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Alstom Grid Remains Bullish On India

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Alstom T&D, the Indian arm of Alstom Grid, will invest 80 million euros in the country despite the dismal state of the country’s power sector.

“It is certainly a difficult period for the power sector due to a lack of visibility. It does sometime slow down the pace of investments, but we are confident India will resolve these issues soon. We are in this for the long term and a little bit of instability doesn’t affect our plans,” said Grégoire Poux-Guillaume, President-Alstom Grid. The company recently won a Rs 2,800-crore high voltage direct current contract from the PowerGrid Corporation of India (PGCIL).

Alstom had pumped in nearly 160 million euros to upgrade its manufacturing facilities and to set up five brand new factories in three locations 2008-09 – in Hosur, Padappi and Vadodara; the product lines were gas-insulated switchgears, disconnectors, circuit breakers, instrument transformers and power transformers. Alstom Grid's total sales for year 2011-12 was 4 billion euros. The Indian arm, Alstom T&D, had a sales revenue of Rs 671 crore in  the first quarter of 2012.

Of course, i'st not that Alstom remains unscathed given the imbroglio in power sector. The financial losses of the distribution sector have spilt over to the power equipment manufacturing industry. Alstom admits dues to it have increased by 50 per cent in a span of less than a year. “Our overdues have gone up by more than 50 per cent in the last one year. It is an indication of the prevailing tension in the power market. We have a few on-going projects which have either been stopped or delayed by our customers who are in no position to pay for the equipments,” says Poux-Guillaume.
The accumulated dues of the state electricity boards (SEBs) is pegged at Rs 41,473 crore; it consists of a principal amount of Rs 25,727 crore and Rs 15,746 crore by way of interest and surcharge. It has bled distribution utilities and has the potential to push the entire power industry into a black hole. The situation is so dire that plans are afoot to restructure SEBs’ losses.
Alstom T&D confessed to a 17-month delay in one of its recent projects (which project is this?) due to land acquisition issues faced by Powergrid. Poor cash flows in another. “Cash in the power sector seemed to have been sucked up. SEBs are at the centre of the problem and the recommendations by the Shunglu Committee needs to be implemented quickly in order to revive investment in generation, distribution and transmission projects,” said Rathin Basu, Country President and Managing Director Alstom T&D.