Reliance Infra to enter steel plant construction biz

The Anil Ambani-controlled Reliance Infrastructure is set to expand its engineering and construction business in India by getting into construction of steel plants through a Chinese tie-up. The company, which currently handles construction of power plants, has tied up with China Metallurgic Corporation to form a special purpose vehicle that will bid for EPC contracts for construction of steel plants. The Chinese major will provide the technology to set up key units of a steel plant such as blast furnaces and coke ovens, while Reliance will contribute its project management expertise. Reliance Infrastructure, formerly called Reliance Energy, also plans to get into construction of nuclear power plants. “We are in talks with a few world leaders in nuclear power plant construction for a similar tie-up. Nothing has been finalised yet,” Mr Lalit Jalan, company’s CEO and director, told Business Line. Infrastructure focus Originally a power generation and distribution company, Reliance Infrastructure is betting big on infrastructure, with plans to invest about $7 billion (over Rs 30,000 crore) in the next three years to expand its engineering and construction business — out of this about 80 per cent will be raised through borrowings. The company’s EPC division is currently sitting on an order book of Rs 20,790 crore. It expects its EPC division to contribute Rs 2,500 crore this fiscal to the company’s overall turnover. In the EPC vertical, the company is into construction of roads, highways, flyovers, urban transportation systems, power projects and airports. The company notched up a total income of Rs 9,760 crore and net profit of Rs 1,178 crore in the last fiscal. “We are quite upbeat on infrastructure. The Government has lined up an investment of $500 billion to improve infrastructure, including roads, railways, power plants and ports, in the 11th Plan period (2007-12), doubling our infrastructure spending from the current 4 per cent of GDP to 8 per cent in 2012. It is estimated that at least 30 per cent of this planned expenditure will be met through private sector participation,” Mr Jalan pointed out. The transformation from Reliance Energy to Reliance Infrastructure in May this year was aimed at broadening its business canvas to cover the entire infrastructure sector. Having so far completed 8,000 MW of power generation EPC contracts.