The Hindu Business Line : ‘Latest technology and fast execution crucial for railway projects’

Our broad plan will be to expand presence in the entire range of manufacturing of trains and its internals, signalling and engineering. This way, we can look at beginning global sourcing from here.

MR RAJIV JYOTI, PRESIDENT AND MANAGING DIRECTOR, BOMBARDIER TRANSPORTATION INDIA.

Srividhya Sivakumar

“India is increasingly visible in Bombardier’s global strategy,” says Mr Rajiv Jyoti, President and Managing Director, Bombardier Transportation India. Bombardier is the number one supplier of metro vehicles worldwide.

In an interview with Business Line, he shares his views on the growing business potential in the railways equipment space in India. Excerpts from the interview:

What is Bombardier Transportation’s scope of operations in India?

We are present in areas that are relevant locally. Indian Railways makes everything — they make trains themselves and also buy systems and components from the industry that go into making these trains. So, in India we manufacture components that go into making trains. We make electrical systems for the Railways.

For instance, we provided transport technology that was used in the Rajdhani locomotives over 10 years ago. We sell critical components such as auxiliary converter, electronics, and transformers, to the Railways, which they later integrate into their locomotives. For this range of products, we have a factory in Baroda. Besides this, we are also into signalling projects.

What business opportunities do you foresee from the setting up of dedicated freight corridors?

The dedicated freight corridors will open up two kinds of opportunities for us. One obviously will be the signalling activities that will move towards larger orders. The second will be the need for locomotives.

I think the latter is a bigger opportunity as far as we are concerned. Indian Railways is looking at operating new-generation locomotives through a model wherein they will procure locomotives and also initiate action for its manufacture in the country.

That is a large opportunity for us. It, however, is still in its initial stage. While it may take some more time to fructify, it will generate major volume, since it will be demand-driven.

You have committed yourself to significant additions in capacities. What is your current production capacity? Which product segment is likely to see addition in capacities?

Currently, since we make converters, which is an assembly operation, production capacity will depend on the numbers of hours put in and the kind of demand that drives production. So, we do not measure capacity based on throughput time. However, I can say that currently we are producing over 1,20,000 direct hours of work.

The additional capacities will be added for metro projects and not for Railways. We have won one of the largest orders from Delhi Metro for which we are setting up a Greenfield metro manufacturing unit in Baroda.

Since these trains will also require electricals, our existing factory, which makes converters, is also being expanded to support the need for converters in metros.

This is a big expansion. This will take us into the next level of growth and may also lead us to becoming a regional hub to manufacture trains in this part of the world, except China.

When do you expect the new facility to begin commercial production?

We are planning to begin commercial production by the first quarter of next calendar year. Our factory should be ready by the fourth quarter of this calendar year. In the meanwhile, learning, training and transfer of technology processes will go on simultaneously.

Hopefully, we will be able to produce our first train in the middle of the next year.

How have you scheduled the supply of coaches to Delhi Metro? Will all the coaches be made in-house in your new facility?

Project execution for Delhi Metro, which is a very huge order, requires us to make about 424 coaches. Out of this, about 90 per cent will come from our Baroda factory. The rest will be imported from Germany.

As the initial trains that are required are of high speed, and we do not manufacture these currently, we will have to have some kind of transfer of technology and production. But we do not want to risk any delay in order supply. More so, as we will also be setting up a factory. The initial trains (about 36 coaches) will, therefore, come in from Germany.

The huge challenge will be to train our people and help them in building up the balance of the order.

Metro projects are being planned in other cities of India as well. Will you be bidding for these projects solely or in consortium with other players?

There is no one format. We will have to assess the business case by case, since each city may have its own model of execution. For instance, Hyderabad is following a public-private partnership model whereas, Bangalore and Delhi did not.

So based on the model and based on what is relevant, we will forge partnerships. We have partnered with Reliance Energy for Hyderabad Metro and GVK for Mumbai, while we operated solely in Delhi. A lot will also depend on the business model the customer is looking at and how relevant it will be for us.

How important is India in Bombardier Transportation’s global strategy?

India is increasingly visible in our global strategy. We have been in India for a long time.

But the emergence of Bombardier India has come to the fore only after we got some of these large orders. Critically, when we are making direct investments in the range of 25-30 million euros in plant and machinery, it does signal that we are in for the long-term. We already have an engineering set-up in Hyderabad. We are planning to further ramp it to support global actions on engineering. I think we have got an excellent footprint, wherein we will develop our local vendors very strongly. We do not believe in too much of a vertical integration. We do not do too many things unless it is strategic and core.

Our broad plan will be to expand presence in the entire range of manufacturing of trains and its internals, signalling and engineering. This way, we can look at beginning global sourcing from here.

What, according to you, is the most crucial requirement for Indian Railways? Any wish lists for the industry?

The most important thing for this industry is fast execution. I think projects such as Delhi Metro are model projects for us. The speed and efficiency with which the entire project was executed is a lesson.

As far as Indian Railways is concerned, they have their priorities clearly laid out. They are setting up dedicated freight corridors, looking at intercity trains and upgradation of safety and security from the signalling perspective.

These are good initiatives but they need to be executed in a very practical sense, and less of a socialistic or popular sense. These are hardcore technical projects and should be done through a strong competitive route getting the best technology worldwide. The focus should be on getting the right partners and pre-qualifications. Re-engineer the processes that are extremely critical to see that we move in a direction that facilitates fastest project execution. Delhi Metro is a clear benchmark. They have set standards in terms of ushering in new technology and execution of project in a seamless manner.