Bombardier, Siemens, GE, Alstom, EMD at war over Rs 40,000-cr locomotive market

In eight years, Indian Railways wants to be in a position to issue a ticket within five minutes of a traveller demanding it. For anyone who comes across this idea enshrined in a report titled Vision 2020, the road ahead is absurdly simple: technology would help issue more tickets to passengers at their doorstep through an array of devices.

But the Railways, even as it gets to that part about delivering the ticket, also has to deal with the fact that it needs to be able to run enough trains to meet the massive demand for seats. It is obvious to anyone who travels by rail for the first time in India that the demand for seats is much more than the supply, which is why tourists get to shoot those postcard pictures of villagers travelling on top of trains.

By 2020, the Railways needs to procure 5,334 diesel locomotives and 4,281 electric locos, spending an estimated Rs 1,20,000 crore. Given that its production units are overburdened, the Railways has decided to procure locos through public private partnerships. The Railways also does not have the resources to adequately fund its massive capital expansion needs on its own, given a surging wage bill which has significantly inflated its overheads.

The Railway Board will soon finalise a tender, to be opened in a few months, for procurement of electric locomotives vis-a-vis a joint venture with the private sector in Madhepura in Bihar. Another tender for a similar diesel loco manufacturing plant may also happen this year. Together, the two contracts are said to be worth around Rs 40,000 crore spread over a supply period of 10 years.

Keen to Join the Bandwagon

According to the plan, the Railways will provide land while the selected bidder would set up the infrastructure and assure a roll-out for a given number of years. The Railways plan to acquire around 800 electric locos from the private sector player. The modalities of the diesel loco project are being worked out. Given the massive procurement plans of the Railways, India has become an exciting market for international manufacturers.

This is why Bombardier, Siemens, GE, AlstomBSE -0.33 % and EMD have all become aggressive about their presence here. Several cities in India are also constructing Metro rail system, which opens up an additional market for these companies which manufacture coaches, locomotives, signalling systems, etc.

Bombardier for instance has set up a new Railway vehicle manufacturing site at Savli, Vadodara, Gujarat, as well as a propulsion systems manufacturing facility and software development centre for signalling and traction applications in Vadodara.

GE India has announced plans to set up a facility that will also manufacture diesel locomotives in Maharashtra with an investment of Rs 1,000 crore. “We are targeting India. We will participate in the tender to be floated soon by the Indian Railways for 1,000 electric locomotives. We are willing to offer 10% cheaper rates than other companies,” Alstom’s locomotive platform director Jean-Marc Tessier had said in an interview earlier in France. While EMD has been a long-standing technology partner for diesel locomotives with the Railways, Siemens too plans to cash in on the opportunity.

Slow, But Not Steady

For the Railways, these tenders would mean a generational change in the way it approaches procurement. As of now, the national transporter manufactures its own locomotives and coaches as well as relies on imports. However, the idea of assuring a massive off-take to two private players is something that the usually conservative railway board is slowly waking up to.

As of now, the Railways has the least amount of exposure to the private sector among other infrastructure segments. Critics have often accused the board of moving at a snail’s pace in opening the doors to companies. Although the two projects were approved in 2006 during the regime of Lalu Prasad, the projects could never take-off on account of procedural issues. In 2008, after getting the cabinet approvals, the Railways floated tenders for setting up a diesel loco factory in Marora and an electric loco factory at Madhepura.

The tender ran into controversy as only GE submitted a bid for the diesel locos. railway officers say at that point, they were in no position to grant the contract as it would then be perceived to have been given on nomination, which would have been in conflict with CAG norms. There have also been sharp differences among Railway Board members over these contracts with some officers having objected to the manner in which the concessions were being devised.

Yet to Gather Steam

Taking into account the kind of infighting taking place at the Railway Board over these projects, the Prime Minister’s Office has started demanding time-bound action on these projects. However, the bureaucratic tussles at the board are still coming in the way of a quick closure of the issue. Recently, there was a debate on whether the winning bidder would be paid an advance for the first set of locos that they would import prior to setting up the facility in India.

A member of the board who retired recently has floated a strongly worded note objecting to such practices. On the controversy, Railway Board member (electrical), Kul Bhushan declined to comment. “The tender should be out soon and we are working towards it. Please appreciate that we are following the due process,” he said.’

There is also a talk about the turf war between the electrical and mechanical wings of the Railway Board. It is said that the mechanical department, which was earlier the sole guardian of locomotives, is unhappy that the electrical wing has got a huge role in this area of expertise due to the rising demand for electric locomotives over diesel locos.’

Globally, All’s Charged Up

This is a phenomenon taking place across the world with several countries going in for electric locomotives although a majority in use today run on diesel. The International Railway Journal says there are around 47,000 electric locomotives currently in operation worldwide with an average age of around 27 years. While the proportion of electric locomotives has increased considerably in the past few years, diesel traction remains dominant. Electric locomotives account for less than 30% of all locomotives worldwide.

Alstom to make Sri City a global sourcing hub

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.

Spanish wagon maker makes India tracks

Spanish rolling stock maker CAF hopes to set up a manufacturing unit in the country given its increasing scope for business in the metro railway segment. A final decision in this regard is expected by next year.

Rolling stock comprises all the vehicles that move on a railway, usually including both powered and unpowered vehicles.

CAF (Construcciones y Auxiliar de Ferrocarriles), along with its joint-venture partner MELCO, has been awarded a contract for nearly Rs 800 crore to supply 14 rakes (84 coaches) to the East West Metro project in Kolkata. Previously, the company supplied eight rakes for the Airport-link of the Delhi Metro.

“We do have plans to start a manufacturing unit here. We are scouting suitable locations for setting up the unit,” Mr Juan Jose Garcia, International Division Area Director, CAF told Business Line. Mr Garcia, however, declined to speak on possible locations for the upcoming unit, the expected investment and product details. “We are a listed company in Spain and are bound by regulatory issues,” he said.

Global rolling stock majors such as Bombardier and Alstom have already built capacities in India to tap the urban rapid mass transport segment.

According to Mr Garcia, CAF, currently the fourth largest rolling stock maker in the world, has already bid for orders from upcoming metro rail projects in Hyderabad (L&T Metro Rail, Hyderabad) and Jaipur. In Hyderabad, it expects contracts for 42 rakes of three cars each. Details of the Jaipur project are yet to be finalised.

For the East West Metro in Kolkata, some rakes will be imported from Spain while others will be manufactured locally. CAF has also bid for the North-South extension project to be carried out by the Kolkata Metro authorities.

Alstom bags Rs.1,470 crore contract from Chennai Metro

NEW DELHI: International rail infrastructure major Alstom’s Indian subsidiary Saturday said it has bagged a contract worth about Rs.1,470 crore (243 million euros), to supply 168 rail cars to the Chennai Metro Rail Limited.

“Alstom will supply Chennai Metro’s public operator with 42 train-sets composed of four cars each,” the company said in a statement.

According to the company, first deliveries of the trains are expected by the end of 2012. The company is also equipping the trains with systems like Automatic Train Protection (ATP) and Automatic Train Operation (ATO).

“They will be equipped with a regenerative braking system ensuring significant energy savings. The cars will operate on 25 KV AC through an overhead catenary system at speeds of up to 80 km per hour,” the statement said.

Earlier, Alstom had provided train control and signalling systems for the Delhi Metro and is installing these in Bangalore.

The Chennai Metro project was started in 2007. The first phase of the project consists linking north Chennai with the airport situated in the south and Chennai central to St. Thomas Mount.

The 32-station route is over 45 km in lengt,h of which 24 km is underground and 21 km is elevated. The capacity of these lines is said to be more than 500,000 people daily and a frequency between two trains as short as 3 minutes.

Alstom Projects India Ltd (APIL) has been present in the country since 1910 and offers a large range of equipment and services related to power generation and transmission solutions as well as transportation systems.

Alstom bags Rs 1,471-cr order from Chennai Metro

Alstom Transport S.A and Alstom Projects India Ltd have bagged a Rs 1,471.3-crore contract for the supply of coaches for the Chennai Metro Rail project.

According to an official press release, the order is for 42 train sets of 4-car configuration totalling 168 coaches including the supply of spares and special maintenance tools. Alstom Transport and Alstom Projects will design, manufacture, supply, test and commission the coaches and provide training on operation and maintenance.

Provision will be made to upgrade to 6-car rake when traffic demand goes up. Each 4-car rake can carry 1,276 passengers, a first class seating section will be provided in the coach closest to the operator’s cab. The maximum allowable operating speed will be 80 kmph with a maximum design speed of 90 kmph. A minimum headway of three minutes will be maintained to satisfy normal peak ridership.

The cars will be of stainless steel, air-conditioned, with 3-phase AC drive and regenerative braking system. They will be equipped with Automatic Train Protection, Automatic Train Operation and electrically-operated bi-parting automatic sliding doors to ensure the safety of passengers. The cars will operate on 25 KV through an Overhead Catenary System.

Electronic route map, public address system, passenger emergency intercoms, video surveillance and CCTV will be provided in the cars. Each rake shall have two wheelchair parking locations for the physically challenged and gang ways for easy movement of passengers from one car to another.

The Chennai Metro, a public sector enterprise, is implementing a 45-km metro rail project in the city with two interconnected lines linking North Chennai to the airport to the south and the Chennai Central to St Thomas Mount.

The Rs 14,600-crore project is funded by the Japan International Cooperation Agency, which is financing 60 per cent of the cost through a loan and the balance is shared by the Central and State Governments.

Published in: on August 7, 2010 at 11:07 am  Leave a Comment  
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