Everyone is talking about a tough winter for Europe this year. What does the market look like for global technology companies like ABB?
I would say, we certainly see signs of slowdown in some sectors, but the overall market looks healthy for us so far. Our order intake has remained unaffected. At some point in time, things will change, but the experience has been good so far. A part of that is because the world is shifting away from hydrocarbon to electricity as the energy of choice. The shift means the need for our products such as drives and motors will enlarge. Ultimately, 45% of the energy needs of the world will be met through the electric mode. So, as the world shifts more to electricity, there be will need for more motors and more drives. And to run a motor more efficiently, in most applications, you need a drive. As the market leader in motors and drives, our expectation is that we will not be immune to the market developments but ABB’s product portfolio will be much more in demand over the next five years than the previous five years.
At a time the possibility of global economy meeting headwinds looks high, how does things look for India?
India is doing well. ABB India is in fantastic shape and the global team is quite happy with its performance. The growth here is very strong. We recently met our channel partners, many of them in the small cities and serving MSMEs. They are quite upbeat and optimistic. Investments are coming to India. Besides, large investments and big capital projects are being announced at regular intervals here. Indian Railways is also making big investments. The government has been spending a lot for the infrastructure and creating policies and frameworks. Now, we also see the industry starting to invest based on those frameworks and policies, feeling secure about the future development of India. So, the market is very good to this point and doing well.
Are you also participating with the Indian Railways, especially on the indigenous high speed Vande Bharat trains?
We are participating with Indian Railways in a large project, which we will announce at the appropriate time. Let me be clear, there is no technology that is available today with India that can get the trains to run at a speed of 220 kmph. It is here we have the opportunity, as we have the requisite solutions. We are working with Indian Railways to see if we can bring about the technology from Europe to India to help meet the 220 ambitions. For India, track renewal will be required if trains have to be run over 160 kmph. By the time the tracks are ready, I’m sure we’ll be able to support them with the right trains.
What is the size of your motion business in India?
We are about $350-400 million in revenue last year. We expect to grow much more this year. The trajectory so far looks very promising in the second quarter. I am happy with this double-digit growth. The mood in India is very positive. The business is growing and many segments are coming up. India may not be immune from what’s happening in the US and Europe and China as we supply stuff from India to those markets. So, we will be impacted. But the mood is positive and the growth has been quite good and the backlog is steadily increasing. So, we have a bigger backlog than ever of solutions we need to provide.
Globally, there has been a shift to energy efficiency. Have you seen that movement also taking shape in India?
In terms of reaching energy efficiency goals, India still has a long way to go. As an example; India has lot of IE2 induction motors installed in its industries. The move towards more efficient motors such as IE3, IE4 here would be gradual. Why does India have to go through IE3, IE4 and then get to most efficient IE5 motors available now? Why cannot India have the most efficient equipment now that are 40-50% more efficient? We are not talking about a huge amount of money. Besides, paybacks are less than two years at current energy costs. In many applications, jumping to the highest level of efficiency can save a lot of money and reduce the impact of CO2 dramatically. But because it is not specified, the consulting engineers, the government and agencies are not saying that IE5 is a recognized standard. It is one thing to make pledges to reduce CO2, it is another thing to say I want the most efficient solutions and that’s what we need the industry to do.
Will you look to manufacture your highly energy efficient products in India?
Yes. Many of the products are already available in India. We get massive investments in Indian infrastructure for serving the market. But not all products are available here. We cannot build the production line for just five motors in India. But as the demand moves, we always move production in India. We should serve the market of India, that we are doing. We have made lot of investments in India over years.
ABB recently did an energy efficiency survey. What was the outcome of the survey?
We did a survey in the early part of this year. The survey had 2,300 participants of which 210 were Indian customers who use our products and are familiar with our technology and applications. There are two big conclusions. First, more than 90% believe that people will invest in higher energy efficiency and solutions and products in the future. And second, all believe in the increasing use of solutions that would reduce CO2. That means, they will focus on efficiency in big ways to reduce CO2. The other interesting fact is that 43% of people in the survey said that they don’t know what is the best solution that they can purchase. They want to buy but they don’t know what is the most efficient solution available. That’s where we have to come in to educate. We are creating effective energy movements led by ABB with other participants, customers, competitors to build awareness.
Are you looking at working to get some kind of star rating of efficiency for industrial products?
Yes. The International Electrotechnical Commission (IEC) is going to come out with standards for various industrial products. We have it for motors; IE ratings up to 5. They only go up to a certain power range. We are working on the next level, which is where big parts of the volume consume electricity. So, steel mills, rolling mills, rice mills and farmhouses are the big power applications where we are working with IEC to develop similar standards like 2, 3, 4, 5. Now, we want something similar for the larger bigger motors too.
