Rising need for safe, reliable transport infra has opened up an array of opportunities in India

Written by Subhash Narayan | Rajat Arora | Updated: Mar 17 2014, 08:17am hrs
After making inroads into the energy market, French engineering and transport major Alstom now plans to give a major push to its transport business in India. The company has identified the country as a key market among emerging economies where investment would be stepped up, especially in the area of public transport. In an interview with FEs Subhash Narayan & Rajat Arora, Alstom Transport president Henri Poupart-Lafarge said that challenge in a price-sensitive country like India was how to keep the costs of products down. It is with this in mind, that the company is aggressively going for a localisation strategy and helping customers with best financing deals. Excerpts:

The year 2013 has not been very good for businesses with the global economic slowdown. How are things at your end

I will say that the market for urban transport has relatively remained unaffected in this period of slowdown. Both Alstom and its competitors have got a number of contracts in this area from different parts of the globe. In the urban market, things are relatively fine worldwide. The problem that the transportation solution providers like us are facing is mainly in case of large projects where financing is becoming a major issue. This has resulted in projects getting postponed in countries such as Brazil and Russia. But again our bread and butter are more day-to-day projects rather than these large ones. The large projects are a bonanza. I am optimistic for the coming years.

Is there a case to step up investments in the Indian market where there is a lot of scope for infrastructure development and need for reliable and safe urban transport system

The increasing infrastructure need for reliable and safe urban transport system in the country has opened up an array of opportunities for the Alstom Transport business in India. Our expanding local industrial footprint with operations in Bangalore, Coimbatore and, now Sri City, is a testimony to the fact that we are ready to respond to the opportunities as and when they arise. Our current priority, however, is to successfully deliver the ongoing projects in India. As per the evolving market scenario, the call on stepping up of investments will be taken.

Is your current establishment sufficient to meet the growing demands in India or you need to decide on further investments in the country

Absolutely, we will need to scale up our operations as the need arises. There is a realisation that market potential in India is immense and that the company would need to be prepared to respond to changes quickly. Keeping this in mind, we have acquired large pieces of land around our Sri City metro coach factory so that we can scale up as required. The expansion can happen both in terms of technology and volumes.

Are you also looking to make Sri City factory an export hub catering to urban transport solutions for neighbouring markets

This is part of our plan as we do not want this factory to service one big order and than wait for a long time to get another one. This factory will not only serve the Indian market, but it will also serve the Asia Pacific region and some other potential export markets. We are already working on getting export contracts for this factory. We have so far not been awarded any export contract, but we have bid with the Chennai facility to two export markets Australia and Latin America.

In India, certain projects have moved at a pace not acceptable globally. A glaring example is the Madhepura loco factory which has been stuck for a long time. Does this impact global business communitys and your interest in country-specific projects

Yes and no. I would say yes, because we like things to move. No, because we know that this is a gigantic project and such contracts globally take a lot of time. In transportation world, there is always two issues: you have the financing issue and what I would call the budgetary issue. Large transportation projects always need some state money/subsidies and state involvement. Then there is also a question of priority in terms of which projects you need to push first. So in transportation this is a constant frustration, but if you succumb to it, you cannot work here.

High-speed trains are widely becoming an acceptable mode of transport globally. Do you see a potential for this in India

High-speed trains are already operational in various parts of the world and I am given to understand that six different corridors have been identified for high-speed rail in India. However, implementation of these is dependent upon a viable financial model, which is yet to be established. Once a viable model is established and the funding tied up, work on these projects can commence. I feel that India should move progressive to higher speeds by first improving the average speed of its existing trains. High speed trains should also be considered between two cities of immense importance.

One issue you highlighted is of financing as transport projects are highly capital intensive. Does Alstom help in providing finance to its customers

Yes and no. Yes, because we are helping our customers to find some financing but no, because we are not putting our whole balance sheet on the table. We are in capital goods, I mean we are not a leasing company. The beauty of Alstom is that we are a global company present on all continents so we can adapt ourselves to the requirement of the customers. So in case there is a requirement for sourcing from Japan to get Japanese financing, we can adapt to the needs. The same can be said true in case of China.