Eaton Corporation is a diversified power management company with global sales of $16 billion in 2011 and presence across 150 countries. In India, Eaton is headquartered in Pune and has four worldclass manufacturing facilities, 11 sales offices and over 2,800 employees. Curt Hutchins spoke to Sandeep Menezes on Eaton’s investment outlook for India and emphasised on the significance of its oil and gas sector.
India’s economic growth figures have slid recently. As an international investor, does this worry you?
It is critical as part of our strategy to not react to the short term since there are short-term ups and down that will always happen. When one thinks of political change and elections-it happens in Europe, US and everywhere else. There is always a time period where short-term microeconomics might seem unfavourable. But then one needs to have conviction on their long-term strategy.
For us at Eaton, the Indian market ranks very high in terms of priority. We have a stated strategic goal that 30 per cent of all of Eaton’s revenues by 2015 will come from emerging markets. Emerging markets mean China, India, Brazil, Russia and a few others. Out of this India will contribute around $500 million revenues by 2015.
Since you head the entire Asia-Pacific region for Eaton, how different is the Indian market vis-à-vis other markets in the region?
I think Asia-Pacific is a great region. Each country has its own unique opportunities and challenges. But there are some similarities with regards to customers wanting products that are more efficient.
It is our responsibility to ensure that the products we introduce fits into the local value proposition. As we look at it today, the next decade of infrastructure growth is expected to be from India.
The upstream exploration is going to be significant and critical to the future growth of India.
There exist huge opportunities in India due to favorable demographics. Challenges like inflation and legislation need to be monitored closely.
What type of business opportunities do you foresee in India?
As a power management company, we serve a variety of markets globally like electrical space, power distribution infrastructure as well as power quality distribution. We serve the hydraulics industry both mobile and stationary applications. We serve the vehicle industry both automobiles for valves and commercial vehicle segments for transmission.
Therefore, the opportunities arising out of the infrastructure development in India gives optimism to all of our businesses.
Which are the top segments contributing to Eaton’s current revenues in India?
In fact, all our businesses in India, whether electrical or hydraulics business which have presence here, are growing. We foresee significant growth opportunities for all our businesses in India.
We as a company are focusing on power management and solutions for applications. The key differentiator for Eaton is that we bring hydraulics and electrical capability together to provide solutions. We believe in bringing our customers solutions that help them to manage power more efficiently.
Currently, how much does India contribute to your global revenue basket?
We have an objective of reaching around $500 million in revenues by 2015 or 2016.
About 64 per cent of India’s crude oil production and 98 per cent of natural gas production comes from the country’s offshore acreages. What are the main challenges in the high technology area of offshore exploration in India?
The challenges faced by upstream exploration are consistent throughout the globe. Having highly reliable and safe products are highly critical. We have solutions and are working on new applications for floating rigs. Therefore, we are working on systems to assist our customers in the high technology area of offshore exploration in India.
India lags behind EU and US in equipment safety norms in high-risk segments like offshore exploration.
You will find that the large investors investing huge investments will have strong safety standards across the globe irrespective of whether a country has as rigid a requirement or not. We find that our customers, especially the large ones, have one set of standards set across the globe.
However, Indian equipment safety norms are not as stringent and global equipment manufacturers could enter with substandard products to keep costs low and increase sales.
I don’t know what other manufacturers are doing. But safety is one of the buyer propositions; it is one of our key differentiators that define us as a company. This is not an area wherein we compromise. It is a key differentiator for us wherein we deliver value to the customer.
How do you aim to achieve this?
By different I meant that our focus would be on safety. The products that we provide will be safe and meet all the expectations of our customers. We think we can provide products that are safer and have better efficiency thereby help our customers to reduce their energy consumption.
Do you have plans to introduce new products and services in the Indian market?
We have introduced new products into the Indian market recently. As we understand the customer’s needs, we will localise and optimise products to ensure that they fit into the local market.