Powering on

Areva is eyeing the nuclear power space in India.

Areva T&D India, the Indian arm of the French energy firm Areva SA, is keenly eyeing the newly opened business opportunity in the nuclear power sector in India. In three years the company has managed to make its presence felt across all segments of the industry - manufacturing, transmission and distribution. Now it wants to supply nuclear reactors. Areva was the first to sign a memorandum of understanding (mou) earlier this year with the Nuclear Power Corporation (NPCIL) for supplying nuclear reactors in India.

The recent signing of the Indo-French nuclear agreement has also provided a fillip to the company’s plans to capture a big share of the nuclear reactor market in the country. Areva expects to ramp up its presence here to make European Pressurised Reactors (EPR) and expects large orders for nuclear equipment supply and construction in the country. The move is a part of the firm’s strategy to tap the nuclear commerce opportunity in India after the Nuclear Suppliers Group gave its nod last year to drop an India-specific ban on nuclear trade.

The agreement signed for nuclear reactors, with the NPCIL, is however not the only “first” in the history of the company’s operations in India. With over two dozen manufacturing units and sales offices in the country, Areva has many firsts to its credit. It has a strong footprint in the Indian energy market - the company commissioned India’s first Extra High Voltage (EHV) substation of 765 kilo volt (kv) for NTPC two years back and recently it was awarded the first private sector 765 kv Substation order by Lanco Infratech. It also built the country’s largest power transformer for Reliance Infrastructure.

While such strategic moves have allowed the company to more than double its profit margins to over 11 per cent in the past 3-4 years, they have also enabled it to retain clients. In the power equipment space, the company’s clientele extends from government agencies to large private sector conglomerates. It now supplies equipment for such Ultra Mega Power Projects (UMPPs) as also private sector players such as Lanco and the Adani Group.

In a bid to double its capacity and focus on high technology related businesses, the company is spending about Rs 700 crore in three years in greenfield projects. This involves investing Rs 500 crore in the manufacture of large power transformers up to 1,200 kv in Baroda in Gujarat. “We are focussing on high-end technology segments like high voltage and extra high voltage since that’s where the potential lies. We are not in the rural electrification space because it’s the low-end,” observes Rathin Basu, country president and managing director. With this investment the company will double its volumes by 2010 as compared with 2007 levels.

In addition to being a major player in the transformer and electrical substation market in India, the company is an established player in the Gas Insulated Switchgear (GIS) space too. GIS equipment is more compact and occupies significantly less space compared to its air insulated counterparts. Given the paucity of space, the company quickly capitalised on this need. Currently, Areva is expanding capacities for the high voltage transformers and GIS switchgears to cater to the growing market and retain its strong position.

Areva’s decision to focus on the core business area of transmission and distribution and on high technology products should help it grow faster especially since it will be able to cater for the larger, high technology, power plants coming up.