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Swiss-Swedish engineering giant ABB sees an uptick in demand for its power systems business after a tough 2013, which saw a dip in orders and modest revenue growth.
The power systems segment designs turnkey systems and services for distribution and transmission grids and power plants. Key products include substation and substation automation, and high-voltage direct current systems. The segment contributes nearly 30 per cent of ABB India's annual revenue.
“Market conditions and selectivity have affected our orders and consequently our backlog, so we must adjust our sails accordingly. However, our key market drivers are intact and our tender backlog remains promising. We also see some good trends in the coming quarter, which we will continue to focus on converting with the right risk-reward balance,” said N Venu, head of power systems of ABB.
Orders declined 26.9 per cent and the order backlog shrunk by 24 per cent in 2013 due to a manufacturing slowdown, market volatility and other factors. Segment revenue was up six per cent and it posted a profit of Rs 94 crore in 2013 as against a Rs 14 crore loss in the previous year. Sector specific issues like fuel linkages, land acquisition and policy matters on tariffs also contributed to the slowdown, Venu said.
However, there were some signs of recovery, especially in generation, the company recently told equity analysts in a post-results conference. ABB said a couple of orders it could not book in the first quarter due to elections were expected to be closed in the second quarter. ABB follows the January-December financial calendar. Additionally, the company is also focusing on renewable energy and export growth.
“ABB’s exports from India are in excess of 15 per cent of our total revenues. We are constantly looking for opportunities within our cluster countries. Some of our products have a global supply mandate, we offer these to other markets as well,” Venu said. The company has grown its exports to Bhutan, Bangladesh, Nepal and Sri Lanka in power supply systems and is exploring business in Myanmar and Jordan.
“We consider India a long-term market and are always open to investing on a continuous basis. We do not share any guidance on our specific investments, however, we will invest depending on how the markets develop. We have the capacity to invest and we will maintain momentum,” Venu added.
