New Delhi: Alstom SA, which is in the final stages of acquiring Areva SA’s transmission and distribution (T&D) business along with its bid partner Schneider Electric SA for $6.13 billion (around Rs28,382 crore), is looking to ramp up its presence in India through new opportunities in the transport and power generation sectors, including manufacture of rolling stock for railways and the upgrade of existing power plants, which contributes almost one-third of its revenue. Patrick Kron, chairman and chief executive officer, Alstom, who was in the country to chair the company’s executive committee meeting being held for the first time here, spoke about this and other issues. Edited excerpts:
What brings you to India at this point of time?
It’s not unusual for me to come to India, which is not only a country in which we have an established presence for close to a century but also a major market for us and a key area for our strategy. Which is why I have decided this time to hold in India my managing board meeting with all our top management here to deal on a monthly basis on the ongoing issues.
Is this the first time you are having a board meeting in India?
Yes, I think it has never happened before in the history of the company.
In India there is a big gulf between opportunity and reality and this is largely because there is lack of stability in policy. It is less unstable now than it was, say, 10 years ago. How do you, as a foreigner, view the changes?
Operations in India: Kron says the pace of the growth in the country will depend on the company’s ability to win contracts. Ramesh Pathania / Mint
What I have seen over the years and having contacts with the top decision makers and political leaders of the country has been constant focus on infrastructure. What I have seen over the very recent years has been the clear application of this focus not only through future plans but also practical action. If you want to build a power plant, it is capital-intensive. So the actors, especially if you want to attract private investors, need visibility and stability. I think that in order to go into this very ambitious development programme of infrastructure you need, first, a political focus which is clear. I had the opportunity to personally meet the Prime Minister a couple of years ago and he mentioned his top priority was infrastructure and among infrastructure what he considered a bottleneck for the development was power generation. The numbers show that it is in fact not only a statement but also turning into reality. What we need, obviously, is the visibility and the stability and that’s true everywhere in the world and one of the problems of the economic crisis, which hit a lot of countries, has been the uncertainty created on some policies.
Which would imply that there are plans of substantially scaling up your operations in India?
It will definitely depend on orders—we cannot just set up plants and wait for orders. There is a combination of domestic demand, ability to get orders and the corresponding needs of capacity, of footprint. We have the possibility to do it by ourselves. We see many opportunities in environment control systems, in transport as we just discussed.
Now, the pace of the growth will definitely depend on our ability to commercially win some contracts.
But would you also be looking at the inorganic growth route?
I think our general policy is to go for organic growth. This being said, and the example of nuclear as well the example of what we do in boilers with Bhel (Bharat Heavy Electricals Ltd) and what we do in steam turbines with BFL (Bharat Forge Ltd) means that we can combine pure organic growth—typically what we have done in hydel—or a partnership where we have a win-win situation with each one bringing to the other what is needed to be successful.
Are there any plans to set up a rolling stock manufacturing unit?
It’s fair to say that in India we have been successful in signalling systems involving high-profile projects like the Delhi Metro etc., but not really on rolling stock and we definitely want to target rolling stock so we are working on the opportunities existing in the main line.
I should also remind you that not many years ago, Indian Railways had a fully integrated approach which was not giving opportunities to companies such as ours. Today, their focus has changed and they (are) looking for some external partnerships and therefore, we are looking for the best way to address this opportunity.
How much headway have you been able to make in the wind power energy sector in India?
The issue in power generation, if you look very long term, is to combine the necessary growth of the capacity which is needed to sustain economic development and social welfare with more and more stringent environmental regulation, among which is the issue of global warming. The way you address that is threefold—firstly, through faster growth of non-CO2 emitting technologies: nuclear, hydel but also other renewables such as wind and solar. The second area in which I think there are massive opportunities in India is the improvement of efficiencies, be able to burn less coal per kilowatt hour. The third one is through capture and storage of CO2 post-combustion and we are working on all three routes. They represent both long-term opportunities as well as low-hanging fruit.
As far as wind is concerned, we are more recent in wind. Our presence today is mostly in Europe and our strategy is to grow it and I don’t rule out India as one area of opportunity but it has not yet been a focus.
One of the concerns expressed on your bid for Areva T&D’s business, jointly with Schneider Electric, has been about possible layoffs. What are you doing to address those concerns?
No, we made it clear that there should not be such concerns on layoffs because, we, first of all, even if we split, there’s no restructuring related to the operation because any employee belonging to Areva T&D will either go to Alstom or go to Schneider.