INTERVIEW: We have plans to make India a Manufacturing Hub for International Markets: Alain Spohr, MD, Alstom

Mr Alain Spohr, Managing Director for India & South Asia, ALSTOM.

Alstom’s Managing Director for India & South Asia cluster based in Bengaluru Mr Alain Spohr is a versatile personality. He joined Alstom in September 2017. Prior to this position he worked for GE Energy India where he was the MD & CEO of the GE/Bharat Forge Joint Venture and also the India Country Leader for Steam Power Systems.

Mr. Spohr brings with him over 35 years of experience in various roles in Country Business Leadership, Unit Management, Project Management, Engineering, Construction and Commissioning coupled with strong exposure to Industrial/factory operations. His rich career in India spans over 14 years which not only gives him a keen understanding on the country’s business environment but also its culture and growth trajectory.

With several large projects underway in the mainline and urban networks, Alstom is uniquely positioned to meet India and Asia Pacific’s changing and growing mobility needs, believes Alain Spohr, Managing Director for India and South Asia. In an exclusive interview with RailNews, Spohr talks about the opportunities, government policies, and company’s projects and strategies.

RailNews: Can you give a brief about the recent achievements by Alstom for the Madhepura Project?

Alain SpohrThe Madhepura Electric Locomotive facility is a JV between the Indian Railways and Alstom. This is the first major FDI of its scale in the Railway sector, with an initial investment of INR 1300 crores to manufacture 800 PRIMA (WAG 12) double engine locomotives over the next 10 years. Within a span of a year, not only did we complete the first phase of the facility but also successfully completed the first locomotive on schedule. A major achievement for us given how this sector is often riddled with delays. Additionally, Alstom delivered on its promise to produce a true “Make in India” locomotive whereby we had been successful in setting up a local supply chain that has provided us with almost 90% of the required components from within the country. A very happy achievement for us.

RailNews: What has been the most challenging aspect of this project? How did you manage to meet the challenge successfully?

Alain SpohrThe remote location of this facility had been a challenge for us. In order to overcome them, the site team closely collaborated with the local stakeholders from the beginning. We also engaged with the local communities to understand their needs. The locals and the authorities have supported us in this challenging journey and it is because of the phenomenal support that we received from them that today we have successfully completed this milestone. In fact our JV partner – Indian Railways has been a great support on this project.

RailNews: Can you briefly list us some significant points about the project and its essence in terms of Alstom and its presence in India?

Alain SpohrSpeaking about Madhepura specifically, this project is undoubtedly, the strongest endorsement of the Government’s ‘Make in India’ initiative in this sector. In fact, Alstom is setting up an infrastructure base in Madhepura to invite our supply chain partners to set up their manufacturing units around the e-loco plant to optimize production and supply processes. Alstom identifies India as one of the fastest growing markets that offers immense opportunities in urban transport with the government’s push towards modernization of infrastructure and making cities smarter and efficient. For Alstom, India is our second largest hub for innovation and manufacturing with 3 production facilities and 3600 employees across its offices and sites in the country.

RailNews: What is Alstom’s India strategy?

Alain SpohrAlstom’s journey in India began with a transfer of technology for Linke Hofmann Busch (LHB) coaches for the Shatabdi and Rajdhani trains. At present, the company is executing metro projects in Chennai, Kochi, Jaipur, Bengaluru and Lucknow. In the mainline network, Alstom’s signalling and power supply systems are a part of eastern dedicated freight corridor. The company’s strong base in India is further strengthened by its new electric locomotive factory at Madhepura in Bihar. The high horsepower locomotives manufactured there will be the most advanced in the Indian Railways fleet. From here, expansion across current metro systems will continue to be strong drivers for Alstom’s business in India. We want our solutions to be considered as the reference technically, economically and environmentally for mobility in the country. Combined with this is our strategy to make India our manufacturing hub for international markets, having successfully delivered export projects out of Sri City this year. Our recruitment plan for India is in step with this growth and investment plan.

RailNews: How is Alstom aligning with Make in India policy, and Look at Indian Railways policy?

Alain SpohrAlstom has set up an e-loco plant at Madhepura (Bihar) and is setting up maintenance depots at Saharanpur (Uttar Pradesh) and Nagpur (Maharashtra) to supply Indian Railways with 800 double-section freight electric locomotives with associated long-term maintenance. This project is one of the strongest endorsements of the Make in India policy of the government because of the highly localised supplier base that has been put in place to execute it. Almost 90% of the components used to manufacture these locomotives are being sourced from Indian companies. The Madhepura locomotive project also includes large-scale development of local infrastructure and facilities that will empower the local economy of Bihar as well. Alstom is adding to this transformation by undertaking community-building projects in Madhepura to make sure the benefits of industry seep through to the grassroots of this remote region. Additionally, our Sri City plant is not just a manufacturing unit for our Indian projects, it is also a base for exports. With an annual production capacity of 240 cars and over 500 employees, this plant is Alstom’s base for manufacturing rolling stock for national and international projects – another strong marker of our commitment towards the Make in India initiative.

RailNews: What are the Key points of the Alstom’s 12,000 HP ‘Prima’ locomotive? What type of latest technologies are being used in this new locomotive?

Alain SpohrThe WAG 12 electric locomotive will enable Indian Railways to have a fl eet of locomotives equipped with state-of-the-art IGBT propulsion technology. Introduction of 12,000 HP locomotives into Indian Railways will be a transformational step as it will allow Indian Railways to run heavy haul and long haul trains over the Dedicated Freight Corridor. With this quantum leap over the existing 6,000 HP locomotives currently being used for freight operations, Indian Railways will be able to run 6,000 tonnes freight trains at speeds of up to 120 km/h. This step will position Indian Railways as among the very best in the world when it comes to freight haulage. These high horsepower electric locomotives are being built in compliance with the Indian standards of freight transport and are designed for the tough Indian climatic conditions. The significant jump in the operating parameters will also allow for faster, safer and more reliable freight movement across the country, thereby reducing congestion for passenger train services and freight services as also reduce the logistics cost of rail transportation. Our growth plans here include aiding in upgradation and modernization of Indian Railways, focus on sustainable urban mobility solutions for the future and building India as a global powerhouse for the business.

RailNews: Regarding the production schedule, What is the present status of the same? What shall be the delivery schedule of the project and by when is Alstom expected to deliver its complete set of locomotives to the IR?

Alain SpohrThe first locomotive is ready as of February 2018.The locomotive is currently undergoing trials and we hope to see it in the network soon. As far as the project is concerned, we plan to roll out the next loco in 2019 and then increasing the production to 35 in 2020, 60 in 2021 and 100 each year till 2029 as stipulated in our contract with Indian Railways.

RailNews: For 2018, How Many locomotives has Alstom targeted for production this year and further handing over to Indian Railways? When will these locomotives be used for Operations by the IR?

Alain SpohrAs mentioned before, the supply of the electric locomotives will follow the plan originally agreed upon with the Indian Railways. The first prototype has been delivered to the Indian railways in February 2018 as promised, which will be followed by the second in 2019. Post the trials and tests, the production will be increased to 35 in 2020, 60 in 2021 and 100 each year till 2029. A total of 800 double section freight electric locomotives will be supplied followed by the associated long-term maintenance of the said engines. Given the recent decision of the Hon’ble Minister of Railways to put electrification of the non-electrified sections of Indian Railways on a fast track, the requirement of electric Locomotives is likely to increase substantially. To that end, we do hope to get an opportunity to serve this burgeoning demand for electric locomotives and manufacture electric locomotives well beyond what the current contract envisages.

RailNews: How much of the Supply Chain of the Locomotive is within India? Will there be further indigenization in India over the years of the project?

Alain SpohrThe PRIMA (WAG12) locomotive is made up of 2500 components out of which, 85-90% has been sourced locally from India making this a true Make in India project. It includes important components for the locomotive like the transformers from ABB, couplers from Faiveley, brakes from Knorr Bremse and so on. The remaining 10-15% or so has been supplied from across the globe, mostly from Alstom sites in France, primarily due to precise and sensitive nature of the parts. Alstom is already at a very high level of localization for this project to keep it competitive and continues to look at opportunities to further increase the localization aspect of the project.

RailNews: What are the roadblocks that you tackled in stabilising your operations?

Alain SpohrAs an MNC (multinational corporation) which has the government as its primary customer, policies of a country play a crucial role in the delivery of our products and services effectively. The government’s recognition of our investments in the country helps us make India one of our most important markets for growing our business worldwide.

RailNews: Are you concerned over policy and regulatory uncertainty in the country?

Alain SpohrWhile policy measures like a streamlined tender/bids process, one window investment portals from the state governments and Ministry of Urban Development’s (MoUD) push for metro suppliers to Make in India have phenomenally improved the ease of operating businesses, the new taxation regime has done much to clean up outdated taxation policies. What is of merit to us is to see how India keeps the momentum of operations in the country strong and steady. Finer nuances of the new regulations are still to be streamlined. That’s something to wait and watch for. To elucidate, under the GST (goods and services tax) input credit rates are higher than output GST on rolling stock. There is a surplus GST credit which comes into play that is non-refundable; hence, an extra cost for domestic rolling stock manufacturers. This extra cost amounts to approximately 7% of sales price, defeating the intent of GST implementation and deterring domestic manufacturers from making locally. Rationalisation or modification of these will take manufacturing in India and the government’s vision to the next level.

RailNews: How is Alstom doing overall in the Indian market?

Alain SpohrWith several large projects underway in the mainline and urban networks, Alstom is uniquely positioned to meet India’s changing and growing mobility needs. Smart cities gaining impetus will open business opportunities in tier-2 and -3 markets. The mainline network, too, is undergoing a major overhaul, which brings with it opportunities aplenty. India is one of the most important markets for us worldwide and we are committed to investing and growing here.

RailNews: What is the reason for investing heavily in India when many other MNCs in the same sector haven’t invested as much.

Alain SpohrAs a business, we consider three primary factors before investing – market potential, availability of talent and government support. As a market, rapid modernisation, adoption of newer, safer and more sustainable technology, rapid urbanisation places India high on the market potential index. Location-wise, having a base in India also helps us assuredly deliver projects across Asia, Middle-East and even beyond. We also have been able to tap into the large, skilled talent pool available in the country – bright, young minds that are helping us develop solutions for projects worldwide. We employ close to 3,600 people in India, which makes it our biggest centre of operations after France. With the government’s Make in India and Skill India initiatives, we find our business goal completely aligned with the country’s vision. I do not know about other companies, but conducting business in India and from India makes sense for us.

RailNews: How has it been working with various state governments including Bihar, Karnataka, Andhra Pradesh, Tamil Nadu?

Alain SpohrWe have received a phenomenal amount of support from all the state governments we have been working with. In Lucknow, the UP government’s support helped us deliver our project ahead of schedule. We wouldn’t have been able to complete construction of phase-1 of the factory and deliver the first e-loco on schedule without the support of the Bihar government. Similarly, for projects in Bengaluru and Chennai, faced none of the roadblocks that public sector projects usually face. We are grateful for the trust they have placed in us and our products and we hope to continue being their preferred partner for upcoming projects as well.

RailNews: Where does Alstom feature in the modernisation being carried out by the Indian Railways?

Alain SpohrRailway minister Piyush Goyal’s vision of modernising Indian Railways is aligned with our services and business vision. Being a global leader in the mobility space, we have the best of technology and services on offer to meet the unique needs of India as a market. Having undertaken and completed similar projects worldwide would ensure that the products and services delivered are thoroughly tested for safety. We have been part of India’s mobility journey for over five decades. We hope to continue on the same track.