How Transport Major Alstom is On Track in India
French transport multinational Alstom is going be in a joint venture with the Indian Railways to manufacture India’s first high-speed freight train engines. The company will roll out 800 high power locomotives in 11 years for the Indian railways, which ferries at least 23 million people every single day. With an investment of $17 billion, this is the first major FDI project for the Indian Railways. The first phase of the project, setting up of a $3.1 billion electric locomotive manufacturing facility in Madhepura in Bihar, will be completed this month.
Making in India
What will be different about the new project is that the French conglomerate is leaving no stone unturned to ‘make in India,’ even as the India’s Urban Development ministry mandated earlier this year that metro companies must make 75% of their coaches indigenously. While Alstom will take the aid of French expertise, it is primarily Indian talent who will work on the project. As much as 85% of the supply chain for the locomotives will be based in India. The first of the 800 electric locomotives of 12000 horsepower each will be rolled out by February 2018.
In fact, the company has over the years taken various steps towards increasing self-reliance in production in India. Bharat Salhotra, Managing Director for India and South Asia, Alstom, told Indo-Asian News Service (IANS), "Four years ago, we started with 30 percent (of the supply chain) coming from India and 70 percent coming from elsewhere. Now it is the other way around."
Apart from just making in India, Alstom India exports to Australia and is also looking at widening its horizons and supplying to the middle-east and southeast Asia.
Speaking of how the company has been growing from strength to strength, Salhotra pointed out that the company’s 1000 plus engineers are booking almost 1.5 million hours a year, for Indian and global projects.
Alstom is one the oldest foreign companies to be operating in India. In fact, its entry to the country dates back to 1910 in Kolkata and it made a comeback in the 1950s in Chennai in South India. The conglomerate that is valued at $8.3billion worldwide is known for its expertise in developing and marketing systems, equipment, and services for the railway sector.
With a strength of 1800 employees in India, Alstom operates out of three locations in India - it has a signalling & rolling stock engineering excellence centre, R&D centre as well as global IS&T operations in Bengaluru, a rolling stock manufacturing unit at Sri City, Andhra Pradesh, and a manufacturing facility for traction equipment at Coimbatore, Tamil Nadu. In fact, the company also provided rolling stock for India’s fastest trains - Shatabdi and Rajdhani.
Falling back on years of experience, Alstom sensed the right opportunities in India and made the best of it. In 2007, as India's cities were growing, the company anticipated an enormous need for infrastructure in the transport sector and plunged in. Its calculations on the need for urban transport were spot on and the company has played a major role in India’s metro rail transport projects.
Today, in 2017, metro projects account for a length of 546 kms that are under construction in 11 cities, while projects with a total route length of 903 kms are under consideration in 13 cities, offering vast opportunities in the transport sector.
Earlier this month, the company inaugurated Lucknow Metro, for which it was awarded a $178 million contract in 2015. The coaches for the project were designed in Bangalore, while they were manufactured in Sri City with components from the company’s Coimbatore plant. This year the company also completed the Kochi metro, a project where it incorporated the first Computer Based Train Control (CBTC) based signaling system in the country. For the Chennai metro, Alstom provided 39 trains of four cars each. The company is also providing technology to Jaipur metro and Bangalore metro. With successful metro projects under its belt, the company is looking to build 50 more metros across India in the next decade.
India is currently working on more than Rs500 billion ($7.7 billion) worth of metro projects in 11 cities and this is likely to grow.
An article in Business World points out that India’s urban transport has a huge need to be met, “It is no secret that Indian urban transportation will soon need to procure around 3,000 metro cars, 25-plus signalling lines, 5,000 EMUs (electric multiple units), nine high-speed lines and 20 semi-high speed lines in the next 60 months,” it states. Along with this, it will also need to be supported by “a network of advanced signaling systems and a regular supply of propulsion equipment for electric locomotives and EMUs to Indian Railways,” it adds.
Canadian company Bombardier Transportation India, German conglomerate Siemens, and Alstom are key players in India’s transport market.
France has long been a supporter of India’s smart city programme and has shown a keen interest in developing sustainable urban infrastructure in India. In fact, 15 French companies are involved in India’s transport sector. Apart from technical assistance, the French Development Agency (AFD) has granted a 360 million euro (INR 2520 cr) loan to Kochi Metro, its single biggest-investment in India to fund the metro and has also invested in various urban mobility improvement works. AFD also funded phase 1 of the Bangalore metro project.
Given France’s interest in developing urban transport in India, it is no wonder that Alstom is an active participant in India's transport sector. The company has claimed to have virtually doubled its revenue every financial year in the last five years. Its engineering unit is also making the best of the skilled labour available in India. Its strategy of identifying opportunities and its willingness to take a risk has put it at the forefront of India's transportation map.
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Elizabeth Raj | Blogger