A PRESENTATION ON THE

INTERNSHIP
PROGRAM

LEARNINGS
(SIP)-2014

DURING THE
AND
ITS

SUMMER
REPORT

(SIP WORK AND THE SUBMISSION OF THE PROJECT WORK REPORT IS DONE IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS OF PGPM PROGRAM OF IBS
GURGAON)

Significance of Indirect Taxes

In
Hydroelectric Power Projects

Presented by :- Anmol Jain

(13BSP0110)

IBS BUSINESS SCHOOL, GURGAON

AGENDA FOR THE PRESENTATION

BRIEF ABOUT THE COMPANY AND SIP

OBJECTIVES METHODOLOGY & LIMITATIONS
DETAILED DESCRIPTION OF THE WORK
DETAILS ABOUT THE SIP COMPANY
MY SIP LEARNING EXPERIENCE

IBS BUSINESS SCHOOL, GURGAON

AGENDA FOR THE PRESENTATION

BRIEF ABOUT THE COMPANY AND SIP

IBS BUSINESS SCHOOL, GURGAON

Alstom is French group present in India since

1911 controlling its business operations through
two companies; Alstom India & Alstom T&D.

Alstom Group
France

Alstom India Limited

Formerly Known As
Alstom Projects India Limited

Alstom T&D India Limited

Formerly Known As
Areva T&D

I got an opportunity to work as an intern at the

Hydro unit of Alstom India Limited.
Alstom India Limited

Power
Power

Renewable
Renewable

Hydro
Hydro

Coal & Oil

Wind

Transport

Nuclear

Geothermal

Biomass

Gas

Solar

Ocean

Major portion of shares held by promoters i.e.

Alstom France & Central/State Government with
Financial Institutions and Banks also have stake in
the company.

The two Hydro Power Projects I worked upon are

Chamera & Uri.
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.

Uri

Chamera

Alstom in India was

awarded Chamera III
contract by NHPC (National
Hydro Power Corporation).
Chamera III Hydroelectric
Project is a 231 MW project
and is situated on Ravi
River, District Chamba,
Himachal Pradesh.
The contract includes
turnkey Electro-Mechanical
package of 3 x 77 MW
Francis Units size along
with associated Balance of
Plants with a schedule of 48
months.

Each project is formulated on the basis of three

contracts.
Power
Project

Contract
1

Offshore Plant
& Equipment

Contract
2

Contract
3

Ex- works
Equipment

Services
(Transportatio
n&
Installation)

AGENDA FOR THE PRESENTATION

OBJECTIVES METHODOLOGY & LIMITATIONS

IBS BUSINESS SCHOOL, GURGAON

Objectives

Primary: To study the significance of Indirect Taxes in the Hydroelectric Power

Projects.
Incidental: To analyze Alstom India Limited as a company in terms of its business
activities, marketing strategies & financial results.

Methodology

Thorough study of the contracts.

Meetings with the project manager, the head of taxation department & the tendering
manager.
Study of the annual reports of the company.
Understanding the taxation with the help of books & internet.

Limitations

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.
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.

AGENDA FOR THE PRESENTATION

DETAILED DESCRIPTION OF THE WORK

IBS BUSINESS SCHOOL, GURGAON

It takes a lot of time to get a contract & the price

quote is based on the laws prevailing 21 days prior
to the bid.

Tender is released

Bid Submission

Scanning the
requirements

Written
clarification by
Employer

Pre qualification

Pre bid meeting

for doubts

Notification Of
Award

Each contract has a different tax liability depending

upon the nature of business activity.
> Income Tax
> Wealth Tax

Direct
Taxes
Indirect
Indirect

Particulars
Contract 1
Contract 2

Off Shore Equipment

Ex-works Equipment

Contract 3

Transportation
Services
Installation Services

>>Custom
CustomDuty
Duty
>>Excise
ExciseDuty
Duty
>>Central
CentralSales
SalesTax/VAT
Tax/VAT
>>Service
ServiceTax
Tax

Type of Tax
levied
Custom Duty
Excise duty
Central Sales
Tax
Service Tax

Rate of Tax
5%
16.32%
4%
10.2%

The tax rates have been changing year after year,

due to which the contract price keeps on changing.
Custom Duty

CST

Service Tax

The taxation department has to be vigilant about the changes

in the taxes, in order to communicate the change and impact
of that change on the contract price to the client.
CHANGE
CHANGEIN
INRELATION
RELATIONTO
TO
TAX
TAX
ALSTOM
ALSTOMCommunicate
Communicatethe
the
change
to
the
Client
change to the Client

Copy
Copyof
ofaaNotification
Notificationof
ofthe
the
change
by
the
Law
as
a
change by the Law as a
reference
reference
++
Letter
Letterwritten
writtenand
andduly
dulysigned
signed
by
the
Taxation
Head
by the Taxation Head
Client
ClientAgrees
Agrees
to
toPay
Pay

Client
ClientDisagrees
Disagreesto
to
Pay
Pay
*(Not
*(Notyet
yethappened)
happened)

Alstom
Alstombears
bearsthe
the
burden
of
tax
burden of tax

Reduction
Reductionin
in
profits
profitsearned
earned
Or
Or
Incur
Incuraaloss
loss

AGENDA FOR THE PRESENTATION

DETAILS ABOUT THE SIP COMPANY

IBS BUSINESS SCHOOL, GURGAON

High industrial rivalry is a major concern in the

power plant equipment industry.
Threat of Substitute is
Low
Barriers to Entry is very
High.

In case of the business of supply of power plant equipment the

threat of substitute is low as only a turbine can be used in place of
a turbine & only a boiler can be used in place of a boiler.

The power sector is highly capital intensive and involves large

amount of commitment in terms of capital, assets & work force.
Hence, only those organisations which have the required
capabilities and are willing to take the risk enter the market.

Industrial Rivalry is
High.

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.

Bargaining Power of
Suppliers is Moderate.

The primary material that a power plant equipment manufacturer

requires is metals like steel, aluminium, copper etc. The prices of
these materials are dependent on the market forces of demand
and supply due to a large number of buyers and seller

Bargaining Power of
Customers is Moderate.

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.

Strong parental support gives Alstom an edge

over its contemporaries.
Strength

Opportunity

1. Strong parental support

gives ALSTOM a clear
edge in integrated power
and hydroelectric projects.
2. Strong references in
India provide a definite
advantage to ALSTOM for
future Projects.

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.

Weakness
1. ALSTOM has a longer
execution cycle (Hydro
projects >5 years, gas
projects 2- 2.5 yrs. & steam
> 4 yrs.
2. ALSTOM operates in a
cyclical industry where
business volumes are
dependent upon
government plans

Threats
1. Problems with fuel (like
gas) could lead to
cancellation / delays in
planned projects.
2. Volatile currencies make
Alstoms investments
difficult, because costs and
revenues change so
rapidly.

Revenue of the company is rising, however the

Gross profit is declining. The reason being the
rising COGS.
Profit/ Costs

Revenue

Declining Dividend Payout shows that Alstom is retaining the

earnings of the shareholders however, returns show that they
are not able to use the money efficiently.
Divident Payout

Returns

2011.0

2012.0

2013.0

Decline in market price per share shows that investors are more
inclined towards Alstom rather than BHEL.

BHEL

ALSTOM

AGENDA FOR THE PRESENTATION

MY SIP LEARNING EXPERIENCE

IBS BUSINESS SCHOOL, GURGAON

My Learning Outcomes
Primary Objective:
Influence of external environment on business: How
government policies can effect the working of the business
like in Alstoms case taxes are influencing the business
activities.
Long execution period: How long execution period can lead
to variations in the job in hand.

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.

Thank You