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