Financial Daily from THE HINDU group of publications
Friday, Nov 05, 2004
Alstom plans to expand Indian operations
New Delhi , Nov. 4
ALSTOM, the France-based energy and transportation major, is drawing up plans to further expand its Indian operations in order to be able to exploit the growing opportunities in the country's infrastructure sector.
"We have ambitious plans to develop infrastructure in India and we will create more business opportunities," said the Alstom Chairman and CEO, Mr Patrick Kron, at a briefing last night following the conclusion of his three-day visit to the country.
Elaborating, he said, India was among the fast-growing economies with a projected GDP growth rate of six per cent this fiscal and with the Government eyeing eight per cent growth in subsequent years, the country's infrastructure, especially the power sector, would have to keep pace to sustain such development.
"So, if all goes well, the country has tremendous demand potential. India will be Alstom's second largest market in power after China."
However, without making any commitment on the level of investments or the magnitude of business that Alstom was looking at, Mr Kron said that the company would increase its engineering capacities in the country for more localisation of equipment content to become cost-effective.
"We have operations in over 70 countries, and when we get orders, we work out plans for local manufacture and sourcing. We are not used to building capacities and then waiting for orders to come in."
On the size of the business Alstom was looking at, Mr Kron said that it was difficult to make any estimates.
Giving an example, he said that the company's Chinese operations fetched 300 million euros two years back. "Last year it was 500 million euros and last week we contracted orders worth 1.4 billion euros."
Stating that he was not very happy about India's purchase price preference scheme, Mr Kron said that the country's power market was very challenging by way of cost competitiveness.
Alstom, therefore, plans to upgrade its existing facilities at Vadodara, besides building significant capacities in and around Delhi to minimise cost.
The company would also be gearing up its plant engineering facilities in order to be able to service EPC and turnkey project contracts, apart from taking in more people as and when necessary.
Alstom's strong point was technology, he said, and the company was highly competitive in power equipment with capacities of 600 MW and above.
During his stay, Mr Kron met the Finance Minister, Mr P. Chidambaram, the Commerce Minister, Mr Kamal Nath, and the Power Minister, Mr P.M. Sayeed, apart from other senior officials in the Government and the power utilities, namely, NTPC, NHPC, and BHEL.
"We had very fruitful discussions with both the Government and the private sector on some proposals and projects."
To a question, Mr Kron said that the process of selling Alstom's transmission and distribution business in the country to Areva, the French energy giant, would be completed by the year-end.
Areva had closed a deal last year to acquire Alstom's T&D business worldwide, except India and some other countries. It had also offered to take over the T&D business of the Chennai-based Alstom Ltd for 14.3 million euros.
The two sides, however, are now entangled in a dispute over the amount Areva would have to pay Alstom for its global operations.
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