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Reliance plans foray into engineering
Mukesh Ambani-controlled Reliance Industries may take on Larsen & Toubro in the booming engineering and construction business, reports Suprotip Ghosh.
The Mukesh Ambani-controlled Reliance Industries may take on Larsen & Toubro in the booming engineering and construction business. Reliance Industries is exploring the option of foraying into the engineering, procurement and construction business in a major way.
The company's existing engineering division, which undertakes captive work, including the construction of the 27 million tonne refinery in Jamnagar, Gujarat, could be transformed into a bigger business that will take up external contracts.
Reliance Industries' engineering division, which employs 500 executives, however, lacks the expertise to design projects.
"There are possibilities of Reliance Industries getting into a partnership for design capabilities," said a source close to the situation. UK-based Becthel Engineering is providing design support for the Jamnagar refinery. According to investment banking sources, the company has already started talking to prospective partners. A Reliance spokesperson said the company did not wish to comment on speculation.
There are, however, some pointers. Reliance Industries is understood to have recently entered into a partnership with the Dubai-based Mammut Group to build pre-fabricated buildings in western India.
The final rollout of the business may take long as the company is expected to complete the refinery in December 2008.
Also, Reliance Industries is consolidating its retail and special economic zone businesses, which are facing opposition from various quarters.
According to government estimates, India will require $475 billion (Rs 1,891,449.986 crore) over the next five years to spruce up its infrastructure. "Private investment needed is around Rs 70,000-80,000 crore a year," Finance Minister P Chidambaram has been quoted as saying.
The infrastructure industry has grown tenfold, with a compounded annual growth rate of more than 58 per cent.
