India's No. 2 private power producer, Reliance Energy Ltd, is scouting for coal mines overseas and sees infrastructure projects such as road and rail as key growth drivers, a senior official said on Thursday.
A strong growth outlook sent its shares up as much as 5.5 percent to an all-time high of 998.60 rupees before they ended at a record close of 987.70 rupees.
They have risen more than 82 percent in 2007 against an 18.4 percent gain on the main index.
Jayarama Chalasani, director for business development, told Reuters the firm was looking to acquire mines in Indonesia, Australia, and Africa at competitive rates and was open to signing long-term contracts.
If you have to set up a coastal power plant, the landed cost of imported coal is cheaper than local coal, Chalasani said in an interview. But we cannot pay five star rates to acquire an asset and then try to produce cheaper power.
Companies in energy-starved India have been seeking to secure long-term coal supplies. In April, bigger rival Tata Power Co bought stakes in two Indonesian coal mines for $1.3 billion.
Chalasani said the company plans to raise between 480 billion rupees ($11.8 billion) and 500 billion in debt over the next seven to eight years to expand generation capacity nearly 16 times to 15,000 megawatts.
It is not the money, but the fuel, which is a constraint for stepping up capacity across the country, he said.
Reliance, which has a market value of $5.4 billion, has submitted a proposal to build a 1,200-MW coal-fired power station, next to its proposed gas-fired 7,840 MW power plant in northern India, Chalasani said.
When the two projects are completed they are expected to produce enough electricity to light up a city nearly five times the size of Mumbai, India's commercial capital.
The company recently won a contract to build a 4,000 MW power plant at Sasan in Madhya Pradesh.
India suffers severe power shortages and the Sasan project is one of seven 4,000 MW power plants planned by the government to add 100,000 MW of electricity by 2012, to meet the growing energy needs of its 1.1 billion people.
Reliance, which also builds plants for other companies, was close to winning a 35 billion rupee power project in eastern India for state-owned Damodar Valley Corp, as it had emerged the sole bidder. This will take its order book position to 90 billion rupees so far in 2007/08.
Chalasani said the company sees infrastructure projects such as toll roads, rail transport, engineering and construction as strong contributors toward its future growth.
Infrastructure projects such as roads and rail are coming up in a big way for private players like us, which otherwise were controlled by the government, he said.
Reliance Energy had completed five road projects spanning 400 km across India and hopes to win more next year, he said.
The company is building a suburban rail system in Mumbai and is eyeing similar projects at Hyderabad, Chandigarh and Kochi.
Shares in the company are trading at about 24 times one-year forward earnings -- higher than Asian peers such as Malaysia's Tenaga Nasional and Australian infrastructure firm SP Austnet at more than 10 and 17 times earnings, respectively.
($1 = 40 rupees)