R-In­fra Re­boots EPC Busi­ness

Co tar­gets or­der book of .₹ 50,000 cr by 2018-19 driven by gov­ern­ment spend on in­fra­struc­ture

The Economic Times - - Companies: Pursuit Of Profit - Ra­chita.Prasad@ times­group.com

Mum­bai: Reliance In­fra­struc­ture has de­cided to re­boot its engi­neer­ing, pro­cure­ment and con­struc­tion (EPC) busi­ness af­ter scal­ing it down in the past 3-4 years due to slow­down in or­ders and shrink­ing mar­gins. The com­pany now tar­gets an am­bi­tious or­der book po­si­tion of .₹ 50,000 crore by 2018-19, a sig­nif­i­cant rise from .₹ 9,000 crore ex­pected by the end of this fis­cal, chief ex­ec­u­tive of­fi­cer Lalit Jalan said.

The Anil Am­bani-led com­pany is also in the process of di­vest­ing stake in as­sets and fo­cus more on cash con­tracts than de­vel­op­ment projects that re­quire eq­uity in­vest­ment.

“Go­ing for­ward, our fo­cus will move away from BOT projects where we have to put eq­uity. We are not look­ing at any more eq­uity in­vest­ments. We have com­pleted our capex and are out to mon­e­tise these in­vest­ments. With the cur­rent gov­ern­ment’s fo­cus on in­fra­struc­ture spend, we are fo­cus­ing on EPC projects,” Jalan said. The com­pany saw its or­der book shrink­ing as slow­down took a toll on in­fra­struc­ture sec­tor and its group com­pany Reliance Power, which was a key source of or­ders, re­frained from tak­ing new projects.

The com­pany re­cently bagged .₹ 3,675crore or­der in Ra­jasthan from Neyveli Lig­nite Cor­po­ra­tion and has emerged best bid­der for an­other ther­mal power pro­ject of the same size that will take its or­der book po­si­tion to .₹ 9,000 crore by March from .₹ 5,540 crore now.

“We ex­pect that the projects that we would be in­ter­ested in and el­i­gi­ble for in the next fi­nan­cial year would be worth .₹ 2 lakh crore. We are keep­ing our in­ter­nal tar­get at 10% of this which we hope to win,” Jalan said.

The com­pany is up­beat on op­por­tu­ni­ties aris­ing out of gov­ern­ment spend on power, roads, rail­ways, de­fence, ports and mega in­fra­struc­ture projects.

“We have de­cided to bid for projects worth .₹ 1,000 crore and above...we have equip­ment worth .₹ 750 crore ly­ing and wouldn’t need ma­jor in­vest­ment in scal­ing up work,” Jalan said.

Sep­a­rately, the com­pany re­ported con­sol­i­dated net profit of .₹ 375 crore, up 49% year-on-year, in the quar­ter ended De­cem­ber 2016. Its con­sol­i­dated to­tal in­come dur­ing the same pe­riod in­creased 11% to .₹ 7,247 crore.

The com­pany said it has filed draft prospec­tus with SEBI for ap­proval for an in­fra­struc­ture in­vest­ment fund that would house 10 projects. The pro­posed is­sue size of the fund is .₹ 3,000 crore. The com­pany ex­pects the is­sue to hit the mar­ket by April.

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