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and this is our base for us to drive the growth in our 18 business divisions. |
So, like every time, we talk about a particular market segment every quarter just to give you |
more granularity of a segment, how we see it. So, food and beverage is the theme for this quarter, |
a deep dive. What we have in this particular market segment, we see about $535 billion of the |
formation of the business in this year. And it has grown quite rapidly from FY '22 at $290 billion |
and is expected to be $535 billion in FY '25. |
And you can see the market segmentation of it. And all these market segments, with the direct |
and indirect opportunities, play with our portfolio. Mostly indirect through machinery suppliers, |
OEMs, as well as our channel partners, they bring a lot of business, and also the large companies, |
they buy equipment and technology directly from us in this segment. So, fastest-growing |
segments, you can see the packaged food, dairy, meat and marine. And also we see with the |
changing lifestyle and food habits, there's a strong domestic demand for this particular segment. |
The expansion of capacities is taking place and more and more emphasis is being put by the |
government. 100% FDI for food processing, PLI schemes, all these are part of this market and |
our portfolio in drive motors, automation, instrumentation, robots, switch gears and digital |
powertrain goes into it. |
Now coming to the business highlights. Our Quarter 2 of 2023 - where we call it as a June |
quarter, I think for many, reference point is quarter 1, but for us it is quarter 2. The orders were |
up 10%, despite a higher base, driven by emerging and traditional segments. Revenues are up |
22%. And profit after tax, if you take a year-on-year basis, it's 200 basis points higher, driven by |
operational efficiencies as well as good execution of the backlog. We have expanded the |
manufacturing footprint of energy-efficient drive portfolio. That again, is playing into the sweet |
spot of the market, wherein more and more customers are replacing or buying products which |
are more energy-saving. So, energy-saving and energy-efficient is a sweet spot for ABB, and we |
see a lot of emerging demand in that particular area. |
And not only are we helping our customers to reduce their carbon footprint, we, ourselves, have |
a concerted effort within the ABB organization, and we have been able to reduce 85% GHG |
Scope 1 and Scope 2 emissions until quarter 2, 2023 compared to a baseline in 2019 in all of our |
manufacturing locations. So, it's a program that we run, and we are very proud of how our teams |
and our businesses have taken upon it and how we are able to be making an impact in each and |
every location. We are engaged with 3,000-plus customers across 13 Tier-1, Tier-2 and Tier-3 |
markets, and a substantial amount of business is coming from these markets for us. We are |
ABB India Limited |
August 11, 2023 |
Page 4 of 20 |
maintaining a good cash position in our balance sheet, and our free cash flow conversion is in |
line with profit after tax. The Board has approved a special dividend. I think that Sridhar will |
give you a bit more details there. We thought that we will bring some value to our shareholders. |
So, there's a positive market momentum across all the segments that we are focused on. All our |
businesses are growing. All of our businesses are having profitability in the right direction. Our |
business now tends to be a short cycle. Our services are growing at a healthy rate. We also have |
good exposure to very strong emerging market segments, be it in the automotive traditional or |
EV segments which are emerging, electronics which is expanding, and also F&B segments. And |
the investment by Railways and Metro, that also is quite favorable for our portfolio and also |
process industries which has started making OPEX and CAPEX investments, there again, we |
are finding good favor. So, with that, our order backlog has grown nearly 29% to Rs. 7,700 crore. |
So, we have some examples here, we have the power and automation going into an aluminum |
major. Then we have the motion solutions comprising of drives and synchronous reluctant |
motors going for a heavy electrical major. Then we have traction motors for railways, blending |
solution for a Japanese engineering procurement company for the energy space, robotics |
solutions for metals majors - It's a non-automotive project. Power distribution and management |
for data centers, which again is a very strong emerging market segment, along with robotics - |
paint in white in orders for automotive majors. More and more Indian automotive majors are |
investing in robotics, and we have quite a favorable positioning there. And of course, our switch |
gears going into ethanol production are also on display. |
Our teams have this recipe of really going and connecting with customers deep in the market |
segments with the new customers as well as existing customers and we had a very strong |
engagement in the last quarter across 13 Tier-2 and Tier-3 markets. This is one of the reasons |
the effort and the leadership of our businesses is really contributing to our growth. |
As I mentioned, our GHG Scope 1 and 2 emissions are down 85% on the baseline in 2019. We |
recycle almost 96% of our waste. And 2 of our 5 plants are now water-positive, cumulative till |
quarter 2 of 2023, and we hope to have all our plants water positive. On the CSR perspective, |
we continue to make impact on helping and supporting our surroundings as well as the targeted |
areas with the infrastructure projects, providing skills as well as education in multiple schools, |
having the kind of residential facility for women with special needs in Nashik. We have a midday meal program supported through Akshaya Patra Foundation. In Faridabad, we run a program |
which is an education scholarship for girls with IT skills, and health care for making special |
camps for communities who don't have access to those means. |
So, with this, I will hand it over to T.K. Sridhar – our CFO, to take you through our financial |
highlights. Thank you. |
T. K. Sridhar: Thank you. Thank you, Sanjeev. It gives me immense pleasure to bring you the results, which |
is absolutely a solid performance in the quarter. So, I think, first of all, I would like to tell you, |
based on the feedback what we got and also the global standards, we improved our press release, |
ABB India Limited |
August 11, 2023 |
Page 5 of 20 |
which would have reached you all with more information, which we will do on a half year and |
full year basis so that we have a better transparency and clarity on the data of the performance |
of the company. |
So, going by that, I think we have now got a consistent track record. Orders are at Rs. 3,044 |
crores, which has seen a 10% Y-on-Y growth. Order backlog, we are at Rs. 7,729 crore, 29% |
up. Revenues - we now have reached Rs. 2,500 crores per quarter. So, that's now consistently |
tracking at that level, with 22% growth. And profit after tax and the profit before tax, I think, |
have grown exponentially with Rs. 393 crores and Rs. 296 crore for the quarter, which is more |
than 100% of what we had delivered in the previous year. |
So, we bring to you, apart from this, I think, a couple more data points, how our earnings per |
share has been improving for the last 8 to 10 quarters and also what has been our trajectory on |
converting the profit into cash. So, we are now quite efficient in converting the profits into cash, |
we are trending at an average of 100 % of what we earn. |
So, I think this is a key summary of how the Q2 looks like. Just to get some more information |
about how we did for the half year. So, half year, on the order level, we are trending at 22% |
more than the half year of last year. So, Rs. 6,169 crore as against Rs. 5,066 crores in orders. |
And the backlog, we said 29%. So, revenues are up 22%. And profit before tax and before |
exceptional items is up by 83%. And profit after tax is up by 5 %. |
The gap is more because in the first quarter of last year, we had one exceptional transaction |
impact of the turbocharger sale divestment, so which can be made out this quarter's PBT of Rs. |
328 crore. And that's the one which is included in the profit after tax of the last year. So, that has |
an impact. But if you remove that, the profit before tax and profit after tax for the 6 months also |
will trend at the same levels is what we have seen. So, cash balance, we are at Rs. 4,092 crores |
at this point of time. |
Just to dwell a bit more on what the structure of the P&L looks like. So, as we explained the |
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