ABB Q3 net up 71% at Rs 36 crore

The net profit goes up as localisation, supply chain efficiencies kick in

ABB India, the power automation technologies provider, has reported a healthy 71% growth in its third quarter net profit to Rs 36 crore for the quarter ended September 2013 as compared to the corresponding previous quarter, riding primarily on heightened efficiencies and increased localisation.

This sharp turnaround has been acheived despite a 1.3% drop in revenues to Rs 1,762 crore. A senior official of the company said that this is effect of a series of measures which ABB India implemented in looking at how it can bring down material costs as compared to the sales.

"The ratio was at 74% and we have managed to bring it down to 69-70% of our sales primarily driven by localisation efforts and driving sharp focus on supply chain management. We will be able to drive it down further to around 65%," he said.

ABB India MD Bazmi Husain said that savings from these initiatives have helped balance the adverse impact of continuing price erosion and weak market condition.

“The economic environment in India remains muted and capex investments continue to be deferred. While the renewed momentum in reforms is a welcome measure, the markets are yet to realize its tangible benefits. In the meantime,we continue to pursue new growth opportunities, indigenize our portfolio and innovate to stay ahead,” he added.

ABB India received orders worth Rs. 1,762 crores during the quarter ended September 30, 2013, registering a 5% growth over the order intake of Rs 1, 679 crores for the corresponding quarter in 2012.

Emerging sectors like renewables, exports and rail continued to grow faster than the conventional market segments. With this, the order backlog stood at Rs.8,252crores atthe end of the quarter as compared to Rs.9,062 crores during the same period last year.

However, a significant pain point for the company is the vector of receivables which is at a good Rs 3,000 crore which the company is trying to recover.

"The customers are facing various problem in the market and so the payments are getting delayed and hence we are having to borrow for working capital requirements. The debt is now at around Rs 800 crore and the finance cost has shot up by a good almost 2.3 times to Rs 27 crore during the quarter," the senior official of ABB added.

ABB India's stock gained a healthy 2.7% to close at Rs 644.70 per share on NSE on Wednesday.