How ABB India became a stock market darling
ABB India’s factory in the area, there’s a noticeable change. The temperature is regulated; the quintessential clatter and clang of a manufacturing unit is suspiciously missing; large windows let in abundant natural light, which coupled with the white walls, make the place resemble a laboratory more than a factory. This factory is new, inaugurated just a year ago.
It is an important piece in ABB India’s new strategy that focuses on products catering to engineering, procurement and construction projects. The strategy is centred around what the company calls fast-moving industrial goods (FMIG), a play on fast-moving consumer goods. The term is used to describe the company’s focus on a products-led business that has a quick turnaround time and lower to even negative working capital requirement.
Some examples of FMIGs in ABB’s portfolio include industrial staples like switches, miniature circuit breakers, flowmeters, soft starters, drives and motors, lighting solutions, isolators and relays. The new strategy began with some tough decisions, taken by the ABB Group in Zurich. The group sold one of its biggest units—power grids—to Hitachi in 2020.
The same year, it also sold its solar inverter business to the Italian company FIMER SpA. While the divestment allowed the company’s management to focus on industrial products, it took a toll on its top line. The company’s revenue in India declined from ₹8,210 crore in 2019 to ₹5,821 crore in 2020.
The top line had hit a peak of ₹10,862 crore in 2018. Profit slid to ₹219 crore in 2020 from ₹303 crore in 2019. “Power Grid was almost 32% of our books; we let that go.
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