ABB power head finds today's India is 'another world'

Peter Smits has been coming to India since 1988. Of late his visits have been getting more frequent, reflecting the growing importance of what has been happening in India to the Zurich corporate headquarters of ABB.

And the only way in which he can describe the change on the ground in India over these years is to simply assert, "It is another world."

The change has come in two ways, feels ABB's executive vice president and head of the power technologies division. With a new power law in place, there is greater concern for cutting down power loss and brightening prospects for privatisation of urban distribution.

This means better prospects for what ABB has to offer. But more importantly, Smits finds Indians have a new attitude. They want nothing but the best, the latest technology which will not get obsolete quickly. And in power (transmission, distribution, automation, control - everything except turbines and boilers) ABB is ready to serve it.

ABB people in India are crowing over the latest high profile order they have received, to help set up a super grid (supply transformers and shunts), that is a grid on top of a grid, of super high voltage of 800 kV. This is absolutely the global state of the art, most high voltage grids in the world being of the 400-500 kV level.

There is a stretch in Latin America of 800 kV level and China has decided to set up a grid of similar level. The technology exists but developed economies have not used it yet.

Geography, having to transmit power over long distances, makes such technology attractive. India and China, in their mood to get the latest and the best, want it. The US has not used it yet, and you know their power problems, going beyond the California brownouts.

While ABB offers a range of technologies in power, it is the global leader in power plant automation and control which deals with how to run and monitor a power plant.

It also has strong expertise in service - maintenance and upgrades - which contributes 13 to 15 per cent of the $ 10 billion power business (ABB's total global business is $ 22 billion.)

The research centre in Bangalore contributes to the evolution of automation technology and the engineering teams in the country deliver the services.

ABB also has several factories in India some of which supply ABB's global needs for particular items - like magnetic actuator and medium voltage circuit breaker from Nasik and high voltage circuit breaker from Baroda.

Says Smits, "We do everything in India, bring in the latest technology and have several centres of excellence which help develop and deliver that technology."

It is no wonder then that ABB India has established a rapid growth rate over the last couple of years, with turnover in the first quarter of 2005 up 38 per cent and net profit 67 per cent.

Globally the fastest growing geographies for the company are China, India, the Middle East and Russia. The ABB group in China, including joint ventures, doubled its turnover last year (2004) to reach $ 2 billion. ABB's India business is a fourth of that.

Globally ABB is not just seeing the light at the end of the tunnel, it is "out of the tunnel." The asbestos loss has been taken on the books in 2004 and provided for.

The full bill is known, subject to court approval. Thus ABB is looking forward, not back and this year its power business is "targeting" a 10 per cent margin before interest and tax, up from last year's 7 per cent.