By Anil Penna (AFP)
BANGALORE: Global engineering giant ABB said on Friday India has overtaken China as its fastest-growing market after the South Asian nation generated record profit, sales and orders last year.
Net profit in 2006 jumped 56% from the previous year to Rs.3.4 billion ($77.19 million) and sales were up 44% to Rs.43.4 billion, ABB India Managing Director Ravi Uppal told a news conference in Bangalore.
The company won Rs.56.2 billion of orders, up 50% on the year, for its power and automation equipment as an economy expanding by 9% a year prompted India to invest more in deficient infrastructure such as electricity utilities and irrigation facilities.
“These growth rates are higher than China’s,” said Dinesh Paliwal, the New York-based president for global markets and technology at ABB. “China has been growing several years for ABB at 25% to 35 %; India has now become our fastest-growing market.”
ABB, which added 500 new customers last year including consumer products companies Procter and Gamble and Hindustan Lever and automaker Hero Honda, expects the market to expand faster as the Indian government and industry step up investment.
The company expects Indian investments of $200 billion in the power sector, $130 billion in steel and $13 billion in aluminium by the year 2012, Uppal said.
“The urgent need for quality power, delivered efficiently and economically, across urban and rural India is now among the nation’s key priorities,” he said. “At the same time, Indian industry is increasingly adopting automation technologies as it scales up.”
That will drive demand for ABB’s products and services although interest rates are rising and banks are tightening credit, which may force some companies to put planned investments on hold.
“The demand propensity in the market is so high that most projects will go through,” said Uppal. “I don’t foresee a slowdown.”
ABB India increased its 2006 dividend to Rs.10 a share from Rs.eight the previous year.
It announced a 1:5 stock split implying that each share with a face value of Rs.10 will be split into five of two rupees. The market value of its shares will also change accordingly.
“This will increase liquidity in the market and make the stock more affordable to small investors,” said ABB India Chief Financial Officer K. Rajagopal.