Hitachi-ABB Deal To Bring Tech Synergy Across The Board: India Head

Hitachi ABB Power Grids is looking for opportunities outside power systems, and in areas like mobility, electrification, and mass rapid transport systems, according to N Venu, managing director (India) and region head (South Asia).

Speaking to Business Standard, he said normalcy in business could return by January. Following the completion of the joint venture deal, the company is in the position to offer a combination of power system technology and digital innovation, he added. Venu further said that 16 manufacturing facilities, across five locations in India, were working at 90 per cent capacity, with many customers having resumed operations.

As on March 31, 2020, the firm had an order backlog of Rs 5,192 crore. “This is why our factories are working. New demand will also come in, and we forecast full recovery by next year. The challenge is short-term in nature, but it will be better in the medium term,” said Venu.

The joint venture is a global leader in power systems, with annualised revenues of $10 billion, with 36,000 employees in over 90 countries. Venu said there will be a synergy of technologies from both sides.

Hitachi ABB Power Grids is led by Claudio Facchin as CEO. The total enterprise value of the JV is $11 billion. Though ABB’s portfolio is focused on industrial customers, the onboarding of Hitachi would bring in digitalisation that would secure the entire value chain, including critical infrastructure.

ABB had, in December 2019, announced the company’s transformation towards a decentralised global tech firm, with divestment of 80.1 per cent of its power grid business to Hitachi. The divestment allows ABB to focus on key market trends and customer needs, like electrification of transport and industry, automated manufacturing, digital solutions and increased sustainable productivity.

ABB will initially retain a 19.9 per cent equity stake in the JV, which will be headquartered in Switzerland. ABB has a pre-defined option to exit the retained 19.9 per cent shareholding, three years after closure of the deal. Venu said the priority after re-opening would lie in protecting employees from Covid-19, while enhancing business continuity. The firm had been engaged in providing critical remote solutions to utilities, even during the lockdown.

Besides, it will now work in a new normal, which would include providing reliable sustainable technological solutions.

In the earlier form of ABB Power Grids, it had been following a broader strategy to penetrate the industrial segment, by moving into digital integration, grid connections, and power quality. With the integration into Hitachi, the digitalisation and securitisation segments of technology will get a fillip.