UPDATE 1-ABB India exec says margins under pressure

Mon Sep 19, 2011 5:10am EDT

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By Anurag Kotoky

NEW DELHI, Sept 19 (Reuters) - India's ABB Ltd , a unit of Swiss engineering group ABB , has seen its margins come under pressure as customers hold back spending, its managing director said on Monday.

Firms across India have put growth plans on hold due to increased borrowing costs and insecurity over slowing economic growth that could fall below 8 percent this year.

India's central bank has raised interest rates 12 times over 18 months to rein in stubbornly high inflation, and more increases are expected.

"Clearly, we do see many of our customers holding back in terms of new business," Bazmi Husain, managing director of ABB India, told reporters.

"Margins are certainly under pressure."

He also said the parent company, ABB , had no plans to increase its 75 percent stake in the unit.

ABB, which competes with German conglomerate Siemens AG (SIEGn.DE) and France's Schneider , will see emerging markets contribute 55 to 60 percent of revenue in five years, global Chief Executive Joseph Hogan said.

The Reserve Bank of India reaffirmed its anti-inflationary stance on Friday, despite growth fears after the country's domestic demand driven economy grew 7.7 percent in the April-June period, its weakest pace in six quarters.

ABB's Indian unit, which makes power equipment and provides automation, reported flat net profit for the June quarter with a 17 percent growth in sales, and said its order book would ensure "steady" revenue generation in the near term.

ABB employs 10,000 workers in India and runs 14 plants across seven locations.

Its shares were down just over 1 percent at 824 rupees ($17.43) at 2:15 p.m. (0845 GMT), in a Mumbai market down 1.1 percent on global concerns. ($1 = 47.265 Indian Rupees) (Writing by Henry Foy; editing by Ranjit Gangadharan)

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