Three sources told Bloomberg that Lanco Infratech Ltd is thinking of divesting Griffin Coal Mining Co, its Australian unit. The people said the second largest private power producer in India is considering the sale to help pay back debt.

Two people said Lanco is evaluating options, including a complete sale of Griffin Coal which it purchased in 2011 for a price tag of A$750 million or $665 million. Two other sources also said that the India-based firm is in advanced discussions to sell a hydroelectric power plant in India. They did not name a buyer for the plant.

Bloomberg reported that Lanco is looking to divest the Griffin Coal unit which had become unprofitable after it agreed with lenders to restructure its debt that had grown to INR 339 billion or $5.5 billion in September. Lanco is one of the foreign firms whose Australian coal purchases have turned sour due to the fuel's falling prices for three consecutive years.

In May, Lanco said the loss before interest, tax, depreciation and amortization of Griffin Coal nearly doubled in the fiscal year that ended March 2013 to INR 1.05 billion. It did not specify a reason for the decline. According to the company's August presentation, Lanco's mines in the Collie Basin in Western Australia produce an estimated 4 million tons of coal each year. It intends to increase its output by fiscal 2018 to 18 million tons.

In a December exchange filing, Lanco said it had approved a debt restructuring proposal from its lenders. Lanco's most recent annual report showed that the banks included the State Bank of India and ICICI Bank Ltd. Bloomberg data showed that its debt had grown over fourfold since March 2010.

In January 2012, Philip Chacko who was then Lanco's Director of Investor Relations, said the company was looking to sell a stake in its power business to private equity investors so it could raise up to $750 million, Bloomberg reported.