'GE deal will boost Alstom's energy business in India'

Alstom India president Rathin Basu says GE will be keen on growth and how to grow business further in India

GE will acquire Alstom’s energy assets globally for $16.7 bn, while Alstom will retain its rail transport business

The General Electric’s (GE) proposed deal with Alstom will help the French firm’s energy business globally, Alstom India president Rathin Basu told Business Standard. The deal is positive for India, too, because it will bring in capital, resources, besides providing access to the US market, he added.

Responding to query about a possible restructuring of Alstom’s operations in India after the takeover by GE, Basu said: “I don’t think there will be any job cuts and I believe GE will be keen on growth and how to grow business further in India.”

As part of the deal, GE will acquire Alstom’s energy assets globally for $16.7 billion, while the French company will retain its rail transport business.

From a global perspective, GE’s investments will lead to a long-term sustainable growth of Alstom's energy businesses, which have been under pressure due to weakness in Europe and stiff competition from Chinese and Korean companies. Additionally, the acquisition will enable GE to expand into thermal and hydro electricity, and offshore energy business, which are Alstom’s core areas, Basu explained.

Alstom has two listed entities in India with business interests in power generation and transport - Alstom India and Alstom T&D (transmission and distribution). The French parent owns a 68.56 per cent stake in Alstom India and 75 per cent in Alstom T&D.

In May, GE proposed a Rs 2,340-crore open offer to acquire the publicly-held shares in Alstom's two India units.

“I cannot comment on the open offer as it has been made by GE,” Basu said, when asked if there will be a revision in the offer price as it is lower than the current stock price. He however, added that the offer price made by GE was in accordance with the guidelines of the Securities and Exchange Board of India (Sebi) and there was no violation.

In FY14, Alstom T&D posted revenue growth of 12 per cent and 40 per cent profit growth. Basu said the firm has a healthy order backlog and the number of slow-moving orders (which is about 10 per cent of the total order book) are on the decline.

Basu is optimistic that the power sector - which has been facing problems owing to land acquisition issues, fuel shortage, non-payment of dues by state electricity boards - will revive within the next six months to one year. “The outlook is positive. The new government at the Centre has grasped the basic hurdles faced by the industry, but success will depend on the speed at which the corrective measures are executed. Fifty per cent of the problems are related to states and there has to be a coordination between states and the Centre. I hope good sense will prevail,” he noted.

Basu further said the company is well placed to tap opportunities in the transmission and distribution sector, including the development of the national grid, transmission corridors for renewable energy, smart grid, and smart cities. He, however, declined to give a specific revenue or order guidance.

On the Centre’s proposal to launch a high speed train between Mumbai and Ahmedabad, Basu said Asltom is keen to take part in the project. “However, the government will have to parallely upgrade the existing railway system from 80-100 km to 150-200 km, improve signalling, and carve out a special corridor for the high-speed train,” he added.