New business will fuel growth: Hitachi India MD Ichiro Iino

Japanese business conglomerate Hitachi has chosen India as its fifth headquarter outside Japan, after operating for almost 70 years in the country. India, which was earlier a part of Hitachi Asia, has been re-positioned as an independent management area and Hitachi India will lead other group entities here to enable faster business rollout. The new structure will fuel growth and help the company achieve revenue target of 200 billion yen from Indian operations in the next 2-3 years from 90 billion yen in 2010, Hitachi India MD Ichiro Iino told ET's Pramugdha Mamgain in a chat. Edited excerpts:

Why has India been chosen as one of the global headquarters and how will the new structure be different from the previous one?

India offers huge growth potential owing to its growing population and economy. We are confident that the new structure will support growth momentum and enable us to respond more effectively to customers' needs. As part of the new structure, Hitachi India, which was earlier reporting to Hitachi Singapore, will now directly report to Japan headquarter. Hitachi India's responsibilities and authority in the context of business operations will be expanded, and the company's staff will be increased.

Hitachi's growth in China was faster than India even as it entered China more than a decade after India. What was the reason for slow growth in India?

Both the markets have been equally important to us. For Hitachi, China is certainly 13-14 times bigger than India in terms of revenues because capitalism in China started way before India. China was a communist country, which forced companies to move fast unlike India where democratic and regulatory hurdles were prevalent. We hope to produce significant revenues from India and catch up with China in a short span of time.

Competition has become intense in the air conditioners' space with Japanese companies taking on Korean rivals with aggressive price cuts and reaching out to the masses. Is Hitachi planning the same?

We have been addressing the high-end customers so far. But need of the hour is to tap the burgeoning middle income class in India. We are looking at this segment and may launch products at affordable prices in the future.

Which are the key investment areas for Hitachi in India?

Investments will be spread across segments we operate in including power systems, transportation, industrial and social infrastructure systems, home appliances and information technology. In the power systems space we are investing 50 billion yen in two factories, which will make turbines and boilers. We will also enhance production capacity of our construction machinery business Telcon.

The company is further investing in R&D centre in Bangalore, which will be ready by March next year. We also plan to set up a desalination plant in Gujarat's special economic zone to feed water into industrial parks. Our idea is to invest both in organic and inorganic growth.

How is Hitachi's business faring in developed economies such as US and Europe?

Slowdown continue to cast its shadow on some of the developed economies and that is why we are shifting investments and resources to emerging economies such as India and China. India is a price-competitive market and if we are successful in matching it, growth is obvious.