Switzerland-based power and automation company ABB unveiled its global strategy recently to fast track growth. In an interview with BusinessLine , Bazmi R Husain, Managing Director in India, shared the company’s strategy for the country. Edited excerpts:

Where does India stand in the 1,000-day programmes announced at ABB’s Capital Markets Day in London recently?

One of the things that came out of London was the shifting of the centre of gravity to high growth regions. Clearly, India is one of them. So, we see chances to seize opportunities in India going up. But the design we had was to a large extent meant to meet a need in some other part of the world. That doesn’t mean in India everything has to be unique. But there are things that can be optimised for markets, which we are into now.

So, over time, our capability to develop products in India has gone through a sea change. Today, we are taking it to the next level by looking at producing for the market.

India is traditionally known as a low-cost manufacturing centre. Does the country offer much more for the company?

Cost is clearly a big element. We are in an industry where new things aren’t discovered everyday. So, incremental changes make a big difference. The first thing you do when you enter a new market is increase your sales. When markets develop, you get into manufacturing and engineering.

As the markets get bigger and more relevant, you start localising your supply chain. But localising the supply chain is not the same as optimising it. For example, when we shifted the manufacturing base to India, we asked the local supply chain to produce something that was very easily available in the local market. When you optimise the supply chain, what you optimise is the cost.

We read that there is a $75- billion opportunity as far as power generation is concerned. There are two aspects to this — one, you are a major player; and two, you also have tough competition. The bigger the opportunity, the more the competition will be. From the time you source the energy to the time it comes to the end-user, you lose a lot, to the extent of 75-80 per cent. There is huge wastage.

While half of ABB’s business deals with power, the other half deals with more efficiently utilising it. So this is a huge opportunity.

When you are looking at this kind of potential, for a system to work, it should be in a balance.

In the last several decades, there has been a lot of focus on generation, and we have seen quite a bit on the transmission. I think the distribution part is where steps have to be taken for the system to be balanced. Distribution has not got the focus and investment needed. Going forward, there would be growth in all the three. But lot more on the distribution side.

ABB recently announced that it’s moving away from being focused on regions to giving more power to business units. How will it pan out for India?

It’s a classic matrix organisation. We have always had regions and we have always had business units. For most of the products we sell, supplies come from multiple businesses. So businesses clearly focus on how they can manufacture and supply effectively.

Those are the ones who can optimise at a global level. It matters less where you manufacture; it matters whether you can do it more effectively. On the solutions side, we use many business units to satisfy the customers and that’s where the regions come in. This has been the working model and that remains unchanged. We are part of the local landscape. It sets up a higher growth path with clarity on the roles and responsibilities.

Will you now do less work for global operations from here and more for India?

We do more of both. The rate of change for doing things for India has gone up, but not at the expense of the rate of change of what we do for global markets. We have more global feeder factories in India than 10 years ago. Our exports are increasing consequent to this.

This is not a primary reason, though, for us to establish a new product. But this is a competitive market. We keep the same quality.

So, if we lower costs here and use this as the base, it helps ABB everywhere.

Related Topics