ABB India plans bolt-on purchases to boost biz

ABB India plans bolt-on purchases to boost biz

ABB India, the local arm of Swedish-Swiss industrial major ABB, plans to continue bolt-on acquisitions where they make sense, but also ramp up manufacturing capabilities in the country, said its top executive.

The debt-free, cash-rich company plans to use half of its cash balance of over Rs 3,600 crore for bolt-on acquisitions to up its play in the world’s fifth-largest economy. A bolt-on acquisition is a type of M&A in which a company buys another company, which is in the same business, to merge it with itself or one of its existing units. Bolt-on acquisitions are done where the target company has made a technological breakthrough or has niche strengths. ABB, which has a market value of more than Rs 71,600 crore, is looking at bolt-on acquisitions in areas where the company can add further value to its customers, said its MD Sanjeev Sharma. The target profile also includes startups, Sharma added.

The company, which has been operating in India since 1949, also plans to increase its capital spending to enhance production capacities in the country as it banks on business opportunities created by the government’s thrust on infrastructure expansion through the FY24 Budget. It has 27 manufacturing facilities in the country and will set up some more units to accelerate its sales growth.

Some of these new facilities will come up at the same premises where its existing plants are situated as it has plenty of lands available next to its facilities in India. Recently, ABB inaugurated a gas-insulated switchgear (GIS) factory in Nashik, Maharashtra. The new site will double its GIS capacity, Sharma said.

ABB’s India facilities have not only been catering to domestic requirements but also serving international markets. More than 80% of its revenue comes from India, with the rest coming from the export markets. Though the export market has been expanding, the local market has been growing at a faster clip, the electrical equipment maker, with revenues of over Rs 10,000 crore, said.