Reliance Infrastructure Plans $7 Billion of Investments in India and Abroad

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Researched by Industrial Info Resources (Sugar Land, Texas)--Reliance Infrastructure Limited (BOM:500390) (Mumbai), a part of the Reliance-Anil Dhirubhai Ambani Group, will make investments of about $7 billion over the next three years toward the expansion of its domestic engineering and construction business, as well as for the acquisition of assets overseas. Reliance Infrastructure, formerly Reliance Energy Limited, has a wide scope of business that includes development of roads and airports and is hoping to tap into domestic opportunities made available by the Indian government's plans to invest $500 billion toward infrastructure development by 2012. The company currently has operations in Shanghai with plans to increase its presence in China through partnerships with local companies for production, services and technology ventures. The company wants to establish a global footprint and has assessed opportunities in Bahrain, Jordan and Singapore.

Reliance Infrastructure is looking for international partners to participate in engineering and construction projects in India. The company is currently in partnership with Construcciones y Auxiliar de Ferrocarriles SA (MCE:CAF) (Beasain, Spain) in the construction of a rail system to connect New Delhi's airport to the city. It is also building a 12-kilometer (km) stretch of metro rail in Mumbai in partnership with Veolia Transport, a branch of Veolia Environnement SA (NYSE: VE) (Paris, France). Reliance Infrastructure and Canada-based Bombardier Incorporated (TSX: BBD.A) (Montreal, Quebec), the world's second largest manufacturer of trains, have jointly bid for the 67-km rail corridor project in Hyderabad, India. The company is also developing 400 km of roads in south India, as well as 77 acres of land in Hyderabad, where it will construct a 100-storey building to lease office space.

In addition to Reliance Infrastructure Limited, Reliance Power Limited plans to invest $28 billion over the next five years toward the addition of power generation capacity in India. Reliance Infrastructure recently secured a $3 billion engineering, procurement and construction contract from Reliance Power for its 4,000-megawatt (MW) Ultra Mega Power Project (UMPP) at Sasan in the state of Madhya Pradesh. Reliance Infrastructure will commence operations in July on the first 660-MW unit, which is scheduled to be commissioned in a period of 42 months. Five more units will be commissioned every three months thereafter.

The company has partnered with Black & Veatch (Kansas City, Missouri), an international player in the design and engineering of gas and coal-fired power plants, to provide engineering and consultancy services for the Sasan project as well as the upcoming Krishnapatnam UMPP in Andhra Pradesh. The scope of the agreement includes preparation of project manuals, engineering of critical balance of plant packages, review of engineering details of boilers, generators and turbines, development of a plant information management system, and review of architectural details, equipment layouts, plot plans and the engineering of distributed control systems. Black & Veatch will also provide consultancy expertise in construction, erection, testing, commissioning, material management, operation and maintenance arrangements, project control and management, and associated engineering services.

Reliance Energy and Black & Veatch have also signed a technology support service agreement to develop a modern Centre of Engineering Excellence at Dadri in the state of Uttar Pradesh for development and transfer of technology pertaining to complete design and engineering of power and other infrastructure projects. Reliance Infrastructure, which currently generates 941 MW of power, is also undertaking the development of a 2,000-km transmission infrastructure as part of the Western Region System Strengthening Scheme-II in the states and territories of Chhattisgarh, Dadra & Nagar Haveli, Daman & Diu, Goa, Gujarat, Madhya Pradesh, Maharashtra, and Parbati-Koldam.

Reliance Power is looking to forge alliances with manufacturers of boilers, transformers and turbines. State-owned Shanghai Electric Group Company Limited (HKG:2727) (Shanghai, China), China's power-equipment manufacturing giant, and Dongfang Electric Corporation (HKG:1072) (Sichuan, China), which meets 40% of China's hydropower equipment requirements, are among the leading international suppliers for Reliance Power's projects.

Reliance Infrastructure plans to bid for contracts to develop power stations with an aggregate capacity of 28,200 MW for which Reliance Power will seek competitive bids from domestic and international companies. Reliance Infrastructure expects to generate annual revenues of $4.9 billion through development of power projects and $500 million from construction over the next five years.

The late Indian industrialist, Dhirubhai Ambani, founded Reliance Industries Limited (RIL) (Mumbai) in 1966. Shortly after his death in 2002, the business empire was split into two entities between his sons, who parted ways because of a personal dispute. Mukesh Ambani secured control over RIL and Indian Petrochemical Corporation Limited, while his younger brother, Anil Ambani took charge of Reliance Capital, Reliance Energy and Reliance Infocomm. RIL currently includes Reliance Petroleum Limited, Reliance Retail Limited, and Reliance Industrial Infrastructure Limited. The group has annual revenues in excess of $34 billion and is India's largest private sector conglomerate. Anil Ambani heads the Reliance-Anil Dhirubhai Ambani Group, which encompasses Reliance Capital, Reliance Communications Limited (RCom), Reliance Health, Reliance Infrastructure Limited, Reliance Media & Entertainment, and Reliance Power. The two brothers are again embroiled in a public feud following Mukesh Ambani's recent claims over the right of first refusal to buy RCom, which could sabotage RCom's $70 billion merger plans with telecom giant MTN (Fairland, South Africa). RCom has refuted RIL's claims and has described them in a public statement as being "legally and factually untenable, baseless, and misconceived."

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