NEW DELHI – Hitachi Ltd. plans ¥70 billion in investments in India as it tries to boost revenue in the rapidly emerging economy to ¥300 billion in the year ending in March 2016 from ¥100 billion in fiscal 2011.
The firm’s directors approved the plan in New Delhi on Thursday, the first overseas board meeting in Hitachi’s 102-year history, it said in a statement.
Hitachi’s sales in India are currently less than 10 percent of those in China, where a building boom has spurred demand for construction equipment, air conditioners and power plants. The company now expects faster sales growth in India as it boosts operations in anticipation of the Asian country’s quicker economic expansion than China.
“India is currently one of our highest priorities,” Hitachi President Hiroaki Nakanishi said in New Delhi. “Its growth rate will exceed China’s.”
Hitachi will double its India workforce to 13,000 as it turns to emerging markets to counter a shrinking population at home and government spending cuts that are hurting sales in Europe. The firm generated 57 percent of its ¥9.7 trillion global revenue in the domestic market in the last fiscal year. Income from its China operations accounted for only 11 percent of this sum, while the figure stood at 8 percent in Europe and a just 1 percent in India.
But with revenue from China growing at a slower pace, India could account for 3 percent of global sales by March 2016, Nakanishi said. Under its India plan, Hitachi will increase local output of products, including electronics, construction machinery and industrial air conditioners, and will also open a car parts factory in Chennai.
“India needs infrastructure and Hitachi is strong in (that area),” said Masayuki Kubota, who oversees ¥150 billion in assets at Daiwa SB Investments Ltd, noting the country “has a lot of growth potential.”
The company said it will also increase its use of India as an export center for African and Middle Eastern markets, including shipments of excavators and construction dump trucks.
New Delhi plans to attract some $1 trillion in infrastructure investments by 2017 as its steps up construction of highways, ports and power systems to support the country’s economic growth and trade. Work has previously lagged behind targets because of land disputes, bureaucratic delays and other government policies.
“Sometimes, India’s insistence on public-private partnerships makes it very difficult to set up positions for future investment,” Nakanishi said.
Hitachi is already building two power stations in southern India that should provide revenue of about ¥100 billion a year by 2017. The plants, part of a venture with Chennai-based BGR Energy Systems Ltd., are expected to annually generate 3,000 megawatts by 2014, according to Hitachi, and the facilities will also export equipment to other parts of Asia.
A Hitachi venture has meanwhile won contracts to supply boilers worth about 15 billion rupees (¥23.1 billion) to NTPC Ltd., India’s largest utility by market capitalization. The country suffers from a 9 percent power deficit at peak times that keeps about 400 million people in the dark every day, according the Central Electricity Authority of India.