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Multinationals to Cash in on Indian Automation Boom

Riding on rapid economic growth and a boom in manufacturing sector, the multinational automation majors are on a roll in India.

Multinational companies operating in India are receiving significant orders for products and services, further strengthening their market position within the sector. This was supported by significant success for industrial automation and building solutions projects and a strong growth in the demand for standard products.

ABB India expands

With order backlog of US$700 million as of August, ABB India, the automation technologies major, is now looking at increasing its market penetration by adding new revenue streams and more channel partners. The company is also planning to increase its total headcount, which currently stands at around 5,000. Ravi Uppal, vice chairman and managing director, ABB India, says, "Strong macroeconomic fundamentals, power sector opportunities and industrial growth momentum continue to offer encouraging signs."

As a long-term strategy to strengthen its marketing base and improve the reach of its products in Indian tier-two cities, ABB India is planning to hire around 300 channel partners or distributors in the near future. Currently, the company has a network of 650 channel partners. ABB India is also looking at the prospect of adding new business streams, such as developing automation systems for ports, and process automation and electrification of upcoming special economic zones across India. "With metals leading the charge, ABB India is aggressively targeting sectors like pulp and paper, cement, construction and pharma," says Uppal.

Invensys targets

Invensys, with annual sales of $5.3 billion and 100,000 plant installations, has centers in three Indian cities and plans to expand its operations here.

Invensys is working on Reliance Industries' Jamnagar refinery automation contract that would involve the largest process automated refinery system in the world. Invensys would provide the plant with intelligent automated distributed control systems that use high-speed mesh architecture and the latest emergency safety shut-down systems.

The Senior Director of Invensys, Gregory G. Kataya, says that the company has operations in Hyderabad, Chennai and Mumbai, and plans to expand its Hyderabad centre. This is necessary because the company has added two new products streams for development and support work out of India. It plans to add about 85 people this year to meet the requirements of new product streams.

Rockwell opportunities

"Since we are in the business of industrial automation, we sense a great opportunity in India," Keith Nosbusch, president and chief executive officer of the $5 billion Rockwell Automation, stated a few months ago while he was in India. Rockwell had acquired DataSweep, which has expertise in plant-wide information systems. "We will continue to evaluate the scene, and there are bound to be more acquisitions in the future," he said.

"Indian manufacturing is looking up. The current Indian market potential for our business is around $112 million. We have around 30 percent market share in programmable logic controllers (PLCs). We have specific offerings for the fast moving consumer good (FMCG) and the automobile sectors that are doing well," said Nosbusch.

Rockwell Automation India, which employs around 180, has a turnover of about $70 million. Nosbusch wants the company to grow at more than 20 percent annually in India. Rockwell claims to be a leader in the discrete space—primarily the engineering and automobile sector—with machine builders and auto companies as its major customers.

Schneider bullish

Schneider Electric is also bullish on the Indian market, and plans to make India an export hub. Schneider is expanding its operations in the country, where it is also looking for acquisitions to fuel growth. The company's Chairman and Chief Executive Officer Jean-Pascal Tricoire says that Schneider is witnessing growth of nearly 50 percent annually in India, and that it expects that rate to accelerate in coming years.

"We plan to make India an exporting hub for the rest of the world, toward which we have a new factory in Hyderabad. Last year, 15 million Euros worth of exports to the Middle Eastern and African countries was made out of India," Tricoire says. The Indian market holds considerable growth potential for the company, he notes. Schneider Electric India currently has manufacturing facilities in Chennai, Baroda, Nashik and Hyderabad and a Research and Development centre in Bangalore.

Schneider Electric's global technology centre in Bangalore, which has 400 people, is the largest research and development centre outside of France, and the company has plans to ramp up its head count to 600 this year.

Siemens rebounds

From a loss-making company, Siemens India has come a long way and is registering robust growth, with its businesses growing substantially faster than the market, and India contributing 5 percent to the total turnover. New orders received during last year have more than doubled and, as of June 30, 2006, new order revenue touched around $1.5 billion. Last year had been even more eventful, with amalgamation of as many as four subsidiaries into its fold. Now, when Siemens uses its financial muscle to bid for large contracts, the Indian subsidiary is a key partner for many global markets. "India has emerged as a 'key pillar' in the Asian region, contributing substantially to the global value chain," says Klaus Kleinfeld, president and chief executive officer of Siemens.

With 13 manufacturing facilities located across the country and several centers of competency, Siemens India is well poised to play a larger role in the manufacturing strategy for Asia. Its fourth manufacturing facility is coming up at Kalwa, near Mumbai.

Silent boom

The silent manufacturing boom that is happening in India has caught the attention of the multinational automation companies. As the Economist, in its June issue, pointed out: "Despite manufacturing's low profile in India, it contributes a much higher share of gross domestic product (GDP), at 16 percent, than information technology does; it is the source of 53 percent of exports (compared with 27 percent from services); and it is the destination for four-fifths of foreign investment."



Rockwell Automation Inc.

Schneider Electric

Siemens AG

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