After divesting its power grid business to Hitachi globally in 2018, ABB group has gone through a reorganisation. The company's portfolio is now more industry-centric, especially in robotics and automation, where it's seeing an uptick in demand, both in greenfield and brownfield projects.
In process automation, where the demand was muted from the large industries in the last couple of years, it hopes as the government's initiatives take shape, more capacity and augmentation of the existing capacity by the market players will create demand for its process automation, motion and electrification portfolio, says Sanjeev Sharma, Managing Director and CEO, ABB India and South Asia.
With nearly 70 percent of ABB's solutions being 'product-centric', and only 10 percent 'project-centric', which until recently was inverse, Sanjeev says it augurs well when the market demand by end-users, EPCs and OEMs, grows in different market segments.
"We cater to almost 15 market segments by 18 divisions -- so once they start picking up, we have a very good uptake of our portfolio, which means you supply the products and it gets converted into cash very quickly," he adds.
The project business was typically a high-volume game but would take a long time to convert into cash. With a product centric-approach, ABB says it will see a lot of positive benefits in the balance sheet.
Following the announcement of ABB's Q4 and full-year CY2020 results recently, a research report by Edelweiss on February 11 noted: "Rising localisation and parent mandate reflect well in expanding India footprint. Exit from legacy projects/power segment phase-down remains a near-term challenge, while execution of Tier II market strategy is critical given local competition especially in motion (especially motors) business."
Sanjeev said while robotics traditionally used to be consumed mostly by the automotive sector, the industry is facing challenges in the last couple of years. "We have picked up new good market segments in the food and beverage industries, especially with FMCG, and in the area of electronics manufacturing," he said.
ABB India expanded its capacity in robotics by opening a new factory in Nelamangala last July. While the robotics segment remains a low margin business (3 per cent in CY20), compared to other segments (motion-10.8 per cent, electrification products-10.5 per cent), Sanjeev said one needs to have a scale to start making money in this area.
"As the volume and large-scale projects start getting implemented, which we have in our backlog now, I think gaining a similar level of margin should not be an issue. Even volume should increase over some time," he said.