ABB Looks to Make India its Exports Hub

India one of the top 10 markets for ABB with revenue of $1.3 billion in 2015

a1Swiss power equipment and automation major ABB Limited (NYSE: ABB), which has completed over a century of operations in India, announced on October 13th, 2016, that it is looking at making India an export hub for its power and automation technology solutions. The Zurich-headquartered company, as part of its India focus, has also launched its venture capital arm, ABB Technology Venture (ATV), to scout for opportunities in software engineering, software applications and artificial intelligence in India. ATV has so far invested $150 million globally in technology and energy companies. ABB is also looking to expand its footprint in India by buying out companies and backing start-ups in software engineering and applications. Besides power equipment, the 125-year old company is engaged in robotics and automation.

a2In India, ABB has 40 factories across 12 manufacturing locations across the country, including production units in Nashik, Maharashtra, and Vadodara, Gujarat, which exports power and automation technology solutions to around 100 countries. ABB India opened two new factories in 2013 in Vadodara to manufacture eco-friendly and efficient power equipment like gas insulated switchgears and dry-type transformers. Currently, India is one of the top 10 markets for ABB with an annual turnover of $1.3 billion in 2015. On an average, ABB’s annual investments in its India operations have been $100 million to meet capital expenditure needs to upgrade facilities or set up new facilities.

ABB India’s exports have been growing at a 21% CAGR over the last four years, accounting for 14-15% of its India orders as well as 16-17% of global revenue in Q2 FY16. As an export hub, ABB’s India operations is looking to increase its scope of business in the areas of renewable energy, electric mobility and latest technologies for diesel, dual-mode locomotives as well as electrified railways. ABB India is also the leader in the Indian power grids market, with multiple global feeder factories that caters to both domestic and global demand.

Growing emphasis on renewables

The Government of India plans to augment its solar capacity to 100 gigawatts (GW) from 8GW with an investment of $100 billion by 2022, which ABB sees as an opportunity. Being the major supplier of solar inverters in India, ABB is looking at continuing a healthy double-digit growth in the renewable energy sector going forward. ABB is also working with the government’s program to provide technology solutions for solar-powered agricultural pumps to farmers. a3ABB India recently opened a new solar inverter manufacturing facility in Bangalore, which will enable it to double its production capacity with advanced technology.

ABB also announced the setting up of the first solar-powered microgrid in the country at its Vadodara facility. The microgrid, with a rooftop photo voltaic field, will help ensure uninterrupted power supply at the manufacturing location with around 3,000 employees. The microgrid will also help boost renewable energy generation while reducing dependency on fossil fuels.

Microgrids are considered a viable and cost-efficient solution to not only improve access to electricity, but also to address pressing issues related to energy supply, including growing demand, climate change, energy security, and reliability for power-starved industries and villages.a4

In industrial scale solar domain in India, ABB is the leading manufacturer of solar inverters, having installed more than half of the solar inverters in the country. ABB India has a fully localized value chain for the solar inverter business, and is expecting a double-digit growth rate over the next few years.

The growing emphasis on renewable energy in India has augured well for ABB; the contribution of renewable energy projects and products to ABB’s order book rose from 2% in 2014 to 15% in 2015. Roughly 50% of all solar energy projects in India use ABB’s equipment and 45% use ABB’s inverters. ABB’s solar offering includes inverters, low-voltage products, monitoring and control systems, grid connection, stabilization and integration products, SCADA, relays, transformers as well as complete electrical balance of plant solutions.

ABB also offers a wide range of support and maintenance services, including remote operations and diagnostics, to ensure that its solar installations deliver optimal performance. From power plants (balance of plant), integration of solar in the grid, to rooftop commercial and residential building applications, remote location applications for microgrids, all provide a huge opportunity to ABB in terms of local manufacturing and supply.

Engaging in government projects on a higher scale

ABB is looking to engage with government projects on a larger scale; it sees a major opportunity in India’s plan to become a fully electric vehicle nation by 2030 and deploy 2,300-2,700 electric buses by 2020. ABB plans to bring in its Trolleybus Optimization Systeme Alimentation, or TOSA technology, for the electric buses. TOSA is the world’s fastest flash-charging connection technology, which offers a 600 kilowatt (KW) boost to batteries in 15 seconds.a5

In the Indian power transmission sector, ABB is setting up a transmission line from the Northeast to Agra, near capital Delhi, with an 8,000MW converter capacity. The link will transmit hydroelectric power over 1,728km to Agra to serve nine crore people in the region.

In the public transport sector, ABB will soon compete for India’s diesel-cum-electric engine contracts and is looking to partner with the Indian Railways. Currently, more than half of the country’s diesel locomotives run on ABB’s turbochargers. Besides, around a third of the trains run by the Indian Railways use ABB traction transformers. Moreover, 70% of India’s oil production are monitored and controlled by solutions provided by ABB.

ABB, Microsoft partner to drive digital industrial transformation

a6On October 4th, 2016, ABB and Microsoft Corp. (NASDAQ: MSFT) announced a strategic partnership at the global level to help industrial customers create new value with digital solutions and develop one of the world’s largest industrial cloud platforms. Under the partnership, customers will benefit from the unique combination of Microsoft’s intelligent Cloud and ABB’s portfolio of industrial solutions. The deal is aimed at empowering digital transformation in customer segments such as robotics, marine and ports, electric vehicles and renewable energy. The partnership will building on an installed base of more than 70 million connected devices and more than 70,000 digital control systems to develop one of the world’s largest industrial cloud platforms.

With Microsoft Azure as the exclusive cloud partner for its integrated connectivity platform, ABB customers will now have access to an enterprise-grade cloud infrastructure that benefits from billions of dollars of ongoing investment. ABB and Microsoft will build digital solutions that improve customers’ productivity by increasing uptime, speed, and yield.

Power alliance with Fluor

Stepping up the pace of its global strategic alliances, ABB announced an alliance with US-based contractor Fluor to offer turnkey engineering, procurement and construction (EPC) projects on October 18th, 2016. Combining ABB’s leading power and automation technology with Fluor’s experience in delivering large EPC projects, the alliance will look to win contracts for state-of- the-art electrical substation projects. With 2015 revenue of over $35 billion, ABB is a world leader in air-insulated, gas-insulated and hybrid substations, with voltage levels up to 1,200 kV. Fluor’s 2015 revenue totaled just over $18 billion, the majority of which was derived from its oil and gas projects. Fluor’s new global strategic alliance with ABB is targeting the substation market to bring unique synergies to its Power group. The two companies are expected to formalize the partnership before the end of 2016.

Stock Performance

a7ABB’s stock stood at $22.37, slipping 0.36%, at the close on Thursday, October 20th, 2016, having vacillated between an intraday high of $22.45 and a low of $22.29 during the session. The stock’s trading volume was at 1,402,920 for the day. The Company’s market cap was at $49.06 billion as of Thursday’s close.

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