Dec. 14 (Bloomberg) -- Hitachi Ltd. announced a 70 billion yen ($838 million) India investment plan as it tries to triple sales dwarfed by its business in China.
The company aims to boost India revenue to 300 billion yen in the year ending March 2016 from 100 billion yen last fiscal year, according to a statement. Its directors approved the plan in New Delhi yesterday, the first overseas board meeting in the Tokyo-based company’s 102-year history.
Hitachi sales in India are less than 10 percent of the figure 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 and anticipates quicker economic expansion than in China.
“India is currently one of our highest priorities,” Hitachi President Hiroaki Nakanishi said in an interview in the Indian capital. Its “growth rate will exceed China’s,” he said.
Hitachi will double its India workforce to 13,000 as it turns to emerging markets to counter a shrinking population in Japan and government spending cuts that are hitting sales in Europe. The company generated 57 percent of its 9.7 trillion yen global revenue in Japan last fiscal year. It got about 11 percent in China, 8 percent in Europe and 1 percent in India.
India may account for 3 percent of global sales by March 2016, with China’s figure growing at a slower pace, Nakanishi said.
Under the India plan, Hitachi intends to increase local production of products including electronics, construction machinery and industrial air-conditioners, as well as opening a car-parts factory in Chennai.
“India needs infrastructure and Hitachi is strong in infrastructure,” said Masayuki Kubota, who oversees the equivalent of $1.8 billion in assets in Tokyo at Daiwa SB Investments Ltd. The country also “has a lot of growth potential.”
The company will increase its use of India as an export center for African and Middle Eastern markets, including shipments of excavators and construction dump-trucks. It will also use India as a base for growing its infrastructure systems business in Africa, it said.
India intends to attract $1 trillion in infrastructure investments by 2017 as its steps up construction of highways, ports and power systems to support economic growth and trade. Work has previously lagged behind targets in India 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-equipment plants in southern India that should provide revenue of about 100 billion yen a year by 2017. The plants, part of a venture with BGR Energy Systems Ltd., are expected to make 3,000 megawatts of capacity each year by 2014, according to Hitachi. The facility will also export equipment to other parts of Asia.
A Hitachi venture has also won contracts to supply boilers worth about 15 billion rupees ($276 million) to NTPC Ltd., India’s biggest utility by market capitalization. The country suffers from a 9 percent peak power deficit which keeps about 400 million people in the dark every day, according the Central Electricity Authority.
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