Galloping Growth for ABB India

ABB India (www.abb.co.in) is cashing in on the booming industrial activities and surging manufacturing sector in the country. The company is also taking steps to grow even faster—both organically and through acquistions. Recently, ABB has been awarded orders worth around $57 million to provide turnkey solutions and a range of power and automation products to the JSW Group for its steel and power plant expansions in India.

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According to a statement from ABB, its scope of supply includes substation equipment, transformers, SCADA (Supervisory Control and Data Acquisition), protection and control systems, and MV (medium voltage) and LV (low voltage) switchgear. Under terms of the contract, ABB will provide process automation for the steel plant including plate-mill drives to ensure energy
efficiency and reliability across the production chain.

“We are proud of our long association with JSW and delighted to be an integral part of their visionary growth. ABB remains committed to facilitating productivity and efficiency at JSW’s globally acknowledged plants through state-of-the-art power and automation technologies,” said Ravi Uppal, vice chairman and managing director, ABB India, commenting on the orders.

Strengthening orders

This order strengthens ABB’s order book further. Orders for the nine-month period ended September 2006 totaled $958 million, a 53 percent increase over the same period in the previous year.

“Power sector investments across the value chain are gathering pace, driven by generation capacity additions, transmission network augmentation, grid reliability and efficiency improvements. Industrial growth is also promising, both in terms of capacity additions and productivity enhancement initiatives,” Ravi noted. “In line with our commitment toward profitable and sustainable growth, we shall continue to increase both the depth and breadth of our business. This will be driven by market penetration and increased volumes from the existing portfolio, as well as generation of new revenue streams.

“Our capacity and range expansion investment program across products and locations continues on course, as we strengthen our leadership position and address the power and automation needs of a growing market,” Ravi added.

In addition to significant orders for Power, Automation and Building Solutions projects, the company continued to build on the growth of its standard product business. To cater to the rising demand, other ABB units are also increasing capacities. In the last two years, ABB has set up manufacturing units in Bangalore, Vadodara, Nashik and Halol. “We recently commissioned a low voltage distribution electricals unit in Haridwar. Our new Bangalore based control-gear and LV motors units are also gaining momentum. We have also set up a robotics application engineering centre and an analytical products unit in Bangalore,” said Ravi.

Though the firm is growing at a fast clip, it is taking steps to grow even faster—both organically and inorganically. “We are looking at acquisitions in India,” Ravi said.

Growth through acquisition

ABB is in the process of acquiring Raman Boards Ltd (RBL), an Indian maker of pressboards and insulation components, to strengthen its insulation products business. RBL is headquartered in Mysore, in the southern India state of Karnataka. The acquisition will complement ABB’s global insulation components capacity, which includes making insulation material for transformers, as well as electrical and mechanical components.

“This acquisition will serve as an important source of insulation kit component supply for ABB transformers,” said Brice Koch, head of Business Unit Transformers for the ABB Group. “The additional production capacity will help ABB to further strengthen the transformer business.”

RBL’s products will be seamlessly integrated into ABB’s existing product offerings that include insulation kit components made in Halol, India, and other parts of the world. RBL’s operations will serve both domestic and export markets. “This will help increase our ability and speed to deliver quality products in fast-developing and high-growth markets like India and other Asian countries,” said Ravi.

Sales of industrial robots are also gathering pace in India as automobile companies expand their operations in the country. This has also prompted ABB, one of the top three global manufacturers of robots, to consider setting up a manufacturing centre in the country. According to the ABB Executive Vice-President and Head of Robotics Division Anders Jonsson, the company is open to manufacturing robots in India, as it is a fast growing business.

India already supplies peripherals for making ABB robots, in addition to doing application engineering for them. ABB already has a plant in China to produce robots to cater to the auto sector there. It has so far sold around 1,000 robots in China. Worldwide, ABB has sold about 120,000 robots.

ABB has so far sold about 300 robots in India—during the last seven years. But the company expects double-digit growth from now on because of the rapid expansion of automobile companies. “Maturity for using robots is growing extremely fast in India,” Jonsson said, adding that robots do not replace jobs, as claimed by critics of the technology.

ABB is expected to report a 40 per cent rise in revenues and around a 50 percent increase in profits for 2006, say market observers.

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