The Hindu Business Line : Most of ABB's future investments to be made in India, China

ABB Group is planning to increasingly leverage its Indian operations as a production and resource base while most of its future global investments will be made in India and China.

"Our future investments will be in India and China and we expect sourcing of more products from here," the executive Vice-President and the Chief Financial Officer of ABB Ltd, Mr Michel Demare, told Business Line.

He said the Indian operations are expected to double their sales to around $1 billion in a few years. "(The target) is not unrealistic at all. It is very reasonable and a nice target," he said.

ABB is investing around $100 million (Rs 450 crore) between 2004 and 2006 for capacity expansion in India. He said while operations in Europe for the group had stagnated, India and China were emerging as the fastest growing markets for ABB worldwide.

"It is not just a low-cost location but also a high-skill centre," Mr Demare said. For example, ABB recently set up a manufacturing facility for its new range of ACS 550 drives in Bangalore, becoming the first global drives company to set up such a plant in India. This will reduce lead times for delivery for the customers.

He said the Indian operations were a showcase for the group on how to optimise resources in terms of skills and in governance. "What we need to do is to build capital in India and China," Mr Demare said. "Giving too much at once is not good now," he added.

He said the challenge lay in sustaining growth in India. Indian operations have doubled their business over the last four years, while the company grew by 50 per cent last year. He said most of the growth in India was because of the Government initiative on infrastructure. "You have a good robust economy which is well managed," Mr Demare said.

He said though the growth of the ABB operations in India was centred on the growth of infrastructure in India, the company had a flexible structure. "If the expected growth does not happen, we can export more from India because of the high quality of products coming out of the Indian operations," Mr Demare said. Last year, 15 per cent of the total sales of Indian operations were from exports but it could rise sooner than expected.

Mr Demare said the ABB Group is learning to be better focussed, and is cutting costs and becoming more efficient than ever before. "The results are already showing. We are doing well in Asia and the US," he said. The ABB Group's first quarter net earnings grew 58 per cent compared with the same period last year largely because of demand for equipment grew in Asia and the US.

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