Alstom projects India limited was incorporated on 2nd September 1992. Alstom Projects India provides a regional presence for its French powerhouse parent. The principal activities of the Group are the power generation for utilities and industrial users, transportation systems covering traction, signaling and train control for the railways, transmission systems and energy management for a variety of industries. Company merged three of its subsidiary companies with itself i.e. Alstom Transport, Alstom Systems and Alstom Power Boilers with itself in 2002. Further Alstom Transmission & Distribution Systems Ltd was ceased to be a subsidiary of the company with effect from 1st February 2005 and Alstom T&D Lightning Arresters Private Ltd was ceased to be a subsidiary with effect from 24th September 2004. Company has also installed the signaling and train communications systems for the Delhi Metro in its first phase. It sees opportunities for growth in this area with the possibilities of more metros coming up in different parts of India. Alstom is in the process of strengthening its operations in the power generation sector as opportunities for growth in the thermal, nuclear and hydro areas have brightened with the advent of the 2nd generation of reforms. Alstom plans to utilize the competence and industrial capabilities in India for its global operations. The enactment of the Electricity Act 2003 and the proposal to constitute a Special Empowered Hydroelectric Commission will result in greater impetus to set up power projects in the country.

Products & Services—

Company is engaged in providing a range of services related to power generation for utilities and industrial users, and transportation systems. Company is mainly engaged in power systems and transport business. Its power business manufactures a wide range of power-generation equipment and constructs steam, combined cycle, and hydro power plants. Its transport operations provide rail equipment such as railcars and signaling devices. Company also produces rotating machinery, motors, and fans. Its power business, the larger of the two units, manufactures a wide range of power-generation equipment and constructs steam, combined cycle, and hydro power plants. Its transport operations provide rail equipment such as railcars and signaling devices. Company is engaged in the business of design, engineering, manufacturing, procurement, supply, commissioning, servicing and renovation & modernization of power plants for Utility and Industrial users. It is also engaged in the development and supply of air pollution contro
l systems, equipment for pollution control and conservation of energy. It is having its works in Coimbatore, Durgapur, Noida, Shahabad and Vadodara.

Recent developments—

In sep-09, Alstom Projects India (APIL) and its consortium partners have signed a signaling equipment and services contract with the Bangalore Metro Rail Corporation (BMRCL) for the first two lines of the new Bangalore metro system in India. This contract is worth Rs 5.63 billion out of which APIL’s share is worth Rs 1.87 billion. The contract is also have a provision for BMRCL to exercise a firm option of value Rs 1.41 billion, out of which APIL’s share is Rs 500 million within 15 days of base contract coming into effect.

In nov-09, Alstom Projects India (APIL) has bagged orders worth Rs 3.65 billion by Hindalco Industries for supply and installation of four gas treatment plants in India. APIL will design, engineer, supply, install and commission two gas treatment plants each at the Mahan and Aditya aluminium smelters located in the states of Madhya Pradesh and Orissa. The plants, due on stream in early 2012 will capture, filter and cycle corrosive gas produced by the smelters, notably hydrogen fluoride, improving air quality and thus conforming to the environmental requirements.

In may-10, Alstom and Infosys Technologies have announced the expansion of their partnership in areas of global research and development, engineering and engineering IT services. This partnership envisages substantial strategic investments over the next five years to develop next generation solutions for the power sector. Infosys will provide support to Alstom Power’s global business units in core business areas including product development, simulation, product lifecycle management, and engineering IT. It will also support Alstom in building knowledge management processes for its design and engineering teams. This collaborative operating model will enable Alstom benefit from faster time-to-market for new products, customization and adaptation of existing products for emerging markets, while also sustaining its current offerings.

In may-10, Alstom Projects India (APIL) has been awarded a contract worth Rs 1.24 billion by Dans Energy (P) for a new hydro power plant for 96 MW Jorethang Loop Hydro Electric Project in Sikkim, India. The order entails end-to-end manufacturing of equipments at APIL’s Vadodara facility in Gujarat. The contract includes supply, installation, testing and commissioning of electro-mechanical equipments for the plant’s two 48 MW units.

Valuation—

Company has plans to expand its manufacturing facilities in India to meet the growing demand in thermal and hydro projects. It is in talks with the Nuclear Power Corporation of India for technology tie-up for manufacturing nuclear turbines in India. At CMP, stock is trading at 16.26 P/E multiple of its FY2011 estimated earnings. We recommend investors to “BUY” “Alstom Projects India Limited” with medium to long-term investment horizon.