Thank you very much. The first question is from the line of Renu Baid from IIFL Securities.

Congratulations, team, for super performance this quarter. My first question is to understand - if you look most of the short cycle or the base orders, as you mentioned, there have been some softness. Do y ou think it is primarily linked to inventory destocking or slowdown ahead of elections in terms of base consumption? And at the same time, you also highlighted quite an interesting pickup in large order flow, some delays in decision making but orders are on plate. So how should we look at the mix of movement of orders, both on short cycle and long cycle both with respect to investment and the capex momentum? That's the first question.

Okay. So Renu, so let me start with that question. Let me put a context and afterwards, we have the leaders who will throw more light on it, okay? So what we see today, I think in the last five quarters to six quarters as we have seen, base orders have predominantly been the driver . So that’s what we have seen. And now off late for the last two quarters, three quarters, we saw large orders also picking up, and that's also predominantly coming from process automation and in this quarter, from motion, right? So when I say motion large order, it's not a system order per se, it's a large product order for an higher quantity, which is actually qualifying to be called as a large order. But having said that, how is it playing out in the market? While we see large orders, our focus is to make sure that we grow with base orders as our priority. So that's where we see. And that's across all the divisions as what we are at this point of time witnessing. Now coming to the different markets, what we see , of course, when you go back to those markets of enhance, grow and focus. But I think it's a very interesting sort of story, right? And we have been repeatedly saying this, that data center, electronics and everything have been in new segments, which are growing and giving orders to all of the businesses at this point of time. And food and beverages, which used to be very less, today as a part of our revenue, almost 7%. And automotive as well as building sectors have grown. So I mean this is basically the big picture view, what we see with respect to different segments. While our core segment, which is steel, cement, oil and gas, they also now have started to pick up on their capex spend, and that's from where we are coming. So what we are seeing at this point of time is, while the number of opportunities in the market would be increasing, there could also be a price stabilization, which will happen as it goes forward. Because the metal prices are stabilizing and also reasoning. So I think to compensate for that is where we look for new customers, new avenues, so that we could maintain the bottom line as well. Sanjeev, would you like to add something to this? Any color, Kiran, you would like to give from EL and MO, Sanjeev?

Yes, I can give some inputs. This is Kiran here. I think Sridhar covered most of it. Only a few thoughts there that the base order continues to grow. It's not that there is challenge in the base orders before, there could be some challenges in terms of the projects which gets concluded, maybe some of them have pushed into Q4 as well. That is something what we see. What we also see additional is specifically for the base orders from Tier 3, and Tier 4 cities. I think a lot of orders are coming in. So that is something which actually gives us lot of energy to work upon. And as Sanjeev explained, we are getting into the customers in the Tier 3 and Tier 4 cities as well. So that is also giving us a boost in terms of orders for base orders.

Secondly, if you look at the export numbers in absolute terms the last couple of quarters have been flattish, while the global markets have turned pretty weak in terms of actual investment in sentiment. So is it applicable to increase in the product mix an d more production on the export side? And what will be our growth outlook and strategy for exports, not in percentage of revenues, but in absolute base?

So exports, we said it is 10% of revenues and 11% of orders, right? But if you see the growth in revenues, we are doing 31 % of the revenue, which is coming up, right? But the growth per se in terms of export and absolute value, we see definitely around 13% to 15% as an absolute growth. But that what is basically taking that percentage down is more of an absolute value of domestic market, which is outweighing the growers market. So having said that, I think a focus on exports from EL, from MO, as well as slightly to extent of PA remains unabated. But the good part is that when there was a situation when we have to go scouting for exports, today, I think exports come to us on their own with GIS facility and everything there. And also now that the local markets and the domestic market is so interesting, we would like to focus our efforts on local markets and be relevant over here. Yes. Would you like to say something, Sanjeev?

So, Sanjeev Arora this time. So I think Sridhar, thank you for that. And see exports, yes, you're right that we see that the global markets are not as buoyant as we see the local. But then that ’s also an opportunity , because you do see that the countries are more relying on having a good quality product at a reasonably affordable price. And that gives India and us an advantage to put in our technology at the right price there. So I think that can also work as an opportunity for us going forward. So that's my take. Thank you very much.

Next question is from the line of Amit Mahawar from UBS. Please go ahead.

Sanjeev and Sridhar, congratulations on consistent new benchmarks on profitability. So my first question is in this quarter, we've seen some slippage in energy, auto and PA. On an adjusted basis, what would have been the growth had we seen that? And also, you have provisions on receivables. So what is the adjusted profitability? That's the first question.

So let me take this question while if Balaji wants to comment and put in some numbers, it's okay. That's fine. So I think the PA did INR 529 crores of orders in this particular quarter. They used to do roughly INR 700 crores of orders for the last two, three quarters. The gap is something what we missed and that's missing out because of delay in decision of orders. And that should sort of come out. So, when we forecast large project orders normally, it always has a bit of an 19-20 model. So that's how it happens. But I think are the opportunities there in the market? Answer to that is yes. So, we don't see that as a factor to be concerned about. So Balaji, would you like to comment?

Thanks, Sridhar. Just to add, I don't want to give a number, but then definitely, it's more on delay in approvals that certain orders could not be booked and the teams are on it to get that in place. In comparison, I would say that had we taken in those orders on a comparable basis, we should have been slightly ahead of Q3 2022 on a comparable basis. Just, to give an idea about the ones that slipped in terms of timeline. In terms of visibility, both on the base orders and in terms of large order, there are quite good opportunities in the short term and year midterm as well.

Thank you. So your second question was regarding the profitability, right, Amit, if you could repeat the question again, please?

Yes, Sridhar. What is the recurring adjusted margins if you would, just accounting for the provisions you've made in this quarter?

Okay. So I think we just did not make provisions for the sake of making provisions. It's because we had a reversal last time, which has, which is not present, because reversals or recovery from the customers don't occur every time. So I think if you remember, we were dealing with certain electrical balance of plants, orders or the business which was left by PG, and which was with us. So we had actually provided for those particular receivables basically the model of accounting and conservative model. But as we continuously say, even though we provide, we continue to work on it and make sure that wherever there is a possibility and we h ave a fair chance, we get back those money. So the last quarter, we had an income or a reversal because of this particular efforts to what I certified. And this quarter is a normal quarter without the need of reversal for anything. It's a normal provision which happens only based on the receivable aging as per the accounting policy.

Fair point. Second and last question is more on mobility since this quarter, you have railway as a focus. Let me focus on that. On the propulsion capabilities and capacity of ABB in Indian plants, where are we in terms of the capacity market share ? We hav e Megha, we have Bombardier, we have like two, three guys who have global scale including ABB in India. And you actually mentioned about a significant number in the next seven years that India is going to spend in railways. And propulsion is one of the largest subsets. So can you just maybe Sridhar or somebody else can throw some light on qualitative aspect of where ABB stands on capacity because the step -up in demand every year is going to be significant vis-a-vis what we've seen in railways and propulsion and new type of technologies . So, any color there is useful. Thank you.

Sanjeev, would like to go?

So thank you. Thank you for the question. And I think we are all excited about this journey. So this is Sanjeev Arora. So I think you're right. And let's understand how we operate. So the names that you have taken are the OEMs, whom we serve. And definitely, the expansions, the orders, what we are taking, have a definite expansion plan in place. And you will soon hear from us in coming quarters on how and when we are actually opening up new facilities and also enhancing our current facilities to cater to this. So you're right, and the investments are lined up and planned well. I hope I was able to answer you at this point of time.

Yes. Sanjeev, my only point is assuming the last two years of activity, we've seen a very heavy awarding in one of the largest global numbers that India has seen maybe is on propulsion in terms of large contracts and supplies will soon start. So how is ABB placed capacity-wise? And is there a risk to the industry where capacity might not be ready to meet the next three-year demand to start with? That was my contention, actually.

See, that's what I was trying to explain that if ABB is taking that order - First of all, the bottom line is, we only bid if we are confident that whether we'll be able to meet the customers' delivery. So that's clear. And these are long -term projects. And it is not that it's going to be a very short cycle. It's a long project, and we have a definite plan. As far as ABB capacity goes, whatever project we bid, we will make sure that it will be delivered in time. But regarding the general industry and the orders taken by other people, I wouldn't be the right person to comment. But as far as ABB goes, be rest assured that whatever we take, we commit to the customer we deliver. And we are expanding as I told in my previous comment.

Next question is from the line of Mohit Kumar from ICICI Securities.

Congratulations on a very, very good set of numbers. So my first question is on the mobility margins, which has improved materially in this quarter. Is any large order which got delivered? How should one expect it to revert to the mean in the next couple of quarters?

You're talking of Motion, right?

Yes, motion.

For Motion, PBIT% last quarter was 14.5%, Q3 ’22 was 10.6% and this quarter was 19.4%. So that's basically the question. So Q3 2022, I think one was the mix, definitely the mix and the price realization advantage, which has played out and also the positive impact of forex, which has actually factored into the PBIT itself. From a forex impact on those particular results, it's more driven by the capacity , the margin on the orders and the mix. So this is broadly the thing. So I mean, they have a very clear focus on service. So service as a business division is rendering better revenue scale.

And anything on the expectation this will revert to a mean kind of number?

I didn't get you.

Is it fair to assume that this is stabilized at 15%, 16% rather 19%, which is simply very high?

We don't know. We do not predict those particular numbers at this point of time because we have a lot of backlog, and we need to see what sequence of that particular backlog is executed.

On the Motion, Sridhar, my second question is, I think this quarter, we have won a large order. This seems to be particularly from Vande Bharat. Is it fair to assume this order is executable over the next four years to five years and not over one years to two years. Is that a fair assumption?

I leave the judgment to you because it's an information which is more internal to the organization, we don't share those details in integrity. I'm sorry for that.

Next question is from the line of Ankur Sharma from HDFC Life.

Just on this rail order again, it's for the Vande Bharat. So I assume the value would be around INR 300 crores, INR 400 crores, but more importantly, is it for the Russian customer. Is that right?

So, on the motor division, especially on the LV motors, some of your peers, including CG, are talking of a slowdown there, some channel destocking, etcetera, and that maybe continuing over the next few quarters. I'm not sure if you spoke about this, but how are you seeing demand, especially on the LV motor side?

So we have Dr. Sanjeev Arora here. So he will be able to do this.

So thanks for the question, and I think good that you raised it up. See, let's understand that the pent-up demand is over. And the other part is that a lot of orders are also re -export from our OEMs, and if the global scenario is softening up, even though our local demands will remain, the overall picture will reduce. And there is a lot of exports from India, when you come to general machinery market, pump, compressors, you can name another seven applications more. So overall impact of global economy will be there. India is a global player. We will have to have that brand. But domestic part, I would still say that it would not be that pensive mode, but global demand can drive the overall demand a bit down.

Okay. I understand. Just one last one quickly on the process automation, where we saw this big jump in top line, I think 90% plus. But clearly, the order backlog growth is just about 10% on a Y-o-Y basis. So is it just a base impact? And therefore going forward, it kind of gets normalized? Is that how we should look at it? I'm just trying to understand this big jump in revenues when backlogs are up just about 10% on process automation?

Just to give you a logic on that Ankur, I think process automation started with a low order backlog base a couple of years before, right? And they try to build on this particular order. But the revenue execution was faster than the order intake. So the consumption of the revenues from the order received and the backlog is faster. And therefore, you see only a 10 % growth, in the order backlog. Whereas when you look at MO and EN , you see a larger percentage growth because they have a consistent order backlog based on which they are adding orders and executing revenues.

The next question is from the line of Aditya Mongia from Kotak Securities.

I just had a single question, and this was more on the operational EBITDA margin that you talk about. If I see the Q-on-Q or the Y-o-Y trends in that number, they are very different from your reported numbers. For instance, from 2Q to 3Q, there is a decline in operational EBITDA margin versus what the reported numbers are. Could you give us a sense of what adjustments you are making in that number?

I didn't get your question. So if I look at the operational EBITDA margins, right? So, for Q3 '23, as per the press release, we did 13%. Q3 '22 as well. And Q2 '23 was 13.6%, right?

That's true.

If I look at the PBIT margins for instance, 10.8% last year same quarter has become 17.5%, even though the operational EBITDA margin is only up from 12.1% to 13%. In th at sense, I wanted to get what adjustments do you make which makes the difference at an EBITDA level, operational EBITDA level from a margin perspective very different from your PBIT movement?

Very good. If you have the press release in front you, we have defined what is the operational EBITDA at the end of the press release - you remove out what is before interest, taxes and acquisition, operation with the income and operation, excluding acquisition -related amortization, restructuring related and implementation costs, changes in amounts recorded for our obligations related to divested businesses, the estimates and mark-to-market. So there's a whole set of definitions, what we ha ve to do to normalize to come to operational EBITDA, which reflects the operating margins of the business on a like -to-like basis without having an impact of forex fluctuations, restructuring fluctuations and only onetime impact what happens.

Understood. So essentially, this is a better number to focus on. That's as much as I wanted to clarify.

Next question is from the line of Jonas Bhutta from Aditya Birla Mutual Fund.

Congratulations, Sanjeev and Sridhar on a greater set of numbers. Just one question on this mobility order. Is this one of the many portions of the same order - in the sense, is this going to be a recurring order as the client starts manufacturing the trains? Or this is the entire scope of the order through the life cycle of that project?

So as far as the current detail goes, it's the complete order for complete life cycle at this point of time, and we supply the product portion of it, yes.

Next question is from the line of Amit from Prabhudas Lilladher.

In your initial remarks , you talked about deeper penetration in Tier 2, Tier 3 cities, and you're getting very robust response from that. Just wanted to understand Tier 2, Tier 3 cities, if you could share us what is the contribution in EL and MO from Tier 2, 3 cities this quarter or 9 months?

We do have a number, to be honest. But that's a very sensitive number to share. So, I hope you would like to have the same margins and supplements for the coming quarters also, right, or maybe. So therefore, we would prefer that it's more internal.

Sure. My second question on the superior realizations which you have mentioned in electrification business. Just wanted to understand if you can throw more color where we got this from? And is there any trend which we are witnessing, which is leading to th e superior realization here? Is it a product mix or something?

Okay, I can answer that. Kiran here. Price realization happens in 2 parts. One, in terms of technology, and one in terms of, let's also give some credit to our sales colleagues who are doing a great job. The technology, what we supply is current technology, which is quite, quite superior than many of our competitors. And that's giving us an edge in terms of what we supply to the market compared to any other competitor. So that's one of the reasons. And for sure, our sales colleagues are doing a great job to get this done.

Sure. Sir, last, if I can squeeze in on the gross margin. Would this level be sustainable? Anything, any color you would like to share on the gross margin going forward in coming quarters?

So let me take this question, Kiran. So it is gross margin and it's a bit of sensitive topic. So I think the gross margins, which we have today, which has some products of quite a few actions what happens in the graph, right? It's a capacity utilization. It's a price realization as what Kiran was alluding to. And also it's an average of the mix, right. So these are the three topics. And as I was mentioning earlier, today we have an advantageous situation of execution of those orders, which were secured at the time when the prices were high, but we were able to negotiate with the vendors better and create a better NPV for the organization. But now, going forward, the gap will start to close and because they are all becoming now stable, right? So that being the case, I think we cannot give you a sort of a directional view on where we would like to go to on the margin per se. But I think we want to definitely believe at the company level in the PAT% of more than 10% as what we said is what we would like to be.

Next question is from the line of Harshit Patel from Equirus Securities.

Sir, if I look at our margin profile of last few quarters, I think much of the expansion has come from the operating leverage rather than the gross margins. I mean gross margins have definitely helped, no doubt about that. So is it the case that we are now getting decent level of economies of scale in many product lines, which was not the case earlier now with the increasing revenues and therefore, a very good cost absorption is happening, which was not the case, let's say, 2, 2.5 years ago. So would you agree that this factor would have helped margins more, vis-a-vis, localization that we are doing at the moment?

Okay. So far, Sanjeev Sharma has not gone on air. So this will be the concluding remark for Sanjeev Sharma.

Yes, I think you're right. It's the mix of factors which contribute to the profitability. So, you have to optimize the whole value chain to squeeze the superior profits. If it is based on only one factor, then it is not sustainable. And I think our journey in the last 2, 2.5 years has been to look across the value chain that is what kind of a gross margin we are booking the orders. Then what kind of execution cycle we do in terms of no slippages in execution, only positive slippages. Then productivity measures that we take in our factories in terms of ability to execute the orders without distorting the market price with more efficiency at a lower cost. And then introducing a lot of automation in our factories so that we are able to do far more from the same assets. We are able to produce more from the same assets by means of automation inside the plant, also developing our suppliers for localization and also outsourcing so that we are able to produce more from the same plant. So all these taken into the profitability equation. And also our ability to deliver services very effectively post-delivery, during the commissioning, installation and also after work - That engine is also working for us and attracting some better margin orders from the overseas market. So there are a number of elements when you put them together, they start playing. And of course, capacity utilization is one effect, but then I mentioned to you about other facts. And last but not the least, the supply chain, how tightly they manage the increasing volumes and they take the effect from the suppliers with the increased v olume that we are giving to our suppliers. Sometimes we have a pre-agreement with them, higher volume means lower cost. And sometimes, we have a capacity to negotiate them around it. So if you put that across the value chain and sum them together, that starts showing up in the margin that we are declaring to you and to the market.

Understood. Sir, just a small follow-up to that. On the kind of factors that you have elaborated. So everything seems to be growing right for us. So would you agree that whatever can go right is going right for us and that is causing the kind of margins that we are seeing at the moment?

So I can say the same words I used for the Board presentation today this morning that ABB as an organization, all our 18 businesses are in a very good rhythm. We have very good and very high-quality leadership on each one of the divisions that we have and also the management structure on it. They're empowered to run their businesses in the relevant market segments. And also, they have excellent support coming from the global teams for expansion of the portfolio, localization . So we are in a good rhythm at this point of time, and we are also operating in a very supportive market. So if you combine all those things, these effects are quite normal in my experience.

As there are no further questions, I will now hand the conference over to Mr. T.K. Sridhar, Chief Financial Officer, for closing comments. .

Thank you. Thank you very much. Probably this is the first time since I've started this particular journey where we've answered all questions, right, and completed on time, right? Thank you for a very patient listening and interesting questions. And wish you all a very, very happy Diwali to you and your families, and stay safe and stay healthy. Thank you very much. Looking forward to talk to you in the next quarter. And thanks to all this management team, which was here, which have put in a lot of efforts to come here. Thank you.

On behalf of ABB India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.