Anil Ambani-promoted Reliance Infrastructure (R-Infra) reported a 7.2 per cent rise in its net profit for the April-June quarter, on the back of lower expenses.
The company reported a consolidated net profit of Rs 439 crore, against Rs 409 crore reported a year ago. Total income from operations were 2.78 per cent higher at Rs 7,098.6 crore against Rs 6,907 crore reported in the correspondent quarter a year back. Total expenses for the company was lower at Rs 6,215 crore against Rs 6,252 crore a year ago.
Segment-wise, the company reported an income of Rs 6,002 crore from the power distribution and transmission business, the highest contributor to its total operating income. Income from its engineering, procurement and contracts (EPC) business declined to Rs 719 crore from Rs 1,065 crore a year ago. “The orderbook in EPC is at its fag-end and that is why revenue from this segment has dropped,” said Lalit Jalan, chief executive officer, R-Infra.
The company is now looking to refocus on the EPC business. “The internal target is to go back to the Rs 30,000 crore worth of EPC orderbook that the company had in 2008,” said Jalan. The current EPC orderbook value for the company is Rs 2,720 crore. Jalan did not set a timeline to achieve the target, which he expects to come from sectors like infrastructure, power, railways, port and marine services and transportation projects.
The company is looking to participate in EPC bids worth Rs 2 lakh crore, of which Rs 1 lakh crore is being targeted for bidding in the current financial year. With most infrastructure companies focusing on EPC, R-Infra will have to bid in a competitive market. “We would remain mindful of our margins and will not bid aggressively,” Jalan said.
The company's newly acquired defence business reported a loss of Rs 50 crore and its metro division reported a loss of Rs 70 crore for the June quarter. Jalan added, the company is hopeful, Reliance Defence Engineering, its defence subisidiary, will exit the corporate debt restructuring cell by December.
In the June quarter, the company also completed the sale of its cement division to Birla Corp for Rs 4,800 crore. The proceeds from the sale, the company said, has been utilised to reduce debt. As of June, the company has a total standalone debt of Rs 14,000 crore, the consolidated number which was not readily available would be higher. On the asset monetisation plans for its 11 road projects, the company said, the process to bring in a strategic investors is under process.
Reliance Infrastructure is also looking to sell a 49 per cent stake in its Mumbai power distribution business. “The sale process is facing a delay due to delay in the related tariff orders for the business. Only after that will the definitive agreement be signed,” Jalan said.
In November 2015, Reliance Infrastructure entered into a non-binding agreement with Canadian pension fund Public Sector Pension Investment Board (PSP Investments) to sell a 49 per cent stake in its Mumbai power transmission and distribution business.