia.

"If interest rates come down, half of our problems will be solved," Babu said. "That will boost our cash-flows and will have a positive effect on the economy as a whole."