Alston May Merge With Abb Alston Power Exchange Rate

Alstom Ltd, the domestic outfit of France's $20-billion Alstom is considering a merger with ABB Alstom Power India, another group company, to create the country's largest power and energy equipment maker. This follows the recent acquisition of the management control of ABB Alstom Power, which was jointly promoted by global technology major ABB and power giant Alstom, by the French conglomerate. Top sources in Alstom said: "As the Alstom group holds majority control in both Alstom Ltd and ABB Alstom Power India, a merged entity could improve value for shareholders as well as efficiency of the new company." The French promoter holds nearly 70 per cent stake in the Rs 414-crore Alstom Ltd, while its shareholding in ABB Alstom Power India stands at 51 per cent. Sources said a formal announcement is expected by early September after the board of the Alstom, France, finalises the issue. ABB Alstom Power worldwide was formed in June 1999 as ABB and Alstom merged most of their respective power generation activities to create a 50:50 joint venture. However, ABB pulled out of the joint venture in May 2000. ABB Alstom Power India began operations in December 1999 with the entire engineering, procurement, turnkey and plant contracts of both the promoters. The new company inherited 3,400 workers. It appears that the swap ratio of the merger, if it goes through, will be tilted in favour of Alstom Ltd, simply because of its bigger size and operations compared to ABB Alstom Power India. Alstom Ltd has recorded a net profit of Rs 1.72 crore over a sales of Rs 414.08 crore in 1999-2000. The financial results of ABB Alstom Power are not available as it is yet to complete its first year of operations. The Rs 10 scrips of both the companies have, however, been hovering around Rs 26-30. Alstom has also parted its energy division into a separate entity in equity participation with KoCoS Messtechnik, a world leader on various types of measuring, recording, control, and testing lContinued on Page 10 equipment. Sources said the new company aims to grab a better pie of the electronic meter business, demand for which is on the rise. "Since the group does not have the technological expertise in manufacturing electronic meters, Alstom went for the strategic alliance with the German company," they said. Alstom now makes electromechanical meters. The manufacturing unit of the new company is located in Pondicherry to take advantage of the backward area concessions. The unit is expected to commence commercial production within this month. During 1999-2000, Alstom Ltd has achieved a "substantial savings" through implementation of Stretch 30, an in-house programme which entails reduction in costs, cycle time, inventory by 30 per cent over a three-year period.