Ankity111/rag · Datasets at Hugging Face

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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,

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,