French major Alstom expects to generate more revenues from India’s electricity transmission sector. The Group’s India subsidiary, Alstom T&D India, currently contributes 15 per cent to its overall grid business sales revenue.
At present, Alstom’s total sales revenue from grid business is €4 billion (Rs 28,000 crore). Of this, India contributes €600 million (Rs 4,000 crore).
Grégoire Poux-Guillaume, Alstom Grid President, describes how India is the single largest market for the group and they see more business here than China. Excerpts from the interview:
What do you think caused the world’s biggest black out?
There are few challenging issues. For instance, the National Centre (in India) does not have the authority over Regional Centres to stop consumption after certain limit. Thus, if any region is drawing more electricity, the National Load Dispatch Centre can flag it but cannot cut off supplies.
At the same time, India has installed capacity but some of the power plants are operating at lower loads because of the fuel issues. Issues are very complex.
India or China: Which is a bigger revenue generation destination for Alstom?
We have invested heavily in both the countries. Historically, India has been stronger base for us, which started in 1911 in Kolkata. We have five world class factories in India. We manufacture every Alstom product in India.
China is a different market for us. It’s a market in which we have lot of factories, but we developed our presence through various joint ventures with different players. So, it’s a less coherent presence than in India.
The reason why India is a strong base for us is that it is built through long history and I think built very successfully.
Does this mean India is a better place to run businesses than China?
India is a market we understand well. So, our comfort level in India is very good but comfort level doesn’t bring revenues. You have to be successful and you have to execute well to bring business.
China is once again a market for us but we have a short history and it’s a market, which has evolved quite a lot in the last few years and it’s sometime a bit difficult to read.
For your transmission business how do you handle land acquisition issues?
We are not responsible for securing the land. In our business model, we usually sign a contract where the customer has to make the land available. If the land is not available then we cannot install.
This means that we don’t get paid, which makes it our issue also. We share the frustration as it impacts our business. This is one part of the value chain where we are not in the front line.
What is Alstom’s investment roadmap for India?
India probably is going to be the country next year where we will have the highest capital expenditure compared with individual markets.
Our five factories in India were commissioned less than five years ago. Most of them were commissioned in 2008-09. We invested more than €160 million.
Next year, we are building an extension to our Baroda factory, which would be a huge investment. We haven’t disclosed the numbers but I am pushing our Indian team to negotiate with the suppliers.
How would India’s plan to implement 21 per cent import duty on power equipment impact you?
It would impact us for a few specific projects. For instance, some of the transformers we have to import from Europe because we are only qualified for certain numbers of transformers for India.
Is Alstom facing tremors of economic slowdown?
India has not much to do with the slowdown. Rather, there are issues with independent power producers. Some of them have financing problems or have huge debt. As Alstom, we are still growing.
None of us has a crystal ball to see how long this crisis will last. In some markets, we have seen that customers are not in a hurry to take deliveries of products even when we have kept them ready.