Archana Chaudhary

Mumbai: Reliance Infrastructure, a power generator controlled by Anil Ambani, plans to invest $7 billion in the next three years to expand its engineering and construction business in India and acquire assets overseas. The company, formerly called Reliance Energy, will borrow as much as 80% of the funds, director Lalit Jalan said in Mumbai on Thursday, without elaborating.

“We’re looking for a good asset at a good price,” he said.

Chairman Anil Ambani changed the company’s name in May to reflect the widened scope of its business to include roads and airports as India spends $500 billion to improve infrastructure by 2012. Reliance, which started a Shanghai office 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 Mumbaibased Birla Sun Life Asset Management.

“This company is getting into too many projects. It may be plausible but it’s going to be a big, big challenge.”

Reliance Infrastructure’s stock, the best performer on India’s 30-share Sensitive Index last year, has declined 52% since the start of this year.

The proposed investments will be separate from the $28 billion that its 45%-owned unit Reliance Power plans to spend on adding generation capacity in India in five years. Reliance Infrastructure’s total debt amounts to about 70% of the company’s equity.

Mumbai-based Reliance Infrastructure seeks to partner Chinese companies for a technology, services or production venture, Jalan said, declining to give details. The company had considered bidding for Singapore’s Tuas Power Ltd, acquired in March by China Huaneng Group Corp, and is currently looking to invest in the Middle East, he said.

Dongfang Electric Corp, which supplies about 40% of China’s nation’s hydropower equipment, and Shanghai Electric Group Co, China’s biggest maker of power equipment, are among suppliers for Ambani’s power projects, according to Jalan.

The company’s Reliance Power unit may form ventures with makers of turbines, boilers and transformers, Ambani said on January 4, 2008. Reliance Infrastructure will continue to partner overseas companies for its engineering and construction projects in India, Jalan said. 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 said.

A dozen managers have been hired from abroad to “bring best practices from international firms,” Jalan said.

Reliance Infrastructure is 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-kilometre stretch of a metro rail project in Mumbai with France’s Veolia.

Source : DNA