Reliance Infrastructure is expanding its presence in almost all infrastructure sectors, be it roads, metro rail, airports, power transmission or sealink. It also has plans to enter the cement sector. In an email interview, the R-ADAG company’s chief executive officer & whole time director Lalit Jalan tells FE?s Praveen Kumar Singh about the firm’s current projects, new revenue streams and financing mode. Excerpts:

Reliance Infrastructure is executing more than 20 projects in different sectors. Has the company faced problems like delays in environment clearance, land acquisition and utility shifting?

In the short span of three years, Reliance Infrastructure Ltd (RInfra) has emerged as the largest infrastructure company in India. The thrust of the government and active participation of corporates in the infrastructure sector provide tremendous opportunities. RInfra is currently developing 25 projects with a current outlay of Rs 400 billion (Rs 40,000 crore). Any large infrastructure project involves active coordination with multiple stakeholders and authorities, making it a huge challenge. We did face challenges pertaining to land acquisition and utility shifting; during the construction of Mumbai Metro-1 project.

However, our proactive planning and project management experience have ensured mitigation of such eventualities to a great extent. We, however, give due credit to the government agencies for the synchronised manner of shifting the utilities without causing much inconvenience to end consumers.

What is the plan of action for the next few years?

At the end of the year 2010-11, RInfra will have nine revenue-generating road projects, the Delhi Airport Express (Metro link) rail project and two transmission projects. Our focus remains on completing these projects within time and cost. At Rinfra, we are continuously evaluating and participating in profitable opportunities in these verticals.

The company is also looking at the cement sector. Can you elaborate on the plans? Are the plants meant for captive use?

It is too premature to talk about it at this nascent stage.

The kind of projects that the company is executing needs a lot of investment. How are you arranging for the fund?

RInfra is currently developing 25 projects (11 roads, three Metros, five transmission, one sealink & five airports), with a total project outlay of about Rs 400 billion. The company has a strong balance sheet with a net worth of Rs 200 billion and no net debt. Our existing business is generating cash flow of around Rs 15 billion every year, also we have the necessary resources to fund the equity. We plan our projects in such a way that all of them are financed through traditional project finance routes. Our company is tapping domestic sources and external commercial borrowings.

Is the company planning to raise fresh funds from stock markets or bonds?

As mentioned, we have sufficient capital to fund our existing project portfolio and do not foresee raising equity from the market in the near future.

Is there any time or cost over-run due to delays?

We have adopted best practices and processes to ensure that we do not overrun our time and cost due to delays.

What is the revenue stream the company expects from the projects currently in the construction stage?

During the current year, we have nine road projects generating revenue, besides the Delhi Airport Express and two transmission projects. Our existing distribution and EPC business continue to give revenue and grow above industry average.

Please highlight the financial strength of Reliance Infrastructure?

RInfra has a strong balance sheet with a consolidated net worth of over Rs 200 billion, Rs 81 billion in cash and cash equivalent and a debt of Rs 41 billion. Our existing businesses generate an annual cash flow of approximately Rs 15 billion.

What are the hiring plans of the company?

The company is currently focusing on hiring and leadership grooming in its newer verticals like roads, metro, cement and EPC. We focus on talent acquisition from the industry and across sectors to achieve a healthy mix of competencies. We have adopted the approach of infusing outside talent as well as in house grooming of potential leaders, to meet the challenging and ambitious growth plans. Our thrust, however, is on infusing young engineering /management talent and seamlessly integrating them in the organisation and grooming them for future leadership.

NHAI had recently changed some qualification norms for road projects and the finance ministry is now asking for a reversal of them. What is your opinion on the changes?

This kind of frequent changes lead to uncertainty in the sector. We need to have a long-term view on the governing mechanism in the larger interest of all the stakeholders.

The recent decision to raise the power tariff in Mumbai is attracting criticism from the political class. Do you think the criticism is uncalled for?

MERC has just reinstated the tariff it had stayed 18 months back. The tariff differential in Mumbai is only on account of the shared allocation of power among the three distribution verticals. Power cost is 85% of the tariff. Till 2008, when allocation was proportional, the tariff across Mumbai was similar.