For the French multinational Alstom, setting up of a rolling stock manufacturing unit at Sri City in Andhra Pradesh could be the beginning of a new phase in its transport business in India.
Though the facility is being created initially to make coaches for the Chennai Metro, it could become a sourcing hub for its projects in India and other countries.
According to Mr Henri Poupart Lafarge, President, Alstom’s transport business, the Sri City venture was in line with the company’s strategy to be closer to its clients as also an indicator of its expanding global footprint.
“Sri City factory is not only to cater to our operations in India but also to the rest of the world; we are pushing our global footprint towards the fastest growing markets that includes India, Latin America and the Middle East,” Mr Lafarge said.
Alstom will spend €30 million to develop the Sri City facility. The investment may not be large, considering similar manufacturing projects in the automotive sector. But the project will bring in new technology and engineering capabilities that could help make modern metro trains locally.
Initially, the extent of indigenisation will be 40 cent, but will eventually go up to 80 per cent, he said. Besides, the projects could attract investments in India by Alstom’s global vendors and also fuel development of domestic ancillary units.
The facility, being built in an area of 156 acres, is scheduled for commissioning in this September. The first set of rolling stock is expected to roll out in January, 2014.
The fists set of steel cars for the Chennai Metro is being built in Alstom’s factory in Brazil. The cars built in India too will be identical.
The €243-million order from the Chennai Metro Rail for supply of 168 cars seems to have encouraged Alstom to explore other metro projects in the country more vigorously.
Mr Lafarge believes that the company is well placed to take advantage of the growing opportunities in metro rail projects in India, despite tough competition from other global players.
Talking to a group of visiting Indian journalists in Paris, he said, the company will bid for the third phase of the Delhi Metro and other projects in the country. Earlier, Alstom had supplied the signalling system for the Delhi Metro. It also has a contract from the Bangalore Metro for signalling equipment.
The company has an order for the train control system for Jaipur metro. Other urban rail projects, including Kochi Metro, Hyderabad, expansions in Bangalore and Kolkata are expected to come up in the near future.
Alstom’s Bangalore facility provides application engineering for a number of its projects in Europe and Asia. The centre is now being converted into a group R&D centre.
Alstom, a major player in building high-speed trains, also sees opportunities in India, where it had associated with Indian Railways in the past. Its Coimbatore unit, set up in 1999, manufactures a range of traction and signalling equipment mainly for the Indian market.
Globally, transport business contributes only 25 per cent of the company’s revenue as the major share comes from the power business. This is the case in India too.
However, Mr Lafarge expects transport business to grow faster in the emerging markets with a number of cities planning metro rail services.
Despitethe Euro zone financial crisis, Alstom continues to have orders in the homemarket. Currently the company is engaged in a major project for automating line-1of the Paris Metro.