Honeywell has been present in India for more than 80 years now. The US multinational conglomerate helped set up the country’s first oil and gas refinery in Digboi, Assam. Today, India is an integral part of Honeywell’s global growth strategy. “Each of our businesses—aerospace, home and building technologies, safety and productivity solutions, performance materials and technologies—have well-established operations in India,” says Vikas Chadha, president, Honeywell India. “We have set up manufacturing and engineering operations here and are playing a defining role in the growth of India’s 100 smart cities,” he tells Sudhir Chowdhary in a recent interaction. Excerpts:
How important is India for Honeywell? Talk to us about your India presence and commitment.
For Honeywell, India is a very important geography and there are two dimensions to it. One is India itself, the business we do in India. India is a high growth region. How many economies are growing at 7-8% and are large enough, that they have a significant delta in terms of the growth they bring in for Honeywell overall?
Organic growth is one of our core performance criteria. This is one of the key priorities of our new CEO, appointed in April 2017, and India is a big contributor to that. In the past few years, because of the decisions we made in terms of investment and making the right moves in India we have been growing more than two times the GDP, which is very good and hence it contributes in a big way to the overall growth environment.
The other dimension is because of the global engineering centres that we have set up in India. We contribute a lot in terms of the software technologies that is getting developed in India. Now we say that we want to be a premier cyber-industrial company, but practically most of our products have a software-wrapper already, and we continue to make a lot of user interface software. A lot of the software that is made which we sell globally with new product introductions and upgrades is being done from India by our engineers.
Globally we have 131,000 employees, of which 15,000 are in India. If you see, it is more than 10% of employee base which is very substantial for a company. We continue to invest in India in terms of mushrooming these talents and getting to do some of the state-of-the-art work through our six manufacturing facilities and five global technology and development centres in India. Last year, we invested $200 million in a facility in Bangalore, which is going to house almost 5000 of these engineers.
We have a manufacturing facility in Gurgaon, called the Honeywell India Technology Center (HITC), it is the only such technology development hub outside the US. It is a miniaturised working plant. Here we pilot, you can create a miniature of what you will eventually do and you can test that in an environment to see the kind of output you will get. It is something that works and produces something. It is not a sheer model, but a working mini -sized refinery.
How well are you placed in India to meet its technology and manufacturing needs?
We have been in India for more than 80 years now. We have partnered with Indian customers to create the necessary solutions they need. We are a core engineering company. When we say engineering, a lot of the solutions that we sell to our customers, is about stitching it all together and creating the right customised solutions for them. Hence, if we have been present in this country for so long and have been growing more than two times the GDP, not for a year or two, but over a decade, it means we have already done a lot of localisation of the engineering, the products, the solution designing, etc., in India. I would say, we are a very local company from an India perspective, which also gives us the nimbleness, the flexibility and the strength to take up new challenges that the Indian economy throws up or as the Indian customers keep on telling us.
Honeywell is already playing a defining role in the growth of India’s 100 Smart Cities. We are strategic partners with state governments and local authorities to implement our Internet of Things (IoT)-enabled citywide security and surveillance systems, including installation of 10,000 closed-circuit televisions (CCTVs), emergency response solutions, automatic number plate reading system, and intelligent traffic management technologies at work in 65 cities and towns.
What are the key priorities and growth drivers for Honeywell in India in 2018?
For this year, I would say three:
1. Driving mass mid-segment growth: We have always been creating local products and have also have had a close arrangement with China where we wanted to see their capabilities of designing some of these products for us, so we were getting these products from there. But, suddenly the demand is changing between India and China. China is going more up and India needs to take the mandate to create more mass mid-segment products not only for India, but for the world. This is a very big and important initiative that we have taken up in India so we want to create a lot of the products which are there for the mass mid-segments, which the mass middle class can afford and these are the products that can eventually go to many other geographies around the world.
2. Becoming a software-industrial company: The second is that our overall mission, over a period is to become the world’s largest software-industrial company. Our former CEO, Dave Cote, used to say that we want to be the ‘Apple’ of the industry. The way Apple has become the consumer brand, we want to similarly become the ‘connected software-company’ for the industrial vertical. We have always been doing software, it’s just that we have to position ourselves and further create solutions which involve cyber security, Big Data analytics, etc.
3. Investing in mega trends: There are certain mega trends in India which we are watching very closely and we are investing in them. Euro 4 to Euro 6 transition is one. There is this transition happening and we know that there will be investments, so how do we as Honeywell play in the scheme of things; not only as our entitlement, but also create local solutions that are required? Smart cities is another one.
With the government aggressively pushing for ‘ Make in India ’, how is that helping you in your growth?
‘Make in India’ has not had the impact that it should have had as compared to some of the other initiatives that the government has introduced. I think we are on the way to get a lot more traction. It is also to do with the capex cycle our overall economy is going through. However, in pockets we are seeing investment happening.
‘Make in India’ has two dimensions to it:
One is how much more, we as Honeywell can make in India, and we are not only into products but also into solutions. So, making in India is not just about creating the products but also making solutions which you can install. Our philosophy in Honeywell is – when we sell a solution, we don’t just sell a solution, we want to sell a solution to the customer and live with the customer forever.
The other aspect to it is the manufacturing sector is now trending to see and attract some new investments. There are smaller customers who are coming and talking to us about Industrial Internet of Things (IIoT), which is very good and exciting. India has always been an early adopter of software, given that we have so many engineers many technology companies mushroomed. Our understanding and acceptance of software is high compared to other markets. All of this put together has an impact on the manufacturing sector.
What is your role in the Indian government’s 100 Smart Cities campaign?
When we started on this, we found that there is no clear definition available. The definition can vary, needs can vary, opportunities can vary because some cities are looking at more greenfield projects and some cities do not have a greenfield capacity available and they have to do everything that is brownfield. If you look at the 100 Smart Cities vision, there are various things that fall in it—surveillance, utility, e-governance, energy management, traffic management, people management and so many components of smart cities. The government did a great thing by setting up these Special Purpose Vehicles (SPV).
The way we approach this is to say that we went and talked to all the SPVs, asking them what they exactly want. What does smartness mean to you? Surveillance is one thing. We saw what can we bring on the table as Honeywell. We are also into utilities, we can also do traffic management, etc, depending on what they want to do. Some of the SPVs want to focus on one element and go deep, some want to do a pilot across all and then bring it together, some want to set up a central command station. So, different SPVs have different approaches.
Honeywell has been speaking about being a software industrial company. What does that really mean? What is your ‘connected’ proposition?
When we say we want to become one of the leading software-industrial companies, it means that we want to sell maximum value to our customer through our software solutions. In fact we now call it ‘The Power of Connected’, this is our new brand positioning. We want to sell a connected solution to our customers in whatever we do. Connected buildings, connected homes and connected workers —these are all what it means to Honeywell as a software-industrial company.