| ABB's CY06 performance has been impressive, with over 11 per cent operating margins and almost 8 per cent net margins. Could you please comment on the sustainability of these levels of profitability and growth from here-on? |
| The Indian economy is on the move, assisted by strong industrial growth. The urgent need for quality power delivered efficiently and economically across urban and rural India is now among the nation's key priorities. At the same time, Indian industry is increasingly adopting automation technologies as it scales up. |
| We bring value to our power and automation customers through leading-edge technologies, domain expertise and project execution abilities. At the same time our product focus in the form of range expansion and market penetration is paying handsome dividends. |
| Our technology strengths, product portfolio and our unique ability to package solutions and provide a single window approach to existing and emerging sector verticals continue to be a key differentiator. At the same time we remain focused on operational efficiencies and managing growth in a profitable and sustainable way. |
| What does ABB's order book look like? |
| ABB India's cumulative order intake of Rs 5,623.6 crore for the year 2006 recorded a new high and grew 50 per cent over the previous year. The record growth in order intake helped strengthen the company's order backlog further to Rs 3,372.3 crore as at the end of 2006. |
| This was 60 per cent higher than the opening order backlog at the beginning of the year. It provides good visibility for the coming quarters when the backlog will be manifested into revenues. On future prospects, we are optimistic on expected growth looking at the market scenario, orders being booked and, of course, the enquiry pipeline. |
| What are your capital expenditure plans? |
| Our $100 million (approximately Rs 440 crore) capital expenditure programme initiated a couple of years back should be completed by the middle of this year. We have plans to invest another Rs 250 crore for capacity and range expansion across the country, over 2008. However, based on business needs we can even invest more, as required, as long as the returns justify it. |
| What is the key focus of the ABB India portfolio? |
| In terms of our portfolio, we do three types of businesses, namely, projects, products and services. Here, in terms of products and services, we have moved from an 80:20 situation to a 50:50 mix in the span of the last six years. |
| So while projects continue to grow in absolute terms, the focus on products and services has led to a higher proportionate contribution than before. This portfolio realignment has been an integral part of our strategy to bring stability, reduce cyclicality and address margins. |
| What is your outlook on the power and automation businesses? |
| The power sector is a key driver for ABB in India. With substantial generation, capacity enhancement, development of the transmission grid and the immediate focus on distribution, ABB's technology strengths and domain expertise are being leveraged to help India gear up its power infrastructure, across urban and rural India. |
| In the past couple of years, we have also seen our automation business pick up. The acceleration in industrial growth to double digit levels has been led by sectors like ferrous and non ferrous metals, cement, pulp and paper, construction and pharma. |
| Other sectors like automobiles and oil, gas and petrochemicals, and cement are also gathering momentum. All this bodes well for leading automation technology providers like ABB. |
| A higher scale of investments, larger capacity additions (both brownfield and greenfield), focus beyond Indian markets, technology enhancements, increased focus on competitiveness, productivity, efficiency, quality, consistency and aesthetics are some of the factors that automation technologies can help influence. |
| As Indian industry globalises and at the same time gears up to meet rising domestic consumption needs, we can expect the automation market to grow further. |
| What would be ABB India's new verticals or revenue streams? |
| We have introduced several new verticals and revenue streams and many of these cut across divisions, requiring both power and automation solutions for instance, water, ports, railways and asset management services. |
| We offer turnkey solutions all the way from consulting to design, supply, installation, commissioning, after sales and even asset management for a variety of projects. We also continue to expand our product range with continual introduction of several products to meet growing demands of Indian utilities and industries. |
| What is your approach to inorganic growth? |
| We are extremely focused on our core businesses of power and automation, so we stick to the knitting. We would look at inorganic growth in cases where it gives us tangible benefits like product gaps, technology, value-chain-complementing or market access. In short, it has to fit into our strategy and plans. |
| What is the overall outlook for ABB India, vis-à-vis the region, as well as the group? |
| India is one of the fastest growing operations within the group today and ABB views it as a 'high priority' country. ABB in India has over 5,000 employees, manufacturing across ten units and a countrywide marketing presence. |
| A network of around 750 channel partners ensures market penetration and reach. We also host the largest single location global R&D centre and an engineering and operations centre in Bangalore, which caters to group requirements across geographies. |
| No doubt, India is a key market for ABB. During the last few years, ABB in India has seen a significant acceleration in top- and bottom-line growth. In fact, we have seen more than 25 quarters of sustained growth along with continued market leadership and this is likely to continue as the market develops. We are optimistic across our power and automation businesses, as infrastructure development and industrial growth gathers momentum. |
| Besides being a promising domestic market, ABB also envisages the Indian operations to continue playing an increased regional and global role, be it in the form of projects, products, services or even R&D. |
| At ABB, we refer to countries like India, not as 'low cost' but 'high productivity' countries. India has been designated as the hub for the South Asia region which includes countries ranging from Afghanistan, Singapore, Indonesia, Philippines, Vietnam, going all the way to Australia and New Zealand. |
| Globally, we source several products form India. This reinforces our 'Made in ABB' philosophy, where ABB technologies speak for themselves, regardless of their origin. The high skill level and domain competence in India is also being leveraged in the spheres of engineering and R&D at ABB India, which makes us a vital resource base for ABB units worldwide. |
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