The power sector here needs speedy implementation of reforms

Updated: Nov 29 2004, 05:30am hrs
Fred Kindle, president & CEO designate, ABB Group, is just three months into the job, but has already made his first trip to India. Proof, if any were needed, of just how seriously the company, widely regarded as Europes answer to GE, views its India operations. Excerpts of an interview with FE:

How do you see power sector reforms in India
The Central government has expressed a clear intention to continue with the overall reform process in the power sector. There is no turning back on unbundling of state electricity boards, even though the deadline has been extended by a maximum of one year in some cases. Corporatisation and privatisation on a case-to-case basis could be the next logical step. The government is also encouraging private sector participation in generation and distribution, and has reinforced its commitment to the Electricity Act.

We would, of course, like to see an acceleration in the momentum and pace of development. In my opinion, some of the key priorities which should be addressed are: acceleration of power sector reforms and speedy implementation of the Electricity Act, significant addition in generation capacity, development of the national transmission network, rural electrification, focus on distribution system improvements and encouraging private participation and investment.

On the whole, there is a need to ensure the financial viability of the sector and act in the broader and long-term interest of the country. The Indian power sector needs speedy implementation of reform programmes, keeping the user perspective in mind at all times, by ensuring availability, reliability and quality at a fair value!

Your Indian arm has been designated as a global supplier of certain power and automation equipment and is also working on international projects. Given your policy of global optimisation, what role do you see for your Indian subsidiary
Besides tapping the market potential India offers, India will also play a key role in ABBs global optimisation philosophy and we are committed to leveraging our operations here, as a key regional and global resource base for projects, products, services, R&D and engineering.

To start with, some of the products that shall be sourced from India for the world market include high-voltage circuit breakers, medium-voltage circuit breakers, magnetic actuators, drive mechanisms and instrument transformers. India will also play a major role in developing the South Asian market for ABB. We are also delighted with the progress of our global corporate research centre in Bangalore, which incidentally was the first such centre to be set up outside Europe and the US. It employs around 100 highly skilled domain experts and we will take it up to 500 over the next two years. This centre is handling high-end development work for ABB, especially in the area of embedded technologies or industrial IT.

The world is moving towards IT networked systems and processes. What are the key technologies available, their acceptance level, and the outlook for such intelligent solutions in the power and industrial sectors in India
When we speak of power, distribution still remains a key focus area in India. While distribution is already in reform mode and some progress has been made, this momentum must be accelerated. Distrib-ution system improvements and reduction of techno-commercial transmission and distribution losses are a top priority and should be seen as low hanging fruits, which can release much needed capacity. Automation and IT must be increasingly applied for greater monitoring, control and grid efficiencies. Technologies like Scada (Supervisory Control And Data Acquisition), Wams (Wide Area Monitoring Systems), billing systems, remote metering etc. can all help facilitate the effort.

Automation is emerging as a bigger business proposition for ABB globally. How does it fit in with your India plans
Industrial automation in India has been seen more from the shopfloor perspective rather than as a driver for business performance. The level of automation technologies dep-loyed has generally been low. While Indian industry has accepted and is adopting enterprise solutions for business processes, it is yet to recognise the full potential of manufacturing automation and collaborative systems. It is my observation that this trend is changing and Indian industry is entering a phase of global aspirations. It is realising that automation can help in ensuring an optimum balance between labour and technology, allowing for the streamlining of manufacturing processes, quality control, as well as greater control and integration of systems across the value chain.

What is your future vision for ABB in India
India is one of the fastest growing operations within the group and ABB views it as a high priority focus country. ABB has also set up a dedicated global corporate R&D centre in Bangalore, which focuses on software development and industrial IT development and deployment. It also helps maintain and support a range of software-intensive products and acts as a partner for ABB R&D centres as well as business areas within the group.

The future vision for ABB India will be focused on profitable and sustainable growth. We have announced an investment programme of $100 million over three years. We envisage an enhanced regional and global role for our India operations, as a key resource base for the group in the form of international projects and product sourcing, as service providers and also as an R&D and engineering hub. We are moving away from the traditional Made in India or China concept to Made in ABB.

ABB has gone in for restructuring, hiving off businesses and writing off large losses for discontinued businesses last year. Has that paid off
The rationalisation of ABBs portfolio was required. ABBs core businesses are power and automation technologies. We have divested or announced the divestment of non-core businesses so that our focus is concentrated on our core activities, be it in terms of R&D, market focus, production or customer value creation. It does not make sense to be jack of all trades and master of none! This strategy has helped ABB make its comeback and we intend basically, to stick to the knitting and build on our power and automation platforms in the forseeable future.

In the past two years, ABB has been in the news for all the wrong reasons. In retrospect, what went wrong
It is true that we had a few special challenges and below the line issues, but thanks to a focused leadership and the amazing enthusiasm, motivation, and contribution of our employees we are back on track.