Seeing a trend of monthly improvement in orders: ABB India's Sanjeev Sharma

In a Q&A, the firm's MD says export orders remain steady, and the company is focusing on reduction of discretionary expenses, high cash collection and limited critical business investments

ABB India opened a new a new robotics facility in Bengaluru on Friday. Sanjeev Sharma, managing director for the company, spoke to Amritha Pillay on the market potential of robotics. Sharma added export orders remain steady, and the company is focusing on reduction of discretionary expenses, high cash collection and limited critical business investments. Excerpts:

What is the current market size for robotics in India?

As per the latest International Federation of Robotics (IFR) study published in 2019, India ranked 11th worldwide in terms of annual installations. The Indian industrial robotics market was evaluated at 4,771 units in 2018. While automotive still holds the largest share in the robotics market (44 per cent of total installations), the strongest growth driver in 2018 was the general industry, which augurs well for the expansion of robotics applications in other sectors such as food and beverages and electronics manufacturing.

What is the expected growth potential for this business in India in the next few years?

The current push around Atmanirbhar Bharat or self-reliance in manufacturing while being locally and globally competitive is also a key growth driver for the market. The industrial automation market is likely to grow in double digits (about 10 per cent) until 2023 which can provide a further fillip to the adoption of robotics.

Post the lockdown are you seeing more companies opting for robotics?

There has been traction in the use of digital and low-touch activities across categories, including delivery services, at-home entertainment, education, food, staples, shopping, communications, health, and fitness. Customer segments such as insurance and SMEs, activities like pick-and-place are resorting to automation like never before.

With the multiple unlock versions, has production and factory work now stabilized?

Following the announcement by the Ministry of Home Affairs (MHA) in May, ABB opened up its manufacturing activities across the country and ramped up initially to 60 per cent capacity after putting in place due safety precautions, thereby stabilising operations across the country. We have made our processes as nimble as possible so that we can scale to the extent as the situation demands in a seamless manner.

What is the order inflow expectation for this year? 

Orders in the first half (H1) of 2020 has been impacted due to the lockdown, global slowdown, however, our order backlog is strong and steady to support us through the coming quarters. We are also seeing a trend of monthly improvements, a few of the deferred orders, especially in power distribution, energy segments have fructified within the first half (of 2020). As compared to last year, the first half orders were down by 16 per cent and order backlog is flat, which we think, considering the changes in our portfolio and global transformation due to the pandemic, and also our breadth of portfolio in automation, robotics and digitalization, could be easily worked over. Despite the global uncertainties, our export orders for H1 2020 as compared to H1 2019 have not gone down but is flat.

How does client liquidity position look, are there any delays in payments?

If you see our cash position, we have been able to sustain even in this market. This has been due to efforts in collection and keeping a continuous eye on cash as not the king but the emperor has helped. We will continue to focus on key segments comprising high RoI projects with good quality orders, which honor payment terms. These are the companies also with strong and sound balance sheets whom we will partner for the next level of growth.

Which are the segments where you see demand coming from?

We will be strong on riding through the ongoing crisis by focusing our resources on the right business segments that are expected to return to growth and normalcy while servicing all our customers with remote and onsite services. These segments include food and beverage where we have a range of our solutions from control systems, drives and motors to robotics, data centers, pharmaceuticals, railways and metro, and energy & chemicals.

What is ABB's strategy to mitigate challenges that the current pandemic poses?

Our first priority is the health and safety of our employees. Sustaining business continuity, focus on serving customers, regular use of virtual meetings, webinars and digital engagements, and strong backlog execution in factories and adjusting capacity to demand. Then would be efficient cost and cash management with continued structured effort to reduce discretionary expenses, high focus on cash collection and payables, and critical business investment.

How much does India's instance on cutting down imports from China impact ABB? 

Manufacturing companies like ABB have deep-set capabilities, which have been built over decades. Most of the product portfolio across our 16 business lines are manufactured here. We continue to upgrade it as the technology evolves globally.

Will it also provide opportunities as India may source more from factories within the country?

Companies such as ours, are continually striving to deepen our supply chain base in the country and partner with MSMEs in different ways. Irrespective of how the situation pans out, self-reliance should be a continuing goal post.