The company, formerly called Reliance Energy, will borrow as much as 80 per cent of the funds, Director Lalit Jalan said in an interview in Mumbai today, without elaborating. "We're looking for a good asset at a good price."
Chairman Ambani changed the company's name in May to reflect the widened scope of its business to include roads and airports as the government has lined up a $500 billion (Rs 21,35,000 crore) investment to improve infrastructure by 2012. Reliance, which begun an office in Shanghai last year, expects to unveil a venture in China in the next two months and aims to develop a global business, Jalan said.
"It sounds easy on paper but the proof of success only comes after projects are completed," said Mahesh Patil, who helps manage $9 billion in debt and equity at Mumbai-based Birla Sun Life Asset Management. "The company is getting into too many projects. It may be plausible but it's going to be a big, big challenge."
Rel Infra's stock, the best-performer on the Bombay Stock Exchange's 30-share Sensitive Index last year, has declined 52 per cent since the start of this year. The shares fell by Rs 61, or 5.68 per cent, to end the day at Rs 1,012.35. The proposed investments will be separate from the $28 billion that its 45 per cent-owned unit Reliance Power plans to spend on adding generation capacity in India in five years. Rel Infra's total debt amounts to about 70 per cent of the company's equity.
The Mumbai-based infrastructure firm seeks to partner Chinese companies for a technology, services or production venture, Jalan said, declining to give more details. The firm had considered bidding for Singapore's Tuas Power, which was acquired in March by China Huaneng Group Corp, and is currently looking to invest in West Asia, he said.
Dongfang Electric Corp, which supplies about 40 per cent of China's hydropower equipment, and Shanghai Electric Group, China's biggest maker of power equipment, are among suppliers for Ambani's power projects. Subsidiary Reliance Power may form ventures with makers of turbines, boilers and transformers, Ambani said on January 4.
Reliance Infrastructure will continue to partner foreign companies for its engineering and construction projects in India, said Jalan. "About 1,500 engineers were hired this year and a similar number may be added in each of the next three years to help the company meet its targets," he added.
"A dozen managers have been hired from abroad to bring the best practices from international firms," Jalan said. Reliance Infrastructure is also building a rail system to connect New Delhi's airport to the city in partnership with Spain's Construcciones & Auxiliar de Ferrocarriles SA.
It is building a 12-km stretch of a metro rail project in Mumbai with France's Veolia Transport, a unit of Veolia Environment SA. The company has jointly bid with Canada's Bombardier, the world's second-largest trainmaker, to build a 67-km elevated rail corridor in Hyderabad.
Reliance Infrastructure is also building 400 km of roads in southern India and a 100-storey building in Hyderabad, where it is developing 77 acres to lease office space, Jalan said.
Generation Capacity
The company, which currently operates 941 mw of generation capacity, transferred its new projects to Reliance Power, which raised $3 billion in January this year through India's biggest initial share sale. Reliance Infrastructure plans to bid for contracts to build power plants with a combined capacity of 28,200 megawatts, for which unit Reliance Power will seek competitive bids from Indian and overseas companies, Jalan said.
Each project will form a separate arm that will raise debt independent of Reliance Infrastructure's balance sheet, he said. Annual revenue from building power projects may amount to as much as Rs 21,000 crore ($4.9 billion) in five years and may generate Rs 2,000 crore from construction, Jalan said.
