ABBNSEAugust 16, 2022

ABB India Limited

8,005words

59turns

9analyst exchanges

4executives

Download PDF ↗ABB stock page →

Management on call

Sanjeev Sharma

MANAGING DIRECTOR

Tk Sridhar

CHIEF FINANCIAL OFFICER

Sanjeev Arora

PRESIDENT, MOTION BUSINESS

Kiran Dutt

PRESIDENT, ELECTRIFICATION

Key numbers — 40 extracted

rs,

ects. Motion which represents the core of energy efficiency portfolio of ABB, with electrical motors, generators, drives and associated services, including the mechanical power transmission products.

64%

gone quarter, April to June. You may have already observed in our results that our orders are up 64% year-on-year, revenues are up 44% year-on- year and profit after tax is up 115%. We directly attri

44%

may have already observed in our results that our orders are up 64% year-on-year, revenues are up 44% year-on- year and profit after tax is up 115%. We directly attribute this to operational efficienc

115%

t our orders are up 64% year-on-year, revenues are up 44% year-on- year and profit after tax is up 115%. We directly attribute this to operational efficiencies and customers connect our team and our pa

45%

market segments and different geographical categories where we are focused. Exports revenue grew 45%, services revenue grew 14% and of course we have high growth segments which are contributing high

14%

ent geographical categories where we are focused. Exports revenue grew 45%, services revenue grew 14% and of course we have high growth segments which are contributing higher than others. Large proje

30%

projects, and it’s a quite a success story. Just as one example for energy efficiency – we save 30% energy in the luxury Amanbagh projects or the facility in Airoli using ABB drives for HVAC system

100%

o waste to landfill. We already have achieved renewable energy goal that from 2022 onwards we are 100% on renewable energy and the waste A Illi recyclability in all our location has already

96%

able energy and the waste A Illi recyclability in all our location has already touched 96%. We are happy about it. We do it because this is the right thing to do. With respect to the soc

2767 crore

evenues, as well as the margin expansions what you see. Total orders received for the quarter was 2767 crores which talks off 64% growth quarter-on-quarter. But while I say this, we have 20 divisions busine

6000 crore

ned on a very well sustainable ground. So, with this, I move to the order backlog, we have almost 6000 crores of order backlog. This provides good visibility for revenues, none of these order backlogs are s

2053 crore

ved and we are able to see that coming as order backlog as well. Coming to the revenues, we are 2053 crores 44% increase quarter-on-quarter. We also look at it sequentially, how well we performed because

Advertisement

Guidance — 20 items

Sanjeev Sharma

opening

“It is our resolve to become water positive in our locations, we informed you last quarter that we are water positive in Nelamangala and same project is being implemented in our other factories and premises.”

Sanjeev Sharma

opening

“So, we are committed to provide good infrastructure to the capacity we have and the resources we have, we have already executed a project in two locations.”

T K Sridhar

opening

“And naturally, this has project businesses as well because if you look at the total traction, Process automation is one of the major business divisions which has gained more momentum, orders from ThinkGas are what we are talking of A Illi and orders from other steel majors are something which have really improved and we are able to see that coming as order backlog as well.”

T K Sridhar

opening

“So, totally, we will be roughly around 3100 crores.”

T K Sridhar

opening

“So, we will have a good order backlog execution going forward as well.”

T K Sridhar

opening

“So, EL and Motion as what we normally see form 70% of our business portfolio we will be in India.”

T K Sridhar

opening

“They see traction orders of course there will be competition around who are picking up the markets as well.”

T K Sridhar

opening

“There was always a question as to how exports will grow.”

T K Sridhar

opening

“Overall, this was about the performance, but I should also close my call with saying that there are certain risks, which we should keep in mind when we are looking at the future trends that could probably impact us going forward.”

Ravi Swaminathan

“So, basically, how they are panning out, is the ordering momentum still firms from these kinds of sectors which generally give the last ticket order so if you can give a commentary on these sectors, it will be really great.”

Risks & concerns — 8 flagged

In ESG risk assessment, we achieved a strong category.

— Sanjeev Sharma

The sequential quarter which is Q1 22 had a one-time impact of the sale of turbo business, which had 293 crores.

— T K Sridhar

So, if anyone is wondering how we really managed this material cost, it’s more of an impact of two, three, really vital ingredients.

— T K Sridhar

Because in this time where inflation is high, and where the commodity price is increasing and Forex is volatile, we have no other option but to make sure that the customer also pays for the increase and that’s something which is consistently being done by all the divisions across.

— T K Sridhar

Personal expenses, we are at 7.1% compared to what we were at previous year, our previous quarter amounted to 139 crores, so in the same range, this is probably an impact of the different of increments what we give every year to the employees and other expenses.

— T K Sridhar

I would bucket it into three, one is commodity and inflation this is something which we keep watching – the commodity market is pretty volatile today.

— T K Sridhar

And how we are sort of ring fencing our risk in a competitive market.

— TK Sridhar

So, that’s how it is and yes, over a period of time, this part of the business is growing much faster than the turbocharger, which was on decline, because railways have decided not to pursue the diesel engines anymore, so there is an impact, but at the same time, since they’re converting everything to electrical, and the metro is also electrical that had a positive impact on our mix of our portfolio.

— Sanjeev Sharma

Advertisement

Q&A — 9 exchanges

So, basically, especially the order inflow traction has also been very strong at around 2700 crores. And we have seen some large orders in the motion business and the process automation business, if you could give your commentary on the sustainability or the visibility of such large orders over the next 12 to 24 months from steel, cement and other large orders. So, basically, how they are panning out, is the ordering momentum still firms from these kinds of sectors which generally give the last ticket order so if you can give a commentary on these sectors, it will be really great.

Sanjeev Sharma

Thank you Ravi. So, we have a benefit of Sanjeev Arora our Motion President present here so and Ganesh is present also. So, Sanjeev Arora how do you see on the large project size, do you have certain good orders on the traction side, how do you see going forward? First of all, thank you very much for giving me this opportunity to answer this question. And thanks for the question. So, in my opinion, yes, we are actually, if you read the market, the market currently is fluctuating, or I would say looking into the metal prices and others but let me tell you that the pipeline is strong. Metals, ce

Sir first on the order inflows again, and very, very strong number close to about 2700-2800 odd crores, if you could just help us what was the value of the large order which you typically break out and what was the value of the base orders just trying to understand also what is driving this big growth in base orders?

Sanjeev Sharma

So, we did have a couple of large orders, but that’s not how ABB India story is getting built, it’s not around the large orders, it is around the momentum that we have in the base orders. And that is coming, we have mentioned few times that we are laser focused on multiple market segments of growth across the country. And that’s how we are able to – number one, get higher growth, because our penetration is increasing. Number two, when our penetration is increasing, we are also making sure that our product portfolio expands and that also contributes to a better intake. And then the geographical

I have two quick questions, first is in the first half period, the order intake seems to be exceeding last year in a three-year CAGR number by better margin. How much of contribution is from the new mandates that you have got from the parent especially in the low voltage, that’s my first question. I’m talking about the new plant expansion that we’ve got in.

Sanjeev Sharma

So, you’re right, in a way that we have been making investments in our, for last two to three years now as I said, this story we never say that we did something dramatically good in last quarter that our results were better. We have been making investments in the product portfolio expansion, localization, and productivity enhancement in our plants. The amount of productivity increase we have in the low voltage plant is tremendous. And it’s almost a case study in making now not only within India, but also, we will share it globally. Maybe next time when you are in Bangalore, we will try to give

My first question is on the win that you gave on the extra import market that has been allocated to you now, how sustainable is that extra market; do you think it will stay with you or is it very opportunistic, given the compliance constraints?

Sanjeev Sharma

The market which has been allocated is not allocated, it is something wherein the group has decided that they would like to use their well-developed India base for that particular divisions to be the permanent base for supplies into certain markets. So, certain markets which have been allocated they run through of course India, of course then apart from India, its Middle East, South America, North America, all locations are being served from here. So, these investments, and this shift is permanent in nature, unless we find ourselves incapable or delivering or we have some issues in other areas

Just probably one question given the commodity prices are softening, do you see any impact on pricing or pullback on pricing and obviously competitive environment with regards to that?

TK Sridhar

Deepak, very good question. So, this is basically not of how we balance your capacities and offerings to the customer. And how we are sort of ring fencing our risk in a competitive market. So, that’s basically what it is right. So, as I said, for all the orders what we had bid and what we are executing and behind the backlog, the hedges are in place. So, that means that something which has already been offered, and we will have to execute that. Now going forward, it’s a play of how the market determines the price keeping in view, the commodity volatility, and that’s how our business leads that

Only one question, have you provided for the large order and base order breakup for the quarter?

TK Sridhar

Actually, if you look at ABB today. So, large orders is something which we always have a larger number, if you want to just understand what is the project orders which are sizable in nature say above 100 crores or something like that, the large orders are flexed up only 250 crores in total order book what we have.

Sir, my first question is on our railways and Metro product portfolio. What would be the contribution of these segments in our overall sales. Also, if you could bifurcate these railways and Metro sales between motion and electrification segment, then that will be very helpful. Also, as per my understanding with the divestment of turbocharger business, we now don’t have any A Illi relevant offerings from the process automation segment for railways in metros so if you could elaborate on all these points, it will be very helpful sir.

Sanjeev Sharma

So, you’re absolutely right on the turbocharger side, yes turbocharger was part of process automation division, and that we have at a global level we have separated that as a company and same thing will happen in India as has been announced. The process automation doesn’t have direct offerings to railways anymore, because of the turbo chargers. Now, our offerings from EL and MO are strong into railway and metro. So, I’ll invite the comments from Sanjeev Arora in terms of what is the outlook and the portfolio for motion for railway and metro and what percentage of motion business is metro and r

Thank you, thank you very much for all the participants in the call both from the investor side as well as the management side. And as I close this call wish you all a very Happy Independence A Illi Day, 75th Independence Day that’s very important we celebrate as we give some strong set of numbers. Thank you very much.

Management

ABB India Limited Plot No. 5 & 6, 2nd Stage, Peenya Industrial Area IV, Peenya Bangalore 560058 Karnataka CIN: L32202KA1949PLC032923 https://new.abb.com/indian-subcontinent

Management

Speaking time

Sanjeev Sharma

Moderator

TK Sridhar

T K Sridhar

Puneet

Sanjeev Arora

Ankur Sharma

Harshit Patel

Ravi Swaminathan

Amit Mahawar

Advertisement

Opening remarks

T K Sridhar

Ladies and gentlemen, good morning to all of you. Welcome to the Q2 Earnings Call. We want to take you through the results of Q2 and give you a good insight of what is there coming and how the division have all performed. On the call with me is Sanjeev Sharma – Country Managing Director, and then have all the business managers Kiran Dutt representing, EL, Sanjeev Arora representing Motion. Unfortunately, we have Balaji traveling out and so we don’t have anyone PA, but we will manage that. And also, we have Subrata Karmakar, representing our Robotics. So, without wasting more time, over to you Sanjeev.

Sanjeev Sharma

Thank you, Sridhar. Good morning to all of you. Thanks for joining in for ABB India’s, April to June quarter call. Most of you know ABB and you have been following us for a period of time. You have familiarity with our portfolio. But just as a reminder, ABB has been present in this country for over a century and we have been manufacturing here for over 70 years with our core portfolio in – electrification, which essentially deals with substation to socket products, enabling safe and smart and sustainable electrification, be it cities, buildings, or infrastructure projects. Motion which represents the core of energy efficiency portfolio of ABB, with electrical motors, generators, drives and associated services, including the mechanical power transmission products. These solutions, if you look at ABB portfolio, are a major part of our revenue stream. Process automation, which is the process control system catering to the solution for process and hybrid industries, including the process c

T K Sridhar

Thank you Sanjeev. This is one of our, I would say, strong quarter as we have performed and we still moving in the right direction that we want to remain credible. But we want to make sure that we have a more consistent performance and focus on the basics of how to run the organization with more sustained performance levels. Our focus what Sanjeev was saying on the 23 market segments by the 20 divisions what we have, they started to yield some good traction. And that’s how you see, and robust quarter based on orders, on revenues, as well as the margin expansions what you see. Total orders received for the quarter was 2767 crores which talks off 64% growth quarter-on-quarter. But while I say this, we have 20 divisions business units within each of the segments. And the information that I have, shows traction in each and every business division. So, that means it’s just not in one division or one business area, which is propelling the growth, it is basically growth by all the business di

Advertisement

← All transcripts ABB stock page →

ABB India Limited

Market Movers