Tier-2, -3 cities bring in double-digit growth: Sanjeev Sharma, ABB India

Electrification and automation major ABB India reported a robust second-quarter performance, with a 78.3% increase in net profit and 30.6% growth in revenue from a year earlier. While large orders have seen traction and demand from core sectors is expected to remain strong in the medium term, it is the tier-two and -three cities that are bringing in double-digit growth, country head and managing director Sanjeev Sharma tells Kalpana Pathak. Edited excerpts:

The quarter has been a good one. What are the reasons for this growth?

The quarter has been a solid one where we delivered on multiple fronts and the result of actions undertaken over several earlier quarters. We have categorised products and solutions from 19 divisions to serve 23 market segments comprising emerging and traditional sectors. This provides for a diverse basket of opportunities converting to base and large orders. It also enables an optimal order and revenue mix. Customer deliverables were customised as per the nature of the problem and delivery. The initiatives to transform shopfloors into smart ones in sustainable green campuses also help in seamless execution.Which segments do you see most growth coming from in future?
ABB products and solutions serve 23 market segments. These comprise emerging or lighter segments as well as the core and traditional ones which also offer a fertile base for service orders and revenue. We have a keen focus on products business which currently comprises about 70% of our offerings; the other two being projects and services. The share of the emerging or lighter segments to the orders basket has doubled in the last five years and has now grown to contribute more than 40% of the product orders. These segments would include data centres for which we have a range of electrification and motion solutions to make them more sustainable and energy efficient. Other segments include electronics (with our robotics applications), warehouse and logistics, food and beverage, pharma and healthcare and water/wastewater. Railways and metro and renewable energy are also expected to generate growth in the coming years.

You have an order backlog of over Rs 8,000 crore. How do you plan to execute this?
Consistent uptrend in order backlog positions us well for future growth visibility. These opportunities span different segments and geographic locations. We have been consistently investing in further modernising our manufacturing capability and have opened new shopfloors in Nashik, Bengaluru and Vadodara this year. The one in Nelamangala (Bengaluru) of smart power solutions with industry 5.0 standards and our shopfloor in Nashik strengthen the manufacturing of our eco-friendly products portfolio. The focus is on last-mile experience for seamless execution and delivery. This would be complemented by world-class service capabilities aided by digitalisation. Our deep footprint spread across multiple locations also creates a smooth last-mile delivery. Today 70% of our portfolio is products and ETO which is engineer to order; this is when we use our own products and create a sub-system and make it another product and send it out. Each division has in place its own plan of such execution, be it the channel partner and products focused electrification and motion, solutions and projects-oriented process automation, or value-added solutions with system integrators for robotics.

What kind of growth do you see coming from tier-2 and -3 markets?
We feel very privileged to partner with the ambition of the companies in tier-2 and -3 cities. Their entrepreneurial spirit, resourcefulness and wanting the latest technology solutions are the growth drivers. Healthy double-digit contribution from our channel partner business emanates from these cities. The opportunities here are diverse, ranging from the multi-infrastructure upgrade projects, especially in transportation (stations, airports, metros) to a strong requirement for energy-efficient solutions across energy-intensive industries, be it textiles, metals, mining, etc. Renewable energy projects in solar and wind, using our power distribution equipment, offer opportunities. Resource efficiency with digital monitoring and tracking, be it for energy or water distribution networks, is also a major area. My management team and I spend a lot of time visiting and interacting with our teams and customers in these markets. This will remain a key lever of our growth strategy.Do you see the current geopolitical unrest impacting your business or supply chain in any way?
We are keeping a close watch on the situation and developments. Being part of a global supply chain ecosystem has its advantages, but we also complement it with alternate sourcing options for critical raw material and other components. Our digital capabilities also help us in accurately forecasting and catering to the same to deliver our customer commitments.


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