We expect 8-10% growth if India’s GDP is 4-5% this year: Tom Szlosek
Honeywell International CFO Szlosek says India unit plans to improve its performance by taking advantage of the new govt's focus on the defence and gas sectors
New Delhi: Honeywell India, a maker of aerospace, automation and transportation equipment, has outpaced the country’s economic growth in the past eight years despite a tough business environment. The local unit of the US-based firm now plans to improve its performance by taking advantage of the new government’s focus on the defence and gas sectors, Tom Szlosek, senior vice-president and chief financial officer, Honeywell International Inc., said in an interview. Edited excerpts:
We have a new government at the centre. How is the international business community reacting to it?
Certainly there is a lot of optimism. Even the bankers outside the country are quite bullish. In general, the focus on making it easier to do business in India is how I would describe it. The optimism will turn into reality when you see some of the things on people’s wish list start happening.
It seems you are more comfortable in the current environment than before, as you have made your growth projections after the new government has come in to power.
Your growth projections are quite optimistic.
I would agree that our outlook is as optimistic as anybody else’s. Overall, it works out to be 5% compound annual growth rate (CAGR) over a period of the next five years. That is on a global basis. Developed regions are going to grow at 5%. High growth regions, therefore, for us to get to those levels, we need to grow in double digits. When you look at India... you look at its GDP (gross domestic product). We generally try and target two times GDP growth. If the GDP is 4-5% this year, we expect our growth to be between 8-10% or more. We have done better than that… maybe by three times over the next five years. So, we have a reasonable degree of confidence that those plans are realistic.
Which of the sectors that you operate in will help in meeting these projections? Your key functional areas such autos are down and so are aerospace and power equipment businesses...
First of all, in aerospace, when you look at the commercial aerospace business, we are really excited about the macros and demographics that we see here. In the US, there are 13,000 commercial aircraft for 380 million population, while in India there is 400 aircraft for 1.2 billion people. What happens to increasing the penetration is really not up to us, but we have a high degree of confidence that it is going to happen and as and when it does, we will be well positioned. So, we feel good about commercial aircraft.
On the defence side, I know it is one of the five targeted areas for the new prime minister. We are actively engaged in a number of pursuits and we are going to be highly successful there as well.
I would say on the transportation side, we have been doing very well. We have been an exporter from India. We make turbochargers in Pune. We will continue to do that. We are seeing us getting some significant pick-up in the local market and the market for us does not necessarily grow. For us, our turbochargers help in improving miles per gallon, fuel efficiency, emission norms, etc. India is moving to higher emission levels. So, I would say it’s the legislation that really gives us a nice boost for growth apart from the market conditions.
Then we look at the PMT (performance materials and technologies) sector where we want to augment our position in oil and gas segment. Obviously, some things have to change, the way gas is priced. That will be an example of something that we would hope to be addressed (by the new government) at some point. When gas starts to become a bigger source of energy in the country, we are very well positioned with the technologies that we have.
What percentage of revenue do you drive out of India?
We are about a billion dollars in India and Honeywell is a $40 billion company globally. If India grows at 5% and Honeywell grows 10-15%, you can do the math. It is not going to be 30% of the company in five years, but it will become a larger piece of what we do.
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First Published:12 Aug 2014, 04:06 PM IST
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