Power business to drive growth for Alstom T&D

With private power projects losing steam, Alstom T&D India is banking on contracts from government-controlled companies, including PowerGrid Corporation and NTPC, to spur its revenues for at least the next few years.

The government utilities market is growing for the company, while its industry and infrastructure segments have turned negative, country president and managing director Rathin Basu told Business Standard.

The company has three business verticals — utilities, which includes business from government-owned entities like PowerGrid, NTPC and electricity boards; industry, which includes private companies into power generation, aluminium, steel and metal business; and the infrastructure vertical, including power supply systems for grid connection.

Basu said the portfolio earlier had utilities and industry verticals contributing equally to total revenue. The contribution of utilities has now increased to 60 per cent. “We do not see any radical changes taking place in the next year, except for the PowerGrid orders , as the company has huge plans for the next two to three years. NTPC, too, will be issuing tenders for bulk tenders.” The company has participated in several tenders and expects to bag orders worth at least Rs 200 crore in 2012-13.

Generation projects in the private sector have suffered due to coal supply and pricing issues, besides problems on land acquisition. Basu said the high cost of money and falling merchant power rates had worsened the situation. Since transmission projects are linked to the coming up of generation stations, he does not expect the situation to radically change in the next year. However, long-term prospects for the overall power sector were bright. "The growth in the coming years would not be as big, as the important segment (power generation) of the market is not growing," he said.

The Indian operations contribute 14 per cent revenues to Alstom Grid, the global entity for transmission business in the group. "We are number one as a country and number three as a region," said Basu.

Till December 2011, Alstom T&D, then called Areva T&D, had an order book of Rs 5,000 crore, the highest ever. These would be implemented over 17 months. From January 31, Areva T&D India changed its name to Alstom T&D India. This followed the global acquisition of Areva T&D’s transmission business by Alstom in June 2010 and the demerger of the distribution business. The high-voltage transmission, power electronics and automation business operations are under the control of Alstom.

From December 2006, when the company was Areva, the annual sales volume was around Rs 1,600 crore, of which the transmission business was Rs 1,100 crore. "From then to December 2011, we have seen a growth of three fold," said Basu.