The Restructuring of ABB India
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Case Details:
Case Code : BSTR143
Case Length : 12 Pages
Period : 1998-2004
Organization : ABB
Pub Date : 2005
Teaching Note :Not Available
Countries : India
Industry : Heavy Engineering
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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EXCERPTS
The Restructuring
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In spite of its remarkable history, the ABB Group's future looked bleak as several business operations were discontinued across the globe due to a worldwide slump in the engineering industry.
In addition, legal action filed against ABB's Combustion Engineering unit in the US tarnished the company's image . The year 2001 was tough for the company as it suffered its first ever loss of $691 mn since its formation in 1988. Moreover, 2002 turned out to be worse as losses further rose to $787 mn. As the ABB
Group's revenues were stagnant in the US and Europe, it was looking towards
India and China for growth...
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The Result
The restructuring programme yielded positive results. On April 27, 2004, ABB India declared that for the first quarter ending March 2004, the net profits nearly doubled compared to the corresponding period the previous year.
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The company registered a 56 per cent rise in revenues, amounting to Rs 4413.6 mn for the same period. However, improvement was not merely in terms of financial performance. Bearing testimony to its all round business performance, ABB India won the 'Asiamoney's Award' in February 2004, for the best small capitalization company from India for 2003. Commenting on the 'best to date' quarterly performance of the company, Uppal said, "ABB India continues on its committed path of profitable and sustainable growth, with a constant quest for higher productivity and operational efficiencies. Our focus on value based projects, exports, standard products and services have paid good dividends and shall continue unabated..." |
Looking Ahead
When Uppal initiated the restructuring exercise at ABB India, the market for capital goods was stagnant and power sector reforms had not yet begun. These reforms, started in 2001, shifted the focus from power generation to power transmission and distribution.
As part of the reforms, the Indian Government allotted nearly Rs 90 bn to the Accelerated Power Development and Reforms Programme (APDRP) to improve power distribution in the southern states of Andhra Pradesh, Karnataka and Tamilnadu...
Exhibits
Exhibit I: ABB India's Financial Performance (1997-99)
Exhibit II: ABB India's Financial Performance
Exhibit III: ABB India - Employees and Revenue per Employee
Exhibit IV: ABB Stock Performance
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