Alstom, a leading supplier of solutions for the metro rail market in India, is currently supplying rolling stock for the Chennai, Kochi and Lucknow Metros, all of which are being manufactured at the company’s facility in Sricity, near Chennai. It is also supplying signalling and track works for various Metro projects in India. For Alstom, this is an exciting time to up its stakes in the fast-growing India market. Driving this new focus is Jean-Francois Beaudoin, Senior Vice-President, Asia-Pacific region. Beaudoin, who has a doctorate in mathematics and automatics, has grown the order backlog through key breakthroughs in the Australian, Indian and Chinese markets and has significantly contributed to localisation efforts in India. In an interview with BusinessLine , he spelt out Alstom’s plans for the India market.
How do you see India as a market for Alstom?
We started a little late in India largely because the market at that time was not as promising as the one in China. But today, the dynamics are different and we are growing very fast in India. For us, India as a market has become more and more predictable. While it offered immense potential, the pace at which this potential transformed into reality was much less when compared to several other nations. In the last couple of years, the potential has started to become real, more opportunities are coming up and we have positioned ourselves at the right moment with a comprehensive strategy. We are investing in India by setting up factories, expanding existing factories and in people, by creating key competencies locally.
Today, India has become the second-largest country for Alstom in terms of engineering staff, next only to France. This feat was impossible to predict or imagine till five years ago. Today our strategy is not only to use India as an operational platform to serve the local market but also to deliver projects, components or engineering services for international markets. One of the key examples is that we are currently executing a metro project for Australia from India and it has been pretty successful so far. Similarly, we have teams working in India for projects with end customers in Germany, Sweden, Saudi Arabia, France, and Italy, either by contributing to engineering activities and/or by manufacturing components that we ship to integrating units in Europe and elsewhere.
What are the growth opportunities you see in terms of upcoming and ongoing metro projects?
If you go by the announcements and commencement of metro projects across cities in India, the numbers have significantly increased in the last two years. We believe these projects will continue to rise for the next five to 10 years as cities expand, new cities come up and Smart Cities come up. That will surely drive up demand for robust, efficient and clean metro systems. At Alstom, we will be very keen to study each of these projects on offer and put in our bid, wherever possible.
What is the current employee strength in India? Are you planning to increase the headcount?
We have 2,000 employees in India and we are planning to add approximately another 1,000 in the next couple of years. Depending on our success in the Indian market and in international markets, where we can use India as an export base, we might hire even more. Today, close to half of our total Asia-Pacific staff is in India and this is where we are staffing the most. The engineering vertical is critical for us, where we are currently adding 20-40 engineers a month. The engineering staff strength in India is second only to France. Further, we staff at different levels of seniority — we staff very experienced people and we also run a programme to attract and staff young graduates.
How has your experience been on the ‘ease of doing business’ front in India?
I would say that the dynamics are very positive. Over the last couple of years, the ease of doing business has improved and I am really confident that it will continue to improve. There are difficulties like administrative complexities and decision-making process sometimes takes a little bit longer, but on the other hand, there have been numerous simplifications. I tell my team — don’t think of changing India, you need to understand India and get used to it and then you will be able to contribute to developing India. But you won’t change India per se.
What is the progress on the Madhepura (Bihar) contract?
The team has been set up and the design activities are running in full swing. The land has been acquired, we have done the fencing of the land, and we have started preparatory work for earth filling. We will start construction of the walls in October. We are receiving full support from the local administration in Bihar. Our relationship with the Indian Railways is very good for this locomotive manufacturing plant and we are working together to ensure that this project, which is critical both for Bihar and India, is executed in a time-bound manner. This project is being set up by a JV, where we are the majority shareholder and Indian Railways is the minority shareholder. While it’s our technology and knowledge, Indian Railways is also very much involved as a key shareholder. And ultimately, they are the customer.
How important is the Asia-Pacific region for your growth?
Today, the growth in the railways market in largely driven from regions other than Europe. Asia-Pacific is one of the fastest growing and important regions for us, both in terms of our position in the market as well as operational set-up. Today, we are generating a turnover of €700 million a year from the Asia-Pacific region.
You are looking at India as a hub for Asia pacific. What are the new contracts in the pipeline?
We submit offers very regularly for various markets and we have the outcome of those offers from time to time. However, I am not in a position to divulge anything at this stage because a number of contracts are currently work-in-progress.