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When the input cost is there, especially during inflationary periods, the customers are more
sensitive because they understand that they have to pay the higher price. But when it comes to
the normalization, then the prices get normalized in the marketplace. But that is something you
don't force yourself to do it. It's a market adjustment picture. And Kiran and Sanjeev, they're
very sensitive and very elastic to how the market plays out. So, this is something you don't
strategize. This is something you play how the market shows up.
Parikshit Kandpal: At the current level, are you seeing some pushback from the pricing? I mean, do you think there's
still some scope for improvement? Or do you think that now maybe we have peaked out and
could see some correction?
Sanjeev Sharma: Any insight to add, Sanjeev, on that?
Sanjeev Arora: No, I think, again, I can only repeat what Sanjeev is saying, that the market price levels are
dominated by demand and supply, one; and the second part is the material prices. So, there could
be a possibility that we can see some reduction in the material price bookings if the price goes
down globally. So, at this point of time, we can say that it has stabilized. But going forward, if
global demand decreases and then it has an effect on the material prices, then again, the reset of
the button can take place. So, that's my take on it. But if you are looking for an absolute number,
I will not be able to give that right now.
Moderator: We have our next question from the line of Jonas Bhutta from Birla Mutual Fund. Please go
ahead.
Jonas Bhutta: So, I just wanted to understand, has there been any positive impact of this government scheme
called RDSS on our EP segment in terms of order flows? Is ABB going to have a role to play
there? That's the first question
Sanjeev Sharma: Can you repeat what government scheme you're referring to?
Jonas Bhutta: The RDSS.
Sanjeev Sharma: RDSS. Okay. So, maybe you know something more than we do? What exactly is RDSS?
Jonas Bhutta: The upgrade of the power distribution network.
Sanjeev Sharma: This is upgrade of power distribution network.
ABB India Limited
August 11, 2023
Page 17 of 20
Jonas Bhutta: Yes, so it leads to a host of smart metering, etc.
Sanjeev Sharma: Smart metering, okay. All right. Kiran, do you have a view on that?
Kiran Dutt: On the smart metering side, we are not exactly on the tariff meters, we are on the low-voltage
side. So, we are not into that product segment at all.
Jonas Bhutta: So, there's no positive pull-through because there's an upgrade of the entire metering network?
So, does that have any positive pull-through for our distribution product in the power distribution
product lines?
Sanjeev Sharma: Ganesh, do you have any impact of this changing of the metering and the RDSS part? Do you
know of any impact on your business?
Ganesh Kothawade: There is quite a good opportunity in the distribution segment because when there is an
upgradation in the distribution line, there is quite a good requirement which is coming for the
medium voltage breaker side. And generally, these jobs are done by the EPC contractors, and
we do get the business from EPC contractors and from these utilities. So, there is definitely a
scope, but not as much potential as smart metering. But definitely, there is quite a good potential,
which is available in the modernization of the distribution network, particularly on the 11 kV
side and 33 kV side.
Jonas Bhutta: And my second question on the EP segment was, sir, you alluded to this business has seen a
massive improvement in its operating margin. And a part of that is the lag and lead time between
raw material prices increasing and decreasing, and our ability to hold on to pricing in those
periods. Do you believe that with this quarter, a large part of that benefit of holding some bit of
high-cost pricing, but low-cost inventory is largely now into the margins of the segment?
Sanjeev Sharma: Kiran, do you have a point of view? Our performance on the bottom line on the product side, is
that correlating with inventories that you bought at a lower cost and then you had a better price
realization? Is that contributing? Or you think that's not correct?
Kiran Dutt: I would rather answer in a different way, Sanjeev, on this. It's not a question of what we have
purchased at a particular price or something. It's more in terms of the demand for the market in
terms of product mix, what's required. It's also related to the earlier question where you were
talking about how exactly this distribution can actually support us in terms of volumes. It's an
indirect one, what we could say. So, it's a question of how exactly indirectly, whether there's a
building coming up, whether there's a segment of an industry which is coming up in the market,
which is actually supporting our growth. And when it comes to margin, what we are talking
about is the volume, for sure, it is playing a very big role in terms of getting us the margin as
well. We also spoke about commodity prices going down or softening up, that's actually
supporting us in terms of our margins.
Sanjeev Sharma: Fair enough. I think the same way plays out for Ganesh's portfolio as well.
ABB India Limited
August 11, 2023
Page 18 of 20
Moderator: We have our next question from the line of Bhavin Vithlani from SBM Mutual Fund. Please go
ahead.
Bhavin Vithlani: A couple of questions. Could you talk about competitive intensity, because some of the capital
group's company in compressors and abrasives have spoken about influx of Chinese companies
and restarting of the unorganized players. And if you could also give some comment in the
motors business. We understand CG Power, EMEIC and WEG going for mega expansion.
Sanjeev Sharma: So, we did answer about the players in the market, and they will find their own space. And with
respect to customer behavior of buying branded products or the nonbranded product, that's a
customer behavior topic. But what we see in India is a marked shift in last few years, especially
after COVID, wherein the reliability of a supplier and the reliability of the product has become
a bigger criterion for decision making. And the market shift has taken place. Apart from demand
growth, the market shift has taken place for the people who are the marginal buyers. They have
shifted to more reliable and more established players in the market. And that's also part of our
growth story in the marketplace. And in India market as diverse as we are, you will always have
customer segments which will be transactional at the bottom of it, and then there are people who
are really appreciate reliability, availability, maintainability and serviceability of a company
which serves them. So, that's how the market gets formed. And we find that the top of the market
is becoming larger rather than shrinking, from our perspective.
Bhavin Vithlani: A follow up. Are we also looking at margins over growth, and consequently, we're seeing some
slowdown in revenue growth? Or are we reading too much into it?
Sanjeev Sharma: We should cross the bridge when we face it, but that's not the situation we are in at this point of
time.
Bhavin Vithlani: Great. Just last question. If you could talk about the exports growth because we spoke about
slowdown in the global market. How should one think about the growth rates for the exports?
Sanjeev Sharma: So, we do 11% to 12% exports. And as I said that story is in the early stages of development as
far as India is concerned because as the global team chooses, whichever business chooses to
adjust their global footprint, it has an exponential impact on what we will export out of India.
And that story has to play out as we go ahead.
Moderator: We have our next question from the line of Aditya Mongia from Kotak Securities. Please go
ahead.
Aditya Mongia: I'll limit to a single question. The question relates to energy-efficient drive and your optimism
on that front. It would be useful to get a sense from you what is the current penetration of this