Infra firms scout for opportunity

The sun sets behind electric pylons in Allahabad February 22, 2006.

MUMBAI (Reuters) - As India looks to spend a trillion dollars overhauling its infrastructure, Indian companies are looking at overseas acquisitions to help them operate new projects at home while funds are eager to invest and firms are bidding aggressively for billion-dollar highway projects.

In a country that faces frequent blackouts, clogged and potholed roads and severe delays in projects due to corruption and red tape, firms see opportunity as Asia's third-largest economy plans to spend $1.5 trillion in the ten years ending in 2017 on improving its crumbling infrastructure.

Some Indian firms are eyeing coal assets overseas to fire up power plants in India, looking to benefit from the energy-hungry nation's aim to halve its nearly 14 percent peak-hour power deficit within two years.

Speaking at the Reuters India Investment Summit in Mumbai, GVK Power and Infrastructure(GVKP.BO) and Lanco Infratech(LAIN.BO) executives said they are searching for coal assets in Indonesia, Australia and Africa.

"We are scouting around for (coal) assets. It's on the top of our mind," GVK Vice Chairman G.V. Sanjay Reddy said. "We are looking for as much coal as we can get."

India aims to cut its power deficit to 6.5 percent in the fiscal year ending March 2012 from the current 13.8 percent, the head of the Central Electricity Authority told Reuters.

For a graphic on the performance of the Indian Infra sector vs

the benchmark stock index, click: r.reuters.com/cyn35p

To achieve that target, more power plants need to be built to boost capacity in the country, but getting sources of energy such as coal and bagging clearances for land are huge obstacles.

Several executives expressed frustration at the land acquisition process in India, which is strewn with bureaucracy, environmental concerns and social problems such as farmer compensation.

Still, there is tremendous growth.

Hindustan Construction Co (HCC) and Larsen & Toubro are looking at acquisitions in sectors such as power transmission and distribution and oil and gas pipelines to take on larger infrastructure projects in India.

HCC is exploring acquisitions in Europe, the Middle East and South East Asia, the firm's chief financial officer said at the Reuters Indian Investment Summit on Tuesday.

The company is looking for firms that are in saturated markets and have nowhere to grow, so they can offer HCC their capabilities and technology in exchange for a piece of the India infrastructure pie.

"It's technology, equipment and people that we are looking at," HCC Group Chief Financial Officer Praveen Sood said at the Reuters Summit.

Indian engineering conglomerate Larsen & Toubro will pursue energy opportunities overseas to supplement its domestic expertise in building power plants and transmission lines, a senior official said at the summit.

FUNDS, ROADS

The World Bank is considering an investment in the $11 billion debt fund to be rolled out by the Indian government next year as part of the massive push to its infrastructure sector, the bank's India chief told the Reuters Summit.

AMP Capital Investors, a unit of Australia's No. 2 wealth manager AMP, is planning to invest about $200 million in the Indian infrastructure sector over the next two years, a senior official said on Tuesday.

Foreign investors are likely to fund up to 30 percent of India's $18 billion road projects in the current fiscal year, a top official at the National Highways Authority of India (NHAI) told Reuters at the summit. But Indian firms are big players too. HCC wants to expand its presence in the building of toll roads, a relatively new concept in India, as the government is expected to accept bids for around 6,000 kilometres of highway projects by March next year.

HCC will bid for at least three to four national highway projects over the next six months, worth between $1.5 billion to $2 billion each, Group Chief Financial Officer Praveen Sood told Reuters at the summit. He expected to bag two of the projects.

GVK and Lanco are also looking at fresh opportunities in toll roads, lured by the potential for large orders. All firms said that auctions for road projects in India were very competitive.

(Additional reporting by Pratish Narayanan, Ami Shah, Prashant Mehra, Swati Pandey, Ketan Bondre, Kaustubh Kulkarni, Manasi Phadke, Aniruddha Basu, Devidutta Tripathy, Tony Munroe, Sumeet Chatterjee and Nishant Kumar; Editing by Surojit Gupta)

(For more business news visit Reuters India)