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revenue portion of it, other income consists mainly of interest income from the cash deposits we |
have made. The material costs are holding on at 63.5%. This is probably because of 2 things. |
One is the mix of orders remaining consistent with a good amount of services portion and also |
a bit of a softening of the metal prices, which has helped us. And our ability to command a better |
price in the market has actually improved the material cost. These material costs are derived |
from the orders we have booked in the previous quarters. So, this is something what we need to |
keep in mind. |
Personnel expenses is at Rs.168 crore compared to Rs. 145.7 crores from same quarter of the |
last year. And that's representative of the increments that have been given to the employees on |
a year-to-year basis. We don't have any other events apart from that. Other expenses remain |
consistent. So, the only outlier is the exchange and commodity price variation. So, in last quarter |
it was Rs. 56.8 crore, and this quarter was Rs. 29.8 crore, resulting in a Rs. 30 crore swing. That's |
ABB India Limited |
August 11, 2023 |
Page 6 of 20 |
the only additional impact. But otherwise, the other elements remain pretty consistent with what |
we had in the previous quarters. |
So, overall, we are very satisfied to deliver this particular result as there is profit after tax of |
11.8% and on a 6-month basis at 11 %. |
So other income includes 49 crores, and majority of it is interest income. Operational EBITDA, |
quite interesting, I think this is something which all you have been tracking as to how ABB is |
performing. We maintain stability on the performance. So, we always have been saying that we |
want to have the 10% PBT first and then move into the next corridor of delivering better |
profitability and PAT level, and that is reflective in this particular slide of EBITDA and PBT. |
And that's more because of the volume price and the capacity utilization. |
Just to give a bit more color on how each of the segments have performed. So, electrification |
and motion, everyone continues to be on the growth trajectory. All the divisions in electrification |
posted a growth. So, I think that's something which is quite visible in across all the divisions. |
Revenues - this is basically possible because we had a seamless supply chain supporting the fast |
growth of the EL division, which also helped in delivering the revenues on time. Profit before |
tax and interest, I think it is more of a price realization, capacity utilization and a mix, which |
gave a positive lift to the numbers. |
Motion. I think, again, a strong demand from energy-efficient products. This is a theme which |
is a hallmark of Motion offerings. So, that has actually driven the growth. And it's good to see |
that for the last 2 quarters, we are consistently at Rs. 1,100 crore in order bookings and reaching |
up to Rs. 1,000 crores in revenue execution as well and a good development in profitability as |
is evident. Q1 had a onetime impact of a quality warranty what we have provided, and that's |
exactly what is there, and this was already informed to you in the last quarter's earnings call. |
Process Automation. So, we got a large order from a metals major as was told. I think that's |
helping us to get to Rs. 784 crore this particular quarter. Revenue is consistent with the order |
booking, what we had on hand of Rs. 510 crores, so profitability coming back to Rs. 11.1 crore. |
And I think in the Q4 '22, it was more contributed because of the highest ever revenue, which |
was there, an exceptionally higher service revenues, which pulled up the profitability to Rs. 17.6 |
crore. |
Robotics. Again, another quarter of solid performance. So, the orders were slightly less than in |
this particular quarter compared to the run rate, and that's more about the timing of orders. This |
being the first quarter for quite a few companies, so the decisions come up in the next quarter |
onwards upto the financial year starting from April onwards. But I think Robotics as a business |
is actually performing and quite consistently with the numbers we have. |
The last slide is about how we see our channels, offering and geography. So, products |
dominating the total offerings with 77%, services with 13%, and X1 projects with 10%. There |
has been a broad bifurcation. |
ABB India Limited |
August 11, 2023 |
Page 7 of 20 |
Next is geography. I mean, while it is good to see that we have 11 % of exports that has come |
out in this particular quarter, more important is that the domestic demand is growing faster than |
the export. While we see the absolute value of exports also increasing, the domestic demand is |
far exceeding the export demand, and that's exactly why the percentage seems low. |
So, what is the focus for H2 '23? So, definitely, we continue on the market penetration. We also |
make sure that we have an order booking momentum going on. And sustaining margin |
momentum is also key for us to be there in the corridor of our goals. And we'll make sure that |
capital that is available is allotted for the right projects and the right processes. And last but not |
least is making sure that the sustainability target is also achieved. |
So, while on this, I have something else which I thought I should offer to you because I know a |
lot of people reach out to the organization to set up meetings. So, in order to make sure that we |
have a more seamless experience on how we deal with analysts and investors, we thought that it |
is time for us to gear up to make it more digital and make it more user friendly. |
So, we will reach out to you with a link wherein you could register yourself and ask for meetings, |
and then the organization will make sure that it is set up at the right point of time. And this also |
helps us to share with any of the regulators at some subsequent point of time if it is asked for. |
So, this way, I think we make it a bit more structured and more documented also well for you, |
and it also helps you to record yourself for the meetings or to have that with ABB. |
So, with this, this is the end of our discussion. So, we could open now for Q&A. |
Moderator: Thank you very much. We will now begin the question-and-answer session. We have our first |
question from the line of Renu Baid Pugalia from IIFL Securities. Please go ahead. |
Renu Baid: My first question, obviously, when we look at the numbers, margins, you have seen consistent |
improvement. While your comments have been very clear, can you show some more inputs in |
terms of the gross margin's consistency of 36% for almost 3 quarters now… How sustainable is |
this? And what comfort do you derive from the order pipeline in terms of competitive intensity |
in the mix, which should help you sustain this profitability? |
Sanjeev Sharma: Thank you, Renu. Thanks for this question. So, we have shown you our backlog numbers, which |
have grown by 29%. So, that gives us forward revenue surety, and that's where the margins come |
from. So, we have a fairly robust pipeline of revenue. So, we feel that with the consistent |
execution each and every division that is carrying out, I think trajectory is in the positive |
direction for us. |
Renu Baid: And any input specifically on the mix of large orders that you have booked in the current quarter, |
probably in the process segment? And how has been the outlook from core sector awarding like |
steel, especially on the greenfield projects? Also, do you perceive any slowdown in orders |
towards the end of this calendar year or beginning next calendar due to the elections? |
ABB India Limited |
August 11, 2023 |
Page 8 of 20 |
Sanjeev Sharma: So, the second part, I'll answer. First part, you can go ahead about the orders being booked, the |
large orders, Sridhar? |
T. K. Sridhar: Yes. I think the large order, what we have booked from a metals major, I think that happens |
normally in Process Automation. And also, Renu, to answer your question on the first question, |
which is consistency about how good will that 63.6% or 64% in the material cost, right? So, if |
you look at the backlog, the majority of it is projects because it comes. But all the product |
businesses, which is motion and EL, a lot of them are book-to-bill or short-cycle orders. So, |
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