Sanjeev Sharma, managing director, ABB India, tells
Nehal Chaliawala and
Satish John.
Unfazed by the lockdown, Sharma said ABB is on the lookout for “good opportunities” in India. “Whenever such an opportunity comes, either from the private space or from the public sector, we will definitely have a look and evaluate how it fits into our overall business model.”
Edited excerpts:
How did ABB respond to the challenges posed by Covid-19?
For a case like this, you don’t have a playbook. As they say, while travelling in airlines, before you take care of somebody, you first wear the oxygen mask yourself….That’s exactly what we are doing. We made sure that all the processes that we have are redefined in terms of how to secure the employees, their families, and they have enough guidance available so that they can understand the situation as it develops.
We proactively connected with our customers because many of them are running serious process industries and in some cases, we provided our service engineers, with their willingness, to be localized in the plants of the customer. This ensured that the service they require during this period was available to them in-house and that’s how we continue to serve them.
A lot of our technology goes to essential service providers, especially pharmaceuticals and food, and we made sure that we could ship spare parts or equipment. A lot of physical movement was restricted. But then again, our readiness to be able to serve customers remotely helped. We manage about 7,000-8,000 robotic arms globally from here, so we are well adapted to connect with the equipment remotely, perform diagnostics and help the customer remotely.
Globally, companies are looking at a China-plus-one sourcing strategy. How does India fit in, especially when Delhi is focusing on self reliance?
We have been manufacturing in this country for the past 65 years. So, we are a very domestic multinational corporation. There are different degrees of localisation of our equipment and technology. It is part of our goal to continue to expand the localization so that the dependence on the dollar reduces, and the supply chain with MSMEs gets deeper.
Talking about the China-plus-one strategy, I think everybody now expects that there will be some kind of a reaction globally in terms of not creating over-dependency on a single country. And that’s why we hear so much about Vietnam. And Vietnam is able to capture these opportunities because they seem to be well-prepared on the ground. When it comes to India, on a macro level, I believe the companies that will come and can sustain well are the ones who are interested in India as a market. And then use India as a base to serve other markets.
Will Covid-19 push Indian shop floors toward more automation?
When you spend capital, you should get a return on the capital employed (ROCE). Any technique helping you get a better ROCE will be employed by most of the industries. For the last many years, we have seen very rapid adoption of robotics in the industry and also the automation of machinery. And it is done because they are able to increase the factory output. I don’t think Covid-19 will be an accelerator for it. The increase in productivity and ROCE will remain the drivers.
BHEL recently said that it was willing to partner foreign companies and offer its manufacturing facilities. Do you see partnerships of MNCs and PSUs taking shape in the coming years?
BHEL wrote to us as well as part of the initiative to express interest. We are present deep in the country – we are in Nashik, Vadodara, Bangalore, Faridabad and multiple other locations. About 30 or 40 years ago, we used to collaborate quite a bit with PSUs to bring new technologies for power plants… But now, we are on our own and I believe whatever technology we will bring as a listed company, you will see through ABB.
But there could be a case in any new areas where liberalisation and opening up takes place, whether it is defence or any specialized area where MNC presence is not so high, or for probably those companies who want an easy entry into the country and if a PSU is providing that gateway, it could be an opportunity. But the established companies that are already operating well in India, I think there would be less of a case for them.
There’s also talk about privatisation of some of the PSUs. Would ABB be interested in some of the Indian assets?
It is a proven fact within the country that India has done quite well wherever they have privatised. One of the examples is Hindustan Zinc. India still has a stake in it and you can see that over a period of time, the value of the Indian government’s stake has grown multiple times. I think similar benefits could be obtained from many PSUs, I’m not having any particular one in my mind at the moment, but they’re quite a few. We are on the lookout for good opportunities. So, whenever such an opportunity comes, either from the private space or from the public sector, we will definitely have a look and evaluate how it fits into our overall business model.
A lot of companies are shelving investment plans. What is ABB’s view on this?
From ABB’s perspective, in the last 4-5 years, when the industry’s capacity utilization has been only 70-80%, we have been investing during that period. Frankly, we are very long in India as a company for the simple reason that the US economy is now $20 trillion, China is $14 trillion. But if you go back 20 years, it used to be the same as India. India is now close to $2.5-3 trillion and is expected to go to $5 trillion. Now, whether it happens in 2024 or it takes a few more years wouldn’t matter. It is very clear that it is the number 3 market in the world. ABB has a very strong presence in India, we know how to operate here and we know where to do business and where not to do business.
Having acquired this knowledge and our ability to produce world-class products with the local engineers and the local team, I think we have a very strong leverage point not only in terms of investing to support the growing local market but also use it as a base to serve the global market.
At a time when companies are talking about cutting costs, do you see any company investing capital in technologies like industry 4.0?
Industry 4.0 is directly related to productivity. I think all the existing and running industries will continue to adapt to industry 4.0. Cash-rich companies will continue to invest and the ones that are a bit over-leveraged might slow down. We found when there are several competitors who cannot invest, typically the larger ones or the medium-sized ones consolidate and buy technology to create a gap between themselves and the others and gain more market share. So we do see that movement taking place. We will invest capital going forward. It just that you need to balance your cash during this period, April, May and June, and given the life of a company, we are talking only two or three months.
Many companies were bullish on the 100 smart cities. Has there been any progress?
We got orders on the electrical side of our portfolio. For example, water metering. The entire city of Surat is monitored by ABB flow meters. We supply a lot of embedded smart technologies and we have quite a few orders. But we are not looking out for a big PPP (public-private partnership) contract in a smart city where we have a Rs 3,000-crore single order. We have multiple orders that are part of the design and ecosystem of a city.
Will you be increasing the adoption of work from home going ahead?
Work-from-home was always a demand because we have a lot of global business services and technology services and quite frankly, we were quite hesitant about how far we can go with work from home – how will the productivity be; how can we have so many people working away from offices; how will supervisors oversee employees? Covid-19 has been a kind of rapid experiment for us to really get some experience on how it works. Our experience has been positive.
Going forward, two things will happen. ABB will be very comfortable with this concept and will not be resisting this. And it will also help us bring in more workforce who want to work but couldn’t due to several reasons. We can bring more women into the workforce if they can work from home. There are qualified, experienced women who stopped working for the last few years for family reasons.