1

ALSTOM India Ltd.

A Report
On
A study of significance of Indirect
Taxes
In
Hydroelectric Power Projects
(Chamera and Uri Hydroelectric Projects).




By:
Anmol Jain
(13BSP0110)
ALSTOM India Ltd.

2
ALSTOM India Ltd.


A Report
On
A study of significance of Indirect
Taxes
In
Hydroelectric Power Projects
(Chamera and Uri Hydroelectric Projects).
By:
Anmol Jain
(13BSP0110)
ALSTOM India Ltd.
A report submitted in partial fulfillment of the requirements of
PGPM Program of IBS Gurgaon 2013-2015
Distribution List:
Prof. Jyoti Ahluwalia
Mr. Sant Bhasin

Date of submission:
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ALSTOM India Ltd.


AUTHORISATION

This is to certify that a project on A study on significance of Indirect Taxes in Hydroelectric
Power Project " is submitted to IBS, Gurgaon in partial fulfillment of the requirement for the
award of degree in Post Graduation Program in Management, is an original work carried out by
Anmol Jain, Enrollment No. 13BSP0110.




















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ALSTOM India Ltd.


ACKNOWLEDGEMENT

Every work accomplished is a pleasure a sense of satisfaction. However a number of people
always motivate, criticize and appreciate a work with their objective ideas and opinions, hence I
would like to use this opportunity to thank all, who have directly or indirectly helped me to
accomplish this project.
Firstly I would like to thank Mr. Sant Bhasin (Project director, Alstom India Ltd.) without
whose support the project could not be completed. Next I would like to thank Mr. Subodh
Arora, (Director of the Indirect Tax Department, Alstom India Ltd., Noida) for his valuable
suggestions and support in completion of this project, also I would like to thank Mr. Anil
Gupta,(Tendering Manager, Alstom India Ltd.). I am thankful to all the personnel in
ALSTOM INDIA LTD. for their utmost co-operation and timely help extended by them for the
completion of the project.
Lastly, with deep sense of gratitude I express my sincere indebtedness to Prof. Jyoti Ahluwalia
for being a mentor under whose guidance, supervision and encouragement the present study was
undertaken and completed. Her sympathetic, accommodating and constructive nature remained a
constant source of inspiration for me throughout the duration of this summer project.









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ALSTOM India Ltd.



Table of Contents

Executive Summary ...................................................................................................................................... 7
Objectives, Methodology &Limitations ....................................................................................................... 9
Part 1: Company ......................................................................................................................................... 10
1. A) ALSTOM ....................................................................................................................................... 11
1. A.1 Alstom ...................................................................................................................................... 12
1. A.2 Alstom in India ......................................................................................................................... 12
1. A.3 Major Projects .......................................................................................................................... 16
1. A.4 Products & Services ................................................................................................................. 18
1. A.5 Clients ...................................................................................................................................... 20
1. A.6 Competitors .............................................................................................................................. 22
1. B) Marketing Strategy ......................................................................................................................... 23
1. B.1 Promotion Mix ......................................................................................................................... 24
1. B.2 Pricing Strategy ........................................................................................................................ 25
1. C) Financial Analysis .......................................................................................................................... 26
1. C.1 Ratio Analysis .......................................................................................................................... 27
1. C.2 Cash Flow Analysis .................................................................................................................. 55
1. C.3 CAGR Analysis ........................................................................................................................ 57
1. C.5 Competitor Analysis ................................................................................................................. 59
1. D) Michael Porter Analysis ................................................................................................................ 61
1. E) SWOT Analysis ............................................................................................................................. 63
Part 2: Taxation in Hydroelectric Projects .................................................................................................. 65
2.1 Taxation ............................................................................................................................................ 66
2.2 Indirect Taxes .................................................................................................................................... 66
2.2.1 Types of Indirect Taxes .............................................................................................................. 67
2.3 Power Sector in India ........................................................................................................................ 69
2.3.1 Hydropower ............................................................................................................................... 70
2.4 Hydroelectric Power Projects............................................................................................................ 71
2.5 Chamera Hydroelectric Project ......................................................................................................... 73
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ALSTOM India Ltd.


2.6 Uri Hydroelectric Project .................................................................................................................. 73
2.7 Key Facts .......................................................................................................................................... 74
2.8 Construction Contracts ...................................................................................................................... 76
2.8.2 Contract 1 ................................................................................................................................... 77
2.8.3 Contract 2 ................................................................................................................................... 80
2.8.4 Contract 3 ................................................................................................................................... 83
2.9 Reimbursement Procedure ............................................................................................................... 86
2.10 Conclusion ....................................................................................................................................... 87
2.11 Learning Summary .......................................................................................................................... 88
Annexure(s)................................................................................................................................................. 89
Balance Sheet .......................................................................................................................................... 90
Income Statement .................................................................................................................................. 92
Notes ....................................................................................................................................................... 93
Price Schedules Chamera III ................................................................................................................... 94
Price Schedules Uri II ........................................................................................................................... 100
Bibliography .............................................................................................................................................. 105













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ALSTOM India Ltd.



Executive Summary

As a part of Post Graduate Program in Management from IBS, one has to go through a 14 weeks
of summer internship program in order to get the exposure to the Indian corporate industry. A
student gets an opportunity to see the corporate world through the window of his theoretical
learning in the institute.
ALSTOM India Limited gave me an opportunity to peep into its world and try to fathom the
areas of business in which it operates. Alstom India is a part of the Alstom Group which is a
French multinational and is present in India since 1911. Alstom operates in mainly three business
areas namely Power Generation, Power Transmission and Rail Transport.
At Alstom I worked in the Hydro Power unit which provides solutions regarding the power
generation through the use of the gravitational force of falling or flowing water. By solutions I
mean they work as contractors for clients like NHPC, NTPC etc. and provide all the plant and
equipment for the hydroelectric projects with the transportation and installation services. These
projects are turnkey projects i.e. Alstom constructs the power generation unit and transfers the
working unit to the client after all the tests and checks.

Government plays a very important role in the execution of these projects. As these projects
require the use of natural resources and are very large in terms of the activities involved they
attract a lot of legal procedures to be followed, one of them being compliance to the taxes
applicable on such projects. Hence my study deals with the understanding the significance of
these taxes in hydroelectric projects.

In pursuit of my objective of understanding the significance of taxes in the hydroelectric
projects, I also analyzed Alstoms financial statements with the help of ratio and cash flow
analysis and compared it with the competitors financials as well. During the analysis I found out
that over a period of 3 years the Revenue CAGR is 21% whereas the PAT CAGR is only 2%
which shows that the company's costs are also increasing almost at the same pace as the revenue,
MPS CAGR is -18.5 % and the EPS CAGR is 2.85% as a result of which the price-earnings ratio
has been declining, which shows an investors losing faith in the company.

Meanwhile, I thoroughly studied two of Alstom's hydroelectric construction contracts namely
Chamera and Uri. Chamera III Hydroelectric Project is a 231 MW project and is situated on Ravi
River, District Chamba, Himachal Pradesh & Uri II Hydroelectric Project is a 240 MW project
and is situated on Jhelum River, District Baramula, Jammu& Kashmir.

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ALSTOM India Ltd.


Both these projects have three contracts each:
1. Supply of Offshore
1
Plant & Equipment.
2. Supply of Onshore
2
Plant & Equipment of Indian Origin.
3. Onshore Transportation & Installation Services.

Contract 1 deals with custom duty because of imports, contract 2 deals with Central Sales Tax
due to the Indian Origin of the goods and contract 3 deals with the service tax as there are
taxable services provided. After thorough study of these contracts and numerous interactions
with the project manager and head of the taxation department, I realized that the gestation period
of these projects is very long due to which the taxes applied in the contracts are not constant.
They change either due to change in rate, applicability of new tax or due to some interpretation
given by the court.

For instance, both Chamera and Uri started in the year 2007 and are in the completion stage now.
There has been changes in service tax since then the rate was 10.2% in 2006-07 and was changed
to 12.2% in 2007-08 it was again 10.2% from 2009 - 2012 and currently it is 12.36%.

Hence, the taxes form a significant part of the contract as in case there is a hike in tax it has to
be communicated to the client in order to get the same reimbursed or in case the taxes has been
reduced then also the benefit is to be given to the client. Also, to keep an eye on the amendments
in the taxes and then convincing the client that he has to bear such change is not an easy task. All
this makes taxes a crucial part of the contracts as taxes can directly affect the revenue and the
profit margin if not taken care of.







1Off Shore = any country other than one's own. Same as foreign.
2 Onshore = Country in which one is domiciled and comes under the jurisdiction of its courts.
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ALSTOM India Ltd.


Objectives, Methodology &Limitations

Objectives
Following were the objectives behind this study.
Primary: To study the significance of Indirect taxation in the Hydroelectric Power
Projects.
Incidental: To analyze Alstom India Limited as a company in terms of its business
activities, marketing strategies and financial results.

Methodology
Following methods were used to achieve the objectives.
Thorough study of the contracts.
Meetings with the project manager, the head of the taxation department & the tendering
manager.
Study of the Annual Reports of the company.
Understanding the taxation with the help of books and internet.

Limitations
Following were the limiting factors in my study
Alstom's Hydro Power division is located in Vadodra, Gujarat with only fewer
operations in Noida. Hence, access to information was limited.
A period of 3 months was not sufficient to understand the business of Alstom India
Limited as the scope of their business is vast.
The contracts were divided into various volumes in terms of product specifications, price
variation etc. Hence, the focus was only on the portions related to taxation.
Because of long execution period of the contracts access to material like invoices, debit
notes etc. was not easy.
All the taxes mentioned in the study are vast in their own terms. Hence, only the portions
relevant to the contracts were mentioned in the report.
There was no exposure towards the rail transport business of Alstom.


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ALSTOM India Ltd.











Part 1: Company


In this part of the report I will try to enlighten you about Alstom India Limited as a company in
terms of its origin, the business areas, projects, products & services etc. you will also find the
detailed financial analysis conducted with the help of ratio and cash flow analysis. Also, I have
tried to compare the growth of the company with that of its contemporaries post which there is
porters five forces model followed by SWOT analysis.





11
ALSTOM India Ltd.







1. A) ALSTOM











12
ALSTOM India Ltd.


1. A.1 Alstom

Alstom is a French headquartered multinational company which holds interests in the power
generation and rail transport markets. According to the company website, in the years 2012
2013 Alstom had annual sales of 20.3 billion, and employed approximately 93,000 people in
around 100 countries. Alstom's headquarters are located in Levallois-Perret, west of Paris. Its
current CEO is Patrick Kron.
Alstom is active in the fields of electrical generation and transmission, with products including
turbines for hydroelectric, gas, coal and nuclear powered plants, as well as large scale electrical
grid infrastructure. It is also a major rail vehicle manufacturer, active in the fields of passenger
transportation, signaling and locomotives, with products including the Eurostar (British Metro),
and Pendolino ( Italian metro) high speed trains, in addition to suburban, regional and metro
trains, and Citadis trams (European trams).


1. A.2 Alstom in India

Alstom has been associated with Indias progress for a century and has a long-standing
reputation for providing highly innovative and sustainable solutions for meeting the countrys
energy and transport requirements. Subhansiri - largest hydro project of India situated in Assam
and Arunachal Pradesh and signalling system in first two lines of Delhi Metro are few examples
to prove that.
Alstom has its operations in India since 1911 and has two companies namely Alstom India
Limited conducting the business of power generation equipment and rail transport & Alstom
T&D India Limited conducting the business of transmission and distribution of power.
Alstom Indias power unit is widely spread as they are into providing equipment for almost all
sorts of power generation projects. They are into power generation through Gas, Coal & Oil,
Nuclear and Renewable Energy.
Talking about Capital Structure of the company, Alstom India Limited is major share of the
capital structure is held by the shareholders i.e. Alstom gets its funds for running the business by
way of equity shares. Market price of Alstom's share Rs. 499 with 1.5?% growth as on 22
nd

May 2014.


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ALSTOM India Ltd.


Following is the shareholding pattern of Alstom India Limited.

As per the information given in the annual report 68.56% of Alstom's share are with Alstom
Finance BV, Netherlands ( Promoters) being the immediate holding company. However, the
parent company of Alstom is Alstom France.

Organisational Structure

Alstom in India has to companies Alstom India Limited ( formerly known as Alstom Projects
India Limited) and the other one is Alstom T&D India Limited ( Formerly known as Areva
T&D). Alstom India Limited is in to the business of supply of power plant equipment and rail
transport and Alstom T&D India Limited is into the grid business.
Under the power plant equipment business the company supplies equipments for all types of
power generation plants for instance Gas, Renewable, Nuclear and coal & oil. Under renewable
they supply for Hydro, Wind, Ocean, Biomass, Solar & Geothermal.
This study deals with two of Alstom India Limited's hydroelectric projects namely Chamera &
Uri.



14
ALSTOM India Ltd.


Following Chart will help you understand Alstom's organisational structure.






















Alstom Group
France
Fra
Alstom India Limited
Formerly Known As
Alstom projects India Limited.
Alstom T&D India Limited
Formerly Known As
Areva T&D.
Power Transport
Gas
Nuclear Renewable
Hydro Wind Geothermal Biomass Solar Ocean
Chamera
Uri
Coal & Oil
15
ALSTOM India Ltd.



Major Projects


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ALSTOM India Ltd.


1. A.3 Major Projects
This section of the report will acquaint you to the presence of Alstom in India. Following
are some of the projects that Alstom has accomplished or is about to accomplish in field
of power generation and rail transport.

Power

Utran project
One of Indias most efficient CCPP project - Utran, will generate 370 MW that will help
region reduce its electricity deficit. Utran marks a countrywide milestone by giving the
highest efficiencies in thermal power generation in India whilst maintaining low emission
levels.

Subansiri largest hydro project of India
Alstom is providing power generation equipment for one of the biggest Hydro Power
project, 2000 MW Subansiri Hydro Power Project located in Assam and Arunachal
Pradesh, India. The largest ever Francis Runner in India has been manufactured by
Alstom Vadodra unit for Subansiri Project


Transport
Signaling System For Delhi Metro Rail Corp. (DMRC):
Signalling solution deployed in Delhi Metro Rail Corporation (DMRC) is based on the
URBALIS U200 platform. Alstom Transport Information Systems (TIS) unit in
Bangalore provides system management, engineering, testing & commissioning solutions
for this Project on Lines 1 and 2 of Delhi Metro.
Indian railways:
Design, Supply, Installation, Testing & Commissioning of Audio Frequency Track
Circuits (AFTC) for zonal railways and Mumbai Railway Vikas Corporation Ltd
(MRVC)
Metro Rolling Stock Contract For Chennai Metro (CMRL):
Alstom signed its first metro rolling stock contract in India for supplying 168 cars and 16
additional metro cars to Chennai Metro

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ALSTOM India Ltd.





Products & Services



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ALSTOM India Ltd.


1. A.4 Products & Services

Power
Alstom Power designs, manufactures, and supplies state-of-the-art products and systems
for the power generation sector and industrial markets. Following is the list of products
designed, manufactured and supplied by Alstom Power.

Turbo machines Portfolio
Electrical & Control Systems
Steam Cycle add-ons
Repowering and Rehabilitation
Hydro
Environmental Control Systems
Heat Recovery Steam Generators
Energy Recovery Systems
Pulverisers
Power Automation and Controls

Transport

Alstom India is multi-specialist rail transport solutions supplier offering cutting-edge
products and services to four distinct types of customers: urban transit authorities and
operators; rail freight and intercity passenger rail operators; rolling stock and
infrastructure owners
Alstom supplies the complete trains, its sub-systems,
Signalling & telecommunication systems,
Rail power supply and rail traction systems,
Track works (permanent way) including their life term maintenances to turnkey system.

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ALSTOM India Ltd.







Clients




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ALSTOM India Ltd.


1. A.5 Clients

ALSTOMs clients all across India have achieved significant results after using its products and
services.This is evident from the varied clients Alstom has all over India. Following are few of
Alstoms clients having trust in its competence:

National Hydro Power Corporation (NHPC):2000 MW Subansiri Hydro Power
Project, Chamera 1, Chamera 2 & Chamera 3 are few of the projects awarded by NHPC
to Alstom.

Andhra Pradesh Power Generation Corporation Limited (APGENCO):Lower Jurala
Hydro Electric Project, The Project is on Krishna River, District Mahboobnagar, Andhra
Pradesh. Alstom in India has won a contract worth Rs 460 crores (Euro 78 million) with
Andhra Pradesh Power Generation Corporation Limited (APGENCO).

BANGALORE METRO RAIL Corp. : Design, manufacture, supply, installation,
testing and commissioning of modern Signaling/Train control system for two corridor
lines

Mumbai Railway Vikas Corporation Ltd (MRVC) :Design, Supply, Installation,
Testing& Commissioning of Audio Frequency Track Circuits (AFTC) for zonal railways
and Mumbai Railway Vikas Corporation Ltd (MRVC)

Chennai Metro Rail Limited (CMRL): Chennai Metro Rail Limited has signed with
Alstom Transport a 243 million contract to supply 168 cars, with an option for 16
additional metro cars for the metro of Chennai in India.

Nuclear Power Corporation of India Limited (NPCIL):Alstom will also supply Turbine
Generator package to Nuclear Power Corporation of India Limited (NPCIL) for the (2x700
MW) Rajasthan Atomic Power Project (RAPP) units 7 & 8, located at Rawatbhata in Rajasthan.

Delhi Metro Rail Corporation: Alstom has supplied Converters / Inverters & Control Box,
Static Inverters as per Mitsubishi Electric Corp (MELCO) design to Delhi Metro Rail Corporation
(DRMC) RS1 project .Electric equipment & Services for RS and Signalling and telecom systems


21
ALSTOM India Ltd.







Competitors



22
ALSTOM India Ltd.


1. A.6 Competitors

A competitor is any person or entity which is a rival against another. In business, a company in the
same industry or a similar industry which offers a similar product or service. In case of Alstom
India Limited it was difficult to circle down the competitors as the company is involved in varied
business activities namely power generation equipment and rail transport. So for a company to be
called as a competitor of Alstom India Limited should also be involved in the business of design,
manufacture and supply of power generation equipment and rail transport. Hence, in this section I
have tried to list down the competitors of Alstom India Limited.
After going through the details of various companies following companies were matching the
aforesaid criteria:


1. ABB India Limited
2. General Electric
3. Siemens (Voith)
4. Bharat Heavy Electrical Limited
However, except Bharat Heavy Electric Limited the scope of other companies in terms of business
operations is more than Alstom's as they are engaged in business activities other than design,
manufacture and supply of power generation equipment and rail transport as well. Hence, only
BHEL can be called as the true competitor of Alstom India Limited.
ALSTOM
ABB
VOITH
BHEL
GE
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ALSTOM India Ltd.













1. B) Marketing Strategy

An organization's strategy that combines all of its marketing goals into one comprehensive plan. A
good marketing strategy should be drawn from market research and focus on the right product
mix in order to achieve the maximum profit potential and sustain the business. After discussing
about Alstom's products & services, it's clients, competitors and the projects handled, in this section
I will try to throw some light on few of the marketing strategies explained to me by the tendering
manger.











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ALSTOM India Ltd.


1. B.1 Promotion Mix

A company's total promotion mix consists of the specific blend of advertising, public relations,
personal selling, sales promotion, and direct marketing tools that the company uses to
persuasively communicate customer value and blend customer relationships. Hence, in this
section I will try to highlight which promotion tool does Alstom follow in order to communicate
customer value to its clients.
As discussed above there are five major promotion tools namely:
Advertising
Sales Promotion
Personal Selling
Public Relations
Direct Marketing
As Alstom's clients are big organizations and businesses, Alstom is in to B to B (i.e. business to
business) marketing. Hence, Alstom uses Direct Marketing as a tool for promotion of its
products & services.
Direct Marketing means direct connections with carefully targeted consumers to both obtain an
immediate response and cultivate lasting customer relationships. Tools like direct mail, the
telephone, e-mail, presentations etc. are used for direct marketing. (Philip Kotler, 2013)
In order to communicate about the products & services and the innovations taking place in the
technology of Alstom the marketing managers keep in touch with the existing and prospective
clients. They arrange meetings, send e mails and make required phone calls time to time to keep
the clients aware about the offerings of Alstom.









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ALSTOM India Ltd.


1. B.2 Pricing Strategy


A business can use a variety of pricing strategies when selling a product or service. The Price
can be set to maximize profitability for each unit sold or from the market overall. It can be used
to defend an existing market from new entrants, to increase market share within a market or to
enter a new market. Businesses may benefit from lowering or raising prices, depending on the
needs and behaviors of customers and clients in the particular market. Finding the right pricing
strategy is an important element in running a successful business.
At Alstom they use Target Pricing, so as to keep the price to a level where a certain rate of return
is achievable.
Target Pricing
It is a pricing method whereby the selling price of a product is calculated to produce a particular
rate of return on investment for a specific volume of production. The target pricing method is
used most often by public utilities, like electric and gas companies, and companies whose capital
investment is high, like automobile manufacturers.
Since, Alstom is in the business of power generation and rail transport the capital investment is
very high and using target pricing method is justified.
Also, the pricing is dependent on the competitors prices as well. Alstom is in the business of
supplying power generation equipment and rail transport and to get the contracts the they have to
bid for the tenders open for all the companies operating in the same business. Hence, in order to
quote the lowest bid they have to consider the capabilities and price offering of the competitors
as well. The focus is not only the lowest bid Alstom also has to make sure that it is able to make
a certain profit in spite of quoting the lowest price by carefully monitoring the cost of
production.





26
ALSTOM India Ltd.







1. C) Financial Analysis

Financial analysis (also referred to as financial statement analysis or accounting analysis or
Analysis of finance) refers to an assessment of the viability, stability and profitability of a
business, sub-business or project. Hence, in this part of the report I will try to assess the viability,
stability and profitability of Alstom India Limited using tools like CAGR, Ratio & Cash Flow
analysis.






27
ALSTOM India Ltd.







1. C.1 Ratio Analysis
(Kalra, 2009)

Ratio analysis is used to evaluate various aspects of a companys operating and financial
performance such as its efficiency, liquidity, profitability and solvency. The trend of these ratios
over time is studied to check whether they are improving or deteriorating. In this section I have
tried to analyze the trend of Alstoms ratios over a period of three years in order to check
whether they are improving or deteriorating.







28
ALSTOM India Ltd.


Overall Performance
3


Following is the analysis of overall financial performance of Alstom followed by the detailed
ratio analysis. This analysis is based on the Five types of ratios i.e. Profitability: To measure the
income or operating success of an enterprise for a given period of time, Investment: To decide
about a company as an investment opportunity at a point of time, Liquidity: To measure the short
term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for
cash, Turnover: To evaluate the efficiency with which the firm manages and utilizes its assets
and capital & Coverage: To measure the firm's ability to service the fixed liabilities.

The performance of company in terms of profitability is not good as the expenses are
rising and the profits are declining though the figures of profits in Income Statement
(Annexure 2) have increased in 2013 in comparison with 2012 but they are not able to
keep up with the rise in sales.

In terms of investment the dividend per share has been constant whereas earnings per
share have increased in 2013 after a dip in 2012. The earnings and dividend yield are
rising however the reason behind this rise is the declining market price per share
(Annexure 2) which is due to the declining price earnings ratio indicating higher risk.

In terms of liquidity the company is striving towards the ideal ratios which are good.

In terms of turnover the company's overall performance is good the only concern is with
the stock turnover ratio which is declining indicating that the stock is not selling fast.

In terms of coverage ratio the debt equity ratio is rising showing increase in debt and the
interest coverage ratio is rising indicating that the operating profit is not able to match
the rising interest.




3
For reference you can see annexure 1,2 & 3( Balance Sheet,Income Statement,Notes )
29
ALSTOM India Ltd.


Profitability Ratios




Figure 1



1. Gross Profit Ratio

GPR= Gross Profit x 100
Sales

This ratio is calculated to find the profitability of business. A high ratio of gross
profit to sales is a sign of good management.

However, as per the financial statements of Alstom India Limited the gross profit
margin is declining which is clearly shown in figure 1above.

The reason behind this decline is the rising Cost of Goods Sold ratio which is also
evident from figure1 above. Though the sales have also increased however the
rate of increase in cogs is more than the rate of increase in sales.



0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00
2011
2012
2013
Percentage
2011 2012 2013
COGS 53.49 57.95 59.42
Gross Profit 46.51 42.05 40.58
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ALSTOM India Ltd.


Statement Showing % Change in Sales & COGS
(Rupees Million)
Particulars 2011 2012 Increase % 2013 Increase %
Revenue 15742 24183 8441 53.62 27858.4 3675.4 15.20
COGS 8420.9 14012.9 5592 66.41 16552.4 2539.5 18.12


It is clearly shown from the table above that sales in 2012 increased 53.62% from
2011 whereas the COGS increased 66.41%, similarly in 2013 sales increased
15.20% from 2012 whereas cogs increased 18.12%.


2. Cost of Goods Sold Ratio

COGS ratio = COGS x 100
Sales

This ratio indicates the proportion that the cost of goods sold bears to sales. Lower
the ratio, the better it is. Higher the ratio, the less
Favourable it is because it would have a smaller margin of gross profit.

It is clearly seen in figure 1 that the cogs ratio is rising which is not favourable.
The main reason behind this rise is the rising material cost.

Statement showing calculation of COGS
(Rupees Million)
Particulars 2011 2012 2013
increase/ decrease in stock -3.5 -15.1 22.9
material 8,142.40 13508.1 16003.9
power 149.5 210 242.4
repairs 84.5 109.1 108.3
tools and spares 48 200.8 174.9
Cost of Goods Sold 8420.9 14012.9 16552.4
31
ALSTOM India Ltd.



Figure 2



3. Operating Profit Ratio


Operating Profit Ratio = Operating Profit/EBIT x100
Net Sales


This ratio indicates the portion remaining out of every rupee worth of sales after all
operating costs and expenses have been met. Higher the ratio the better it is.

The operating profit ratio of the company is declining as shown in figure 2 above the
reason behind this decline is the rising operating cost. Due to the rise in operating
cost the operating profit margin is declining in spite of the rising revenue



4. Operating Cost Ratio


Operating Cost Ratio = Operating Cost x 100
Net Sales

0.00 20.00 40.00 60.00 80.00 100.00
2011
2012
2013
Percentage
2011 2012 2013
Operating Cost 84.48 92.62 93.31
Operating Profit 15.52 7.38 6.69
32
ALSTOM India Ltd.


The operating cost ratio establishes a relationship between the operating cost and net
sales. Operating cost includes cogs as well as other operating expenses i.e.
administration, selling and distribution & depreciation which have a matching
relation with the sales.

Lower the ratio, the better it is. A higher ratio is unfavourable as it will leave a small
amount of operating income to meet interest, dividends etc.

As shown in Figure 2 above the operating cost ratio is rising, resulting in the decline
of operating profit ratio. The reason behind this rise in the operating cost ratio is the
existence of cogs (which is rising, as explained above) and the rising trend of selling
expense ratio(explained further), due to these two factors the operating cost has risen
over the last 3 years. Though the administrative expenses have also risen but their
rise in comparison with the sales has shown a decline in 2013 which is clearly
evident from the administrative expense ratio (explained further).





Figure 3


5. Operating Expense Ratio

Operating Expense Ratio = Operating Expense x 100
Net Sales
29.00 30.00 31.00 32.00 33.00 34.00 35.00
2011
2012
2013
Percentage
2011 2012 2013
Operating Exp. 30.99 34.67 33.90
Operating Exp.
33
ALSTOM India Ltd.


This ratio shows the relation between the operating expense i.e. selling and
distribution, administration & depreciation expenses with the net sales. Here we do
not include the cogs. A lower ratio is favourable.

Unlike the rising Operating cost ratio the Operating expense ratio has shown a
decline in 2013 from its rise in 2012 which is a good sign. The reason behind this
decline is fall in the administrative expense ratio (explained further). Though the
administrative expenses have also increased like selling and distribution expenses but
when taken as a percentage of sales admin. Expenses have declined.


Figure 4

6. Administrative Expense Ratio


Administrative Expense Ratio = Administrative Expense x 100
Net Sales


This ratio shows the relation of the Administrative expenses with the net sales.
Lower the ratio the better it is.

As shown in Figure 4 above the ratio increased in 2012 however the company
managed to lower it down in 2013. The ratio did not lower down because the
expenses reduced instead it lowered down as the rate of increase in sales was more
than the increase in administration expenses.

22.00
24.00
26.00
28.00
30.00
2011
2012
2013
Percentage
2011 2012 2013
Admn. Exp. 24.19 28.04 26.63
Admn. Exp.
34
ALSTOM India Ltd.



Statement Showing % Change in Sales &Administration Expenses
(Rupees Million)
Particulars 2011 2012 Increase % 2013 Increase %
Revenue 15742 24183 8441 53.62 27858.4 3675.4 15.2
Admin.
Expenses 3807.9 6780.4 2972.5 78.06 7419.1 638.7 9.42


It is clearly visible that in 2012 the increase in sales was 53.62% whereas increase in
administration expense was 78.06% & in 2013 the sales have increased by 15.2%
whereas administration expenses by only 9.42% hence the ratio declined.



Figure 5


7. Selling Expenses

Selling Expenses = Selling Expenses x 100
Net Sales

This ratio shows the relation between the selling expenses and the net sales. A lower
ratio is favourable.

The selling expense ratio of Alstom India Ltd. has shown a rising trend in last three
years.

0.00
2.00
4.00
6.00
2011
2012
2013
Percentage
2011 2012 2013
Selling Exp. 4.21 4.52 5.29
Selling Exp.
35
ALSTOM India Ltd.


Statement showing calculation of Selling Expenses

(Rupees Million)
Particulars 2011 2012 2013
royalty 217.1 417.3 515.8
travelling 432.5 598.3 612.3
provision for bad debts 3.9 76.7 213.4
bad debts 8.5 1.1 131.3
selling exp. 662 1093.4 1472.8

It can be seen from the table above that out of all the rising components included in
calculation of selling expenses Provision for bad debts and Bad debts have shown a
significant increase, and can be called as the primary reason of the rise in the selling
expenses and the ratio.



Figure 6

8. Net Profit Ratio

Net Profit Ratio = Net Profit x 100
Net Sales

This ratio is very useful to the proprietors and prospective investors because it
reveals the overall profitability of the concern. This ratio measures the relationship
between net profit and sales of the firm.

2011
2012
2013
0.00 2.00 4.00 6.00 8.00 10.00 12.00
Percentage
2011 2012 2013
Net Profit 10.73 6.94 6.60
Net Profit
36
ALSTOM India Ltd.


Higher the ratio, the better it is because it gives an idea of improved efficiency of the
concern.

In figure 6 above we can clearly see that the net profit ratio has shown a declining
trend which is not favourable.

Statement Showing % Change in Sales & Net Profit
(Rupees Million)
Particulars 2011 2012
Increase/
Decrease % 2013
Increase
/Decrease %
Revenue 15742 24183 8441 53.62 27858.4 3675.4 15.2
Net Profit 1689 1677.5 -11.5 -0.68 1837.3 159.8 9.53

As shown in the table above the reason behind this decline is that the rate of increase
in sales is more than the rate of increase in net profit. Also in 2012 the profit
decreased by 11.5% however in 2013 the company managed to increase the profit by
9.53%. This is a good sign.


Figure 7


9. Return on Capital Employed

Return on Capital Employed= Profit Before Interest &Tax x 100
Capital Employed


0.00 10.00 20.00 30.00 40.00
2011
2012
2013
Percentage
2011 2012 2013
ROCE 39.61 24.28 21.72
ROCE
37
ALSTOM India Ltd.


This ratio measures the relationship between Profits before Interest
&Tax and the average Capital Employed. This ratio is an indicator of the earning
capacity on the capital employed in the business.

The objective of this ratio is to determine how efficiently the long term funds
supplied by the creditors and shareholders have been used. Hence a higher ratio is
favourable.

The capital employed ratio of Alstom India Ltd. has been declining since 2011 which
shows that the company has not been able to efficiently utilise the funds of the
shareholders which is not favourable. The reason behind this decline is the increasing
capital employed.


Statement Showing % Change in EBI T & Capital Employed

(Rupees Million)
Particulars 2011 2012 Increase % 2013 Increase %
EBIT 2442.5 1785.8 -656.7 -26.89 1863.3 77.5 4.34
Capital Employed 6166.2 7354.8 1188.6 19.28 8579.7 1224.9 16.65


We can see from the table above that in 2012 the EBIT has decreased by 26.89%
however it has increased by 4.34% in 2013 which is a good sign, whereas the capital
employed has only increased since 2011. Also it is important to note that the rate of
increase in capital employed has declined from 19.28% in 2012 to 16.56% in 2013
which is appreciated.










38
ALSTOM India Ltd.



Figure 8


10. Return on Equity


Return on Equity = Earnings to Equity x 100
Equity Shareholders Fund


This ratio measures the profitability from the equity shareholder's viewpoint. This
ratio is calculated to find out how efficiently the funds supplied by the equity
shareholders have been used.

Higher the ratio the more efficient the management and utilization of equity
shareholders funds.


11. Return on Shareholder's Fund


Return on Shareholder's Fund = Profit after Tax x 100
Shareholder's Fund
This ratio is a measure of percentage of net profit to average shareholder's fund.
Average shareholder's funds include Equity Shareholder's funds as well as Preference
Shareholder's funds.
0.00
10.00
20.00
30.00
40.00
2011
2012
2013
Percentage
2011 2012 2013
ROE 35.04 24.18 22.91
ROSF 35.04 24.18 22.91
39
ALSTOM India Ltd.



The main difference in above two ratios is the existence of Preference Share Capital
and Preference Dividend, since there is no Preference Share Capital or Preference
Dividend the results of both the ratios are same.

Both the ratios have declined since 2011 and the main reason behind this decline is
the rising shareholder's fund which can be seen in the table below.

Statement showing calculation of Shareholders Funds

(Rupees Million)
Particulars 2011 2012 2013
(a) Share Capital 670.20 672.30 672.30
(b) Reserves and Surplus 5,202.80 6,264.70 7,348.80
Shareholders' Funds 5,873.00 6,937.00 8,021.10

The rise in the shareholder's fund is the result of rising Reserves & Surplus i.e. the
company is holding the profits as reserves and investing back in the business as a
result the shareholders are getting lesser returns.









40
ALSTOM India Ltd.


Liquidity Ratios


Figure 9
1. Current Ratio

Current Ratio = Current Assets
Current Liabilities


The current ratio is a widely used measure for evaluating a company's
liquidity and short term debt paying ability. This ratio reveals the relationship
between current assets and current liabilities.

A current ratio of 2:1 is considered ideal, i.e. if current ratio is 2 or more it means
that the concern has the ability to meet its current obligations but if the ratio is less
than 2 it indicates that the concern has difficulty in meeting its current obligations.

The current ratio of the company is not 2:1 but has been rising since 2011 which is
good. It is clearly seen in figure 9 that it has reached to 1.16 times in 2013 from 1.07
in 2011.




2011, 1.07
2012, 1.09
2013, 1.16
2011
2012
2013
1.02 1.04 1.06 1.08 1.10 1.12 1.14 1.16 1.18
TImes
Current Assets
Current
41
ALSTOM India Ltd.




Figure 10

2. Liquid Ratio
Liquid Ratio =Liquid Assets
Current Liabilities


This ratio is a measure of a company's immediate short term liquidity. The liquid
assets exclude inventory and prepaid expenses. The inventory may not be readily
saleable, and prepaid expenses may not be transferable to others.

The usual guideline for the liquid ratio is 1:1; however some industries may find that
a ratio less than 1:1 is adequate.

The ratio has been above 1:1 since 2011 which is a good sign. This shows that the
company is has more than enough liquid assets to cover it current liabilities.




2011
2012
2013
1.02 1.04 1.06 1.08 1.10 1.12
2011, 1.05
2012, 1.05
2013, 1.11
TImes
Liquid Assets
Liquid
42
ALSTOM India Ltd.


Investment ratios


Figure 11
1. Earnings per Share

Earnings per Share = Earnings to Equity Shareholders
No. of Equity Shares

Earnings per share are the measure of the net income earned on each share of
common stock. The objective of determining this ratio is to measure the profitability
of the firm on the equity shares.

Higher the earnings per share, better is the performance and prospects of the
company.

There was a negligible decline in the EPS of the company in 2012 as shown in figure
11 above however the company has been able increase it in 2013 which is
appreciated.
23.00
24.00
25.00
26.00
27.00
28.00
2011
2012
2013
R
u
p
e
e
s

2011 2012 2013
EPS (Rs.) 25.12 24.95 27.33
EPS (Rs.)
43
ALSTOM India Ltd.



Figure 12


2. Dividend per Share

Dividend per Share = Dividend Paid to Equity Shareholders
No. of Equity Shares


This ratio is calculated to see how much dividend is paid for each share held by the
equity shareholders.

Higher the ratio, the more favourable it is, because this ratio shows that how much
income as profit will be received by the investors.

Alstom has maintained the dividend per share at Rs. 10 since 2011 which is a good
sign.




2011 2012 2013
DPS (Rs.) 10 10 10
0
2
4
6
8
10
12
R
u
p
e
e
s

DPS (Rs.)
44
ALSTOM India Ltd.



Figure 13

3. Dividend Pay-out Ratio

Dividend Pay-out Ratio = Dividend per Share x 100
Earnings per Share


The pay-out ratio measures the percentage of earnings distributed in the
Form of cash dividends. Companies wanting to have a high growth rate try to
maintain a low pay-out ratio because they reinvest most of their net income into the
business.

Alstom's pay-out ratio increased in 2012 however there was a significant decrease in
2013. The reason behind this fluctuation was that the company maintains a constant
DPS of Rs. 10 but the EPS declined in 2012 resulting in increase of pay-out ratio and
hiked up in 2013 resulting in a decrease in pay-out ratio and such decrease is
favourable as this means that the company is holding the earnings for the purpose of
reinvestment in the business.

34.00
36.00
38.00
40.00
42.00
2011
2012
2013
P
e
r
c
e
n
t
a
g
e

2011 2012 2013
Divident Payout 39.80 40.08 36.59
Divident Payout
45
ALSTOM India Ltd.



Figure 14


4. Price Earnings Ratio
Price Earnings Ratio = Market price Per Share
Earnings per Share

This ratio is helpful in determining whether the share of a particular firm should be
purchased or not. High Growth shares have high P/E ratios as investors are willing to
pay a greater multiple of current earnings to achieve a higher future growth.

If high risk is found in a share, it reduces its market price and hence automatically
reduces its P/E ratio.

We can see from figure 14 that the P/E ratio is declining which indicates that there is
high risk involved due to which the yield will be high (explained further) however
the MPS will decline as shown below.

Statement Showing the Market Price per Share
(In Rupees)
Particulars 2011 2012 2013
MPS(closing rates) 586.75 355.60 318.25


0.00
5.00
10.00
15.00
20.00
25.00
2011
2012
2013
P
e
r
c
e
n
t
a
g
e

2011 2012 2013
Price Earning(in times) 23.36 14.25 11.65
Earning Yield 4.28 7.02 8.59
Divident Yield 1.70 2.81 3.14
46
ALSTOM India Ltd.


5. Earning Yield Ratio

Earning Yield Ratio = Earnings Per Share x 100
Market price Per Share

This ratio is also known as Earnings - Price ratio. This ratio shows the relationship
between the EPS & MPS. Higher the ratio the better it is as each investor in equity
shares expects a certain amount of earnings, whether distributed or not from the
company in whose shares he invests.



6. Dividend Yield Ratio

Dividend Yield Ratio = Dividend per Share x 100
Market price Per Share

This ratio is also known as Dividend - Price ratio. This ratio is important for the
investors who are interested in the dividend income. This ratio shows that how much
dividend can be received by an investor if he buys the shares from open market.

From figure 14 above we can see that the Earning Yield as well as the Dividend
Yield has been rising since 2011. The reason behind this rising trend is the decline in
the Market price Per Share which is due to the high risk involved as explained in
point 4 above.









47
ALSTOM India Ltd.


Coverage Ratios


Figure 15
1. Interest Coverage Ratio



Interest Coverage Ratio = Earnings before Interest & Tax
Interest on Long Term Debt

This ratio indicates the relation between net profits before interest and tax and
interest on long term debts. This ratio shows the number of times the interest charges
are covered by the income out of which they will be paid.

Higher the ratio the more beneficial it is for lenders, because this ratio measures the
margin of safety for the lenders.

In case of Alstom this ratio has been declining since 2011 and there has been a
drastic decline in 2013 to 74.83 times from 274.74 times. This shows that the lenders
margin of safety has declines and the lenders will be reluctant to lend money to
Alstom.
Interest Coverage Ratio
0.00
100.00
200.00
300.00
400.00
2011
2012
2013
T
i
m
e
s

2011 2012 2013
Interest Coverage Ratio 359.19 274.74 74.83
Interest Coverage Ratio
48
ALSTOM India Ltd.



Figure 15


2. Proprietary Ratio

Proprietary Ratio = Shareholders Funds
Total Assets


This ratio shows the relationship between shareholder's funds and total assets. This
ratio shows that how much capital is introduced by the owner in business.

Higher the ratio means a sound position of business, because it shows that the
organisation is not run by the outside funds which mean less interference and
pressure of outsiders.
It is clearly seen in the figure 15 above that the ratio has been rising since last three
years which is a good sign.
2011 2012 2013
Proprietary 0.21 0.25 0.29
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
T
i
m
e
s

Proprietary
49
ALSTOM India Ltd.



Figure 16

3. Capital Gearing Ratio

Capital Gearing Ratio = Long Term Loan + Preference Share Capital
Equity Share Capital


This ratio establishes the relationship between the fixed cost bearing capital (the
capital upon which the rate of return is fixed) e.g. long term loans or preference share
capital & variable cost capital (the capital upon which rate of return is not fixed) e.g.
equity share capital.

The higher ratio the more beneficial for the firm because at the time of prosperity the
owners will enjoy the benefits of trading on equity, while at the time of depression
they will have to suffer a lot because they will have to pay the interest whether they
are in loss or profit.

Since the ratio has shown a rising trend in last three years it is a good sign.
2011 2012 2013
Capital Gearing 0.05 0.06 0.07
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
T
i
m
e
s

Capital Gearing
50
ALSTOM India Ltd.



Figure 17

4. Debt Equity Ratio

Debt Equity Ratio = Debt
Equity


This ratio indicates the relationship between long term debts and shareholder's fund.
A low ratio is generally favourable as it shows a greater claim of owners than
creditors. From the creditors point of view it represents a larger margin of safety
since owners equity is treated as a margin of safety by creditors also the owners try
to maintain a low ratio so as to avoid the interference of outsiders in the operations of
the business.

Alstom's debt equity ratio has been rising in last three years. The desirable norm for
this ratio is 2:1, hence this rise is favourable.




2011 2012 2013
Debt-Equity 0.05 0.06 0.07
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
T
i
m
e
s

Debt-Equity
51
ALSTOM India Ltd.


Turnover Ratios


Figure 18

1. Stock Turnover Ratio

Stock Turnover Ratio = Cost Of Goods Sold
Stock

This ratio measures the number of times on an average the stock is sold during the
period. The purpose is to measure the liquidity of Stock.
A faster turnover is favourable as less cash is tied up in stock and less the chance of
stock obsolescence.
Over the last three years the ratio has declined from 20.28 in 2011 to 18.86 in 2013
this means that the stock does not sell fast and stays on the shelf for a long time
compared to earlier years, this needs to be improved.

Stock
18.00
19.00
20.00
21.00
2011
2012
2013
T
i
m
e
s

2011 2012 2013
Stock 20.28 18.94 18.86
Stock
52
ALSTOM India Ltd.



Figure 19
2. Debtors Turnover Ratio

Debtors Turnover Ratio = Net Sales
Debtors

This ratio measures the number of times, on average, the debtors are collected during
the period i.e. how faster the debts are being collected.

Debtors turnover has been on a rise since 2011 which is evident from figure 19
above. This is good as the company is able to promptly collect the debts as the years
are passing by.

Note: It is assumed that total sales are credit sales.

2011 2012 2013
Debtors 2.31 2.35 2.54
2.15
2.20
2.25
2.30
2.35
2.40
2.45
2.50
2.55
2.60
T
i
m
e
s

Debtors
53
ALSTOM India Ltd.



Figure 20

3. Creditors Turnover Ratio
Creditors Turnover Ratio = Credit Purchases
Creditors

This ratio is used to establish a relation between credit purchases and average trade
creditors. The objective of calculating this ratio is to determine the efficiency with
which the creditors are managed.

A low turnover ratio reflect liberal credit terms granted by suppliers, while a high
ratio shows that accounts are to be settled rapidly.
There has been an increase in the turnover ratio in last three years which means that
the accounts are to be settled faster than the earlier years; however we can see from
figure 20 that the company has managed to lower the ratio to 4.78 in 2013 from 5.03
in 2012. This shows that the creditors are providing liberal credit terms to the
company.
Note: It is assumed that total purchases are the credit purchases.
2011 2012 2013
Creditors 3.62 5.03 4.78
0.00
1.00
2.00
3.00
4.00
5.00
6.00
T
i
m
e
s

Creditors
54
ALSTOM India Ltd.



Figure 22

4. Capital Employed Turnover Ratio

Capital Employed Turnover Ratio = Net Sales
Capital Employed

Capital Turnover Ratio indicates the efficiency of the organization with which the
capital employed is being utilized. A high capital turnover ratio indicates the
capability of the organization to achieve maximum sales with minimum amount of
capital employed.

Alstom has been able to increase this ratio since 2011 and has maintained it over 3
from 2012 onwards. This means that the company is able to generate sales 3 times
more than the capital employed in the company which is a sign of good performance.







Capital Employed
0.00
1.00
2.00
3.00
4.00
2011
2012
2013
T
i
m
e
s

2011 2012 2013
Capital Employed 2.55 3.29 3.25
Capital Employed
55
ALSTOM India Ltd.








1. C.2 Cash Flow Analysis


An examination of a company's cash inflows and outflows during a specific period.
The analysis begins with a starting balance and generates an ending balance after accounting for
all cash receipts and paid expenses during the period. Hence in this section I have tried to
analyze the flow of cash from different business activities of Alstom, namely Operating,
Financial & Investing.

















56
ALSTOM India Ltd.


Cash Flow Statement ( Rupees in Millions)
Particulars 2011 2012 2013
Operating Activities 2754.1 -1277.4 330.6
Investment Activities
Inter corporate deposits given -14 -3273 -12943
Inter corporate deposits received back 814 12856
Purchase of equity shares of Subsidiary Company -0.5
Interest received 373.7 364.9 253.1
Purchase of investments -315.3
Purchase of fixed assets -933.7 -955.2 -837.1
Sale proceeds of fixed assets 8.7 9.5 4.5
Net cash used in Investing -565.3 -3355.6 -666.5
Financing Activities
Dividend and corporate dividend tax paid -781.5 -773.6 -781.4
Movement in unclaimed dividend account -1.3 -1.2
Interest paid -27.1 -6.5 -19.1
Net cash used in Financing -808.6 -781.4 -801.7




We analyse from the figures above that the company was not able to generate
cash through its operations in 2012 however it managed to turn it around in
2013 which is good.

The company is earning from the investments in form of interest. However
they are investing more in fixed assets as a result there is a loss of cash from
investing activities. We can also see that the company is investing in fixed
assets in order to facilitate its operating activities.

The main financing expense is that of the interest payments though the major
portion of the financing expense is covered by the payment of dividend it is
more or less constant.





57
ALSTOM India Ltd.








1. C.3 CAGR Analysis

CAGR-compound annual growth is the year-over-year growth rate of an investment over a
specified period of time. The compound annual growth rate is calculated by taking the nth root of
the total percentage growth rate, where n is the number of years in the period being considered.
Available From: (Inv) Hence, in this section I will try to analyze Alstom's growth in terms of
Revenue, Profit After Tax, Earnings per Share & Market Price per Share.







58
ALSTOM India Ltd.



Figure 23

The figure above shows the compounded annual growth rate - CAGR of Alstom India Limited in
terms of Revenue, Profit After Tax, Market Price per Share and Earnings per Share. The above
growth rate has been calculated for a period of three financial years starting from 2010-11 ending
2012-13. Which is calculated using the following formula:

CAGR = (



)
1/3
- 1


As clearly shown in the figure above the Revenue CAGR is 21% which shows that the company
is able to earn more revenue with the passing years. PAT CAGR is only 2% which shows that
the company's profits are also increasing, however not at the same pace as its revenue. The
reason behind this could be that the company is not able to control its costs i.e. the revenue is
rising but at the same time the costs are also rising. MPS CAGR is -18.5 % and the EPS CAGR
is 2.85% this indicates that despite of growth in EPS investors are not willing to buy Alstom's
shares. The reason behind this could be that the growth of 2.85% in EPS is lower than the
expectations of the investors; hence the investors are losing interest in Alstom's shares.



Revenue PAT MPS EPS
Alstom CAGR 20.95 2.84 -18.45 2.85
-25.00
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
P
e
r
c
e
n
t
a
g
e

Alstom CAGR
59
ALSTOM India Ltd.











1. C.5 Competitor Analysis

After analysing the growth of the company it is important to compare it to the growth of the
competitors so as to see who is performing better financially. Hence, in this section of the report
I have tried to compare the growth rate of Alstom with that of its competitors to see where does
Alstom stands when compared with its contemporaries.
















60
ALSTOM India Ltd.



Figure 24




As the scope of competitors in terms of business operations is more than Alstom's because they
are engaged in business activities other than design, manufacture and supply of power generation
equipment and rail transport as well and since the segment wise bifurcation of financial results
was not available it was not fair to compare the growth of these competitors with Alstom's
growth. However, Bharat Heavy Electricals Limited is in the business exactly similar to Alstom.
Hence, I have compared BHEL's growth with Alstom's growth.

In spite of low growth in Revenue (4.63% against 20.95%) BHEL's growth in PAT (5.30%) is
more than that of Alstom(2.84%) this clearly shows that BHEL is able to manage its costs well.
Also, it is clearly visible that the growth in EPS of BHEL( 3.25%) is more than that of
Alstom(2.85%). However, on the other hand the MPS of BHEL (-24.53%) is declining at a
greater rate than Alstom's MPS (-18.45%) this indicates that though the profits and EPS of
BHEL are growing more than Alstom still investors prefer Alstom over BHEL.









Revenue PAT MPS EPS
CAGR Alstom 20.95 2.84 -18.45 2.85
CAGR BHEL 4.63 5.30 -24.53 3.25
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
P
e
r
c
e
n
t
a
g
e

CAGR
61
ALSTOM India Ltd.














1. D) Michael Porter Analysis

Porters model is based on the insight that a corporate strategy should meet the opportunities and
threats in the organizations external environment. Especially, competitive strategy should base
on and understanding of industry structures and the way they change. Hence, in this section I
have tried to analyze different aspects of the environment in which Alstom operates.
Since, I have worked in the Hydro power division I have not been able to get exposure of the rail
transport industry. Hence, the following analysis is only based on the power generation
equipment industry.
















62
ALSTOM India Ltd.




As Alstom is in the business of supply of power plant equipment and it
provides equipments for all the types of power generation systems like
Hydro, Wind, Gas, etc the threat of a substitute is very low. For example
in case of Hydro power a turbine can only work in place of a turbine and
nothing else.
Threat of Substitute
As the power sector is highly capital intensive and involves large amount
of commitment in terms of capital, assets and work force the threat of
new entrants is low. Only those organisations which have the required
capabilities and are willing to take the risk of entering a sector which can
be seen as still developing will enter the market.
Barriers to Entry
The degree of industrial rivalry is high as the source of income for a
company supplying power plant equipment is the contracts for providing
the equipment for power projects and there are a number of suppliers
supplying the same. Hence, whoever bids the lowest price gets the
contract. For instance, a leader Like BHEL is facing tough competition
from Alstom and the Chinese suppliers. This shows that there is high
level of industrial rivalry.
Industrial Rivalry
The primary material that a power plant equipment manufacturer
requires is metals like steel, aluminium, copper etc. in order to
manufacture the turbines and other equipment. The prices of these
materials are dependent on the market forces of demand and supply
due to a large number of buyers and seller. Hence, the bargaining power
of a supplier for this power plant equipment industry is said to be
moderate as the customers have a lot of suppliers available.
Bargaining Power of Suppliers
As the requirement of equipment is growing exponentially, the supply of
Power Equipment can be met by importing or from the domestic
suppliers. So the bargaining power of the Customer is moderate enough
to tackle in the current scenario.
Bargaining Power of Customers
63
ALSTOM India Ltd.











1. E) SWOT Analysis

SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for
identifying both the Opportunities open to you and the Threats you face. Hence, in this part I
have tried to list down Alstom's Strengths that it owns, Weaknesses that hold it back,
Opportunities that it can utilize for growth and Threats that needs to be strategically dealt with.
Since, I have worked in the Hydro power division I have not been able to get exposure of the rail
transport industry. Hence, the following analysis is only based on the power generation
equipment industry.









64
ALSTOM India Ltd.





Strength

1. Strong parental support gives
ALSTOM a clear edge in integrated
power and hydroelectric projects.
2. Strong order backlog imparts
earnings visibility.
3. Strong references in India
provide a definite advantage to
ALSTOM for future Projects.
4. ALSTOM is one of the few
players to execute hi-end power
projects in India.
Opportunity

1. Demand for power and hence
plant equipment is expected to
grow.
2. Ageing power plants would
give rise to more spares and
services business.
3. Life expansion program for old
power stations.
4. Easy processing of joint
ventures/ collaboration/import/
acquisition of new technology.
Weakness

1. ALSTOM has a longer execution
cycle (Hydro projects >5 years, gas
projects 2- 2.5 yrs. & steam > 4 yrs.
2. ALSTOMs hydro projects carry
various risks including on
environmental issues over which
ALSTOM has no control.
3. ALSTOM operates in a cyclical
industry where business volumes
are dependent upon government
plans
Threats

1. Competition with the likes of
BHEL remains a key threat for
ALSTOM.
2. Problems with fuel (like gas)
could lead to cancellation / delays
in planned projects.
3. Politics can increase Alstoms
risk factors, because governments
can quickly change business rules
that negatively affect Alstoms
business.
4. Volatile currencies make
Alstoms investments difficult,
because costs and revenues
change so rapidly.
65
ALSTOM India Ltd.







Part 2: Taxation in Hydroelectric Projects

In first part of the report I tried to explain about ALSTOM, its areas of business and financials.
Now in the second part of the report I will try to throw some light on the taxes in India, the
contracts in study and the implication of these taxes in these contracts.
Firstly, I will explain about the taxes that are prevalent in India in terms of their applicability,
scope and extent etc.
Secondly, I will try to highlight some facts about the power generation sector in India taking it
forward towards hydro power.
Then, I will talk about the construction contracts and their types.
Post which, I will try explaining about Hydroelectric Projects and the bidding process through
which these projects are acquired.
Finally, I will give details about both Chamera & Uri hydroelectric projects and analyze the taxes
applicable on these projects and their significance.






66
ALSTOM India Ltd.


2.1 Taxation

In order to understand the application of taxes on the hydroelectric projects it is important to first
understand the taxation structure in India. Tax is imposing financial charges on individual or
company by central government or state government. Collected tax amount is used for building
nation (infrastructure & other development), to increase arms and ammunition for defense of the
country and for other welfare related work.
There are two types of taxes:
a. Direct Taxes: The Taxes whose burden falls directly on the Tax payers are the Direct
Taxes like Income Tax, Wealth Tax etc.
b. Indirect Taxes: The taxes in which the burden is passed on to a third party are called
Indirect Taxes like Service Tax, VAT etc.
This study deals with indirect taxes which are explained hereinafter.


2.2 Indirect Taxes

Indirect taxes are taxes collected by an intermediary from the person who bears the ultimate
economic burden of the tax. Direct taxes are collected directly from the person on whom tax is
imposed. In India, both the Central Government and State Governments impose various indirect
taxes. Customs Duties, Excise Duties, Service Tax and Value Added Tax are examples of
indirect taxes that India levies. Being a major source of tax revenue for the governments at all
tiers, administration of indirect taxes has been witness to different interpretations of provisions
and consequential disputes. India is on the threshold of major reforms in this area as Goods and
Services Tax (GST) is set to be introduced merging all indirect taxes. An indirect tax is a tax
collected by an intermediary (such as a retail store) from the person who bears the ultimate
economic burden of the tax (such as the customer). An indirect tax is one that can be shifted by
the taxpayer to someone else. An indirect tax may increase the price of a good so that consumers
are actually paying the tax by paying more for the products.

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ALSTOM India Ltd.


2.2.1 Types of Indirect Taxes

Customs Duty

Custom duty is a form of indirect tax. Standard English dictionary defines the term "custom" as
duties imposed on imported or less commonly exported goods. This term is usually applied to
those taxes which are payable upon goods or merchandise imported or exported. It is also
defined as tax imposed by the government on the import of items (goods). The Customs Act was
formulated in 1962 to prevent illegal imports and exports of goods.

In India, customs duties are levied on the goods at the rates specified in the Schedules to the
Customs Tariff Act, 1975. The taxable event is import of goods into India or its export out of
India. Export duties as specified in the Second Schedule are levied on a very few items only.
But import duties are levied universally, barring a few items such as food grains, fertilizers,
lifesaving drugs and equipment, etc.

Excise Duty

The tax imposed by the government on the manufacturer or producer on the production of some
item is called excise duty. The liability to pay excise duty is always on the manufacturer or
producer of goods. The duty being a duty on manufacture of goods, it is normally added to the
cost of goods, and is collected by the manufacturer from the buyer of goods. Therefore it is
called an indirect tax. This duty is now termed as "Cen vat".

There are three types of parties who can be considered as manufacturers-

1. Those who personally manufacture the goods in question
2 .Those who get the goods manufactured by employing hired labor
3 .Those who get the goods manufactured by other parties

For example, excise duty on the production of sugar is an indirect tax because the manufacturers
of sugar include the excise duty in the price and pass it on to buyers. Ultimately it is the
consumers on whom the incidence of excise duty on sugar falls, as they will pay higher price for
sugar than before the imposition of the tax.

In order to attract Excise duty liability, following four conditions must be fulfilled:
a) The duty is on "goods".
b) The goods must be "excisable"
c) The goods must be "manufactured" or produced.
d) Such manufacture or production must be "in India".
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ALSTOM India Ltd.


Value Added Tax

Under the Indian constitution, the States have the exclusive powers to levy tax on the sales of
goods. The tax on the inter-state trade is levied by central government, and is called Central
Sales Tax (CST). Due to various defects in the Sales Tax System, the Govt. has introduced a new
system called Value Added Tax (VAT) in place of State Sales Tax.

VAT is a multi-point tax levied and collected on the value added to goods at different stages of
sale. It is another form of sales tax where tax is collected in stages rather than collection of the
tax at the first or last point. VAT, in simple terms, is a multi-point levy on each of the entities in
the supply chain with the facility of set-off of input tax i.e., the tax paid at the stage of purchase
of goods by a trader and on purchase of raw materials by a manufacturer is allowed to be set off
while payment of tax collected by the dealer to the government. Only the value addition in the
hands of each of the entities is subject to tax.

For instance, if a dealer purchases goods for Rs 100 from another dealer and a tax of Rs 10 has
been charged in the bill, and he sells the goods for Rs 120 on which the dealer will charge a tax
of Rs 12 at 10 per cent, the tax payable by the dealer will be only Rs 2, being the difference
between Rs. 12 the tax collected and Rs. 10 tax already paid on purchases. Thus, the dealer has
paid tax at 10 per cent on Rs 20 being the value addition of goods in his hands.

Most State governments have implemented VAT w.e.f. 1.4.2005. Haryana was the first state to
implement VAT w.e.f. 1.4.2004 in the first year itself, Growth in tax revenue has been reported
by the States as compared to the tax collection during the same period in previous year.



Central Sales Tax

Central Sales Tax (CST) is a tax on sales of goods levied by the Central Government of India.
CST is applicable only in the case of inter-state sales and not on sales made within the state or
import/export of sales. Inter-state sale is when a sale or purchase constitutes movement of goods
from one state to another. Accordingly, a consignment to agents or transfers of goods to branch
or other offices is not a sale as per the CST Act.

CST is payable in the state where the goods are sold and movement commences. The tax
collected is retained by the state in which the tax is collected. CST is administered by Sales Tax
authorities of each state. Thus, the State Government Sales Tax officer who assesses and collects
local (state) sales tax also assesses and collects CST.

Sales Tax is a tax, levied on the sale or purchase of goods. There are two kinds of Sales Tax i.e.
Central Sales Tax, imposed by the Centre and Sales Tax, imposed by each state.

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ALSTOM India Ltd.


Service Tax

Service Tax is a form of indirect tax imposed on specified services called "taxable services".
Service tax can only be levied on such services which are included in the list of taxable services.
Over the past few years, service tax has been expanded to cover new services. The objective
behind levying service tax is to reduce the degree of intensity of taxation on manufacturing and
trade without forcing the government to compromise on the revenue needs. The intention of the
government is to gradually increase the list of taxable services until most services fall within the
scope of service tax. For the purpose of levying service tax, the value of any taxable service
should be the gross amount charged by the service provider for the service rendered by him.
Service Tax was first brought into force with effect from 1 July 1994. All service providers in
India, except those in the state of Jammu and Kashmir, are required to pay a Service Tax in
India. Initially only three services were brought under the net of service tax and the tax rate was
5%. Gradually more services came under the ambit of Service Tax.

Now there is a negative list showing the services which are not included in the scope of service
tax rest all the services are taxable.








2.3 Power Sector in India

The Power sector in India had an installed capacity of 243.02 GW as of March 2014, the
world's fourth largest. Non Renewable Power Plants constitute 87.55% of the installed capacity,
and Renewable Power Plants constitute the remaining 12.45% of total installed Capacity. The
total annual generation of electricity from all types of sources was 1053.9 Terawatt-hours (Tw)
in 2012.
In terms of fuel, Thermal power account for 68.19% of India's installed electricity capacity. After
thermal, renewable hydropower accounts for 17.39%, Renewable energy (wind, biogas etc.) for
12% and Nuclear for about 2.08%. All this data show that Alstom has great amount of
opportunities available in India.


Particulars

Rate (%)

The current rate of service tax

12

Education cess is 2% of rate of service tax
0.24
Secondary and higher education cess @ 1%
0.12
Total rate of service tax payable
12.36
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ALSTOM India Ltd.





2.3.1 Hydropower
In this system of power generation, the potential of the water falling under gravitational force is
utilized to rotate a turbine which again is coupled to a Generator, leading to generation of
electricity. India is one of the pioneering countries in establishing hydro-electric power plants.
The power plants at Darjeeling and Shimsha (Shivanasamudra) were established in 1898 and
1902 respectively and are among the first in Asia.
India is endowed with economically exploitable and viable hydro potential assessed to be about
84,000 MW. Also, 56 sites for pumped storage schemes with an aggregate installed capacity of
94,000 MW have been identified. It is the most widely used form of renewable energy. India is
blessed with immense amount of hydro-electric potential and ranks 5th in terms of exploitable
hydro-potential on global scenario.
The public sector has a predominant share of 97% in this sector. National Hydroelectric Power
Corporation (NHPC), Northeast Electric Power Company (NEEPCO), Satluj jal vidyut nigam
(SJVNL), Tehri Hydro Development Corporation, NTPC-Hydro are a few public sector
companies engaged in development of hydroelectric power in India. All the above mentioned
organizations are Alstoms client which shows Alstoms presence in the hydro power business
prevailing in India and also that Alstom hydro is an important part of Alstom India.


68%
18%
2%
12%
Power
Total Thermal Hydro (Renewable) Nuclear Renewable (Wind, Biogas etc.)
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ALSTOM India Ltd.


2.4 Hydroelectric Power Projects

Hydroelectric projects are those projects where a structure is built to generate electricity using
the hydropower i.e. the production of electrical power through the use of the gravitational force
of falling or flowing water.

This study deals with two of Alstoms hydroelectric projects namely Chamera Hydroelectric
Project situated in Himachal Pradesh & Uri Hydroelectric Project situated in Jammu & Kashmir.

After a valuable interaction with the tendering manager at Alstom Hydro I came to know that in
order to get these contracts a company has to go through the following process:

1. Tender is released by the client like NHPC, NTPC etc.
2. Contractor has to scan the tender in order to see whether the company meets or can meet
the requirements of the tender or not.
3. Whether the company qualifies the pre qualification, if any
4. A pre bid meeting is held so that the contracts can seek clarifications from the Employer, if
any
5. Employer gives written clarifications on the doubts raised.
6. Bid submission
7. Notification of award i.e. declaration of bid results
8. Signing the contract.

Post this procedure the projects are executed and the gestation period for a hydroelectric project
is around 5 years due to which the tax structure will not be constant as there would have been
some changes in the taxes during this period.

There are three reasons for the change in taxes:
1. Due to amendments in law
2. Due to a change in the rates of taxes.
3. Due to introduction of new taxes/Applicability of existing tax.

It is because of these changes the taxes are crucial in these contracts as the increase in tax will
lead to reduction in profits where as a decrease in taxes will lead to rise in profits.

Hence, in this study I have tried to find out how the indirect taxation structure of India affects the
revenue of these projects.
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ALSTOM India Ltd.




Chamera III & Uri II Hydroelectric Project



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ALSTOM India Ltd.


2.5 Chamera Hydroelectric Project
Alstom India Ltd. entered into a contract with to NHPC (National Hydro Power
Corporation) to supply the Offshore and Onshore plant and equipment, for
Chamera III Hydroelectric Project.
Chamera III Hydroelectric Project is a 231 MW project and is situated on Ravi
River, District Chamba, Himachal Pradesh.
The contract includes turnkey
4
Electro-Mechanical package of 3 x 77 MW Francis
Units size along with associated Balance of Plants with a schedule of 48 months.

2.6 Uri Hydroelectric Project

Alstom in India was awarded Uri II contract by NHPC (National Hydro Power
Corporation).
Uri II Hydroelectric Project is a 240 MW project and is situated on Jhelum River,
District Baramula, Jammu& Kashmir.
The contract includes turnkey Electro-Mechanical package of 4 x 60 MW Francis
Units size along with associated Balance of Plants.
Both the projects above have three contracts each
1. Supply of Offshore Plant & Equipment for CIF5supply of all offshore
plant and equipment including specified spare parts and tools & instruments
2. Supply of Plant & Equipment of Indian Origin for Ex- works6supply of
all plant and equipment including specified spare parts and tools &
instruments of Indian Origin
3. Onshore Transportation & Installation Services for Providing all on-
shore services in respect of all the equipment supplied under both First &
Second contract and any other service specified in the contract including
performance and guarantee test.

4
Turn-key project is a type of project that is constructed by a developer and sold or turned over to a
buyer in a ready-to-use condition.
5 CIF - A trade term requiring the seller to arrange for the carriage of goods by sea to a port of
destination, and provide the buyer with the documents necessary to obtain the goods from the carrier.
6
Ex- works = A trade term requiring the seller to deliver goods at his or her own place of business. All other
transportation costs and risks are assumed by the buyer i.e. price includes only the cost of manufacturing.
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ALSTOM India Ltd.


2.7 Key Facts

Chamera Hydroelectric Project
Himachal Pradesh
Contract(Electrical & Mechanical Works)
Basis 1 2 3



For

Offshore
Plant & Equipment
(Power Hydraulique)
Ex- works Plant & Equipment
(Indian Origin)
(Projects India)
Onshore
Services
Client NHPC(National Hydroelectric Power Corporation) Ltd.
Date 02-03-2007
Time of
Completion
Shall be determined from the date of Notification of Award
Time
Schedule
23-01-2007 - 22-12-2010
Contract
Price
JPY 1,150,003,216
EURO 3,216,547
+ INR 1,102,108,474
+INR 363,000,000
INR 271,968,000
(Transportation : INR
53,630,000 & Installation: INR
218,338,000)
Taxes
Custom Duty @ 22.58%
(Calculated on CIF + 1%
Landing Charges)
Excise Duty(Reimbursed
DEP) & CST @ 4%
(C Form)
(Calculated on main
equipment value + ED @
16.32%)
Contract price inclusive of
Service Tax @ 10.2%
Tax Value
INR 100,553,333.98
(JPY 1,150,003,216
@ 0.3834 INR)
INR 55,232,648.23 INR 251,73,081.67
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ALSTOM India Ltd.


Uri Hydroelectric Project
Jammu & Kashmir

Contract(Electrical & Mechanical Works)

Basis 1 2 3
For
Offshore
Equipment(Power
Hydraulique)
Ex- works Equipment
(Indian Origin)
Onshore
Services
Client NHPC(National Hydroelectric Power Corporation) Ltd.
Date 25-01-2007
Time of
Completion
Shall be determined from the date of Notification of Award
Time Schedule 29-12-06 - 28-04-10
Contract Price
JPY 1,814,229,275
+
CHF 14,256,086
INR 1,867,339,795
+
EURO 3,531,935
INR 388,169,847
(Transportation : INR
80,356,129 &
Installation : INR
307,813,718)
Taxes
Custom Duty @ 22.58%
(Calculated on CIF +
1% Landing Charges)
Excise Duty (Reimbursed DEP)
& CST @ 4% (C Form)
(Calculated on main equipment
value + ED @ 16.32%)
Service Tax not applicable on
J& K as per Section 64 of
chapter v of Finance Act 1994.
However, works contract tax
@ 4.2% is payable.
Tax Value INR 287,030,225 INR 69,553,078.20 INR 21144554.54
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ALSTOM India Ltd.


2.8 Construction Contracts
As per Indian Accounting Standard (Ind AS) 11construction contract is a contract specifically
negotiated for the construction of an asset or a combination of assets that are closely interrelated
or interdependent in terms of their design, technology and function or their ultimate purpose or
use. It also includes agreements of real estate development to provide services together with
construction material in order to perform contractual obligation to deliver the real estate to the
buyer.
There are two types of construction contracts:
1. Fixed Price Contract: A fixed price contract is a construction contract in which the
contractor agrees to a fixed contract price, or a fixed rate per unit of output, which in
some cases is subject to cost escalation clauses.

2. Cost Plus Contract: A cost plus contract is a construction contract in which the
contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of
these costs or a fixed fee.
Available From: (Min).

The contracts mentioned above are fixed price contracts as the contract price is fixed and is also
subject to cost escalation clauses.












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ALSTOM India Ltd.


2.8.2 Contract 1

This contract was made in the year 2007 (Chamera 2
nd
March 2007 & Uri 25
th
January 2007)
between National Hydroelectric Power Corporation Limited (now NHPC); the Employer and
M/s ALSTOM Power Hydraulique (a company incorporated under the laws of France); the
Contractor.

As per this contract, Employer engaged the Contractor for CIF
7
supply of all offshore plant and
equipment including specified spare parts and tools & instruments for both (3 x 77 = 231 MW)
Chamera Hydroelectric Project (Stage 3) & (4 x 60 = 240 MW) Uri Hydroelectric Project (Stage
2).
The employer agreed to pay to the contractor in consideration of the performance of his
obligation as per the contract the Contract price of JPY 1,150,003,216 for Chamera and
JPY
8
1,814,229,275 + CHF
9
14,256,086 for Uri.

Terms of Payment for both the contracts are as follows

Ten per cent (10 %) of total CIF amount as Interest free advance (Paid within 28 days of
notification of award.)
Two and half per cent (2.5%) of total CIF amount after submission of test reports,
layout drawings and on expiry of 12 months reckoned from the date of release of initial
advance payment.
Five per cent (5%) of the total CIF amount after submission of guide drawings, proof of
procurement of major raw material and on expiry of 18 months reckoned from the date of
release of initial advance payment.
Two and half per cent (2.5%) of total CIF amount after submission of balance data and
on expiry of 24 months reckoned from the date of release of initial advance payment.
Five per cent (5%) of the total CIF amount after completion of design engineering &
approval of 80% of the total drawings against the contract package and on expiry of 30
months reckoned from the date of release of initial advance payment.
Sixty Five percent (65%) of total of FOB. All taxes and duties shall be reimbursed on
production of documents.

7 CIF - A trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination, and
provide the buyer with the documents necessary to obtain the goods from the carrier.
8
JPY = Japanese Yen
9
CHF = Swiss Franc
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ALSTOM India Ltd.


Sixty Five percent (65%) of total of CIF along with price variations, if any, upon
delivery to site less 65% on Fob already paid.
Five per cent (5%) of the total or pro rata CIF amount on completion certificate.
Five per cent (5%) of the total or pro rata CIF amount on operational acceptance
certificate.

Since the contract involves import of goods it will attract compliance to the custom laws hence,
the company will be liable to pay custom duty for the import of goods. However due to long
gestation period of the project there has been some changes in the rate of basic custom duty
during the execution of the project. Available From: (EXI)

2007 7.5
2008 5
2009 5
2010 7.5
2011 5
2012 7.5

The above rates represent the changes only in the basic duty over which there is cen vat duty,
additional duty and cess. It is clearly visible from the table above that there have been evident
changes in the tax rate and this has changed the contract price accordingly. In a situation like this
Alstom communicates such changes to the employer and after due correspondence the excess tax
paid is reimbursed by the employer and vice versa.

Contract of Chamera was made on 2
nd
March, 2007 and of Uri was made on 25
th
January, 2007.
The bid for these projects was filed in the early 2006 and the contract was made in early 2007,
while discussing the bidding process we saw that it takes a lot of time between the filling of the
bid and execution of the contract. When the bid is filed the contractor has to quote a price with
the taxes prevailing 21 days prior to filling the bid. Hence, while filing the bid i.e. in early 2006
the Basic Duty was 5%, in 2007 it was changed to 7.5% while in 2008 it was changed again to
5%. The contract was made with the bid price having Basic Duty @ 5% however it was charged
@ 7.5% in 2007 whereas, in 2008 it is being charged @ 5% and so on. The variation was
communicated to the client for the reimbursements.



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ALSTOM India Ltd.


Schedule of Taxes and Duties
Chamera
S.No. Taxes Rate Amount (JPY) Tax (JPY) Tax (INR)
1 Customs Duty 22.58 1,161,503,248.16 262,267,433.43 100,553,333.98

Basic Duty (5%)
+ CVD (16% + Edu. Cess
2%=16.325)
+ Edu Cess (2%)
(Applied on assessable value
i.e. CIF + 1% Landing
Charges)


Following SBI Bills selling exchange rate as on date of opening of price bid has been taken for tax
calculation:
1 JPY = INR 0.3834


Uri
S.No. Taxes Rate Currency Amount Tax Tax (INR)
1 Customs Duty 22.58 JPY 183,271,572.00 413,749,501 165,044,675.93

Basic Duty (5%)
+ CVD (16% + Edu.
Cess 2%=16.325)
+ Edu Cess (2%)
(Applied on
assessable value i.e.
CIF + 1% Landing
Charges)
CHF 14,398,646.86 3,251,214 121,985,566.58
Total 2870,30,242.51

Following SBI Bills selling exchange rate as on date of opening of price bid has been taken for tax
calculation:
1 JPY = INR 0.3989
1 CHF = INR 37.52



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ALSTOM India Ltd.


2.8.3 Contract 2

This contract was made in the year 2007 (Chamera 2
nd
March 2007 & Uri 25
th
January 2007)
between National Hydroelectric Power Corporation Limited (now NHPC); the Employer and
M/s ALSTOM Projects India Limited (now Alstom India Limited); the Contractor.
As per this contract the Employer desires to engage the Contractor for Ex- works
10
supply of all
plant and equipment including specified spare parts and tools & instruments of Indian Origin for
(3 x 77 = 231 MW) Chamera Hydroelectric Project (Stage 3) & (4 x 60= 240 MW) Uri
Hydroelectric Project (Stage 2).
The employer hereby agrees to pay to the contractor in consideration of the performance of his
obligation as per the contract the Contract price of INR 363,000,000 + EURO 3,216,547 + INR
1,102,108,474 for Chamera & EURO 3,531,935 + INR 1,867,339,795 for Uri.

Terms of Payment for both the contracts are as follows
Ten per cent (10 %) of total EXW
11
amount as Interest free advance (Paid within 28 days
of notification of award.)
Two and half per cent (2.5%) of total EXW amount after submission of test reports, layout
drawings and on expiry of 12 months reckoned from the date of release of initial advance
payment.
Five per cent (5%) of the total EXW amount after submission of guide drawings, proof of
procurement of major raw material and on expiry of 18 months reckoned from the date of
release of initial advance payment.
Two and half per cent (2.5%) of total EXW amount after submission of balance data and
on expiry of 24 months reckoned from the date of release of initial advance payment.
Five per cent (5%) of the total EXW amount after completion of design engineering &
approval of 80% of the total drawings against the contract package and on expiry of 30
months reckoned from the date of release of initial advance payment.
Sixty Five percent (65%) of total or pro rata EXW amount along with price variations, if
any, upon dispatch. All admissible taxes and duties shall be reimbursed as per actual at this
stage.
Five per cent (5%) of the total or pro rata EXW amount on completion certificate.
Five per cent (5%) of the total or pro rata EXW amount on operational acceptance
certificate.

10
Ex- works = A trade term requiring the seller to deliver goods at his or her own place of business. All other
transportation costs and risks are assumed by the buyer i.e. price includes only the cost of manufacturing.
11
EXW = Ex- works
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ALSTOM India Ltd.


The above two contracts deal with the manufacturing of products and Alstom being the
manufacturer is liable to pay excise duty on the equipment supplied. However as per chapter 8 of
EXIM policy Supply of goods to the power projects and refineries shall be regarded as deemed
exports.
"Deemed Exports" refers to those transactions in which the goods supplied do not leave the
country and the payment for such supplies is received either in Indian rupees or in free foreign
exchange.
Deemed exports shall be eligible for Exemption from terminal excise duty where supplies are
made against International Competitive Bidding . In other cases , refund of terminal excise duty
will be given. Available From: (EXI1)
Since, as per the contracts above Alstom is supplying goods to a power project and is receiving
the payment in foreign currency, it is eligible for the exemption from the terminal excise duty
hence, Alstom need not pay excise duty.
Alstom's hydro equipment manufacturing unit is situated in Vadodra, Gujarat. Since the projects
Chamera & Uri are situated in Himachal Pradesh and Jammu & Kashmir respectively there is a
movement of goods from one state to another which attracts the payment of Central Sales Tax.
During the execution of both these projects the rate of CST changed a couple of times.

1
st
July, 1975 - 31
st
March, 2007 4%
1
st
July, 2007 - 31
st
May, 2008 3%
1
st
June, 2008 - till date 2%
(Min1)
The bid was filed in early 2006 when the CST rate was 4%, on 1
st
July, 2007 it was changed to
3% while on 1
st
June, 2008 it was changed to 2%. The contract was made with the bid price
having CST @ 4% however it was charged @ 3% from 1
st
July, 2007 - 31
st
May, 2008 whereas
from 1
st
June, 2008 onwards it is being charged @ 2% and the variation was communicated to
the client for the reimbursements.

The sales tax on inter-state sale is 2% or the applicable sales tax rate for sale within the State
whichever is lower if the sale is to a dealer registered under CST and the goods are covered in
the registration certificate of the purchasing dealer. The purchasing dealer is eligible to get these
goods at concessional rate if a declaration in C form is submitted to the selling dealer.
Reduction of CST rate first from 4% to 3% & then from 3% to 2% has been done as a precursor
to the introduction of Goods & Services Tax (GST), as CST would be inconsistent with the
concept & design of GST.
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ALSTOM India Ltd.


Schedule of Taxes and Duties
Chamera
S.No. Taxes Rate Currency Amount Tax
Total Taxes
(INR)
1
Excise Duty
(16% + 2% Education
Cess)
16.32
EURO 3,216,547
Deemed Export
Benefit
INR 1,005,113,081

2

CST
4% against C form
(calculated on equipment
value + ED @ 16.32%)
4

EURO 3,216,547 128,661.88
7,409,637.67
INR 1,195,575,264 47,823,010.56 47,823,010.56




55,232,648.23

Following SBI Bills selling exchange rate as on date of opening of price bid has been taken for tax
calculation:
1 EURO = INR 57.59


Uri
S.No. Taxes Rate Currency Amount Tax
Total Taxes
(INR)
1
Excise Duty
(16% + 2% Education
Cess)
16.3

EURO 3531935
Deemed Export
Benefit

INR 1288063803

2

CST
4% against C form
(calculated on equipment
value + ED @ 16.32%)
4

EURO 3531935 141,277.40
8,363,622.08
INR 1529736403 61,189,456.12 61,189,456.12




69,553,078.20

Following SBI Bills selling exchange rate as on date of opening of price bid has been taken for tax
calculation:
1 EURO = INR 59.20



83
ALSTOM India Ltd.


2.8.4 Contract 3

This contract was made in the year 2007 (Chamera 2
nd
March 2007 & Uri 25
th
January 2007)
between National Hydroelectric Power Corporation Limited (now NHPC); the Employer
and M/s ALSTOM Projects India Limited (now Alstom India Limited); the Contractor.
As per this contract the Employer desires to engage the Contractor for Providing all on- shore
services in respect of all the equipment supplied under the First, and Second contract and any
other service specified in the contract including performance and guarantee test for (3x77 = 231
MW) Chamera Hydroelectric Project (Stage 3) &(4 x 60= 240 MW) Uri Hydroelectric Project
(Stage 2).
The Employer hereby agrees to pay to the contractor the Contract Price in consideration of its
obligations hereunder. The Contract Price shall be the aggregate of:

The above amount is inclusive of service tax @ 10.2%.


Terms of Payment for both the contracts are as follows

1. Local Transportation including Port Clearance, Port Charges and Inland Insurance

In respect of local transportation (i.e. including port clearance & port charges and inland
insurance) for both the foreign currency (where applicable) and the local portions, the
following payments shall be made:

One Hundred per cent (100 %) of the total or pro rata local transportation (including
port clearance & port charges and inland insurance) amount to be paid upon delivery to
the site.


2. Installation

In respect of installation services for both the foreign and local currency portions, the
following payments shall be made:

Chamera (INR) Uri (INR)
Local Transportation including Port
Clearance, Port Charges and Inland
Insurance
53,630,000 80,356,129

Installation 218,338,000 307,813,718
Total 371,968,000 388,169,847
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ALSTOM India Ltd.


Ninety per cent (90 %) of the measured value of work performed by the contractor
during the preceding month will be made monthly.

Five per cent (5%) of the total or pro rata value of installation services performed by the
contractor upon issue of the completion certificate.

Five per cent (5%) of the total or pro rata value of installation services performed by the
contractor upon issue of the Operational Acceptance Certificate.

Since Alstom is providing service in these contracts it is liable for the payment of service tax.
However, in case of Uri service tax will not be applicable as Uri is located in Jammu & Kashmir
and as per section 64 of finance act 1994 ( as amended by finance act 2013) service tax is a
destination based service tax and extends to the whole of India except for the state of Jammu &
Kashmir.
The services provided in the above contracts are Transportation and Installation. As per section
65(105) of finance act 1994 (as amended by the finance act 2013) transportation service comes
under the definition of Business Support Services and the installation service comes under the
scope of Erection, Commissioning or Installation Services which explained hereunder.
Business Support Service (Batra, 2012)
Date of Introduction: 01.05.2006 vide Notification No.15/2006-ST, dated 24.04.2006
Taxable Service means any service provided or to be provided to any person, by any other
person, in relation to support services of business or commerce, in any manner;
(Section 65 (105) (zzzq) of the Finance Act, 1994)

Support Services of Business or Commerce means services provided in relation to business or
commerce and includes evaluation of prospective customers, telemarketing, processing of
purchase orders and fulfillment services, information and tracking of delivery schedules,
managing distribution and logistics, customer relationship management services, accounting
and processing of transactions, operational assistance for marketing, formulation of customer
service and pricing policies, infrastructural support services and other transaction processing.

Erection, Commissioning or Installation Services (Batra,
2012)
Date of Introduction: 01.07.2003 vide Notification No.7/2003-ST, dated 20.06.2003
Taxable Service means any service provided or to be provided, [to any person], by a erection,
commissioning and installation agency in relation to commissioning and installation;
(Section 65 (105) (zzd) of the Finance Act, 1994)
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ALSTOM India Ltd.



Erection, Commissioning or Installation means any service provided by a commissioning and
installation agency, in relation to,
(i) Erection, commissioning or installation of plant, machinery, equipment or structures,
whether pre-fabricated or otherwise or
(ii) Installation of
(a) Electrical and electronic devices, including wirings or fittings therefore; or
(b) Plumbing, drain laying or other installations for transport of fluids; or
(c) Heating, ventilation or air-conditioning including related pipe work, duct work
and sheet metal work; or
(d) Thermal insulation, sound insulation, fire proofing or water proofing; or
(e) Lift and escalator, fire escape staircases or travelators; or
(f) Such other similar services;


Though, service tax is not applicable in the state of Jammu & Kashmir. Still as per the
notification dated 30
th
March 2007, Government of Jammu & Kashmir specified that all the
services provided in shape of works contract shall be taxable @ 4%. Hence, Alstom has to
charge the works contract tax which is applicable on the installation services provided in the
state of Jammu & Kashmir.

During the execution of both these projects the rate of service tax changed a couple of times.

10-9-2004 to 17-4-2006 10.24 (2% cess)
18-4-2006 to 10-5-2007 12.24 (2% cess)
11.5.2007 to 24-2-2009 12.36 (2% E. cess + 1% SHEC)
25-2-2009 to 31-3-2012 10.30 (2% E. cess + 1% SHEC)
1-4-2012 to till date 12.36 (2% E. cess + 1% SHEC)
Available From: (Sar)
Due to the above changes there was change in the amount of service tax to be paid by Alstom to
the government. Hence, Alstom had to communicate the change in the rate of tax to the client in
order to claim the reimbursement of the excess tax paid.
It is due to these changes Alstom puts a clause regarding future adjustments in the contract so
that the it can legally bind the employer to reimburse the excess at the same time Alstom also
provides benefit in case the rate has declined.
As explained above, when the bid is filed the contractor has to quote a price with the taxes
prevailing 21 days prior to filling the bid. Hence, while filing the bid i.e. in early 2006 the
service tax rate was 10.2% and on 18.4.2006 it was changed to 12.2%. The contract was made
with the bid price having service tax @ 10.2% however it was charged @ 12.2% and the
variation was communicated to the client for the reimbursements.

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ALSTOM India Ltd.


Schedule of Taxes
Chamera
S.no. Particulars Amount ST @ 10.2%
1 Transport 53,630,000 4,963,938.29
2 Installation 218,338,000 20,209,143.38
Total

25,173,081.67

Uri
S.no. Particulars Amount Tax Nature
1 Transport 80,356,129
74,37,681.63
Service tax @ 10.2%
2 Installation
307,813,718 12,407,078.84
Works Contract Tax @ 4.2%





Total

21,144,554.54

For item wise price details see annexure 4 & 5(Price Schedules Chamera III, Price Schedules Uri II)


2.9 Reimbursement Procedure

In a situation where a change in tax occurs, the client is intimated about the change in order to
make him realise that there has been a change in tax and he has to bear the burden. To avoid any
hassles there is a clause in the general conditions to the contract stating the fact that the employer
has to bear the changes in the tax structure, if any.
At the time of intimating the change in tax laws following documents are produced in front of
the client:
1. Copy of notification of change in law
2. A letter in writing duly signed by the Taxation head of the contractor i.e. Alstom
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ALSTOM India Ltd.


2.10 Conclusion

During the study of Chamera Hydroelectric Project And Uri Hydroelectric Project I came across
a lot of facts about how contracts are made, what are the issues to look upon while making a
contract, indirect taxes like customs duty, central sales tax , service tax etc.
After analysing all the contracts of both the Hydroelectric Projects, I can conclude that Indirect
Taxes are significant for Hydroelectric Projects. The reasons behind this is the long gestation
period of these projects. Government, for the betterment of the taxation structure keeps on
improving the tax laws by way of amendments year after year and Hydroelectric projects due to
a longer gestation period are prone to be affected by these amendments.
In order to cope with these changes Alstom's taxation department keeps a close eye on the
amendments made in the law and tries to communicate the same to the client as soon as possible.
And the client upon being satisfied with the documents submitted by Alstom reimburses the
taxes. And it takes a lot of time and effort to be updated about the taxes applicable and then
convince the client that he has to bear the burden for the same.
In case of Indirect Taxes the person liable to pay the tax does not bear burden of the tax, rather
the ultimate consumer of the good or service on which tax is applicable bears the burden. In the
present case Alstom has the liability to pay the tax and the burden of tax is falling on client
(NHPC).
If in case Alstom is not updated about the taxes or is updated but is unable to convince the client
to reimburse them, Alstom will have to bear the burden of the tax i.e. Alstom will have to pay the
tax whether or not it is reimbursed by the client and as a result the payment of tax will affect the
profit margin and may turn it into a loss as well. This is because the bid price or the contract
price is affected by the requirements of the bid and also by the quotations of the competitors and
the profit margin is not too high.
Hence, it can be said that taxation forms a significant part of these contracts as it directly affects
the revenue and the profit of these contracts. Also that to keep an eye on the latest updates in the
taxation structure is a crucial task involved in these kind of businesses.




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ALSTOM India Ltd.


2.11 Learning Summary

As my internship period came to an end, I feel more enlightened in a way that now I know things
which I was not aware of earlier. The experience of learning in an organisation where the scope
of the business activities is so vast was a delight. If I try to enumerate a few things that I learnt
during the course of my internship, following will be some of them:
Primary Objective:
Power Projects: I learnt about the power projects in terms of the companies in the
market that are involved in the business of power generation.
Taxes: I learnt about the taxes prevailing in India and how they can have an effect on a
business depending upon the business activities. However, I got to learn only a brief
about the taxes due to the limited time.
Amendments: While studying about the taxes I also learnt that Government keeps on
amending the tax structure in order to improve the scope of taxation in India by way of
interpretations given by the courts, change in tax rate etc.
Contracts: Though there are different types of contracts for different businesses but I got
an opportunity to see and thoroughly study the hydroelectric construction contracts and
analyse the technicalities one has to keep in mind while framing them.
Bidding: It was very interesting to know that in order to win the bid Alstom has to keep
an eye on the innovations of the competitors in order to match the same and get ahead of
them, also they have to be in touch with the clients through e-mails and meetings in order
to get the updates of future projects.
Incidental objective:
Performance of the company: Post analysing the financials of the Company I learnt that
one cannot judge the performance of a company only on the basis of its Revenue, one
has to compare the revenue with other aspects like profits and expenses in order to see
the real picture.
Efficiency of the company: I learnt that even if the company is growing in its revenue,
its efficiency depends on how well its earnings are growing.
Aforesaid points list out my learning which can be termed as more of academic in nature
however, I also grew as an individual while serving as an intern to the company. The internship
helped me realise the importance of time management as I had to meet the deadlines and of
the protocols that one has to follow in the organisation.

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ALSTOM India Ltd.














Annexure(s)






90
ALSTOM India Ltd.


Annexure 1
Balance Sheet
BALANCE SHEET Rupees in Million

EQUITY AND LIABILITIES 2011 2012 2013

(1) Shareholders' Funds

(a) Share Capital 670.20 672.30 672.30

(b) Reserves and Surplus 5,202.80 6,264.70 7,348.80
A
Shareholders' Funds 5,873.00 6,937.00 8,021.10




2) Non-Current Liabilities


(a) Other long term liabilities 102.40 112.30 144.40

(b) Long term provisions 183.10 305.50 414.20

(c) Deferred tax liabilities (Net) 7.70

B
Long Term Loans 293.20 417.80 558.60
(A+B)=C
Capital Employed 6,166.20 7,354.80 8,579.70




3) Current Liabilities


(a) Construction contracts in progress, liabilities 17,584.10 14,587.70 12,556.00

(b) Trade payables 2,249.30 2,686.60 3,346.30

(c) Other current liabilities 1,534.60 1,544.50 1,695.00

(d) Short-term provisions 1,090.90 1,278.20 1,025.70

22,458.90 20,097.00 18,623.00
TOTAL 28,625.10 27,451.80 27,202.70




ASSETS 2011 2012 2013

(1) Non-Current Assets


(a) Fixed assets 3,980.50 4,686.20 4,820.70

(i) Tangible assets 3,486.70 3,687.70 4,414.00

(ii) Intangible assets 46.40 43.60 33.20

(iii) Capital work-in-progress 447.40 954.90 373.50
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ALSTOM India Ltd.



(b) Non-current investments

0.50 0.50

(c) Deferred tax assets (Net)

124.50 108.20

(d) Long term loans and advances 648.90 693.50 675.50

(e) Other non-current assets

40.20 77.70

4,629.40 5,544.90 5,682.60




(2) Current Assets


(a) Inventories 415.20 739.70 877.80

(b) Construction contracts in progress, assets 6,108.10 2,384.80 2,091.20

(c) Trade receivables 6,811.40 10,290.60 10,977.00

(d) Cash and bank balances 7,360.60 2,232.00 1,097.60

(e) Short-term loans and advances 3,226.60 5,889.70 6,018.50

(f) Other current assets 73.80 370.10 458.00

23,995.70 21,906.90 21,520.10
TOTAL 28,625.10 27,451.80 27,202.70
Available From: (Als)







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ALSTOM India Ltd.


Annexure 2
Income Statement
INCOME STATEMENT Rupees in Million

Particulars 2011 2012 2013
A
Revenue 15,742.00 24,183.00 27,858.40
B
COGS 8,420.90 14,012.90 16,552.40
(A-B)=C
Gross Profit 7,321.10 10,170.10 11,306.00
D
Selling expenses 662.00 1,093.40 1,472.80
E
Admin expenses 3,807.90 6,780.40 7,419.10
F
Depreciation 408.70 510.50 550.80
(D+E+F)=G
Operating Exp. 4,878.60 8,384.30 9,442.70



(C-G)=H
Profit/PBIT 2,442.50 1,785.80 1,863.30
I
Other Income 471.80 718.00 980.60
J
Finance Cost(interest) 6.80 6.50 24.90



(H+I-J)=K
PBT 2,907.50 2,497.30 2,819.00
L
Current -775.90 -928.90 -884.40
M
Earlier tax

-58.30 -54.90
N
Deferred Tax -73.50 167.40 -42.40
(L+M+N)=O
Total Tax -849.40 -819.80 -981.70
(K+O)=P
Profit 2,058.10 1,677.50 1,837.30
Q Profit/Loss from
Discontinued Operation -369.10

(P+Q)=R
PAT/EE/Net Profit 1,689.00 1,677.50 1,837.30
S
No. of Eq. Shares 67.23 67.23 67.23
(R/S)=T
Earnings Per Share(EPS) 25.12 24.95 27.33
U
Dividend Per Share(DPS) 10.00 10.00 10.00
V MPS(closing rates) 586.75 355.60 318.25
Available From: (Als)

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ALSTOM India Ltd.


Annexure 3
Notes
Notes
Particulars
2011 2012 2013
Net Sales Revenue
Revenue
16,086.10 24603.1 28678.2
excise duty
344.1 420.1 819.8
Net Sales Revenue
15742 24183 27858.4

2011 2012 2013
COGS
increase decrease -3.5 -15.1 22.9
material 8,142.40 13508.1 16003.9
power 149.5 210 242.4
repairs 84.5 109.1 108.3
tools and spares 48 200.8 174.9
variable expenses 8420.9 14012.9 16552.4


Total (other exp.) 2025 3967.8 4319.4

Selling
&
Admin.
Expenses
operating
exp.
other expenses (fixed) 1743 3447.9 3793.8
employee benefit 2,726.90 4425.9 5098.1
depreciation 410.2 514.7 554.9
transfer from revaluation
reserve -1.5 -4.2 -4.1
fixed exp. 4878.6 8384.3 9442.7


Selling
royalty 217.1 417.3 515.8
travelling 432.5 598.3 612.3
provision for bad debts 3.9 76.7 213.4
bad debts 8.5 1.1 131.3
selling exp. 662 1093.4 1472.8


Admin. Exp. Admin. Exp. 3807.9 6780.4 7419.1


Financing Exp. Financing Exp. 6.8 6.5 24.9


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ALSTOM India Ltd.


Annexure 4
Price Schedules Chamera III


Contract 1
S.No. Particulars QTY. Unit Price (JPY)
Total Price
(JPY)

FOB
12
CIF (Qty. x CIF)
1 Turbine & Accessories 3 38,043,342.63 38,622,682.76 115,868,048.28
2 Governing System & Accessories 3 15,313,524 15,546,725.73 46,640,177.19

Spare parts 1 2,682,816.61 2,723,671.98 2,723,671.98
3 Main Inlet Valve & Accessories 3 4,073,446.41 4,135,478.71 12,406,436.13
4 Generator 3 20,601,692.67 20,915,423.63 62,746,270.89
5 XLPE Cable 1 198,495,529.4 206,500,507.2 206,500,507.22

Spare parts 1 9,069,310.33 9,207,421.84 9,207,421.84

Tools & Instruments 1 13,430,558.43 13,635,084.19 13,635,084.19
6 Gas Insulated Switchgear 1 592,868,660.4 604,125,660 604,125,660.04

Spare parts 1 6,946,840.43 7,052,629.48 7,052,629.48

Tools & Instruments 1 39,470,683.81 40,071,760.44 40,071,760.44
7 Control Monitoring System 1 28,822,923.29 29,025,548.32 29,025,548.32
Total 1,150,003,216



















12
FOB - When used in trade terms, the word "free" means the seller has an obligation to deliver
goods to a named place for transfer to a carrier.
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ALSTOM India Ltd.

























Contract 2A
S.No. Particulars Qty.
Unit Price (INR)
Total Price (INR)
1 Turbine & Accessories 3 16,646,481 49,939,443
2
Governing System & Accessories
(Digital Type)
3 1,876,975 5,630,925
3 Main Inlet Valve & Accessories 3 7,707,216 23,121,648
4 Generator 3 44,108,151 132,324,453
5 Excitation System 3 129,306 387,918

Spare parts 1 3,491,267 3,491,267
6 Isolated Phase Bus Ducts 3 14,115,383 42,346,149
7 Control Monitoring System 1 334,161 334,161

Spare parts 1 1,002,484 1,002,484

Tools & Instruments 1 2,004,968 2,004,968
8 Protection System 1 28,760,808 28,760,808

Spare parts 1 7,777,820 7,777,820

Tools & Instruments 1 969,210 969,210
9 Cooling Water System 1 58,518,831 58,518,831

Spare parts 1 6,389,915 6,389,915
Total

363,000,000
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ALSTOM India Ltd.


Contract 2B
S.No. Particulars Qty. Unit Price (INR) Total Price (INR)
1 General Technical Requirements 1 1,019,296 1,019,296
2 Turbine & Accessories 3 31,332,357 93,997,071

Spare parts 1 22,808,686 22,808,686

Tools & Instruments 1 12,510,276 12,510,276
3
Governing System & Accessories
(Digital Type)
3 208,552 625,656
4 Main Inlet Valve & Accessories 3 15,859,972 47,579,916

Spare parts 1 6,370,599 6,370,599
5 Generator 3 24,655,390 73,966,170

Spare parts 1 14,536,371 14,536,371

Tools & Instruments 1 15,466,669 15,466,669
6 Excitation System 3 11,142,155 33,426,465

Spare parts 1 1,486,227 1,486,227
7 Isolated Phase Bus Ducts 3 1,299,871 3,899,613

Spare parts 1 718,506 718,506

Tools & Instruments 1 87,006 87,006
8 Generator Step Up Transformers 10 21,606,227 216,062,270

Spare parts 1 4,890,740 4,890,740

Tools & Instruments 1 1,073,203 1,073,203
9 XLPE Cable 1 8,078,553 8,078,553
10 Pothead Yard Equipment 1 13,388,241 13,388,241

Spare parts 1 847,570 847,570

Tools & Instruments 1 61,326 61,326
11 220 V and 48 V DC System 1 22,858,092 22,858,092

Spare parts 1 2,191,787 2,191,787

Tools & Instruments 1 42,928 42,928
12 Control Monitoring System 1 25,587,879 25,587,879

Spare parts 1 980,279 980,279

Tools & Instruments 1 3,506,359 3,506,359
13 Protection System 1 4,167,537 4,167,537
14
Power And Control Cables
(Including Cable Trays)
1 42,028,787 42,028,787

Spare parts 1 3,821,852 3,821,852

Tools & Instruments 1 69,850 69,850
15 11KV Switchgear System 1 16,299,289 16,299,289

Spare parts 1 905,170 905,170
16 D.G. Sets 2 9,377,312 18,754,624

Spare parts 1 503,282 503,282
17 415 V AC Supply System 1 20,280,736 20,280,736

Unit Auxiliary Transformers 3 2,537,342 7,612,026

Station Service Transformers 2 2,537,342 5,074,684

GIS Transformers 1 960,076 960,076

Dam site transformers 1 1,337,248 1,337,248

Transformer at Main Access Tunnel 1 360,028 360,028
Transformer for Surge Shaft Supply 1 411,461 411,461
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ALSTOM India Ltd.


























Spare parts 1 4,806,950 4,806,950
18 Illumination System 1 24,017,151 24,017,151

Spare parts 1 1,414,482 1,414,482
19 Public Address System 1 11,259,518 11,259,518

Spare parts 1 843,757 843,757

Tools & Instruments 1 13,403 13,403
20 Electrical Workshop Equipment 1 16,787,735 16,787,735
21 EOT Crane 1 46,931,937 46,931,937

Spare parts 1 11,932,484 11,932,484
22 Cooling Water System 1 7,212,083 7,212,083
23 Drainage System 1 35,842,350 35,842,350

Spare parts 1 2,511,364 2,511,364
24 HVAC System 1 68,040,083 68,040,083

Spare parts 1 6,179,503 6,179,503
25 Grounding System 1 12,750,442 12,750,442

Tools & Instruments 1 110,387 110,387
26 compress Air System 1 8,816,509 8,816,509

Spare parts 1 1,927,444 1,927,444
27 Fire Fighting System 1 40,695,901 40,695,901

Spare parts 1 1,445,201 1,445,201
28 Oil Filtration Plant insulating Oil 2 12,267,678 24,535,356

Spare parts 1 689,916 689,916
29 Mechanical Workshop Equipment 1 15,126,385 15,126,385

Spare parts 1 226,322 226,322
30 Elevator 1 7,128,769 7,128,769

Spare parts 1 208,638 208,638
Total

1,102,108,474
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ALSTOM India Ltd.


Contract 3
Local Transportation including Port Clearence,Port Charges and Inland Insurance
S.No. Particulars Qty. Unit Price Total Price ST @ 10.2%
1 General Technical Requirements 1 16,881 16,881 1,562.49
2 Turbine & Accessories 3 33,88,210 101,64,630 9,40,827.82
3
Governing System & Accessories
(Digital Type)
3 55,714 1,67,142 15,470.49
4 Main Inlet Valve & Accessories 3 4,63,416 13,90,248 1,28,679.94
5 Generator 3 31,86,316 95,58,948 8,84,766.51
6 Excitation System 3 1,81,335 5,44,005 50,352.55
7 Isolated Phase Bus Ducts 3 5,41,409 16,24,227 1,50,336.80
8
Generator Step - Up
Transformers
10 7,34,198 73,41,980 6,79,566.21
9 XLPE Cable 1 4,66,290 4,66,290 43,159.33
10 Gas Insulated Switchgear 1 12,98,489 12,98,489 1,20,186.82
11 Pothead Yard Equipment 1 7,65,182 7,65,182 70,824.47
12 220 V and 48 V DC System 1 1,02,595 1,02,595 9,496.09
13 Control Monitoring System 1 1,32,193 1,32,193 12,235.65
14 Protection System 1 37,916 37,916 3,509.47
15
Power And Control Cables
(Including Cable Trays)
1 11,80,783 11,80,783 1,09,292.07
16 11KV Switchgear System 1 1,29,607 1,29,607 11,996.29
17 D.G. Sets 2 65,454 1,30,908 12,116.71
18 415 V AC Supply System 1 7,92,745 7,92,745 73,375.67
19 Illumination System 1 2,94,151 2,94,151 27,226.32
20 Public Address System 1 38,819 38,819 3,593.05
21 Electrical Workshop Equipment 1 1,29,526 1,29,526 11,988.79
22 EOT Crane 1 50,55,450 50,55,450 4,67,927.31
23 Cooling Water System 1 38,65,628 38,65,628 3,57,798.60
23 Drainage System 1 8,13,570 8,13,570 75,303.21
24 HVAC System 1 52,72,137 52,72,137 4,87,983.64
25 Grounding System 1 6,15,245 6,15,245 56,946.45
26 Compress Air System 1 87,129 87,129 8,064.57
27 Fire Fighting System 1 8,17,535 8,17,535 75,670.21
28 Oil Filtration Plant insulating Oil 2 1,94,468 3,88,936 35,999.52
29
Mechanical Workshop
Equipment
1 2,98,628 2,98,628 27,640.70
30 Elevator 1 1,08,477 1,08,477 10,040.52
Total

536,30,000 49,63,938.29



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ALSTOM India Ltd.


Installation
S.No. Particulars Qty. Unit Price Total Price ST @ 10.2%
1 General Technical Requirements 1 1,13,640 1,13,640 10,518.40
2 Turbine & Accessories 3 108,16,184 324,48,552 30,03,404.99
3
Governing System & Accessories
(Digital Type)
3 23,17,754 69,53,262 6,43,586.86
4 Main Inlet Valve & Accessories 3 23,17,754 69,53,262 6,43,586.86
5 Generator 3 149,70,930 449,12,790 41,57,082.20
6 Excitation System 3 17,89,703 53,69,109 4,96,959.27
7 Isolated Phase Bus Ducts 3 23,72,357 71,17,071 6,58,748.86
8
Generator Step - Up
Transformers
10 5,49,384 54,93,840 5,08,504.25
9 XLPE Cable 1 32,49,623 32,49,623 3,00,781.80
10 Gas Insulated Switchgear 1 50,97,448 50,97,448 4,71,814.61
11 Pothead Yard Equipment 1 29,19,351 29,19,351 2,70,212.16
12 220 V and 48 V DC System 1 2,61,244 2,61,244 24,180.48
13 Control Monitoring System 1 4,24,788 4,24,788 39,317.95
14 Protection System 1 4,00,893 4,00,893 37,106.25
15
Power And Control Cables
(Including Cable Trays)
1 237,68,016 237,68,016 21,99,943.40
16 11KV Switchgear System 1 6,13,855 6,13,855 56,817.79
17 D.G. Sets 2 4,77,886 9,55,772 88,465.28
18 415 V AC Supply System 1 24,90,316 24,90,316 2,30,501.12
19 Illumination System 1 81,50,497 81,50,497 7,54,401.72
20 Public Address System 1 20,78,235 20,78,235 1,92,359.32
21 Electrical Workshop Equipment 1 1,25,894 1,25,894 11,652.62
22 EOT Crane 1 52,98,869 52,98,869 4,90,457.93
23 Cooling Water System 1 264,64,152 264,64,152 24,49,495.01
23 Drainage System 1 5,01,583 5,01,583 46,426.01
24 HVAC System 1 179,12,577 179,12,577 16,57,969.92
25 Grounding System 1 57,67,550 57,67,550 5,33,838.57
26 Compress Air System 1 3,54,568 3,54,568 32,818.45
27 Fire Fighting System 1 11,07,807 11,07,807 1,02,537.49
28 Oil Filtration Plant insulating Oil 2 2,57,278 5,14,556 47,626.78
29
Mechanical Workshop
Equipment
1 1,72,960 1,72,960 16,009.00
30 Elevator 1 3,45,920 3,45,920 32,018.00
Total

2183,38,000 202,09,143.38



100
ALSTOM India Ltd.


Annexure 5
Price Schedules Uri II
Contract 1
S.No. Particulars Qty. Unit Price Total Price
JPY CHF JPY CHF
FOB CIF FOB CIF (Qty. x CIF)
(Qty. x
CIF)
1
Turbine &
Accessories
4 32,956,550 33,458,426

133,833,704 -
2
Governing
System
& Accessories
(Digital Type)
4 14,251,217 14,468,240

57,872,960 -

Spare parts 1 2,765,651 2,807,767

2,807,767 -
3
Main Inlet
Valve
& Accessories
4 4,027,891 4,089,230

16,356,920 -
4 Generator 4 19,613,161 19,911,838

79,647,352 -
5 XLPE Cable 1 859,007,052 870,621,418

870,621,418 -

Spare parts 1 34,615,717 35,142,860

35,142,860 -

Tools &
Instruments
1 26,897,974 27,307,587

27,307,587 -
6
Gas Insulated
Switchgear
1

10,670,667 10,766,767

10,766,767

Spare parts 1

358,140 363,594

363,594
7
Control
Monitoring
System
1 31,862,078 32,086,069

32,086,069 -
8
Cooling Water
System
1 47,776,249 48,503,806

48,503,806 -
9 VAC System 1 78,501,225 79,696,675

79,696,675 -
ADDITIONAL BAY AT URI 1


- -
1 XLPE Cable 1 371,948,487 383,562,853

383,562,853 -

Spare parts 1 26,067,201 26,464,163

26,464,163 -

Tools &
Instruments
1 20,020,264 20,325,141

20,325,141 -
2
Gas Insulated
Switchgear
1

2,769,644 2,788,244 - 2,788,244

Spare parts 1

332,419 337,481 - 337,481
Total

1,814,229,275 14,256,086



101
ALSTOM India Ltd.


Contract 2
S.No. Particulars Qty. Unit Price Total Price

INR EURO INR EURO
1 General Technical Requirements 1

2,570,896.82 -
2 Turbine & Accessories 4 79,443,386.46 231,935.00 317,773,545.84 927,740.00

Spare parts 1 23,304,592.50 129,300.00 23,304,592.50 129,300.00

Tools & Instruments 1 14,679,736.51

14,679,736.51 -
3
Governing System & Accessories
(Digital Type)
4 870,236.88

3,480,947.52 -
4 Main Inlet Valve & Accessories 4 23,464,634.36

93,858,537.44 -

Spare parts 1 7,169,749.47

7,169,749.47 -
5 Generator 4 68,148,197.06 389,000.00 272,592,788.24 1,556,000.00

Spare parts 1 15,788,548.32

15,788,548.32 -

Tools & Instruments 1 15,455,979.77

15,455,979.77 -
6 Excitation System 4 8,387,584.99

33,550,339.96 -

Spare parts 1 4,431,644.05

4,431,644.05 -
7 11 KV Bus Ducts 4 13,855,019.22

55,420,076.88 -

Tools & Instruments 1 109,699.37

109,699.37 -
8 Generator Step - Up Transformers 13 26,003,692.03

338,047,996.39 -

Spare parts 1 8,603,288.42

8,603,288.42 -

Tools & Instruments 1 1,007,073.71

1,007,073.71 -
9 XLPE Cable 1 4,256,695.10

4,256,695.10 -
10 Outdoor Pot Yard Equipment 1 12,835,638.03

12,835,638.03 -

Spare parts 1 1,399,587.62

1,399,587.62 -

Tools & Instruments 1 57,546.87

57,546.87 -
11 220 V and 48 V DC System 1 18,265,614.83

18,265,614.83 -

Spare parts 1 1,924,762.38

1,924,762.38 -
12 Control Monitoring System 1 24,839,493.08 807,237.00 24,839,493.08 807,237.00

Spare parts 1 2,117,920.42 88,827.00 2,117,920.42 88,827.00

Tools & Instruments 1 5,171,726.71

5,171,726.71 -
13 Protection System 1 33,380,679.39

33,380,679.39 -

Spare parts 1 7,298,562.45

7,298,562.45 -

Tools & Instruments 1 584,671.34

584,671.34 -
14 Cabling System 1 38,426,957.54

38,426,957.54 -

Spare parts 1 5,561,780.70

5,561,780.70 -

Tools & Instruments 1 65,545.79

65,545.79 -
15 11KV Switchgear System 1 9,016,187.99

9,016,187.99 -

Spare parts 1 758,758.37

758,758.37 -
16 D.G. Sets 1 29,893,404.59

29,893,404.59 -

Spare parts 1 562,751.08

562,751.08 -
102
ALSTOM India Ltd.







17
415 V Switchgear Unit And
Station Service Transformers
1 66,815,359.93

66,815,359.93 -

Spare parts 1 7,134,254.62

7,134,254.62 -
18 Illumination System 1 18,249,616.98

18,249,616.98 -

Spare parts 1 1,277,472.77

1,277,472.77 -
19 Communication System 1 4,844,471.29

4,844,471.29 -

Spare parts 1 791,765.57

791,765.57 -

Tools & Instruments 1 12,576.95

12,576.95 -
20 Electrical Workshop Equipment 1 21,580,153.90

21,580,153.90 -

Spare parts 1 694,161.67

694,161.67 -
21 EOT Crane 1 42,673,387.00

42,673,387.00 -

Spare parts 1 12,451,749.17

12,451,749.17 -

Tools & Instruments 1 107,901.25

107,901.25 -
22 Cooling Water System 1 40,153,249.42

40,153,249.42 -

Spare parts 1 9,939,481.06

9,939,481.06 -
23 Drainage System 1 35,709,591.46

35,709,591.46 -

Spare parts 1 14,153,857.36

14,153,857.36 -
24 VAC System 1 68,391,297.29

68,391,297.29 -
25 Grounding System 1 12,319,308.24

12,319,308.24 -

Tools & Instruments 1 103,584.76

103,584.76 -
26 compress Air System 1 7,083,187.93

7,083,187.93 -

Spare parts 1 1,878,865.17

1,878,865.17 -
27 Fire Fighting System 1 35,208,088.52

35,208,088.52 -

Spare parts 1 1,828,352.27

1,828,352.27 -
28 Oil handling System 1 20,788,162.45

20,788,162.45 -

Spare parts 1 582,664.17

582,664.17 -
29 Mechanical Workshop Equipment 1 10,618,830.75

10,618,830.75 -

Spare parts 1 212,375.66

212,375.66 -
30 Elevator 1 3,959,526.30

3,959,526.30 -

Spare parts 1 296,223.68

296,223.68 -
ADDITIONAL BAY AT URI 1

1 Outdoor Pot Yard Equipment 1 13,901,877.41

13,901,877.41 -
2 Control Monitoring System 1 641,172.03 20,046.00 641,172.03 20,046.00

Spare parts 1 46,695.72 2,785.00 46,695.72 2,785.00
3 Protection System 1 7,259,336.62

7,259,336.62 -

Spare parts 1 1,042,652.77

1,042,652.77 -

Tools & Instruments 1 324,817.30

324,817.30 -

Total

1,867,339,794.93 3,531,935.00
103
ALSTOM India Ltd.


Contract 3
Local Transportation including Port Clearence,Port Charges and Inland Insurance
S.No. Particulars Qty. Unit Price Total Price ST @ 10.2%
1 General Technical Requirements 1

2 Turbine & Accessories 4 49,07,428 196,29,712 18,16,906.19
3
Governing System & Accessories
(Digital Type)
4 58,772 2,35,088 21,759.51
4 Main Inlet Valve & Accessories 4 5,28,944 21,15,776 1,95,834.08
5 Generator 4 33,15,755 132,63,020 12,27,611.65
6 Static Excitation System 4 1,68,709 6,74,836 62,462.13
7 11 KV Bus Ducts 4 5,87,556 23,50,224 2,17,534.34
8 Generator Step - Up Transformers 13 7,51,975 97,75,675 9,04,826.54
9 XLPE Cable 1 13,05,421 13,05,421 1,20,828.44
10 Gas Insulated Switchgear 1 60,50,397 60,50,397 5,60,018.60
11 Outdoor Pot Yard Equipment 1 10,73,176 10,73,176 99,332.08
12 220 V and 48 V DC System 1 1,98,033 1,98,033 18,329.73
13 Control Monitoring System 1 1,99,847 1,99,847 18,497.64
14 Protection System 1 57,319 57,319 5,305.39
15 Cabling System 1 18,96,328 18,96,328 1,75,522.19
16 11KV Switchgear System 1 2,52,844 2,52,844 23,402.98
17 Silent D.G. Sets 1 5,33,452 5,33,452 49,375.77
18
415 V Switchgear Unit And
Station Service Transformers
1 19,10,157 19,10,157 1,76,802.19
19 Illumination System 1 5,55,864 5,55,864 51,450.21
20 Communication System 1 63,585 63,585 5,885.36
21 Electrical Workshop Equipment 1 2,71,691 2,71,691 25,147.44
22 EOT Crane 1 45,37,032 45,37,032 4,19,943.07
23 Cooling Water System 1 13,58,194 13,58,194 1,25,713.06
24 Drainage System 1 14,38,864 14,38,864 1,33,179.79
25 VAC System 1 52,86,094 52,86,094 4,89,275.49
26 Grounding System 1 9,40,276 9,40,276 87,030.99
27 Compress Air System 1 1,55,228 1,55,228 14,367.75
28 Fire Fighting System 1 17,36,273 17,36,273 1,60,707.66
29 Oil handling System 1 6,88,368 6,88,368 63,714.64
30 Mechanical Workshop Equipment 1 3,68,246 3,68,246 34,084.48
31 Elevator 1 1,49,411 1,49,411 13,829.33
32 XLPE Cable (uri 1) 1 12,85,698 12,85,698 1,19,002.90
Total

803,56,129 74,37,681.63





104
ALSTOM India Ltd.



Installation
S.No. Particulars Qty. Unit Price Total Price WCT @ 4.2%
1 General Technical Requirements 1
2 Turbine & Accessories 4 117,53,358 470,13,432 18,94,975.19
3
Governing System & Accessories
(Digital Type)
4 24,42,973 97,71,892 3,93,876.64
4 Main Inlet Valve & Accessories 4 24,42,973 97,71,892 3,93,876.64
5 Generator 4 136,41,385 545,65,540 21,99,378.77
6 Static Excitation System 4 17,77,055 71,08,220 2,86,511.75
7 11 KV Bus Ducts 4 33,24,963 132,99,852 5,36,078.49
8 Generator Step - Up Transformers 13 3,78,007 49,14,091 1,98,072.77
9 XLPE Cable 1 70,59,373 70,59,373 2,84,542.87
10 Gas Insulated Switchgear 1 68,31,651 68,31,651 2,75,364.05
11 Outdoor Pot Yard Equipment 1 42,93,825 42,93,825 1,73,071.64
12 220 V and 48 V DC System 1 16,07,302 16,07,302 64,785.69
13 Control Monitoring System 1 5,69,304

5,69,304
22,946.99
14 Protection System 1 6,65,374

6,65,374
26,819.30
15 Cabling System 1 360,45,600 360,45,600 14,52,893.67
16 11KV Switchgear System 1 5,66,305

5,66,305
22,826.11
17 Silent D.G. Sets 1 12,80,935 12,80,935 51,630.78
18
415 V Switchgear Unit And
Station Service Transformers
1 38,61,526 38,61,526 1,55,646.92
19 Illumination System 1 62,90,151 62,90,151 2,53,537.76
20 Communication System 1 24,53,633 24,53,633 98,898.83
21 Electrical Workshop Equipment 1 7,11,630

7,11,630
28,683.74
22 EOT Crane 1 120,02,175 120,02,175 4,83,772.89
23 Cooling Water System 1 54,47,566 54,47,566 2,19,575.60
24 Drainage System 1 162,95,015 162,95,015 6,56,804.83
25 VAC System 1 244,77,177 244,77,177 9,86,604.06
26 Grounding System 1 93,76,204 93,76,204 3,77,927.61
27 Compress Air System 1 13,34,110 13,34,110 53,774.11
28 Fire Fighting System 1 88,39,090 88,39,090 3,56,278.10
29 Oil handling System 1 12,69,543 12,69,543 51,171.60
30 Mechanical Workshop Equipment 1 2,66,455 2,66,455 10,740.03
31 Elevator 1 2,24,815 2,24,815 9,061.64
32 XLPE Cable (uri 1) 1 96,00,040 96,00,040 3,86,949.79
Total 3078,13,718 124,07,078.84



105
ALSTOM India Ltd.


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