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Business News/ Companies / News/  Solving basic infra issues will help us go in the right direction: Gaurang Pandya
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Solving basic infra issues will help us go in the right direction: Gaurang Pandya

President of UTC Building & Industrial Systems for the India region speaks about the business opportunities in India and the economy

Gaurang Pandya says it’s going to take another 18-24 months before we start seeing cyclical improvements in terms of growth and liquidity coming in. Pradeep Gaur/MintPremium
Gaurang Pandya says it’s going to take another 18-24 months before we start seeing cyclical improvements in terms of growth and liquidity coming in. Pradeep Gaur/Mint

New Delhi: United Technologies Corp. (UTC), the maker of Otis elevators, Carrier airconditioners, Edwards and Kiddle fire safety products, and Lenel security systems, is glimpsing signs of a turnaround in the Indian market, where an economic slowdown set it back by two years in its quest of quintupling India’s revenue to $2.5 billion from 2010—a target it pushed to 2017. The Hartford, Connecticut-based conglomerate, which also makes aerospace systems and aircraft engines, has forecast $65-66 billion of global revenue this year. In an interview, Gaurang Pandya, president of UTC Building & Industrial Systems for the India region, spoke about the business opportunities offered by the government’s smart cities and Make in India initiatives and prospects for the infrastructure sector. Edited excerpts:

On turnaround signs: After the government changed, there were questions raised on how fast things would turn around and how fast we would see movement on the ground. From our perspective, if you compare Q1 of the last (calendar) year, from a business standpoint, it was extremely weak, as we were going into the election cycle. Till Q4 of last year, things still seemed a little slow, but we exited that quarter extremely strong, with double-digit growth going into Q1 of this year and pretty much for the second quarter also. It’s generally been a positive story for us, but the market is going to take some time. On ground, things are still a little sluggish. Liquidity is still tight. Cash is extremely tight in the market for any of the big infrastructure players. For the private sector, if you are still borrowing cash at 10% or 12%, depending on how lucky you are, it’s still at extremely high interest rates. A lot of people who invested in infrastructure are already leveraged in a big way. They have grown at a certain rate and when you grow at a certain rate, you have to invest ahead of the cycle. That puts a very tight process in terms of liquidity. You start taking more debt, at interest rates of 11-12%, it can hurt.

On short-term prospects: I think it’s going to take another 18-24 months before we start seeing cyclical improvements in terms of growth and liquidity coming in. The government hasn’t made big policy changes but has done small basic things. For instance, transparency in labour—they’re putting in place a mechanism where there’s a structured process behind a labour inspector going out to audit facilities. He can’t go out and start randomly auditing a facility... These small changes have brought some transparency, helping investors.

Apart from the US, other global economies are slowing, and that is helping cash come into the country. Will that come as equity or as debt, and how fast will that translate, is an area we have to keep an eye on over the next six months.

On ease of business: One area (the government should look at) is increasing liquidity in the market. If you look at, let’s say, the power sector, in some areas, it’s not that there is a lack of power. The distribution is the problem. The question is how fast can the government start breaking down some of the traditional ways of going to market for them, open up the sector so they can do so and be able to streamline processes so they can begin moving forward. The basic stuff that has been on hold for a few years, that they are talking of revisiting. That’s what we want to see from the industry perspective. The basics in infrastructure is going to help us go along in the right direction. If I have a factory in Gurgaon and I don’t have a road to take my product out—those are the basic issues we need to see getting solved. On one side you have the policy framework—things like the GST (goods and services tax) are at least starting to move. Those are the kind of things we want to see happen. As a leader for UTC in the country, those are the things that will help me go back and make a case for further investments in the country.

On smart cities initiatives: The Modi government has talked about smart cities. People are coming to me and asking what are smart cities. A smart city for us in India is one that has solid infrastructure. The rest of it will come over time. We see smart cities such as Singapore or Hong Kong that are completely connected and such. When they talk about smart cities, they mean security surveillance and reducing manpower requirement on the ground, automate more processes, improve the basics such as transportation, etc. For us in India, that’s not the urgency at the moment. It’s not about reducing manpower but about giving jobs and creating structures that can attract investments. That will not happen till you have roads, electricity, water supply—the basics in place.

We are in discussion on many areas. There’s city surveillance— such as the T2 terminal at the Mumbai airport. We have 2,500 cameras and analytics built in that are able to understand where people are and how they can be secured. The next step is to take it to a city level. We have done it in some parts of the world, in smaller portions. That’s an area we want to get into for the smart cities. Energy is another area. By this I mean building space and energy utilization—design, design philosophies and adapting newer technologies. Things like district cooling such as the Delhi airport that has 20,000 tons of cooling. That’s eight 2,500 ton chillers for the entire facility.

On Make in India: We have been in India for decades. We have been manufacturing in India for decades. In the Otis factory in Bengaluru, we have doubled capacity and invested significant amounts of money. In the Gurgaon facility (Carrier), we have continued to invest every year since it was set up in 1986—millions of dollars in terms of localisation, and transitioning products for this market. I’ve been investing every year to continue to increase our delivery capacity every year.

We have been manufacturing for many years. The question is, how do we do it smarter? How do we start manufacturing more products with local design capability, how do we deliver engineering capability that the Indian market needs? That’s the learning curve that we are going through as an organization... the biggest area we need to focus on is actually being able to tweak those products for the Indian customers, or better suit the Indian conditions. For example, on the HVAC (heating, ventilating and air-conditioning) side, in all our products that come out of the Gurgaon facility, we are increasing the specs on the electronic boards to ensure we don’t have failures in India due to the power fluctuations. Any product that you bring into India is designed for international standards. They are not used to voltage fluctuations and cycle cutoffs 10 times a day. They go through robust tests but they’re not built for these conditions. Hopefully, those things improve over time, in terms of infrastructure, but right now we are building for what the market needs.

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Published: 01 Jun 2015, 12:15 AM IST
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