GE docs–2009 securities fraud and obstruction of justice

———- Forwarded message ———-
From: Seema Sapra <seema.sapra@googlemail.com>
Date: Fri, Jan 20, 2012 at 5:15 PM
Subject: Please pass on this message to the Hon’ble Richard J. Holwell, United States District Judge, Southern District of New York
To: william_donald@nysd.uscourts.gov, brett_kaufman@nysd.uscourts.gov, usanys.crcomp@usdoj.gov, NDwebmail@state.gov, askdoj@usdoj.gov
Cc: "Denniston, Brackett (GE, Corporate)" <brackett.denniston@ge.com>, kdonovan-maher@bermandevalerio.com, greg.danilow@weil.com, rcohen@lowey.com, fcpa.fraud@usdoj.gov, ffetf@usdoj.gov, newhaven@ic.fbi.gov, ny1@ic.fbi.gov, usanys.wpcomp@usdoj.gov, CleggD1@state.gov, chairmanoffice@sec.gov, help@sec.gov

Dear Judge Richard J. Holwell,

I am an attorney in India and had worked as Legal Counsel for GE Transportation’s business activities in India in 2010. I have brought to your attention that I made a compliance complaint to General Electric that is relevant to lawsuits which were filed by General Electric investors before your Court.

I complained that GE employees engaged in criminal conduct amounting to obstruction of justice under US federal statute and tampered with evidence about events that occurred in February 2009. These facts and this evidence are relevant to the cases filed by GE investors before you in the United States District Court, Southern District of New York.

I complained that material information regarding GE’s failed bid for a multi-billion dollar tender for an Indian Railways project for manufacture and sale of diesel locomotives was not disclosed to GE investors in February 2009. This information was capable of influencing share-prices and thus relevant to the shareholder lawsuits filed in the United States District Court, Southern District of New York. I further complained that once these lawsuits were filed in 2009, GE employees tampered with the evidence establishing knowledge of this failed bid by GE officers including Mr.Jeffrey Immelt, Mr. John Rice and Mr. Lorenzo Simonelli. I accidently found out information about events of February 2009 even though I joined GE in April 2010. I mentioned the information I thus acquired to a colleague without realising its significance. This started a process of harassment and retaliation against me by the employees in the New Delhi office who were involved in concealing evidence and creating a misleading record. I ended up raising a compliance concern to the GE General Counsel and Ombudsman in September 2010 that this might involve a securities fraud. (At that time I had no knowledge about the cases filed against GE in 2009. I found out about these cases only in April 2011.) GE retaliated against me and terminated my services. It then carried out a compliance investigation in which Gibson Dunn was involved. However, my complaint was not investigated by GE and Gibson Dunn and the matter was covered up. GE declared its investigation over at the beginning of February 2011. I subsequently responded to GE in writing in April 2011 pointing out that the matter was being covered up and there was sufficient basis for my complaint. It was at this time that I found out about the lawsuits filed by GE investors after February 2009 and I only then understood the full significance of my complaint. I pointed out to GE that evidence showed that offences amounting to obstruction of justice might have been committed. Tampering of evidence, asking employees to lie,suppression/ destruction of evidence and creation of a misleading record to influence a United States Federal Court proceeding would amount to US federal offences and obstruction of justice under US federal statutes.

Among other evidence of what happened around GE’s failed bid in February 2009, I have seen an email sent by GE Transportation employee Mr. Brett Begole to Mr. John Rice and Mr. Karan Bhatia (another GE lawyer) in February 2009 suggesting that a news report from February 2009 that had hinted at GE’s difficulties with the bid be either allowed to die a natural death or that senior Government of India officials (Dr. Montek Singh Ahluwalia and Mr. Ronen Sen, the then Indian Ambassador in Washington) be spoken to. This email was shown to me by Mr. Jeffrey Eglash in New Delhi in late 2010 when he met me during a compliance investigation. This email is suggestive of corruption and demonstrates why GE officers, attorneys and employees might have wanted to prevent their documentary record pertaining to the failed February 2009 bid from being scrutinized by a United States Federal Court. I would like to submit documentary and other evidence on this issue to the Court.

I had informed GE lawyers and ombudsman about my complaint in 2010. The matter was covered up. I thereafter brought the complaint to the attention of the United States SEC and the United States Department of Justice. In 2011, I also brought my complaint to the attention of the Plaintiffs attorneys in several of the law-suits including the partners at Berman DeValerio representing “State Universities Retirement System of Illinois”. I was then contacted by Mr. Ronald J. Keating, the Director of Investigations at Berman DeValerio and I shared detailed facts and documents (substantiating my complaint) on email with Mr. Ronald J. Keating. Ms. Kathleen M. Donovan-Maher, an attorney and a partner at Berman DeValerio was copied on all my correspondence with Mr. Ronald J. Keating. I subsequently made General Electric including Mr. Brackett Denniston, the SEC and the United States Department of Justice aware of my entire communications with Berman DeValerio. I have also recently brought my complaint to the attention of the attorneys representing General Electric before your Court including Mr. Greg Danilow. Further I have contacted various authorities including the United States Ambassador in New Delhi, the United States Attorney General and also the US Legal Attaché (from the FBI) in New Delhi.

I face a grave, immediate and on-going threat to life on account of this complaint as it adversely affects General Electric Executives including Mr. Jeffrey Immelt, Mr. John Rice, Mr. Brackett Denniston, Mr. Alex Dimitrief and Mr. Lorenzo Simonelli.

On the night of 12 January 2012 (Indian time) which would be the forenoon of 12 January 2012 (EST), I called and spoke with the Deputy to your Court (Mr. Bill Donald) and informed him in brief about the nature of my complaint. I told him I was an attorney who had complained about obstruction of justice and tampering with evidence by General Electric concerning facts which were relevant to the General Electric investor law-suits filed in your Court. I informed him that I faced a threat to my life on account of this. He transferred my call to Mr. Brett Kaufman who I was told was the assigned clerk for the case. I briefly explained to Mr. Kaufman why I was calling and informed him about my complaint of obstruction of justice and evidence tampering in connection with the General Electric investor law-suits. I told Mr. Brett Kaufman that I wanted to bring the facts about my complaints to the notice of the Judge. I was advised to send an ex-parte letter to you and I sent a letter addressed to you on the email addresses of Mr. Bill Donald and Mr. Brett Kaufman. I am now providing further detail regarding my complaint.

In 2010, I worked for GE as Legal Counsel for GE Transportation’s business activities in India. I directly reported to Ms. Tara Plimpton, General Counsel for GE Transportation. My boss in India was Mr. Prat (Pratyush) Kumar who is a US citizen and was at that time employed by a US based General Electric entity. He was heading GE Transportation’s business activities and efforts in India and he reported directly to Mr. Lorenzo Simonelli.

I was hired towards the end of April 2010 to provide legal support for General Electric’s bid to win a multi-billion US dollar tender from a Government of India entity, the Indian Railways. This tender provide the opportunity to win a contract from the Indian Railways to set up a plant(factory) in India for the manufacture of diesel locomotives. The tender also included a confirmed purchase order of a 1000 locomotives to be manufactured and supplied over a period of ten years. The purchase order would also include a maintenance contract for the supplied locomotives for a period of 15 years. I refer to this business opportunity hereafter as the “Tender”.

General Electric had participated in this Tender along with another US company, EMD in 2008-2009. The process for winning the tender has two parts. The first step is a pre-qualification process where bids are invited, evaluated and accepted based upon meeting prescribed technical and financial criteria. The second step is the financial bid where the short-listed bidders are invited to submit a price-bid and in the normal course the bidder offering a more competitive price is awarded the contract.

GE failed to win this Tender in February 2009. A fresh Tender for the same project was opened again by Indian Railways in 2010.

When I joined GE in April 2010, I was told that GE and EMD had both prequalified in the earlier round of the Tender (in 2008-2009). I was told that during the price-bid, GE was the sole bidder and EMD did not submit a bid. I was told that the Indian Railways cancelled the Tender in 2009 because there was a single price bid. I was also told that another factor that cost GE the bid in 2009 was the 2009 General Elections in India. This information was provided to me by Mr. Prat Kumar when I interviewed with him for the job.

I joined GE on 23 April 2010. Sometime during the week of 26 April 2010, I was sitting with Prat Kumar and Ramesh Mathur. We were discussing the language for certain certifications that GE would make in the Request for Prequalification for another Indian Railways tender – this one was for electric locomotives. During this conversation Prat Kumar expressed his view that all this legal precision and back and forth was unnecessary because ultimately in his view the Indian Railways had full authority to do whatever it wanted under the RFQ. He then said that in 2009, GE’s bid “was perfect” yet GE did not get the tender.

On 1 May 2010, I attended a meeting with an Indian Railways official along with Mr. Prat Kumar, Mr. Ash (Ashfaq) Nainar and Ms. Alpna Khera from GE. During this meeting I heard the Railways official tell Mr. Prat Kumar that GE would have won the tender in 2009 if they had not made a mistake in their financial bid. He stated that he hoped GE would not make a mistake in its bidding documents in the 2010 round. I was surprised to learn about this mistake. However after the meeting, Mr. Prat Kumar was aggressive and I did not ask about this.

I had no intention of probing the matter of this mistake even though this information contradicted what I had been told earlier by Mr. Prat Kumar and others at GE. I was preoccupied with the fresh tender in 2010. However, I accidently mentioned that GE had made a mistake in 2009 to a colleague Mr. Gaurav Negi on 12 May 2010. The very next day, I first received what sounded like a warning call from HR. Mr. Arvind Subramanian, the HR Manager asked me if I was feeling disgruntled. Prat Kumar came into the office looking worked up. I was summoned to his room and without preamble he started to target me by picking at my work and raising his voice in the presence of Gaurav Negi and other colleagues. Prat Kumar insisted that the only mistake with GE’s bid in in 2009 was in the Power of Attorney. He humiliated me publicly. Thereafter for the next two months I was at the receiving end of sustained retaliation, targeting and harassment at the hands of Mr. Prat Kumar and the GE employees who worked under him at the local office in New Delhi. I was unable to understand the cause of this targeting which seemed to be intended to make me quit. I discussed this harassment with Ms. Tara Plimpton, General Counsel of GE Transportation and with another GE attorney there, Mr. James Winget. I also discussed this harassment with the GE India General Counsel, Mr. Deepak Adlakha. I was told that Mr. Prat Kumar was difficult to work with, crossed compliance lines and that the team under him was not very competent and that the hostilities were a result of this. I was assured that I had the full support of the legal team. During that period I got the impression that I had committed an error in mentioning the mistake in 2009 and that the hostility towards me was on account of that incident. However I kept quiet about the matter and continued to do my job under difficult conditions.

In July 2010, GE employees I was working with including Mr. Prat Kumar altered a document (a customer certificate received from Kazakhstan Railways) and submitted it to the Indian Railways on July 12, 2010 as part of GE’s Request for Prequalification for the tender. I was not a participant to this alteration which amounts to a forgery under Indian law and as I understand under US federal law as well.

After this incident the targeting escalated. I have complained that I was being drugged during this time. I resigned and then withdrew my resignation and told GE that I wanted to raise compliance concerns. I was discouraged but I persisted. I then filed a complaint that I had been targeted because of my having learnt about the mistake in GE’s price bid in 2009 and because I had mentioned it to a colleague. At that time, I had limited information and I complained that Mr. Prat Kumar and other employees at the local Delhi office had lied to their bosses about why GE did not win the bid in 2009. An internal investigation was launched by Ms. Tara Plimpton. However I realised that this was a cover-up. I therefore escalated my complaint and sent it to to Mr. Jeffrey Immelt, Mr. Brackett Denniston and the GE Ombudsperson as well. In my note to them I stated that my complaint about the bid-mistake from 2009 being covered up might amount to a securities fraud. I was immediately fired after this. I left GE but emailed Mr. Denniston that I would pursue my complaint. In that email, I used the words “securities fraud” in connection with my complaint about the February 2009 cover-up. Mr. Denniston asked Mr. Alex Dimitrief and Mr. Jeffrey Eglash to investigate my complaint.

After this, I found out additional information from the internet and news reports about what had happened in February 2009 in so far as GE’s failed bid was concerned. At that time, I was not aware of the investor law-suits filed against GE that covered the period February 2009. I met Mr. Jeffrey Eglash and Mr. John Chesley (from Gibson Dunn) in New Delhi in November 2010. During this meeting I told Mr. Jeffrey Eglash that GE had failed to disclose to investors in February 2009 that it had lost the bid. That this information was capable of influencing share prices and that failure to disclose material information to investors could amount to a securities fraud. I recall telling Mr. Eglash that what I was saying was at least as significant as the comments made by Henry Paulson. Mr. Eglash did not tell me about the pending investor law-suits. Instead he attempted to persuade me that GE had indeed disclosed the information that it had lost the bid to the Indian press. To support his point, Mr. Eglash showed me a press clipping of an Indian news report dated February 23 2009 that mentioned a mistake in GE’s bid. He told me that this clipping showed that GE was not hiding information. I read the extract Mr. Eglash handed over to me and told him that on the contrary it showed that GE was still claiming it would win the tender and that any difficulties with a “mathematical error” with its price bid had been resolved. I asked Mr. Eglash for the first half of the news report he had handed me. He gave me two additional pages. That is when I read the email from Mr. Brett BeGole from GE Transportation addressed to Mr. John Rice and to Mr. Karan Bhatia, an attorney at GE. This email suggested that the news report dated February 23, 2009 that had hinted at GE’s difficulties with the bid be either allowed to die a natural death or that senior Government of India officials (Dr. Montek Singh Ahluwalia and Mr. Ronen Sen, the then Indian Ambassador in Washington) be spoken to. I informed Mr. Eglash of the significance of this email.

When Mr. Jeffrey Eglash showed me the email from Mr. Brett Begole, Mr. John Chesley from Gibson Dunn was not in the room. However, the email and news report was retrieved by Mr. Eglash from a binder/ folder containing documents. This Binder had as I understand been put together by Gibson Dunn after reviewing documents at GE. Therefore, Mr. F. Joseph Warin and Mr. John Chesley from Gibson Dunn have personal knowledge of this email which they must have reviewed.

After this meeting, I sent Mr. Eglash, Mr. Dimitrief and Mr. Denniston a compilation of news reports that I had found on the internet. These reports show that GE submitted a price bid for the Tender on 16 February 2009. By February 23, 2009, the Government of India had already taken a firm decision to scrap the tender. The Government of India held a Cabinet meeting on February 23, 2009 where it took the decision to adopt a different policy route for these projects. The decision to scrap the tender by Indian Railways was communicated to the Cabinet in this meeting on February 23, 2009. Therefore it would appear that this decision to reject GE’s bid was taken by the Indian Railways after February 16 and before February 23, 2009. GE must have been informed of this decision both verbally and in writing. GE did not disclose to GE investors that its bid had failed. Instead the news report from February 23, 2009 and subsequent news reports that year show that GE was misleading news reporters as well as investors on whether or not it would win this contract.

I also found news reports after March 2009 where Mr. Prat Kumar gave interviews to the Indian press stating that the Government of India had rejected GE’s price-bid without any communication to GE. He made no mention of the mistake GE made in the calculations for its price-bid. I sent these to GE as well.

Mr. Eglash refused to discuss my complaints with me after our meeting. I had to send detailed notes. I have complained that during this period after my meeting with Mr. Jeffrey Eglash, I was drugged by GE and an attempt was made to murder me by introducing toxic gas into my home. I fell ill.

I spoke with Mr. Eglash in January 2011. He threatened me by saying that “we do not want you as our enemy forever”.

A few days later, I received a letter from Mr. Alexander Dimitrief on February 3, 2011 stating that GE had investigated my complaints and they were unfounded. I was unwell for a few weeks.

I started to respond to Mr. Alex Dimitrief’s letter in April 2011. At that time I found out about the investor lawsuits in your Court and I was able to connect all the dots. I sent Mr. Dimitrief a detailed note in response to his letter on my complaint that GE failed to disclose to investors in February 2009 that it had lost the locomotives bid. It was only after finding about the GE investor law-suits that I realised why I had been lied to in GE. And why I had been targeted after I found out about the mistake and mentioned it to a colleague. I sent an email to Mr. Joseph Warin pointing out that my complaint had been misrepresented in Mr. Alex Dimitrief’s letter and that it appeared that GE had tampered with evidence about events related to the Locomotives bid in February 2009.

Mr. Lorenzo Simonelli was personally present in New Delhi in February 2009 just for this Locomotives bid. There is email correspondence from February 2009 between Mr. Simonelli and Mr. Immelt on what was going on in Delhi with the price-bid. They all knew about the mistake.

Yet in 2010, I was told by everyone I spoke to in the Delhi office and at GE Transportation in Erie that GE did not get the bid because it was the sole-bidder. No one mentioned the mistake. I found out about it from an external source, mentioned it to someone at GE and was targeted as a result. In August 2011, I asked Ms. Tara Plimpton if she knew about this mistake. She replied – not that I can remember. I was told by a GE Transportation attorney, Mr. James Winget in August 2010 when discussing my complaint of harassment that this should not happen in GE. He told me that a communication from the Indian Railways in February 2009 had been suppressed.

I was told in August 2010 (when I was still at GE) by Mr. Amit Kumar, an attorney from the Indian law-firm Amarchand Mangaldas, that he had provided his services to GE and helped GE get back its security deposit when GE’s bid in 2009 got derailed because of the mistake. He told me he had still not billed GE for these legal services he provided.

I face a grave threat to my life on account of my accidentally finding out about this tampering with evidence by GE. I have been drugged over the course of a year and a half. Attempts have been made and are still being made to poison me.

I request for your help in this matter. I will send to you the news reports and correspondence between me and GE on this issue.

With Regards,

Seema Sapra

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Response dated 13 April 2011 on Securities Fraud issue

This reply was sent by me to Mr. Alexander Dimitrief on April 13, 2011. (For Mr. Alex Dimitrief’s letter click  here.

Dear Mr. Dimitrief,

Subject: response on the issue of the 2009 securities fraud and public procurement corruption and its effect on my employment with GE

Your letter dated 3 February 2011 misrepresents my complaint and appears intended to cover-up a securities/ shareholder fraud, corruption and possible insider-trading. My response follows:

1. My initial reaction to finding out about the 2009 lie/ mistake was that Prat Kumar and Ash Nainar might have misled GE Corporate management.

1. However, after conversations with Jamie Winget and Himali Arora and some research, I communicated to GE that the 2009 cover-up appeared to be a larger misdemeanour, i.e., securities fraud and public procurement corruption.[1]

1. My discussion with Jeff Eglash during the meeting on 1 December 2010 focussed on the issue of securities fraud. I mentioned that the rejection of GE’s bid was price sensitive information and had not been disclosed to investors in accordance with disclosure norms. Surprisingly, your letter dated 3 February 2011 makes no mention that I complained about a securities fraud and about corruption. Instead you have proceeded as if my complaint was limited to my initial reaction that GE senior management might have been misled.[2]

1. In February 2009, GE share price was plummeting because of the financial crisis.[3]

1. The Diesel Locomotive tender for the supply of 1000 locomotives was a huge order, the largest ever for GE Transportation. GE had informed its shareowners and investors about its participation in this tender and the business opportunity and prospects this provided.[4] The news on whether or not GE got this tender was price-sensitive information capable of driving GE’s share price up or down.[5] GE was under an obligation to promptly and accurately disclose this information to its investors and shareowners under US Securities and Disclosure regulations. Further, GE was under an obligation not to publish any misleading or false information regarding this opportunity.

1. GE submitted its financial bid on 16 February 2009. It is important to ask when was GE told and/ or when did it find out that its bid was non-compliant and that its tender had been rejected. Did GE promptly and accurately disclose this information to its shareowners? Was there any violation of fair disclosure norms?

1. The Government of India held a Cabinet meeting on 23 February 2009 where it took the decision to scrap the tenders and to set up the Diesel and Electric Locomotive factories as departmental units. GE must therefore have been informed before 23 February 2009 by the Government that its bid was non-compliant and/or had been rejected.

1. I was informed by a GE employee that the letter/ communication from the Railways informing GE about the outcome of its bid was suppressed. There are published news reports from 2009 where Prat Kumar is quoted as stating that GE did not receive any communication from the Government on its tender and that the bid was scrapped because of the elections or because GE was the sole bidder. All parts of these statements were false and misleading.

1. How could GE not have been informed by the Government that its bid was not compliant or that it was being rejected? The Government was legally bound by tendering rules to follow due process which I assume it must have done unless GE improperly and illegally influenced the process by suppressing a written communication.

1. Your letter shows that GE knew about its bid being non-compliant on 21 February 2009.

1. GE got back its security deposit for this bid. How did it get back its deposit without having received any communication at all about the tender from the Government?

1. Mr. Eglash told me on 30 November 2010 that GE Corporate senior management was aware that the GE bid was non-compliant and Mr. Lorenzo Simonelli wrote to Mr. Immelt saying that GE had submitted a fresh/ revised bid. As I pointed out to Mr. Eglash then, GE could not have submitted a fresh/ revised bid, this being against tendering rules. So either this statement by Mr. Simonelli was incorrect or GE was engaged in irregular/ illegal conduct.

1. On 1 December, 2010, Mr. Eglash showed me a Business Standard Report dated 23 February 2009. This entire report is extracted at Annexure A at the end of my response.

Mr. Eglash suggested to me that this report showed that GE had disclosed to the public that there was an error in its financial bid. This suggestion is false and incorrect.

The report does not record/ attribute a disclosure by GE that its bid was non-compliant. Instead it states that the “ostensible” reason being given is that the problem is that of a single bidder. This is also what GE had publicly stated and was GE’s official position.[6] The report went on to state that some sources in the Railways have indicated that there was a technical mistake in the GE bid. The report further stated: “When this was pointed out, however, the company said it was a mathematical error and has agreed, in writing, to accept that the price of its locomotives be lowered by the extent of the error — for all the locos. This adds up to around Rs 300 crore over the life of the project.”

Therefore GE did not make any disclosure in this report. Instead, when forced to respond to the Railway source’s information that there was a technical error in GE’s bid, GE responded by stating that it was only a mathematical error and GE had agreed in writing to accept a lower price. GE was clearly implying that this technical error was inconsequential and that it had been rectified.

GE’s statement in this report was false, inaccurate and misleading. According to tendering rules, GE could not have been allowed to correct its financial bid. Further the language used by GE implies as if GE agreed with the Railways to lower its price. This is suggestive of an agreement between GE and the Railways and an acceptance by the Railways of GE’s lower price. Moreover, if GE never heard from the Railways about its tender and no official or unofficial communication in this regard was ever received, how did GE lower its price? The report is dated 23 February 2009, the same day that the Cabinet decided to scrap the tenders. Therefore GE must have known before 23^rd February that its bid had been rejected.

During the meeting on 1 December 2009, I requested Mr. Eglash to show me the first half of this news report as he had handed over to me the second page.

When Mr. Eglash handed over the first page to me, I read the internal GE email trail that this news report was attached to. The email trail originated from Delhi and forwarded the report to GE Corporate in Fairfield and to GE Transportation in Erie.[7] The emails questioned – should we [GE] let this [the report] die a natural death or should someone speak with Montek [Dr. Montek Singh Ahluwalia] or with Mr. Ronen Sen.[8]

I pointed out to Mr. Eglash that GE was compelled to respond to the statement from the Railway source and had made no voluntary disclosure about a technical mistake. And that the email trail showed that GE was worried and unhappy about the report. So concerned was GE in fact, that senior management was being asked to consider speaking with highly placed, influential and well-connected Indian officials who were not involved with the tender process.

In light of the above, I disagree with Mr. Eglash’s statement that this Business Standard report shows that GE disclosed the material fact about losing its bid to the public, the media or its shareholders.

1. In your letter dated 3 February 2009, you state that I myself have noted in several communications that “the technical non-compliance in GETI’s D-Loco bid was covered widely in the Indian press”.

1. Indeed, my suspicion that Prat had started to target me and became hostile towards me after I learnt about and mentioned the 2009 bid mistake, was confirmed when I first read a news report dated 11 August 2010 that the diesel locomotive bid submitted by GE in 2009 was non-compliant.[9]

1. However, a perusal of the numerous news reports filed contemporaneous to the events in 2009 shows a disturbing and curious feature. There is conflicting information attributed to and sourced from different interests sometimes in the same article. On the one hand there were statements in the press that GE had been awarded the tender or would be awarded the tender. There were arguments in support of why GE would get the bid. Some of these reports then hinted at different unidentified sources stating that there was a problem or a technical error with the GE bid. It was obvious that there were different sources feeding conflicting information to the Press.[10]

1. Did anyone at GE at anytime provide information to the Press which GE knew or ought to have known to be inaccurate or misleading? Did GE omit to correct misleading or inaccurate information appearing in the Press? This would be actionable misrepresentation or an actionable omission amounting to misrepresentation of a material fact?

1. GE had the obligation to promptly and accurately disclose the news about its failed bid and the reason there-for to its investors and shareowners. There is no evidence that GE did this. Further, it appears that sources in GE and /or GE supporters in the Railways or in the Railway Minister’s office (acting at GE’s behest) were behind the misleading news reports.[11] Moreover, there are statements in news reports filed in 2009 attributed to GE and/ or its employees including Prat Kumar which are materially false, misleading and inaccurate. GE also failed to correct misleading reports published in the Press even after it knew that its bid was non-compliant and had been rejected.

1. A news report dated 20 February 2009 quoted GE’s partner BHEL.

"We have signed the agreement with GE, but the setting up of the company depends on winning the contract from railways," said BHEL chairman and managing director K Ravi Kumar, while handing over an interim dividend cheque of Rs298 crore to the central government.

GE has emerged the single bidder for assembling and supplying 1,000 dual-fuel locomotive engines to the Railways. The company is yet to receive the final order. "First, GE has to get the order for supplying the locomotives. Only then can we go ahead and form the joint venture," Kumar said.

…

Kumar refused comment on whether the tender would be cancelled because it received a bid from only one company.”

Did GE know on 20 February 2009 that its bid was non-compliant and/ or had been rejected?

1. There was a curious report published by Livemint on 23 February 2009. This was titled “Railways seeks CVC cover for $6 bn tender”. The report indicated a lot of background intrigue and lobbying and raised concerns of propriety in the award of the tenders. The Railways was stated to be considering approaching the Vigilance Commissioner to protect itself from being pressured. This report contained the following statements:

“The Railway Board official cited earlier said a tender committee set up by the railways will scrutinize GE’s offer and then decide whether the price it quoted was reasonable or not. “The due process will be followed,” he said.

…

“We do have an objection to the project being awarded to GE,” said an official with one of the firms that were bidding for a tender. However, this executive added that he was unsure whether the company would take legal action. This person neither wanted to identify himself nor his company.

“There is no harm in the railways negotiating with a company if it turns out to be the only one to submit a bid,” said Arvind Mahajan, an infrastructure expert at KPMG. “They also have the prerogative of negotiating a price with the bidder. However, the concerns raised by other companies—of not having been provided enough time—is indeed an issue.””

February 23 was the day the Cabinet decided to scrap the tenders. GE would have known before this date that its bid was non-compliant and not being accepted.

1. Prat Kumar was interviewed for a Business Today report dated 2 April 2009. This report contained the following misleading information:

“In February, the government rejected GE Infrastructure’s financial bid to be a 51 per cent partner in the Rs 2,000-crore diesel locomotive factory in Bihar. The reason: GE was the only bidder!
And, within 18 days, the Union Cabinet changed its mind on the ownership pattern: instead of the government holding a 26 per cent stake, the factory would be fully owned by it.”

1. A news report was published by the Financial Chronicle on 14 April 2009. The report stated that BHEL and GE were planning to seek approval for setting up the locomotive factory. It stated that “The consortium is expecting to sign a formal agreement with the railways in the second half of 2009.” Both these statements were inaccurate and misleading and the same report recorded a denial by Ministry officials.

This report was based upon information provided by BHEL, GE’s proposed partner. GE and BHEL had an existing MOU for this project. Once again GE was either responsible for the publication of this misleading information or actionably failed to correct it.

1. A news report was filed by Bhupesh Bhandari on 22 May 2009. From its content and language it is clear that GE provided information and perspective for this report. It contained the following misleading information:

“Still, GE has an axe to grind. Its proposal to set up a diesel locomotive plant at Marora in the Saran district of Bihar is stuck. In February, the Railways had invited bids for the project and GE was the sole bidder. EMD Locomotive Technologies, which was also in the fray, opted out of the race. On the ground that it might cause a political scandal just before the general elections, the Railways decided to scrap the bid. Instead, they suggested that they could build the plant themselves.”

This report further stated:

“Whether the Railways will be able to match GE’s price is not known. The internal reserve price of the Railways was Rs 12.9 crore per locomotive. GE says its bid was below that. The bid document, prepared by the Planning Commission, said that the price would come down by three per cent every year. This advantage will be lost if the Railways put up the plant themselves.”

1. A news report filed by the Hindu on 18 September 2009 that interviewed Prat Kumar contained the following misleading information:

“GE Transport, part of GE’s infrastructure operations, was the sole bidder for the project, to be located in Bihar at an estimated cost of Rs. 2,000 crore, but the project was dropped “without any communication to us,” GE Infrastructure President and CEO Pratyush Kumar said. The company is hopeful that the new Railway Minister takes interest in the project with multiple benefits and revive it.

Speaking to The Hindu here on Wednesday, Mr. Pratyush Kumar felt that the Government was “not comfortable” in awarding the project before the elections as only one bid was received. But, it is natural as it required a company of GE’s scale of operations to pull it off,” he said.”

1. There are other news reports from 2009 and 2010 that I rely upon but do not discuss here.

1. It is therefore evident that GE was involved in some kind of improper/ illegal and/ or corrupt conduct pertaining to its financial bid for the diesel locomotive factory in February 2009. Further GE also violated provisions of the United States Securities Exchange Act and the regulations promulgated there-under by misrepresenting and/ or omitting to disclose material facts about the business, finances, value, performance and prospects of GE inter alia by not promptly and accurately disclosing the rejection of its bid in February 2009. GE also violated fair disclosure norms. This conduct amounted to a securities fraud.

1. I have recently found out that a shareholder Class Action complaint is being heard in the United States District Court, Southern District of New York against GE and senior management officials including Mr. Immelt, Mr. Rice and Mr. Denniston.[12] This complaint alleges that the defendants engaged in fraudulent activity by disseminating materially false and misleading statements and/or concealing material adverse facts. The complaint was filed on 19 March 2009 and covers the period 23 January 2009 to 27 February 2009. The complaint alleges that the defendants misrepresented and/ or omitted to disclose material facts about the business, finances, value, performance and prospects of GE which resulted in artificial inflation of the market price for GE common stock during the said period.

1. The misrepresentations that I have complained about would be relevant for this lawsuit or similar complaints. An inference can also be drawn that Prat Kumar’s misleading statements to the Press signalling that GE received no communication from the Railways, and that GE did not get the tender only because it was a single bidder along with the suppression of the communication from the Railways were motivated by the institution of this lawsuit on 19 March 2009. GE was trying to cover up the misrepresentation and non-disclosure of the 2009 diesel loco failed bid.[13]

1. The securities fraud that I describe, had a direct negative impact on my employment with GE. I found out information that could have uncovered the fraud and I was targeted because of this. When I joined GE, I was told that GE did not get the tender in 2009 because it was the single bidder. This was also what I heard from everyone I spoke to in GE India and in GE Transportation. Soon after joining, during a meeting with an official from the Railways I heard that GE had made a mistake in its financial bid and this was the reason GE did not get the tender. A few days later (13 May 2010), I mentioned the fact that a mistake was made to Gaurav Negi. The very next day I faced retaliation and targeting from Prat Kumar. He was extremely angry with me and publicly humiliated me and went to the extent of saying that I need not take responsibility for the Madhepura tender RFQ that was being prepared.[14] He insisted that the only mistake in 2009 concerned the Power of Attorney. I even received a warning call from Arvind Subramanium, the Human Resources Manager. Prat Kumar continued with targeting me the next day (14 May 2010), and I asked him why he was being so hostile. I offered to quit if he was that unhappy with my work. Prat’s hostility continued on Monday and on Tuesday (17 and 18 May 2010) when he tried to blame me for a mistake that I was not responsible for. The harassment, targeting and retaliation that started with my finding out about the 2009 mistake and my mentioning it to Gaurav Negi, continued thereafter throughout my time at GE for this and other reasons.[15]

1. Once I raised a formal concern that I was being targeted for finding out about the 2009 mistake among other reasons, GE attempted to deal with my complaint by initiating a fixed/ rigged inquiry/ investigation where everything I shared was leaked to the persons I had complained against. I objected to this rigged inquiry/ investigation. I reached out for help to Mr. Denniston and the GE Corporate Ombudsperson. Instead of being provided help or an opportunity to be heard, I was immediately pushed out in violation of whistleblower protection laws. My contract was terminated in a humiliating fashion. No explanation or reason was provided. Mr. Denniston failed to let me know that he, Mr. Immelt and Mr. John Rice themselves had a conflict of interest in the matter.

1. Given all of the above, I reject your finding that I could not have been targeted for this fraud. The enormity of the complaint and the fact that the top most management of GE would be accountable for this fraud, demonstrates exactly why I was targeted.

Thank you,

Seema Sapra

Annexure A

Railways may scrap diesel loco bid

BS Reporter / New Delhi February 23, 2009, 0:41 IST

Railway Board to decide on the matter.

Within a week of floating tenders for setting up two locomotive manufacturing joint venture (JV) plants, one each for diesel and electric locomotives, the railways are likely to go for it alone.

While the railways got no bid for the electric locomotive manufacturing unit, they got one from General Electric (GE) of the US, for the diesel locomotive plant.

The bidding parameter for both the plants is the price at which the loco would be supplied in the first year, after which the prices are to fall according to a pre-specified formula in the bid documents.

The diesel plant will produce 1,000 locomotives (in the 4,500 HP and 6,000 HP range) over 10 years and the winner will also get a repair and maintenance contract for these locos for another 15 years; the electric plant is to produce 800 locomotives (of 12,000 HP range).

A decision on whether the railways should go ahead on their own will be taken by the Railway Board later this week. Two years ago, when the railways first mooted the proposal to set up locomotive manufacturing facilities, they wanted to do it alone. But they were persuaded to go the public-private partnership (PPP) route and look for JV partners instead, since it would lower costs and also ensure better quality.

So, if this decision is taken, it will represent a complete U-turn in the railways’ philosophy over the past few years.

The ostensible reason why a section of the railways is in favour of manufacturing diesel locomotives on their own is that since there was only one bidder, there is no way of knowing if the price quoted is correct.

Electro Motive Diesel (EMD), the only other manufacturer of diesel locos in the world, asked for some more time in view of the global financial crisis.

This is also believed to be the reason why none of the three big global manufacturers of electric locos bid. Also, according to sources in the railways, there also appears to be some technical mistake in the GE bid.

When this was pointed out, however, the company said it was a mathematical error and has agreed, in writing, to accept that the price of its locomotives be lowered by the extent of the error — for all the locos. This adds up to around Rs 300 crore over the life of the project.

Prior to the bid, the railways set up an internal committee to examine what would be the cost if the plant was to be set up on its own.

Sources say the GE bid for diesel engines is below the cost arrived at by this committee. The Railway Board will now take a call based on this. The other option, apart from producing the locos on its own, is to import them for the next year and then call for new bids when global financial conditions improve.

---

[1]It might also raise questions about insider-trading.

[2] That your misrepresentation of my complaint is intentional and deliberate is evident because when I spoke with Mr. Eglash on the phone on 30 November, 2010, he specifically mentioned that he had been told my initial complaint was that Prat Kumar had misled senior management. I clarified to Mr Eglash that since my initial reaction, I had spoken with Jamie Winget and Himali Arora and had conducted extensive research, and I was now of the view that a securities fraud was committed. This elaboration of my complaint is reflected in many emails including my email dated 20 September 2010 to Mr. Brackett Denniston. I do not have a copy of my emails to Mr. Immelt, Mr. Denniston and the GE Corporate Ombudsperson that I sent on 9/10 September 2010 but I believe I mentioned and discussed the issue of a securities fraud in that email.

[3] GE was eventually compelled to cut its dividend. It also lost its credit rating.

[4] In a webcast to investors on 10 February 2009, Mr John Rice, GE Vice President, GE Technology Infrastructure discussed the $6 billion Indian Rail tender and JV opportunity as a driver for GE Transportation’s growth in Asia. Earlier a GE Press Release dated 21 October 2008 had informed investors about this business opportunity for GE: “GE Transportation, a unit of General Electric Company (NYSE: GE) and global diesel locomotive technology leader, and Bharat Heavy Electricals Ltd (BHEL) joined forces to compete for a 1,000 diesel locomotive tender issued by Indian Railways. GE was recently shortlisted by the Indian Railways to compete for this tender. GE and BHEL along with Indian Railways intend to form a Joint Venture company for this purpose.” GE issued a statement on 16 February 2009, the day it submitted its bid. Livemint in a report dated 16 February 2009 included this statement: “Confirming that GE had submitted a price bid, a GE spokesperson said, “We submitted what we consider a competitive bid for the diesel locomotive tender Indian Railways issued in September 2008… We remain cautiously optimistic that Indian Railways will consider our bid favourably. Next steps in the bidding process will be determined by Indian Railways and the government, we eagerly await their decision.”

[5] For example, when GE Transportation announced that it had secured an order to supply 115 locomotives on 24 September 2010, GE shares rose 30 cents.

[6] I was told this when I joined GE. All GE employees I spoke with (until I raised my concerns) stated this.

[7] Karan Bhatia and John Rice were addressed on this email along with others.

[8] Mr. Ronen Sen was at that time the Indian Ambassador to the United States. Dr. Ahluwalia is the Deputy Chairman of the Planning Commission of India.

[9] I mentioned this news report to Deepak Adlakha and he told me to be careful of what I said in my complaint because I could not be sure what the Government’s reason for rejecting GE’s bid was.

[10] Even the Hindu Business Line report dated 25 February 2009 you mention contained conflicting information from different sources. It stated: “While the Ministry’s official position remains that there was a ‘technical snag’ in the GE bid, an official source said that the Railway Minister was not comfortable taking a decision on a single bid just before the elections.”

[11] These misrepresentations suggested that GE had been awarded or would be awarded the bid; or that there was no error in GE’s bid and the single bid issue was the only concern; or that GE had corrected its mistake; or that GE received no communication from the Railways and the bid was scrapped because of the elections and because it was a single bid.

[12] Case No. 09 CIV 2566

[13] When I first searched Google for news reports in September/ October 2010, I did not find the 23 February 2009 Business Standard report. Instead I found all the later reports including those where Prat Kumar made misleading statements. However, once I mentioned the existence of these reports to GE, the Prat Kumar reports disappeared from Google search. I did of course save all the reports when I first found them.

[14] Even at that time with no knowledge of these detailed facts, I sensed that I had made a mistake in mentioning the 2009 mistake to Gaurav Negi.

[15]I intend to institute legal proceedings against Prat Kumar and GE for the harassment (including sexual harassment), retaliation and targeting that I faced at GE from him and from some others at his instance. I do not want to burden this response on the securities fraud issue with that detail.

—————————————————————————————————————-

———- Forwarded message ———-
From: Seema Sapra <seema.sapra@googlemail.com>
Date: Thu, Jan 26, 2012 at 2:20 PM
Subject: Message for Judge Richard J. Holwell
To: william_donald@nysd.uscourts.gov, brett_kaufman@nysd.uscourts.gov, usanys.crcomp@usdoj.gov, NDwebmail@state.gov, askdoj@usdoj.gov
Cc: "Denniston, Brackett (GE, Corporate)" <brackett.denniston@ge.com>, kdonovan-maher@bermandevalerio.com, greg.danilow@weil.com, rcohen@lowey.com, fcpa.fraud@usdoj.gov, ffetf@usdoj.gov, newhaven@ic.fbi.gov, ny1@ic.fbi.gov, usanys.wpcomp@usdoj.gov, CleggD1@state.gov, chairmanoffice@sec.gov, help@sec.gov

Please bring the following information to the attention of Judge Richard J. Holwell. This is further clarification on my complaint regarding obstruction of justice and evidence tampering in connection with the GE investor law-suits.

Thank You,

Seema Sapra

———- Forwarded message ———-
From: Seema Sapra <seema.sapra@googlemail.com>
Date: Thu, Jan 26, 2012 at 2:10 PM
Subject: Further response to Mr. Alex Dimitrief’s letter dated February 3, 2011
To: "Dimitrief, Alexander (GE, Corporate)" <alexander.dimitrief@ge.com>, "Denniston, Brackett (GE, Corporate)" <brackett.denniston@ge.com>
Cc: jeffrey.immelt@ge.com, john.rice@ge.com, john.flannery@ge.com, "Eglash, Jeffrey C (GE, Corporate)" <jeffrey.eglash@ge.com>, "Plimpton, Tara (GE Infra, Transportation, US)" <tara.plimpton@ge.com>, "Warin, F. Joseph" <fwarin@gibsondunn.com>, "Chesley, John" <JChesley@gibsondunn.com>, james.winget@ge.com, greg.danilow@weil.com

Mr. Alex Dimitrief,

I write in connection with your letter dated February 3, 2011. I have already sent several responses, however because I was being drugged and poisoned since July 2010 and all of last year as well, I was not able to point out some readily apparent falsehoods in your communication.

You state that I was engaged as Consultant. This is false. My contract stated otherwise and the work profile I filled was that of Legal Counsel. I was hired as Legal Counsel but on a contract for eleven months. The internal website of the GE Transportation legal team had a pdf organizational chart with pictures and names of the attorneys in Ms. Tara Plimpton’s team. (Ms. Tara Plimpton was the General Counsel for GE Transportation from 2008 till January 2012). When I joined GE in April 2010 there was a place on that chart for the India Legal Counsel. In August 2010, I downloaded that chart and my name was printed on that chart as the Legal Counsel for India for GE Transportation.

I limit this communication mostly to the issue surrounding my complaint of me being misled by GE executives about the reason why GE did not win the Locomotives tender in February 2009. I later understood that GE executives were actually covering up facts and tampering with evidence about these events of February 2009 to avoid these facts from emerging in connection with the GE investor lawsuits filed after February 2009. Please read my comments below in the light of my previous communication on this matter with you and other GE attorneys, external counsel and GE executives.

As already stated before in other communications, my initial complaint made to Ms. Tara Plimpton in August 2010 when I was still at GE, was that Pratyush Kumar and Ashfaq Nainar might have misled GE Officers by concealing the mistake that GE made in its price-bid on February 16, 2009. You go on to state in your letter essentially that GE Officers including Mr. Immelt, Mr. John Rice and Mr. Lorenzo Simonelli all knew about this mistake and that there was a thorough post-mortem review undertaken by GE and therefore the fact of the mistake could not have been concealed.

I have stated that I was told by Pratyush Kumar and others in the Delhi office of GE Transportation and by GE executives from GE Transportation’s Erie office, who I spoke with and exchanged emails with, that GE did not get the bid only because it was a single bidder. I was told by Pratyush Kumar on one occasion in the presence of other GE staff that GE’s bid in 2009 was perfect and on another occasion that the only problem with GE’s bid in 2009 was a printing error in the Power of Attorney. It is clear that Pratyush Kumar was concealing the fact of the mistake in the price-bid from me.

I found out about this mistake accidentally from an Indian Railways official. This led to repercussions. Ten days later, I mentioned the fact of this mistake to another colleague. This started a three-month long process of harassment and targeting directed at me by the GE Transportation India staff which seemed aimed at making me leave my job.

When I first stated in August 2010 that I was being targeted because of my having found out about this mistake, I asked Ms. Tara Plimpton if she knew about this mistake and her reply was “Not that I can remember”.

I spoke with Mr. James Winger, Senior Counsel at GE Transportation in Erie who was working on this deal about this mistake. He admitted knowledge about the mistake and told me the information had filtered down. He also stated that a communication from the Indian Railways had been suppressed.

Ms. Tara Plimpton then started a compliance investigation/ inquiry by nominating Mr. Anil Chaddha, an attorney at GE Transportation based in Erie to gather information from me. This inquiry commenced before I contacted Mr. Brackett Denniston or the GE Corporate ombudsperson.

If the fact of the mistake was common knowledge and was the subject of a post-mortem as you claim and was not being suppressed, then why would Ms. Tara Plimpton tell me that she could not remember if there had been a mistake. Further and more importantly why would Ms. Plimpton appoint a GE attorney to investigate my complaint. All Ms. Plimpton had to do was to tell me that she and other GE executives in Erie and Fairfield were aware of the fact of this mistake and that I could not have been harassed for finding out about it. I add that if this was the mere substance of my complaint on this issue, why would Mr. Brackett Denniston ask you and Mr. Eglash to investigate this complaint, why would GE engage the services of Gibson Dunn to investigate a complaint that had no initial substance in the first place. All Mr. Denniston had to tell me was that he and others were already aware of the fact of this mistake.

After Ms, Plimpton nominated Mr. Anil Chaddha to hear me on my complaint, I spoke to Ms. Himali Arora, the then CFO for GE Transportation in India and she told me everyone knew about the mistake including Mr. Lorenzo Simonelli who was present in New Delhi at the relevant time in February 2009.

Therefore by the time I realised that Mr. Anil Chaddha and Ms. Tara Plimpton were trying to cover up my complaint, I already knew that everybody knew about the mistake.

I thereafter emailed Mr. Brackett Denniston and the GE Corporate Ombudsperson and I asked them to intervene. I sent these emails while I was still at GE and therefore used my GE email account and GE laptop. I do not have a copy of this email but I recall writing that there appeared to be a possible securities fraud here. I received replies from Mr. Brackett Denniston, Mr. Alex Dimitrief and from Mr. Mark Nordstorm that my complaint would be investigated. Instead I was immediately summarily fired on September 20, 2010. I then contacted Mr. Denniston on email the same day on bringing to his notice that I had been fired and that whistle-blower laws had been violated. I quote from this email sent by me to Mr. Denniston on September 20, 2012:

“My complaint about a fraud regarding the reason for GE losing the D Loco bid in 2009 is a potential shareholder fraud and a SEC violation. I intend following up on this. Your response in terminating my contract is in violation of US whistleblower protection laws.”

This email that I sent on September 20, 2010 was also sent to Ms. Tara Plimpton and Mr. Deepak Adlakha with a copy marked to Mr. David Lobo.

Your letter dated February 3, 2011 therefore misrepresents my complaint on this matter. I have already described in earlier communications the interactions that I had later on with Mr. Jeffrey Eglash and Mr. John Chesley during their alleged investigation.

I have also pointed out that GE’s bid had already been finally rejected by the Indian Railways before February 24, 2009. GE would ordinarily have received a written communication from the Indian Railways rejecting GE’s bid and providing reasons there-for. Was this the letter Mr. James Winget told me was suppressed?

The email that Mr. Jeffrey Eglash showed me (sent from Mr. Brett BeGole to Mr. John Rice and Mr. Karan Bhatia) was dated February 24, 2009.

Mr. Amit Kumar, an attorney from the Indian law-firm Amarchand Mangaldas was brought in to provide legal advice on this matter in 2009.

I have provided news reports from 2009 (dating March 2009 and thereafter) where Mr. Pratyush Kumar gave press interviews stating that the Indian Railways cancelled the tender without sending any communication to GE and suggesting that GE was left guessing at the reasons for this action. Why was Mr. Pratyush Kumar making these false statements? Since it is clear that he was not trying to mislead GE executives and Officers, who was Mr. Pratyush Kumar trying to mislead? What was the purpose of these false statements to the Press?

The only inference that can be drawn is that these Press interviews by Mr. Pratyush Kumar were a response to the investor law-suits that were filed against GE after March 2009. All these facts and evidence tie in with my complaint (which I made for the first time in an email sent to Mr. F. Joseph Warin from Gibson Dunn in April 2011, more than two months after your letter dated February 3, 2011) that GE Executives and Officers were tampering with evidence about the events surrounding this tender from February 2009 and the only reason to do so would be the GE investor law-suits that included February 2009 in their class-period.

I have emailed you that I am being drugged, poisoned and gassed because of the above and other compliance violation complaints that I made about General Electric.

Seema Sapra

——————————————————————————————————————

———- Forwarded message ———-
From: Seema Sapra <seema.sapra@googlemail.com>
Date: Mon, Sep 20, 2010 at 5:19 PM
Subject: termination of my contract
To: "Plimpton, Tara (GE Infra, Transportation, US)" <tara.plimpton@ge.com>, deepak.adlakha@ge.com, brackett.denniston@ge.com
Cc: david.lobo@ge.com

All,

I was sorry to learn today that GE had decided to terminate my contract. This amounts to retaliation against me for making a harassment complaint and raising compliance concerns and for speaking the truth.

What does GE intend to do about my complaints? I would like a copy of all emails(received and sent) on my concerns because I intend to go to Court.

My complaint about a fraud regarding the reason for GE losing the D Loco bid in 2009 is a potential shareholder fraud and a SEC violation. I intend following up on this. Your response in terminating my contract is in violation of US whistleblower protection laws.

Please provide me with a copy of all my emails in the "concerns" outlook folder and my word documents in the "concerns" file folder on the laptop I was using. These are records of the complaints I made and I am entitled to retain a copy.

I have also requested that my emails and documents be preserved.

I was informed by Arvind that the decision on terminating my contract was jointly taken by Tara, Deepak, David, Prat, Arvind and Anil Chadha. I am surprised how people I have complained against could be a party to this decision.

I would also request that everyone who I worked with or interacted with regarding my concerns be asked to preserve their email records as evidence.

Regards,

Seema
–
Seema Sapra

——————————————————————————————————

From: Denniston, Brackett (GE, Corporate) [mailto:brackett.denniston@ge.com]
Sent: Saturday, September 25, 2010 3:01 AM
To: Seema Sapra
Cc: Lobo, David (GE India); Plimpton, Tara (GE Transportation, US); Adlakha, Deepak (GE India); Eglash, Jeffrey C (GE, Corporate); Dimitrief, Alexander (GE, Corporate)
Subject:

Seema,

I have received your September 20th email. I want to assure you that a thorough and independent review of your concerns is being conducted. I have asked Jeff Eglash, who is senior counsel handling investigations for GE Corporate, to lead the investigation. Alex Dimitrief, who reports directly to me, will oversee Jeff’s work. Jeff will be assisted by other attorneys or investigators as needed. Please consider Jeff to be the appropriate point of contact for you going forward and direct your communications to him. His email is jeffrey.eglash@ge.com.

I trust that we can count on your continued availability and cooperation as we look into these matters. Jeff will be in touch with you shortly, and he will respond to your specific requests regarding documents and emails.

Sincerely,

Brackett

Brackett B. Denniston

Senior Vice President and General Counsel

General Electric Co.

3135 EastonTpke

Fairfield, CT 06828

203-373-2453

brackett.denniston@ge.com

————————————————————————————————————

Copies of some correspondence on my complaint against General Electric on the securities fraud issue

————————————————————————————–

Email sent to Mr. Jeffrey Eglash by me on December 3, 2010 (the attachments with the news reports and GE investor update are also extracted below:

———- Forwarded message ———-
From: Seema Sapra <seema.sapra@googlemail.com>
Date: Fri, Dec 3, 2010 at 4:54 PM
Subject: some news reports on the issue of false information published about the 2009 bid
To: "Eglash, Jeffrey C (GE, Corporate)" <jeffrey.eglash@ge.com>
Cc: "Dimitrief, Alexander (GE, Corporate)" <alexander.dimitrief@ge.com>, "Denniston, Brackett (GE, Corporate)" <brackett.denniston@ge.com>

Jeff,

As I mentioned here are some news reports that you might find useful for your investigations. Also attached is the investor update/ press release sent out by GE.

Best Regards,

Seema

Seema Sapra

Attachment 1 – GE Press Release

21 October 2008

GE Transportation and BHEL Team-up in Pursuit of 1,000 Locomotive Tender for Indian Railways

Erie, Penn. and New Delhi, India (Oct. 21, 2008) - GE Transportation, a unit of General Electric Company (NYSE: GE) and global diesel locomotive technology leader, and Bharat Heavy Electricals Ltd (BHEL) joined forces to compete for a 1,000 diesel locomotive tender issued by Indian Railways. GE was recently shortlisted by the Indian Railways to compete for this tender. GE and BHEL along with Indian Railways intend to form a Joint Venture company for this purpose.

GE Transportation plans to supply diesel locomotives based on the company’s global Evolution® Series locomotive platform. The Evolution® Series locomotive is the most technologically advanced, fuel-efficient and low emissions locomotive to-date. With more than 2,800 units in use today, the Evolution Series locomotive is one of GE Transportation’s best-selling products worldwide. These locomotives deliver 5% higher fuel efficiency and a 40% reduction in emissions over previous locomotives. GE’s locomotive reduces fuel consumption by approx. 300,000 gallons, or more than 1,1 million liters, over the life of the locomotive.

The Evolution Series locomotive serves as one of GE’s first products to be certified as part of its “Ecomagination” initiative. Ecomagination is a company wide commitment to developing technology designed to help customers satisfy environmental challenges, to maximize performance and reduce cost.

Should it win the tender, GE is prepared to bring the most advanced rail technology to India. GE’s locomotives for India have been designed in the John F. Welch Technology Center in Bangalore, India, and will have a peak output of 6,000 GHP delivering 40% more power at 30% less weight than the locomotives of the same series currently utilized in North America. These locomotives will be up to 5% more fuel-efficient and generate 84% fewer particulate emissions compared to fleets currently in use.

“We are excited about the prospect of expanding our relationship with Indian Railways and to partner with BHEL, one of the leading technology companies in India,” said Lorenzo Simonelli, President and CEO of GE Transportation. “BHEL’s know-how, customer centricity and local operations will help us deliver our product to Indian Railways in a timely and cost-effective manner.”

“GE is known to build the world’s most reliable and fuel-efficient diesel locomotives to-date,” said K. Ravi Kumar, Chairman and Managing Director of BHEL. “We are proud to expand our successful association with one of the most respected companies in the world to bring best-in-class locomotive technology to our long-time customer, Indian Railways.”

For more than 45 years, BHEL has been a leading supplier of propulsion systems and locomotives to Indian Railways. BHEL manufactured approximately 160 electric locomotives and supplied over 4,000 sets of electric propulsion systems to Diesel Locomotive Works.

GE Transportation has established itself as a global technology leader. With close to 4,000 researchers and engineers, GE’s John F. Welch Technology Centre in Bangalore, India, is the company’s first and largest integrated, multidisciplinary Research and Development Center outside of the United States. GE Transportation maintains a specialized technology team located at the Centre providing advanced engineering design solutions for existing and next generation locomotive platforms in India and around the globe. The team works closely with scientists and engineers from GE’s Global Research Center, who are also located at the Centre. Technologists from Global Research provide core technology expertise in electric motors, combustion processes and sophisticated systems modeling to help optimize the design of locomotives for breakthrough power, fuel and emissions performance.

GE Transportation already applied Evolution Series technology to serve its global base of rail customers. On Sept. 1, 2008, GE Transportation delivered the first of three hundred 6,000 GHP China Mainline locomotives to the Ministry of Railways P.R. China. Kazakhstan Temir Zholy (KTZ), Kazakhstan’s state-owned national railway company, ordered 310 Evolution-based locomotives in 2006. Rio Tinto Iron Ore received forty heavy haul Evolution Series locomotives to support its mining operations in Australia’s Pilbara region in 2008. In addition, GE Transportation introduced its new PowerHaul™ engine and locomotive for the UK and European markets in October 2008.

About GE Transportation

Established more than 100 years ago, GE Transportation, a unit of General Electric Company (NYSE: GE), is a global technology leader and supplier to the railroad, marine, drilling, mining and wind industries. GE provides freight and passenger locomotives, railway signaling and communications systems, information technology solutions, marine engines, motorized drive systems for mining trucks and drills, high-quality replacement parts and value added services. With sales in excess of $4.5 billion, GE Transportation is headquartered in Erie, Pennsylvania, and employs approximately 10,000 employees worldwide. For more information visit www.getransportation.com

About BHEL

Established over 40 years back, BHEL is the largest engineering and manufacturing enterprise in India and caters to core sectors of the Indian economy, viz. power generation and transmission, industry, renewable energy, defense and transportation. BHEL is the single largest partner to the Indian Railways over the past four decades in the supply of propulsion systems to meet Indian Railways production requirement of diesel locomotive, electric locomotive and EMU coaches. BHEL is the only producer in the country for main line locomotives for the Indian Railways. The overall turnover of BHEL is $5.5 billion and an employee strength of 40,000 with about 10,000 engineers. For more information visit www.bhel.com.

PRESS CONTACTS

Stephan Koller
GE Transportation, Communications Manager
+1 814 875 3457
+1 814 431 3150(mobile)
stephan.koller@ge.com

Attachment 2 – New reports sent to GE on December 3, 2010

Tue, Sep 21, 2010 | Updated 12.54PM IST

2 Oct, 2009, 07.22AM IST, Priyanka Sangani,ET Bureau

GE plans to turn India gradually into a sourcing base

GE may have shelved its plans of garnering $8 billion in revenues from India by 2010 thanks to the slowdown, but by no means is the infrastructure and energy major going slow on its plans for the country. At GE Day, its annual two-day jamboree in Hyderabad, the company announced that it would be setting up a wind turbine manufacturing plant in South India by mid next year. For a company that has a presence in manufacturing primarily through local partners, this is a big step forward. Tejpreet Chopra, president and CEO, GE India, Sri Lanka & Bangladesh says that while initially the company would be working with supply chain partners globally and assembling the units in India, it would, over time, develop a local supply chain and indigenise production.
Quiz Chopra on the company’s prospects in India and he hands you a line one suspects he uses rather often : “What this country really needs – apart from education – is bijli, paani and healthcare . And GE is among the largest players globally in all three segments.” GE plans to script its growth primarily in healthcare , energy and infrastructure through a clear three-pronged strategic approach. This will be a mix of localisation of products and services to adapt them to local needs, partnerships such as the existing ones with BHEL for gas turbines and SBI for credit cards, and public-private partnerships (PPP) with the state on defence and infrastructure projects.
Pratyush Kumar, president & CEO, GE Infrastructure, India, the biggest contributor to the company’s $2.6 billion revenues last year, says that while GE is the largest infrastructure technology supplier in the world, it is still in the process of getting to where it would want to be in India. A significant part of this, he says, will come through PPP. One such major project is with the Indian railways where GE would be setting up a locomotive factory in Bihar which would bring in cutting edge technology as well as create thousands jobs in the region. “The mandate is to produce 1000 diesel and 800 electric locomotives over 10 years. The project had been put on hold earlier this year because of the elections, but we are keen to revive it,” says Kumar.
From the time GE first did business with India in 1903, the company has slowly moved up the value chain, from outsourcing with GECIS (now Genpact) in 1998 to setting up its largest technology research centre outside of the United States in Bangalore the next year. Alongside, it has grown its business through a slew of partnerships with homegrown biggies like L&T , Wipro and SBI. Going ahead too, these collaborations will contribute significantly to the company’s growth in India, says Chopra. Now, GE also has plans of gradually turning India into a sourcing base, starting with the wind turbines once the plant is running at full capacity, followed by other parts like blades, towers and gearboxes.

The company got another shot in the arm when it got a VEU (validated end user agreement) from the US government which gives it permission to sell advanced defence technology to specific Indian institutions . “We have done a lot of work in the defence and security space in the United States which we will now be able to sell in India,” says Chopra.
And with the India-US nuclear deal finally going through, GE expects to be doing a fair amount of work on nuclear energy by next year as well. Given the company’s dedication to going green, nuclear is going to be one of the big focus areas for GE. So far though, the company has a negligible presence in this renewable energy space, something that it will be looking to change with this latest announcement . “The renewables space in India has only just taken off in the last few years, but now, with the government actively taking steps to promote it, we do expect to be present in it in a larger way,” says Kishore Jayaraman, president & CEO, GE Energy India, Bangladesh, Sri Lanka.

The energy business is also a significant area of focus at the John F Welch Technology Centre, with 1700 of the 5500 scientists there working exclusively on this business. “What we do here is principally develop technology and innovation to support the energy business which can be taken to other markets as well. We want to develop products here with local contribution and grow them globally,” says Jayaraman.

Meanwhile, the company has been doing a lot of local innovative projects locally like running a biogas plant solely on cowdung in Ludhiana , something Chopra says they could replicate in other parts of the country as well provided certain conditions are met. The third arm, healthcare, is perhaps where the most innovation has happened out of Bangalore. Under the company’s healthymagination venture, GE has earmarked $6 billion globally to come up with affordable healthcare solutions for the developing areas of the world. One such, a portable lowcost ECG machine made in Bangalore has managed to bring the cost of an ECG down from Rs 1000 to Rs 50.
Little wonder then, that Chopra and his team remain extremely upbeat about India. And the reason he says is simple: “What we (GE) do for a living in this country is what this country needs.”

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GE may have shelved its plans of garnering $8 billion in revenues from India by 2010 thanks to the slowdown, but by no means is the infrastructure and energy major going slow on its plans for the country.

Railways: Right on track

Shalini S. Dagar

April 2, 2009

Stoicism and patience are two virtues that infrastructure investors need in plenty. Pratyush Kumar, President and CEO, GE Infrastructure India, is no exception. In February, the government rejected GE Infrastructure’s financial bid to be a 51 per cent partner in the Rs 2,000-crore diesel locomotive factory in Bihar. The reason: GE was the only bidder!
And, within 18 days, the Union Cabinet changed its mind on the ownership pattern: instead of the government holding a 26 per cent stake, the factory would be fully owned by it.
Sitting in his office in central Delhi, across the Rail Bhawan, Kumar, though disappointed, is determined to be there whatever the opportunity, whenever. “We will not walk away from this,” he says, all the while hoping that a better decision will be arrived at. At the Rail Bhawan, senior railway officials admit that it is difficult for the government to take such decisions close to the general elections.
“We recognise that this opportunity will still be there after the elections because the fundamental need for locomotives has not gone away,” says GE’s Kumar. Sure, that is true for many of the other opportunities in the rail sector.
“The New Delhi Railway station modernisation is another missed opportunity. It was delayed for rather inane reasons—one of them being cross-ownership, which was causing discomfort to the bidders. Now it will take another 8-9 months to bid it out again,” says a high-ranking Railway Ministry official.
These two stalled projects were clear and present opportunities and had held out hope for public-private partnership in the Railways on a really big scale. But there are plenty of others waiting to be grabbed. According to industry estimates, opportunities in construction and development projects, adding up to nearly Rs 1,60,000 crore, would be available over the next few years.
Reason: Movement of goods across India is an expensive proposition. The cost of the supply chain in India is estimated to be around 13 per cent of GDP, as compared to 9 per cent of GDP in developed nations. That translates into a $45-50 billion logistics opportunity straight away. And rail freight has an advantage over road freight not just in terms of cost and ease of operations, but in terms of environment friendliness, too.
In line with this logic, and aided by the Budget surpluses of the last few years, several big-ticket item of investments were proposed by the Railway Ministry. A major one being the dedicated rail freight corridor connecting the northern regions to the ports on the east and west coast of India.
A special purpose vehicle Dedicated Freight Corridor Corporation of India (DFCCI) was formed two years ago to plan, mobilise resources and execute the project. This is likely to throw up several opportunities to bid for turnkey projects for the private sector. V.K. Kaul, Managing Director, DFCCI, says: “Loan financing from the Japanese investors and World Bank will be finalised shortly. And the freight corridor will come up in 5-6 years after that.” The corporation has sought some 11,000 hectares of land for the corridor.
Railway Ministry officials say land is not a problem. “We need to acquire very little land for the freight corridor. We will need to acquire only in towns or where it has been encroached, otherwise we have space for four lines from Delhi to Mumbai,” says Sudhir Kumar, Officer on Special Duty (OSD) to the Railway Minister. The same is the case with the Eastern Corridor where work was initiated recently. Of the recently bid out contracts, the cost of earthworks alone adds up to Rs 500 crore, says Railways’ Kumar.
The freight corridors will spawn huge logistics and warehousing infrastructure alongside. Bids invited by the Indian Railways for multi-modal logistics parks received enthusiastic response from logistics players. Industry watchers peg the opportunity at Rs 20,000 crore.
Fitting into this piece of action will be the private container trains, which were introduced a few years ago. The current downturn in traffic volumes has added to their woes.
Many of them had blindly replicated the business model of Container Corporation of India. Ajay S. Mittal, Chairman & Managing Director, Arshiya International, a logistics company, admits that many players did not get things right. “There has to be an equal investment in rakes, containers and associated infrastructure. Private players will certainly rectify these issues now,” he adds. Much of that will mean more investments.
Arshiya, through its wholly-owned subsidiary, Arshiya Rail Infrastructure, started its rail operations in February. It plans 30 rakes for Vedanta Aluminium with custom-built containers. “This will not only help in lowering Vedanta’s operational costs, but also reduce damage to the cargo (aluminium powder and ingots). The end-to-end solution will lead to direct and indirect savings of around 20 per cent in the cost of the supply chain,” says Mittal. The BSE mid-cap company is planning Rs 6,000 crore of investments in sidings, rakes and free trade warehousing zones over the next six years. One of the earliest proposed warehousing zones will be at Khurja—where the two freight corridors will meet.
Fresh investments apart, the existing rail network will also need continuous modernisation to make it perform. The good thing is that money and the inclination are not missing, both in the state-run Railways and the private companies. As GE’s Kumar says, there is no reason to walk away from building infrastructure in India.

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Tue Sep 21, 2010

12:53 PM IST

GE Infra awaiting revival of bids for setting up locomotive unit

HYDERABAD, September 18, 2009

M. Rajeev

GE Infrastructure India, the infrastructure arm of global leader GE, is anxiously awaiting the Central Government’s decision to recall bids for setting up a diesel locomotive manufacturing unit in association with Indian Railways.

GE Transport, part of GE’s infrastructure operations, was the sole bidder for the project, to be located in Bihar at an estimated cost of Rs. 2,000 crore, but the project was dropped “without any communication to us,” GE Infrastructure President and CEO Pratyush Kumar said. The company is hopeful that the new Railway Minister takes interest in the project with multiple benefits and revive it.

Speaking to The Hindu here on Wednesday, Mr. Pratyush Kumar felt that the Government was “not comfortable” in awarding the project before the elections as only one bid was received. But, it is natural as it required a company of GE’s scale of operations to pull it off,” he said.

Eyes aviation sector

The company was looking at the aviation sector and was in touch with the Ministry of Defence which invited bids for 126 multi-combat medium range aircraft. Meanwhile, General Electric will be setting up its first wind turbine manufacturing plant in India.

The diversified $183 billion conglomerate’s energy arm, GE Energy, will be setting up the Indian plant in South India, Tejpreet S. Chopra, President and CEO of GE India, said.

Date:25/09/2009 URL: http://www.thehindubusinessline.com/2009/09/25/stories/2009092551250600.htm

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GE Cap to provide new tech platform for credit cards

Amit Mitra

Hyderabad Sept. 24 GE Capital, which is partnering with State Bank of India in the SBI Card business in India, is bringing in new technologies from its parent company, the $183-billion General Electric conglomerate.

The new technology provides better risk management and monitoring of card holders. “Some technologies have already been incorporated in the joint venture and newer ones are in the process of being injected into the business,” Mr Anish Shah, President and Chief Executive Officer of GE Capital, told Business Line.

“We may consider sharing the technology with other cards that are part of the SBI Card portfolio. Apart from servicing SBI Card customers, GE Capital Business Process Management Services also services customers of several third-party loyalty programmes in the country, including those of the Tata Group and the Indian Railways,” he said.

GE Capital, which is in the process of exiting from its unsecured loans business, is planning to step up its commercial lending operations, including corporate debt. “We are looking at shoring up our commercial lending in sectors such as infrastructure, aviation, energy and healthcare. We also need to build scale in terms of our mortgage lending,” Mr Shah said. In the home financing segment, the company has an exposure of Rs 1,700 crore and is looking for ways to add value.

GE Infrastructure

GE Infrastructure India, another arm of the GE group, will be participating in the re-bidding process for setting up the proposed Rs 2,000 crore diesel locomotive manufacturing unit in Bihar in association with the Indian Railways.

Last time, when bids were called for the project, GE Infrastructure was the sole bidder, but subsequently the bid was cancelled by the Railways.

“This time we are anticipating competition as our price is already on the street. But we are preparing for it,” Mr Pratyush Kumar, CEO of GE Infrastructure, said.

© Copyright 2000 – 2009 The Hindu Business Line

Business » Industry

Published: September 18, 2009 00:33 IST | Updated: September 18, 2009 00:33 IST HYDERABAD, September 18, 2009

GE Infra awaiting revival of bids for setting up locomotive unit

M. Rajeev

GE Infrastructure India, the infrastructure arm of global leader GE, is anxiously awaiting the Central Government’s decision to recall bids for setting up a diesel locomotive manufacturing unit in association with Indian Railways.

GE Transport, part of GE’s infrastructure operations, was the sole bidder for the project, to be located in Bihar at an estimated cost of Rs. 2,000 crore, but the project was dropped “without any communication to us,” GE Infrastructure President and CEO Pratyush Kumar said. The company is hopeful that the new Railway Minister takes interest in the project with multiple benefits and revive it.

Speaking to The Hindu here on Wednesday, Mr. Pratyush Kumar felt that the Government was “not comfortable” in awarding the project before the elections as only one bid was received. But, it is natural as it required a company of GE’s scale of operations to pull it off,” he said.

Eyes aviation sector

The company was looking at the aviation sector and was in touch with the Ministry of Defence which invited bids for 126 multi-combat medium range aircraft. Meanwhile, General Electric will be setting up its first wind turbine manufacturing plant in India.

The diversified $183 billion conglomerate’s energy arm, GE Energy, will be setting up the Indian plant in South India, Tejpreet S. Chopra, President and CEO of GE India, said.

Printable version | Sep 21, 2010 1:08:12 PM | http://www.thehindu.com/business/Industry/article21779.ece

© The Hindu

Published on mydigitalfc.com (http://www.mydigitalfc.com)

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Bhel, GE to seek nod for locomotive unit in Bihar

By :Chaganti Sarita & Parul Chhaparia

Apr 14 2009

The country’s largest engineering and manufacturing company, Bharat Heavy Electrical (Bhel), along with the US-based General Electric, is planning to seek the railway ministry’s approval for setting up a locomotive factory in Bihar.
“We see a big opportunity in Indian Railways’ scrapping the bidding for locomotives supply contract in Bihar. This could be a big risk. The company has expressed its willingness to the government to take a financial risk by setting up a locomotives factory on its own,” K Ravikumar, chairman and managing director of Bhel told Financial Chronicle.
Indian Railways had planned to set up two locomotive factories and one coach factory in Bihar on the public private partnership (PPP) basis. However, the plans were abandoned in February as the railways received only one bid for each project. The Bhel-GE consortium was the sole bidder for the railways’ diesel locomotive plant in Marhowra, Bihar. The consortium is expecting to sign a formal agreement with the railways in the second half of 2009.
Railway ministry officials, however, denied any move to go for a private company participation in the project. “As of now, there is no plan to get back to the PPP model or get it wholly developed by the private company. It is not possible, at least till the elections are over and the new government is in. If the new government wants to revisit the project, it can opt for private investment again,” said a senior ministry official on condition
of anonymity.
The railways is now planning to turn the factories into fully-owed departmental production units. The present plan may hit the finance hurdle because of significant increase in the project cost.
The railway official said that it was in the
best interests of the railways to go for private partnership. “The ministry will require Rs 4,800 crore to set up three factories on its own. If the private players participate, the railways with the 26 per cent stake will have to shell out only Rs 300 crore,” the official said.
The railways is still exploring options to bring in private investments for other work related to the project.

© 2010 Financial Chronicle, All rights reserved

Source URL: http://www.mydigitalfc.com/companies/bhel-ge-seek-nod-locomotive-unit-bihar-786

GE, Siemens in race for electric locomotive unit

Sharmistha Mukherjee / New Delhi August 11, 2010, 1:17 IST

Leading manufacturers of railway rolling stock like GE, Siemens, Alstom and Bombardier have been shortlisted for setting up a Rs 1,960-crore electric locomotive manufacturing unit at Madhepura in Bihar.

The facility, to come up on the public-private-partnership (PPP) mode, will roll out 120 IGBT (insulated gate bipolar transistor) electric locos of 12,000 horse power every year.

“GE, Siemens, Alstom and Bombardier have been selected for the first stage of bidding to set up the factory at Madhepura. We expect the project to be awarded by the end of the year,” said a senior GE executive on condition of anonymity.

Railway officials said efforts were on to expedite the bidding process so that the unit could become operational in three years.

At the same time, they are considering applications for setting up a diesel locomotive manufacturing unit at Marhowrah, also in Bihar’s Chhapra district. The railway ministry expects the Rs 2,720-crore unit will manufacture 130 diesel locomotives every year.

The overall investment envisaged for setting up both the facilities and manufacturing rolling stock units at Madhepura and Marhowrah is estimated to be Rs 29,000 crore. The ministry would procure 1,000 units each of electric and diesel locomotives from the two facilities over an eight-year period.

The railways had floated tenders for setting up both the facilities in April 2008. On receiving one non-compliant bid each for both the units in February 2009, the ministry had resolved to establish the factories as departmental production units.

The four companies were shortlisted even that time for the electric loco unit. GE and US-based EMD were shortlisted for the diesel loco plant, though GE was the only one to put in the final bid. The private sector entities entrusted to set up the units would be responsible for maintaining the locomotives for a period of 25 years.

The factory at Marhowrah was approved in 2006 and that at Madhepura in 2007.

A senior official at the ministry informed, “Due to the slowdown last year, we had received feeble response from potential bidders. Initially, the projects were considered to be set up as production units of the railways. Consequently, Railway Minister Mamata Banerjee gave a go-ahead to put the units on the PPP basis.”

Both the factories were envisaged for commissioning during the current five-year Plan period (2007-12). They are now slated for commissioning by 2013.

Low budgetary allocations for the projects have raised concern from industry experts. Of the Rs 2,720 crore required for setting up the Marhowrah factory, Rs 29 crore — just over one per cent — has been provided till date. Another Rs 667 crore is to be raised from private sector entities. The remaining resources have to be provided by the ministry.

Similarly for the Madhepura unit. Of the total requirement of Rs 1,960 crore, Rs 63 crore — about 3 per cent — has been made available by the ministry, while Rs 667 crore is to be raised on PPP basis.

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Bhupesh Bhandari: GE waits for the railway signal

Bhupesh Bhandari / New Delhi May 22, 2009, 0:52 IST

General Electric lobbied hard in favour of the Indo-US civilian nuclear deal. And it agreed to stick to Satyam when the company was in serious danger of imploding. Large customers were ready to junk the scam-tainted provider of software services. Alarmed, the government-appointed board soon after it took charge started calling up large customers not to cancel the work given to Satyam.

It would be unreasonable on GE’s part to expect anything in return in a democratic setup. There is without doubt self-interest involved in both Satyam and the nuclear deal. Under its new owner, Tech Mahindra, Satyam will in all probability deliver the services mandated by GE. Moving the business to a new service provider at this moment could be unwise. And the nuclear deal will mean huge orders for GE which is a key maker of nuclear power plants in the world.

Still, GE has an axe to grind. Its proposal to set up a diesel locomotive plant at Marora in the Saran district of Bihar is stuck. In February, the Railways had invited bids for the project and GE was the sole bidder. EMD Locomotive Technologies, which was also in the fray, opted out of the race. On the ground that it might cause a political scandal just before the general elections, the Railways decided to scrap the bid. Instead, they suggested that they could build the plant themselves.

The plant, the Railways have said, will now be built using the “technology transfer” route. Since there are only two companies that make the kind of diesel locomotives the Railways want, there is a good possibility that GE may still get some business out of it. But there are flaws in this decision.

To begin with, the technology in such transfers remains frozen in time. The provider has little incentive to upgrade it. There are enough examples of it in the country. The plants put up with technology transfer have gone to seed in no time. Two, often the technology is not customised for local conditions. Indian Railways run their locomotives on broad gauge. So, what India needs is broader and shorter locomotives.

On its part, GE had spent millions of dollars to develop such a locomotive. It had put together a team of 80 for the project. Since it was designed specially for India, it is unlikely it can be used elsewhere in the world. So, GE’s India team will find it difficult to justify the costs if the project is lost. What will it do with the engineers on its rolls?

Whether the Railways will be able to match GE’s price is not known. The internal reserve price of the Railways was Rs 12.9 crore per locomotive. GE says its bid was below that. The bid document, prepared by the Planning Commission, said that the price would come down by three per cent every year. This advantage will be lost if the Railways put up the plant themselves.

Then there is the question of investment. The Railways have said that they will invest up to Rs 2,000 crore in the project. In GE’s scheme of things, Railways’ investments wouldn’t have added up to more than Rs 100 crore — it was a public-private partnership. The Railways will have to find additional resources to the tune of Rs 1,900 crore at a time when its freight earnings are under strain, thanks to the economic slowdown. GE has not disclosed what would have been its investment in the project. But it is safe to assume that it would have been of the same magnitude as the Railways — Rs 2,000 crore.

GE is no stranger to bureaucratic hassles. Of its four lines of business — finance, energy, technology infrastructure and the media —, at least two (energy and technology infrastructure) involve a huge interface with the government and bureaucrats. And it knows that the wheels of government turn very slowly all over the world. India is no different. Patience and perseverance hold the key in government negotiations.

Once the new Congress-led government has settled down, which shouldn’t take too long, it will need to take a final decision on the issue —whether to revive the GE proposal or go ahead with the Railways. At a time when countries the world over are falling over each other to get investments, should we let the GE proposal die? Companies now have limited budgets for investments. If not the diesel locomotive plant at Marora, GE could find some other use for the money. Will GE go to the courts? That is unlikely because it has to do business with the Indian government in the future. It has zeroed in on China and India as the engines of future growth.

Meanwhile, the story of the Dabhol power plant, owned now by Ratnagiri Gas and Power, has taken another turn. The turbines supplied by GE had stopped functioning. Much time was lost in finger-pointing and passing the buck — who was responsible for maintaining those turbines? A maintenance contract with GE is being drawn up. This will open another revenue stream for GE from India. This could be crucial at a time when global corporations are downscaling their revenue projections.

http://www.domain-b.com/companies/companies_b/Bharat_Heavy_Electricals/20090220_ge_hybrid.html

BHEL signs deal with GE for hybrid diesel-electric locomotives news

20 February 2009

Public-owned equipment giant Bharat Heavy Electricals Ltd a public sector equipment manufacturer, has signed an agreement for a joint venture with US-based General Electric (GE) to manufacture diesel locomotives for Indian Railways, with an investment of Rs1,000 crore. The Railways will also hold a stake in the venture.

The facility is to be set up in Marhoura, Bihar, with an initial capacity to manufacture 120 locomotives a year. Bhel would hold a significant minority stake of 23 per cent, while GE would have the majority shareholding of 51 per cent in the joint venture. Indian Railways would take up the remaining 26 per cent.

"We have signed the agreement with GE, but the setting up of the company depends on winning the contract from railways," said BHEL chairman and managing director K Ravi Kumar, while handing over an interim dividend cheque of Rs298 crore to the central government.

GE has emerged the single bidder for assembling and supplying 1,000 dual-fuel locomotive engines to the Railways. The company is yet to receive the final order. "First, GE has to get the order for supplying the locomotives. Only then can we go ahead and form the joint venture," Kumar said.

The proposed joint venture will make 100-120 high-powered locomotive engines capable of running on both diesel and electricity at Marohwara.

GE Locomotive is designing a hybrid diesel-electric locomotive that will capture the energy dissipated during braking and store it in batteries. The energy can then be reused by the crew on demand, reducing fuel consumption by as much as 15 per cent and emissions by as much as 50 per cent compared to most freight locomotives in use today.  The energy dissipated in braking a 207-ton locomotive over the course of a year is enough to power 160 American households for that year. The hybrid locomotive will capture that energy, which can be used to produce more more horsepower and simultaneously reduce emissions and fuel use.

Kumar refused comment on whether the tender would be cancelled because it received a bid from only one company.

The new venture would also include setting up a component manufacturing facility in Bhopal, where BHEL already has a similar plant. "In this new facility, we will manufacture components that will be used in the locomotive assembly unit in Marhaura," BHEL director (industrial systems and products) B P Rao said. BHEL and GE would own equal stake in the component-making unit.

Bhel is also looking to set up a unit to manufacture electric locomotives in Madhepura, also in Bihar. "We are in talks with Siemens, Bombardier and Alstom, which are the three qualified technology providers for the railways’ proposed contract," Kumar said. This facility would also manufacture 120 locomotives a year.

The three foreign companies were shortlisted by the Indian Railways to supply electricity-run locomotive engines, but none have made their bids so far. BHEL will make such locomotives in a joint venture with the company that is awarded the tender, Kumar said.

The railway ministry has planned procuring 800 new electric locomotives of 12,000 HP each and 1,000 diesel locomotives of 4,500/6,000 HP each over a period of 10 years. These locomotives will also be maintained by the joint venture company over the next 25-26 years.

BHEL, which has an order backlog of Rs120,000 crore to be completed in 42 months, expects a revenue growth of 25 per cent to 30 per cent this fiscal. Ravi Kumar told CNBC-TV18 that "This financial year and we are expected to see a double digit growth in profits."

He said, "I would be happy if we end the year with 30 per cent, but definitely there will be between 25–30 per cent growth in sales." He sees profit growth in the range of 10–15 per cent for the financial year.

http://www.livemint.com/2009/02/23000634/Railways-seeks-CVC-cover-for.html

Railways seeks CVC cover for $6 bn tender

Only one bidder each for the two projects on offer; railways hopes CVC endorsement will pre-empt any disputes

K.P. Narayana Kumar and Rahul Chandran

New Delhi: The Indian Railways is to approach the Central Vigilance Commission, or CVC, seeking to shield itself from potential controversy before awarding to the sole bidders a $6 billion project to manufacture electric and diesel locomotives in Bihar, home state of railway minister Lalu Prasad.

The proposal to approach CVC, the government oversight body, follows attempts in the last two months by the railways to speed up closure of the project, conceived two years ago, to manufacture electric engines at Madhepura and diesel locomotives at Marora.

When the bids were opened on 16 February, only German engineering firm Siemens AG was found to have bid for the electric locomotive factory and American conglomerate General Electric Co. (GE) for the diesel one. Some companies originally in the race said they didn’t have sufficient time to prepare bids.

“Yes, we are planning to seek a clearance from the CVC, given the special circumstances,” said a top Railway Board official, who didn’t want to be named.

CVC is the apex body that oversees the functioning of government departments and agencies on vigilance issues. An endorsement by CVC that due process had been followed in awarding the tenders would provide the railways a shield in the event of a future legal dispute over the project, and help avoid project delays.

Chairman of the Railway Board S.S. Khurana declined comment on the matter.

“There have been situations earlier, too, when various ministries approached us for a clarification or sanction before completion of awarding (projects) under complicated circumstances,” said a CVC official who didn’t want to be identified. “But normally, if there are serious complaints against the tendering process, the CVC would not agree to their requests.”

A railways official said on condition of anonymity that of the two bids that were received, one was “subject to the ministry agreeing with several conditions stipulated by the winning company”. The official declined to share more details and Mint could not independently ascertain the claim.

Besides Siemens, Bombardier Transportation India Ltd, a unit of Canada’s Bombardier Inc., and France’s Alstom SA had been shortlisted for the the electric engine project. EMD Locomotive Technologies Pvt. Ltd, a subsidiary of US-based Electro-Motive Diesels Inc., had been in the running with GE for the diesel one.

The issue of propriety arose amid concern that if the railways went ahead and awarded the project to Siemens and GE, it could raise uncomfortable questions on the price quoted by the winning bidder in the absence of any competition.

The Railway Board official cited earlier said a tender committee set up by the railways will scrutinize GE’s offer and then decide whether the price it quoted was reasonable or not. “The due process will be followed,” he said.

“But when there was an open tender (and the other companies took a decision not to bid) you cannot say that the awarding will be on a nomination basis,” said this official, who declined to comment on Siemens’ bid.

The project was first approved in early 2007, following which initial bids were called in July 2008. The process gathered pace in January, thanks to consultations between the finance ministry, the Planning Commission and railways to hammer out new terms.

The entire project—first conceived as a so-called public-private partnership—was cleared on 5 February as a joint venture despite objections by finance ministry. This essentially left the firms a fortnight to evaluate terms, tie up funds and make bids in time for the 16 February deadline.

The finance ministry in January had raised several objections to clauses in the project, including the way it was structured, termination payments and the amount of performance guarantees charged from the bidders.

In inter-ministerial consultations, the finance ministry said a public-private partnership was preferable because with an equity of just Rs100 crore, there was a “distinct possibility” that the railways would have no more than a nominal presence on the board of the proposed joint venture.

The railways responded that it had approached both the finance ministry and the cabinet committee on economic affairs for advice on the public-private partnership and joint venture models. The railways said that with the bid process being at an advanced stage, it would not be possible to modify the project structure.

Meanwhile, Mint reviewed the letters EMD and Alstom had sent to the railways seeking an extension of the date of submission of financial bids.

EMD, in a letter dated 13 February, had stated that it was interested in the tender but only if all issues pertaining to the request for proposal, or price bid, were satisfactorily addressed and the opening of the bids was extended by a few months.

Similarly, Alstom, which had shown interest in the electric engine project, told the Railway Board that 16 days were not enough to submit a bid for the project. “We would like to submit that a period of 12 weeks is the bare minimum required for us to explore viable financing models for the project in order to prepare a satisfactory bid,” Alstom said in the letter.

“We do have an objection to the project being awarded to GE,” said an official with one of the firms that were bidding for a tender. However, this executive added that he was unsure whether the company would take legal action. This person neither wanted to identify himself nor his company.

“There is no harm in the railways negotiating with a company if it turns out to be the only one to submit a bid,” said Arvind Mahajan, an infrastructure expert at KPMG. “They also have the prerogative of negotiating a price with the bidder. However, the concerns raised by other companies—of not having been provided enough time—is indeed an issue.”

narayana.k@livemint.com

• Posted: Mon, Feb 16 2009. 11:55 PM IST

Two mega rail engine projects get just one bidder each

Three of the five companies in the running for the project have not bid amid concerns about the terms and the efforts of the railways in the last two months to accelerate the project announced two years ago

Rahul Chandran and K.P. Narayana Kumar

New Delhi: German engineering services company Siemens AG and US-based conglomerate General Electric Co. (GE) have emerged as the sole bidders in separate contracts for an ambitious $6 billion (Rs29,220 crore) Indian Railways project to manufacture electric and diesel locomotives.

Three of the five companies in the running for the project have not bid amid concerns about the terms and the efforts of the railways in the last two months to accelerate the project announced two years ago.

If Siemens, GE get the project, it could raise questions on the price quoted, in the absence of any competition

A government official, who did not want to be named, said that if the railways did go ahead and award the project to Siemens and GE for two factory tenders, it could raise uncomfortable questions on the price quoted by the winning bidder in the absence of any competition.

Most company officials did not want to be named because the bid process was still “live”.

On 3 February, Mint had reported that railway minister Lalu Prasad planned to fast-track proposals for this project. The railways confirmed that it had received only one bid each for the factory tenders.

The project envisages manufacturing electric locomotives at Madhepura and diesel ones at Marora, both in Bihar, the home state of Prasad. GE bid for the diesel locomotive factory; Siemens for the electric locomotive one.

The shortlisted companies that failed to submit bids were Bombardier Transportation India Ltd, a unit of Canada’s Bombardier Inc., and France’s Alstom SA for the electric locomotive project and EMD Locomotive Technologies Pvt. Ltd, a subsidiary of the US-based Electro-Motive Diesels Inc., for the diesel project.

“There is a possibility that the players didn’t see that this is going to happen in such a short period of time. Otherwise most of those players should have bid. Most of the companies were very keen on the project,” said Arvind Mahajan, an executive director with audit and consulting firm KPMG Advisory Services Pvt. Ltd.

An official handling one of the tenders said that GE would be awarded the contract since its competitors had failed to submit a bid. “This is final as the others have not submitted their bids,” he said on the condition of anonymity.

Confirming that GE had submitted a price bid, a GE spokesperson said, “We submitted what we consider a competitive bid for the diesel locomotive tender Indian Railways issued in September 2008… We remain cautiously optimistic that Indian Railways will consider our bid favourably. Next steps in the bidding process will be determined by Indian Railways and the government, we eagerly await their decision.”

Alstom and Siemens officials did not respond to emails seeking comment. A Siemens executive, who did not want to be identified, confirmed that the company had submitted a bid, but refused to share more details.

Another Railway Board official handling the electric locomotives contract said that while Siemens was the only company to submit a bid, another company had sought an extension.

Refusing to disclose the name of the company, this official said, on condition of anonymity: “There is no precedent as such of allowing others now, but there are a number of ways of taking such circumstances into consideration.”

Technically, the railways can award the projects despite receiving only one bid each, though some ministries, such as the roads ministry, have chosen to approach the cabinet to clear the awards of such projects.

An official from one of the companies participating in the electric locomotives tender said they had submitted a letter to the Railway Board putting across their “point of view” on the tender.

However, he insisted the letter was not a protest note and was only an effort to get some clarifications from the ministry.

The railways had issued revised draft request for proposals (RFPs)—essentially guidelines for final price bids—in the last week of January, with a deadline of 16 February. This was finalized when the Cabinet Committee on Economic Affairs cleared the project on 5 February, which some companies claim left them with very little time.

The winning bidder is decided based on the price they bid per locomotive, with all other costs, including maintenance costs, built into the price.

The projects were cleared for investment as joint ventures on 5 February despite the objections by the ministry of finance over many of the conditions laid down in the bids.

The clearances came after a round of inter-ministerial consultations to take the project forward.

The two projects—estimated at a combined $6 billion—include a procurement contract as well as a 15-year maintenance component, where the railways would pay 3.25% of the cost of the locomotive every year to the winning bidder for maintenance.

The winning bidder was also required to build a township, school and hospitals near the factory.

Railway equipment manufacturer GE Transportation, a unit of GE, will tie up with state-owned Bharat Heavy Electricals Ltd (Bhel) to manufacture the diesel locomotives, provided it wins the order estimated to be worth more than Rs10,000 crore.

“Once the tender is awarded to us, we (Bhel) are looking at a total investment of Rs1,000 crore,” he said.

rahul.c@livemint.com

Utpal Bhaskar contributed to this story.

Copyright © 2007 HT Media All Rights Reserved

Date:25/02/2009 URL: http://www.thehindubusinessline.com/2009/02/25/stories/2009022550731500.htm

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New loco, coach factories to cost Rly Ministry Rs 5,137 cr

Plans to import 100 locomotives till production starts.

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Projects planned

The Cabinet has approved setting up of a diesel locomotive factory at Marhowra, Bihar

The Railways will also build coach factory at Rae Bareilly in Uttar Pradesh

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Our Bureau

New Delhi, Feb. 24 The three new electric loco, diesel loco and coach factories to be set up by the Railways as wholly owned departmental production unit will cost the Ministry about Rs 5,137 crore. It is not yet clear if any budgetary provision for the project has been made.

Earlier, the Railways share of investment was much lower as Railways was to put in 26 per cent of the equity for projects.

“The Ministry has to invite bids for an engineering procurement contract for setting up each factory. It also needs to invite bids to select a company from which it will import the rolling stock and enter into a transfer of technology agreement for each manufacturing unit,” said a source in the Ministry.

Rs 2,052-cr factory

The Cabinet on Monday approved setting up of a diesel locomotive factory at Marhowra, Bihar, as a fully owned unit of the Indian Railways at a cost of Rs 2,052 crore. The factory would produce 150 modern technology, high horse power, fuel efficient locomotives a year.

The Railways will also build a wholly owned coach factory at Rae Bareilly in Uttar Pradesh with an investment of Rs 1,685 crore. The factory will build 1,000 railcars a year.

The Cabinet also approved a proposal by Indian Railways to set up a factory as a departmental production unit to build electric locomotives at Madhepura in Bihar.

The factory will produce 12,000 horse power electric locomotives. While the official release does not specify any cost of the project, the Railways have earlier stated that the project is expected to cost Rs 1,400 crore.

Financial bids scrapped

Before the factories start production, Indian Railways proposes to import 50 electric and 50 diesel locomotives over the next three years.

The Railways has scrapped financial bids invited for setting up locomotive units as a joint venture. GE had emerged as a sole bidder for the diesel locomotive unit.

Technical snag in GE bid

While the Ministry’s official position remains that there was a ‘technical snag’ in the GE bid, an official source said that the Railway Minister was not comfortable taking a decision on a single bid just before the elections.

© Copyright 2000 – 2009 The Hindu Business Line

http://www.proactiveinvestors.com/companies/news/8676/ge-transportation-to-supply-locomotives-to-brazilian-railway-operator-mrs-logistica-8676.html

GE Transportation To Supply Locomotives To Brazilian Railway Operator MRS Logistica

GE Transportation, a division of General Electric (NYSE:GE), and Brazilian rail operator MRS Logistica, said Friday that they have entered into a purchase agreement.

Under the agreement, GE transportation will provide MRS with 115 fuel efficient and low emissions AC44i locomotives, which generate up to 15% fewer greenhouse gas emissions.  MRS also has an option to purchase an additional 100 units.

The purchase order is part of MRS’s efforts to meet demand for locomotive transport in light of infrastructure developments in Brazil.

Ninety units are scheduled for delivery in 2011, including 30 units covered under a previous contract and 60 as part of the newly signed agreement. The remaining 55 locomotives will be delivered between 2012 and 2015.

The locomotives will be manufactured at GE Transportation’s plant in Contagem, Brazil and its plant in Grove City, Pennsylvania, will supply the needed components.

As a unit of General Electric, Erie, Pennsylvania-based GE provides freight and passenger locomotives, railway signaling and communications systems, and other transportation-related technology solutions.  The company employs approximately 8,000 people worldwide.

Since the announcement, General Electric’s stock has increased by almost 2% to trade at $16.4 as of 9:47 am ET on the New York Stock Exchange.

http://www.forbes.com/feeds/ap/2010/09/24/business-energy-us-ge-mrs-locomotives_7958166.html

Associated Press

GE division sells locomotives to Brazil’s MRS

Associated Press, 09.24.10, 01:04 PM EDT

NEW YORK — General Electric Co. said Friday its transportation division sold 115 locomotives to Brazil’s MRS Logistica S.A. with an option for 100 more.

Financial terms were not disclosed.

MRS ordered AC44i locomotives that will be built at a GE plant in Brazil. A plant in Grove City, Pa., will supply key components including the diesel engines.

The locomotives are scheduled to be delivered between 2011 and 2015.

GE shares rose 30 cents to $16.44 in morning trading.

Bhupesh Bhandari / New Delhi April 26, 2010, 0:54 IST

GE India’s new president & CEO, John Flannery, plans to resurrect the company’s fortunes by localising operations

Till recently, General Electric (GE) honchos would often talk of a turnover of $8 billion in India by 2010. This was 16 per cent of the company’s projected emerging market business for the year. At that time, GE hoped to sell gas turbines, consumer loans, water treatment plants, medical equipment et al in large numbers; hence the ambitious target. GE had ended 2008 with $2.8 billion. So, will it hit $8 billion when the books are closed for the year? The day of reckoning is almost here.

GE India President & CEO John Flannery says the company no longer discloses numbers for one country alone. So it’s difficult to get him to comment if GE is on course to reach that size. But he does indicate that the target may have been ambitious. “There is no shortage of opportunities in India, and there is a good fit to become two or three times the size we are today. That puts us somewhere close to the number you are poking at,” says he. “Some of those things were aspirational, an attempt to get the organisation excited.”

In his letter to shareowners in the 2009 annual report, GE Chairman of the Board and Chief Executive Jeffrey Immelt had said that GE had a $38-billion business in growth markets, which include resource- and people-rich regions like West Asia, Latin America, China and India. “We sought out pockets of growth wherever we could find them. We deepened our position in fast-growing markets in Australia, Brazil, China and India.”

That GE may have fallen short of its target for India does not mean that GE hasn’t tasted success in India. It ran a hugely successful business process outsourcing outfit, Gecis, till 2004 when it was sold to General Atlantic Partners and Oak Hill Capital Partners for almost $500 million. The John F Welch Technology Centre in Bangalore, which was inaugurated in September 2000, has helped GE cut drastically go-to-market time (up to 50 per cent in some cases), save huge amounts of money and develop products for world markets. No estimates of the benefits are publicly available. Bangalore is a cost centre for GE, into which it has so far invested $175 million. It has four partnerships going in India with state-owned Bharat Heavy Electricals Corporation, State Bank of India, Wipro and now Triveni Engineering. And it is very much in the reckoning for the Indian Air Force’s order for 126 fighter jets.

But there have been serious reverses too. GE Capital had taken a huge exposure to unsecured loans and delinquencies were high. It so much wanted to invest in a diesel locomotive factory in the country; but right before the general elections last year, the government scrapped the bids and decided to put up the factory on its own. The GE gas turbines at the Dabhol power plant of Ratnagiri Gas & Power broke down. Nuclear power is another huge opportunity (GE was one of the most vocal supporters of the Indo-US civilian nuclear deal), but nobody knows when it will start rolling. Then TPS Chopra, the successor of GE’s first CEO in India, Scott Bayman (he drove GE in India for ten long years), left last year. Chopra would often complain of the slow pace of affairs in India.

Clearly, things haven’t gone the way they were intended. How much has that deterred GE? “We are very proud of what we have accomplished so far in India. Are we satisfied with where we are? No, we have still higher aspirations,” says Flannery. “We are here for the long haul. We will make major investments. We are going to do what it takes to win in India. Some things have balanced favourably, some unfavourably. That’s not uncommon in a developing economy.”

The task ahead
Flannery brings with him considerable experience. A 1983 graduate of Fairfield University and an MBA from the Wharton School at the University of Pennsylvania, he has spent 22 years in GE. Before he moved to India, he was president & CEO of GE Capital for Asia Pacific. His brief, before he winged his way to India in January, from Immelt was three-fold: Grow GE’s presence in multiple dimensions, localise it and transform the organisation for the long haul. Flannery doesn’t like to call it Plan B — it is more like revised Plan A, says he. The macroeconomic opportunity in India still excites GE. The opportunities in GE’s core areas of infrastructure (power, railway, water treatment and so on), oil & gas and finance continue to remain huge. “These (growth) markets are investing trillions of dollars in infrastructure and favour a multi-business company that can bring solutions. This allows us to form a ‘company-to-country’ approach in countries where government and business work together to solve infrastructure needs,” Immelt had said in his letter to shareowners.

Flannery’s first step has been to change GE’s reporting structures in India. Ever since GE set up shop in India, all the business lines reported to their global business headquarters. As a result, they didn’t have a reporting relationship with the Indian CEO. What it meant was that GE’s business in India was not looked as a single profit & loss centre. Key decisions on products, distribution and investments were taken outside India. The results, as a consequence, were less than desired.

All management thinkers have stressed the need for multinational corporations to think local. Those who listened carefully to the Indian customer have gained immensely; those who didn’t have failed miserably. The success of LG and Samsung of Korea and Suzuki of Japan can largely be attributed to strong local product development, manufacturing and distribution. All of them empowered their local employees to take important decisions. GE now is a standalone profit & loss account in India. Business lines all report directly to Flannery. “I will be able to control the vast majority of decision-making,” says he. In fact, the buzz in the market place is that the Bangalore technology centre too may become a part of the integrated Indian operations soon.

This will help GE go to a customer with more than one product. Till recently, various GE teams often made separate sales pitches to the same customer. Flannery admits this can often become very frustrating for the customer. With integrated operations, GE will be able to present a unified face to the customer. “It also gives us more scale and critical mass, creates better jobs and career opportunities. The company with the best team on the field ends up number one or number two,” says Flannery. But he stresses that India will still stay very closely connected to GE’s international business: “The centre of gravity will be India, but we are not seceding from the company. We will get the best from GE. It has the history of evolving as the markets change. The hallmark of the company is constant evolution.”

Go local
That taken care of, Flannery wants to localise GE’s business. This means sending people out to the market to gather what products and services are required, designing and manufacturing those products in India, and finally distributing them in India. The first is on track, says he. For design, Flannery plans to leverage the skill sets of the Bangalore technology centre. So far, it has focused on GE’s global requirements. To save cost and time was the first brief to the centre. The business verticals for which this work is done are aviation (commercial aircraft engines), energy (oil and gas, power and water treatment), transportation (diesel locomotives and signal systems) and healthcare. In addition, there is a 400-strong team which carries out work on “Blue Sky” technologies — new substances, materials, nanotechnology and solutions.

The brief could now change. In addition to the work it is doing, it will work on products that could be relevant for India. “The brief is changing as we speak in an incremental and supplemental way. It will continue to be a key base for GE’s global operations; that won’t stop. But we will add resources to go local; some resources may be shifted,” says Flannery. “For the past 18 months, there has been in-country, for-country team at work for India-specific products and designs.” To be fair, some products developed at Bangalore have already found their way to the Indian market — the electrocardiogram that weighs just 1.1 kg and costs around Rs 35,000, the low-cost baby warmer which sells for around Rs 150,000, for instance.

The next part of the jigsaw puzzle is local manufacturing. Here, Flannery wants to make use of frugal Indian manufacturing skills. Immelt had outlined the strategy in his letter. “Our focus is on introducing more new products at more price points. We are driving management practices to capture new opportunities, called reverse innovation. Essentially, this takes a low-cost, emerging-market business model and translates it to the developed world,” he had said. “To this end, we have developed a full line of high-margin, low-cost healthcare devices, designed in China and India, and now marketed successfully in the developed world.”

GE already has two manufacturing joint ventures in India with BHEL and Wipro; it has now signed a third one with Triveni for steam turbines. GE, says Flannery, found Triveni efficient in turbines of up to 30 MW. Its own strength is above 100 MW. So, the two have come together for turbines of 30 MW to 100 MW. “If it works well, you’ll have a new player in 30 MW to 100 MW with the best in technology and cost-competitiveness. We could distribute these turbines globally in the long term. That’s where GE’s distribution capability, global footprint and customer relationships would come in,” says Flannery. GE, of course, is impressed with Triveni’s supply chain, production design and costs. It can deliver turbines at low price points. “Triveni can do reverse innovation. It, we observed, was consistently hitting price points lower than that of global manufacturers. We are not talking of a 5 or 10 per cent change in margins,” says Flannery. The prices could be 30 to 40 per cent below global prices, experts reckon. The reason for the tie-up is clear.

GE could do more such tie-ups with low-cost manufacturers in the days to come. “You will see more investments in supply chain and direct manufacturing capabilities. That can be green-field or partnerships or even acquisition of companies with a manufacturing footprint,” says Flannery. So far as a distribution network in the country is concerned, Flannery says he still needs to figure out how to go about it.

Ups and downs
A broad strategy is fine, but Flannery needs to look at individual businesses as well. In financial services, it was an open secret that GE Capital was stuck with huge delinquencies in its retail portfolio. There was also talk in the market that GE Capital was looking for a buyer for its portfolio. Flannery admits there was a problem of delinquencies with unsecured retail loans. To deal with that, GE Capital has shrunk its retail loan book. A part of its transportation finance portfolio was sold to Shriram Transport Finance Company in December last year. This, says Flannery, has brought down the delinquencies as well as the losses. “GE Capital became profitable in India for the first time in two years during the January to March 2010 quarter,” says he.

Going ahead, Flannery has decided to focus on institutional finance in areas that tie up with GE’s business. In other words, it could finance the purchase of turbines by power plants, water treatment equipment by factories and healthcare machines by hospitals. At the moment, this book is as small as that of retail finance. “We aren’t talking of big dollars at present,” says Flannery. On the positive side, he adds that the partnership with SBI, India’s largest lender, for credit cards is steady. “We would like to build on this relationship,” says he, but does not give details.

There have been some positive developments on the railway business as well. Strained for resources, the Indian government has come round the view that it won’t be such a good idea to put up the locomotive factory on its own. So, it has restarted the process to find a private investor. And this time the stakes are bigger: Not just diesel locomotive, it also wants an electric locomotive plant and another one to make spares for the two factories. “We will take another crack at it. We will definitely restart our interest in the diesel locomotive factory and assess the other two; they look interesting as well,” says Flannery. In the last round, GE had developed a prototype for the diesel locomotive in its Bangalore centre. So, it has a product ready to offer. Flannery says it is not certain if GE will return with the same prototype.

Power play
Power will be a tougher nut to crack. One, GE’s strength is gas turbines, renewable energy (wind and so on) and nuclear power — the gap in its portfolio is coal, which is 50 to 60 per cent of the market. “We will continue to look at ways to play in that,” says Flannery. But he is convinced that the dependence on coal to generate power will decline over time. “Coal tends to be more commodity- and less technology-driven. We are trying to stay up on the technology curve. Coal tends to be a very basic technological and engineering undertaking. For environmental reasons, higher growth will be in other sectors of the energy space.”

Two, there have been aggressive sales from China. So much so, local manufacturers of power equipment are lobbying hard with the government for protection in some form. Flannery feels GE still has an advantage over others. “It’s very important to look at the life-cycle cost of this equation. We have a very strong story there around technology and service offering. These are very long-lived assets.”

Three, Dabhol was bad publicity for GE’s turbines. Flannery says GE engineers have fixed the problem and all turbines at the power plant in Maharashtra are on stream. A service contract has been written for GE. And, adds he, Dabhol no longer crops up when GE executives make a sales pitch to power companies. Four, the fate of nuclear power in India, which can be a huge opportunity for GE, still hangs in balance. Consensus is yet to emerge on the liabilities that could arise from a Chernobyl-like accident. Still, Flannery is convinced of the opportunity for GE in power; what also excites him about the business is that every order for turbines comes with regular revenues from maintenance contracts.

Jack Welch, GE’s best-known CEO and Immelt’s predecessor, had laid down the principle that the company ought to be amongst the top three players in every line of business in a market; it should exit any business where it is a laggard. It may not be the right time to put India through that test. Flannery, on his part, says if he can grow the company, localise it and change its structure, his job will be done. “If I can do these three things, my bosses, I think, will be happy.”

GE arm-Bhel JV bags Railways tender
Economy Bureau
Posted online: 2008-10-22 00:43:58+05:30

Mumbai, Oct 21GE Transportation, a unit of General Electric Company and global diesel locomotive technology leader, and Bharat Heavy Electricals Ltd (Bhel) on Tuesday joined hands to compete for a tender issued by the Indian Railways to manufacture 1,000 diesel locomotives.

GE was recently shortlisted by the Indian Railways to compete for this tender. GE and Bhel, along with Indian Railways, intend to form a joint venture company for the purpose. Bhel’s alliance with GE Transportation is in line with its move to enter into manufacturing of locomotives and coaches.

GE Transportation plans to supply diesel locomotives based on the company’s global Evolution Series locomotive platform. The Evolution Series locomotive is the most technologically advanced, fuel-efficient and low emissions locomotive till date. With more than 2,800 units in use at present, the locomotive is one of GE Transportation’s best-selling products worldwide. These locomotives deliver 5% higher fuel efficiency and a 40% reduction in emissions as compared with the previous ones. GE’s locomotive reduces fuel consumption by approximately 300,000 gallons, or more than 1 million litre, over the life of the locomotive.

The Evolution Series locomotive serves as one of GE’s first products to be certified as part of its “Ecomagination” initiative, said a company statement. Ecomagination is a company-wide commitment to develop technology designs to help consumers beat environmental challenges, maximise performance and reduce cost.

GE’s locomotives for India have been designed in the John F Welch Technology Center in Bangalore and will have a peak output of 6,000 GHP delivering 40% more power at 30% less weight than the locomotives of the same series currently utilised in North America. These locomotives will be up to 5% more fuel-efficient and generate 84% fewer particulate emissions compared to fleet currently in use.

“We are excited about the prospect of expanding our relationship with Indian Railways and to partner with Bhel,” said GE Transport president and CEO Lorenzo Simonelli. “Bhel’s know-how, customer centricity and local operations will help us deliver our product to Indian Railways in a timely and cost-effective manner.”

“GE is known to build the world’s most reliable and fuel-efficient diesel locomotives to-date,” said Bhel CMD K Ravi Kumar. “We are proud to expand our successful association with one of the most respected companies in the world to bring best-in-class locomotive technolog to our long-time customer, Indian Railways.”

For more than 45 years, Bhel has been a leading supplier of propulsion systems and locomotives to Indian Railways. Bhel manufactured approximately 160 electric locomotives and supplied over 4,000 sets of electric propulsion systems to Diesel Locomotive Works.

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