The Restructuring of ABB India

The Restructuring of ABB India
Case Code: BSTR143
Case Length: 12 Pages
Period: 1998-2004
Pub Date: 2005
Teaching Note: Not Available
Price: Rs.400
Organization: ABB
Industry: Heavy Engineering
Countries: India
Themes: Corporate Restructuring
The Restructuring of ABB India
Abstract Case Intro 1 Case Intro 2 Excerpts

"In the past couple of years, ABB India has posted strong top and bottom line performance and in fact, today it is one of our fastest growing operations in the Group."

- Dinesh Paliwal, Chairman, ABB India in 2004.

"Our aim is to make ABB known to the wider public. We want the common man to see and use ABB products."

- Ravi Uppal, Managing Director, ABB India in 2004.

Introduction

ABB India Limited (ABB India), a subsidiary of the ABB Group, a Swedish-Swiss engineering conglomerate, was going through a bad phase in the late 1990s. The company's financial performance was declining, with revenues going down from Rs 10.842 bn in the fiscal 1997 to Rs 7.933 bn in the fiscal 1999. Profit after tax declined from Rs 648.5 mn to Rs 372.0 mn in the same period (Refer Exhibit I for 1997-99 financial statements). ABB India attributed the sluggishness in the power and industrial sectors as the primary reason for its dismal performance. Apart from the lacklustre financial performance, ABB India was facing organizational problems. Over the years, the company's workforce had become lethargic and was unconcerned about the company's poor financial performance. ABB India faced organizational culture-related problems as well. The company was not expecting much financial support from its headquarters as the parent company too was going through an equally dull phase due to global recession and internal organizational restructuring difficulties.

The turn of the millennium heralded a new era for ABB India under the leadership of Ravi Uppal (Uppal), the former managing director of Volvo India.3 He was hired by ABB as its managing director in September 2001. Uppal transformed ABB India from a project-centric company to a customer-centric one. He was given the challenging task of doubling the revenues of ABB India in less than five years. Uppal aimed at accomplishing this task by implementing a major restructuring plan. After its implementation, ABB India's financial results improved. The company's revenues rose from Rs 8.068 bn in the fiscal 2000 to Rs 15.031 bn in the fiscal 2003. The company's profit after tax rose from Rs 540.1 mn to Rs 1008.9 mn in the same period. Industry experts felt this was a significant achievement for the company as the power and automation technology industry was still facing severe recession.

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