RInfra eyes struggling BOT road projects

Anil Ambani-controlled Reliance Infrastructure is eying road and construction projects under various stages of development in the country in order to expand its portfolio. It is currently in negotiations with several

struggling players which are not able to execute the projects due to lack of funds or other resources.

Lalit Jalan, chief executive officer, RInfra, told DNA Money that the company is looking to buy secondary assets, mainly in the build-own-operate (BOT) space.

“We are actively looking at about 15 to 20 secondary assets. With our engineering and financial expertise, we expect 16-20% return on investment in such projects,” he said.

He, however, refused to disclose the names of the companies which were willing to sell their projects, but said RInfra is engaged in negotiations with various parties that are finding hard to finance their BOT projects.

“Many players have aggressively bid for BOT projects and now many of them are finding it hard to execute the projects,” he said.

RInfra currently has a portfolio of 11 BOT projects, of which five are operational and six are being implemented. About five are expected to be operational this fiscal.

Jalan said the company has also been active in the power distribution sector and has recently been invited by the Nigerian government to improve power distribution infrastructure in that country.

RInfra, which is involved in power distribution business along with Tata Power and BEST in the Mumbai license area, has also requested for increase on cross-subsidy charge.

Cross-subsidy is the amount paid by high-end migrating customers to switch to a different power distributor.

Jalan said the company has applied to MERC for increase in cross subsidy and if approved it can also look at bringing down the tariff for its existing customers. The company is currently charging an 88 paise per unit as cross subsidy but Jalan refused to disclose the quantum of increase he expects.

For the quarter ended March 2012, the company’s consolidated sales rose several fold to Rs4,134 crore from Rs775.51 crore in the corresponding period last year. Its order book was at Rs17,280 crore at the end of the fiscal 2011-12. The company reported a flat consolidated net profit of Rs411 crore for the January-March quarter.