When Lalu bowled GE chairman over
GE chairman Jeffery Immelt sensing large business potential with the railways, called on Lalu Prasad.
By TNN |
NEW DELHI: One always thought that the twain shall never meet. But the meeting of contrasts did take place on Wednesday with General Electric chairman and chief executive Jeffery Immelt, sensing large business potential with the railways turning the corner, calling on railway minister Lalu Prasad to pitch for the world's second-most valuable company to grab a share of the pie emanating from the third largest railways.
Immelt, in true American fashion, came straight to the point asking for Lalu's focus areas.
While business, as expected, took centerstage during the hour-long meeting, the Indian Railways CEO, who till recently was known more for his rustic style than managing economic policy matters, managed to allay whatever apprehensions that the GE chief had, reeling out numbers to support the argument that the turnaround was for real and long-term.
"The focus," Lalu said in his own style, "is on cutting unit costs, productivity gains and higher volumes...We want to beat the US and China on unit cost."...
...
Immelt, in true American fashion, came straight to the point asking for Lalu's focus areas.
While business, as expected, took centerstage during the hour-long meeting, the Indian Railways CEO, who till recently was known more for his rustic style than managing economic policy matters, managed to allay whatever apprehensions that the GE chief had, reeling out numbers to support the argument that the turnaround was for real and long-term.
"The focus," Lalu said in his own style, "is on cutting unit costs, productivity gains and higher volumes...We want to beat the US and China on unit cost."...
...
"A railway minister talking this language is music to my ears," said the 49-year-old chief of the Fairfield, Connecticut-based company. He went on to say that the US Rail, the world's largest player in the segment, also turned around in the same fashion with focus on unit cost reduction.
Immelt in fact said that if the Indian Railways' growth story continued, the day is not far when it would acquire GE.
Not the one to be bowled over easily, Lalu promptly clarified that he was not in acquisition mode. "You are number one, we also want to be number one. Simple".
But between all this Lalu managed to extract his pound of flesh. GE, which is more than keen to enter Railways' large signalling business, offered to develop a pilot project at its own cost, with the Railways paying for it only if it helped improve the throughput.
It sounds like a win-win proposition for the railways as well as GE, which is trying to grab the Rs 1,200 crore spend. The potential is even more with signalling spend estimated at Rs 700 crore for the Rs 30,000 crore freight corridor.
And with the golden quadrilateral coming up, and the railways keen on a uniform signalling system, the potential could be nearly a $1 billion business.
GE also want to be part of the Rs 2,00,000 crore public-private partnership of the Railways with its participation in the dedicated freight corridor as also the multi-modal transport parks, proposed on Chinese model where $8-10 billion was spent.
In addition, there is the possibility of entering the wagon leasing scheme for containers, which is expected to be announced over the next few weeks and herald the entry of private freight operators.
Immelt also made a pitch for selling 6,000 horsepower locomotives to Indian Railways as against the 4,000 HP locos manufactured by ABB and General Motors, which are used at present.
Immelt in fact said that if the Indian Railways' growth story continued, the day is not far when it would acquire GE.
Not the one to be bowled over easily, Lalu promptly clarified that he was not in acquisition mode. "You are number one, we also want to be number one. Simple".
But between all this Lalu managed to extract his pound of flesh. GE, which is more than keen to enter Railways' large signalling business, offered to develop a pilot project at its own cost, with the Railways paying for it only if it helped improve the throughput.
It sounds like a win-win proposition for the railways as well as GE, which is trying to grab the Rs 1,200 crore spend. The potential is even more with signalling spend estimated at Rs 700 crore for the Rs 30,000 crore freight corridor.
And with the golden quadrilateral coming up, and the railways keen on a uniform signalling system, the potential could be nearly a $1 billion business.
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There is a strong reason for Railways to switch to the uniform signalling system.The change can help it double the traffic on high-density routes: from 70 trains a day to 140-150 in line with the US trend.GE also want to be part of the Rs 2,00,000 crore public-private partnership of the Railways with its participation in the dedicated freight corridor as also the multi-modal transport parks, proposed on Chinese model where $8-10 billion was spent.
In addition, there is the possibility of entering the wagon leasing scheme for containers, which is expected to be announced over the next few weeks and herald the entry of private freight operators.
Immelt also made a pitch for selling 6,000 horsepower locomotives to Indian Railways as against the 4,000 HP locos manufactured by ABB and General Motors, which are used at present.
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But Lalu and his team made it clear that the change can only be considered if GE agreed to significant indigenisation.Start a SIP with as low as ₹500 with ET Money App!
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