Riding on strong domestic demand, ABB India is looking to invest up to ₹2,000 crore in bolt-on acquisitions. Bolt-on acquisition is done when a business buys another company to merge it into one of its business divisions. It’s also called a tuck-in acquisition. This strategy is often used to buy companies that have made a technological breakthrough, or have found success with a niche that complements the existing business.
The company stated it has ₹3,600 crore available on its books, of which, 50 per cent can be used for organic and inorganic growth. Of the ₹3,600 crore, ₹1,800-2,000 crore will be used for bolt-on acquisitions across the different divisions of the company.
“We are looking for inorganic expansion, where all 18 divisions of the company have been given the mandate to look for bolt-on acquisitions. We will spend for organic and inorganic expansions,” said Sanjeev Sharma, Country Head and Managing Director of ABB India.
Eighty five per cent of the ABB India’s order book comes from private companies. The sales of the company in 2022 crossed ₹10,000 crore, where it witnessed the highest growth from the electrification business (₹3,700 crore) followed by motion business (₹3,600 crore), process automation (₹2,500 crore) and robotics (₹350 crore).
ABB is looking at a ₹1,000-crore capex on a rolling basis for five years. “New segments that have provided us growth will be complemented with the core sector and we see the formation of project deadlines and they will also join party capex spends. Despite that we have seen 31 per cent year-on-year growth last year,” said Sanjeev.
The company in India has witnessed export of 13-15 per cent with the domestic market growing at a faster pace.
The company is looking at expansion in terms of factories, along with increasing the productivity of existing factories. “In the existing factories, we are doing high productivity measures. In the same space, we can produce twice as much as we used to five years ago by bringing in a lot of automation and productivity measures. We have reduced the space by 30 per cent and the production has doubled,” said Sanjeev.
While the company is not facing any challenges in the domestic market with its supply chain, constraints in the area of semiconductors continue to strain its four divisions. For its electronic division, the company undertakes pre-bookings.
“We took orders from the markets which we can serve. The supply situation in India we did not find constraints and was mostly coming from overseas. The chip supply is still strained,” added Sanjeev