The first question is from the line of Mohit Kumar from ICICI Securities.

Congratulations on another status state of results. First question on base orders sir, base order is slightly weaker in the first half. Are you seeing increase in inquiry levels going up post the election?

We did have this election as well as budget period coming. So I think they have a bit of a slowdown in the marketplace. But going forward, I think we can give you a more granular view from our business heads starting with MO. Sanjeev, the question is how do we see inquiry buildup going forward, followed by Kiran, Ganesh for ELDS and Subrata.

Yes. Thank you for the question and thanks Sanjeev for getting this opportunity to answer this. As we all know that now the government has formed that it's quite stable. Things are in the right shape. And the growth story of India is very much predominant still. So we feel that be it heavy industry, light industry, transport and infrastructure, all this piece where ABB is present in each and every segment, we have a strong conviction that this will show a steady growth path. Of course, there would be some cycles, some headwinds, maybe some global impacts, how the world is behaving, but I think underlying strength is for India is that we will see opportunities coming up as we move forward. So that's from my side, Sanjeev.

And same question for you, Kiran, for the EL.

Thank you. See, from my side, adding to what Sanjeev Arora said, what I would like to say is we did see some challenges in the building sector. And we have also had some informations where the building sector would have de -grown by almost 18% as a market i n terms of the pickup of apartments especially in the residential side. And that could be for many reasons in the macroeconomics, as well as it is also what we saw was some base order decrease probably due to the delay maybe because of budget and things like that due to elections. So that's what we saw in some of the sectors of the market. But what we see is also probably the Tier 2 and the Tier 3 cities coming up. So that's what we see on the positive side, which could pick up in terms of the base orders.

Thank you. Ganesh, from the Electrification Distribution Solutions side.

When it comes to the distribution solution, obviously, there was a natural hold of the delays due to the election and because the budget was not announced, because some of the infrastructure projects where government has to really clear the cash to the EPC people. But if we see to the pipeline, we see a very strong pipeline, which is coming from industry as well as the upcoming segment, and we can see an increase in the base order in the coming quarter if you look it at the pipeline.

Thank you, Ganesh. Subrata, from the Robotics, and on your segment which you cater to, how do you see the pipeline going forward? Subrata Karmakar From Robotics' point of view, I see that it's a constant growth in the market. I never seen because of election market was flat or going down and again going up. It is not like this. It's a constant growth. Still automotive holds major share of Robotics. H owever, I feel that small customer, base customers are growing. Number of robot sales in the Indian market has grown by more than 50% between '22 and '23. And I think that, that growth will be constant in coming years.

Thank you, Subrata.

Thank you. I think, Mohit, you got the sort of colour from all the divisions representatives, I think which is more comprehensive in a way.

Understood, sir. My second question is order inflow for us versus the group within India. Is that a market share inching as compared to group companies by Indian orders? Are you producing more products through Indians companies, so Indian companies are getting more share -- wallet share?

I didn't get your question, Mohit.

Sir my question is on the order inflow for us versus the group. Our number, 13% up, right, compared to group for Indian orders were 3% -- 2% up, right? My question is, is the market share inching us? Are we getting more orders from the global export orders but because you're producing more products indigenously? Is it the right understanding?

So I think we haven't established any correlation, and we don't pay too much attention to that because that's more of a flow, which happens based on how the group companies and the global players may be exposed, right? So other channels would be exposed. So what we can confidently say is about the India numbers, how we are exposed directly to the market. And those numbers are more predictable from our point of view. So we haven't established a correlation, maybe this is something we have to think about.

We'll take the next question from the line of Sumit Kishore from Axis Capital.

My compliments on a very strong quarterly performance. Two questions. The first one is, over the last 5 years, the EBITDA margin reported by the MNC parent were higher than ABB India. Over the last couple of quarters and particularly Q2, ABB India EBITDA m argin was higher than the parent. Your comments on the sustainability of this phenomena given ABB India pays royalty technology fee to the parent and there are imports that ABB India does from the parent. That's the first question. The second question is, we've seen large orders and long cycle orders from energy and core industry segments, which contributed to order inflow during the quarter. Could you give us a sense on how is the mix of base orders and large orders in the order book roughly? And what is your sense on sort of what kind of execution –schedule does it entail across this and large orders in your four reportable segments?

Sridhar, you can take the second question first.

I think I have already replied the second question, but for the sake of benefit, I said that the order backlog, which is roughly about INR9,500 crores today has 40% to 45% made of long cycle and project progress. That's number one, right? And that gets executed over a period of time. And normally, the execution of projects normally hover on about 15 to 18 months, depending upon to which sector they cater to. And the balance 55% to 60% is short cycle order and that go over an execution period of 6 to 9 monthly, roughly. So I think that's how we see most of it.

On the first question about group and ABB catching up and exceeding the performance in India. So I think both are not comparable because group is exposed to all markets of the world, and they have to see the cyclic nature of China, Europe, Asia, Americas and we take at least some total effect of whatever is happening across the order flow. And it's a credible performance relative to where ABB Group used to be and our ABB Way, which was implemented by our group CEO, Bjorn, who of course, now has moved on and new CEO is installed from 1st of August. I think he did a credible job globally, and we are all thankful to him for the discipline and the focus that he brought for us. As far as India story is concerned is, as we say, it's an India story. It's an India story is about emerging market story, which should be seen in its own merit and its own isolated effect. And here the results that we are getting now for last 3, 4 quarters, they are not made recently. They are in making for last 4, 5 years. If there's some total or number of things that converge, so that you get an effect out of operation, and one is that you get good quality orders from the market, you have much more broad -based market segment participation, you have much more broad-based geographical participation due to higher localization as we go, we will expand your portfolio of offerings in the market and you also make sure that all the localization being done by our OEM partners, our machine builder partners, we participate in them so that countries import will start reducing. So it's a kind of a combination effect, and on top of it, the productivity measures that you take in your shop floors and you continue to reduce your cost and also ensure that you make only meaningful investments so that the businesses are able to expand m eaningfully and participate in the market growth and the volume growth. So I think when you align all these value chain elements in a good way, and we are lucky, and we are very thankful to our leadership of the division, each one of them have been doing it very well, and they have taken the opportunity in the last few years to reach where we are. So it's –a collective effect of all the work that has been done in past. And market is very supportive at this point of time. There is a much higher appreciation of higher quality products in the market relative to past wherein the customers used to compare high - quality products with the cheaper versions. But post COVID, the mindset of the customers have changed and they look for more reliable products rather than cheaper products. So that's where, again, it is sweet spot for us. That's why you have seen 27% CAGR growth in the last 3 years. And when you process them in the volu mes and the capacity you have, and you put more productivity in the shop floor, you start seeing the rolling results into the bottom line. So that's how we read it how the situation is.

Just adding to what Sanjeev mentioned, I think we've also seen a consistent growth in service revenues, which is very important for us to have the margins, right? So that's something which was a bit dull due to COVID and other topics, which are in the coun try, we had to deal with. Now that we have all passed that, I think that is also a very effective contributor. And just for information, we have dedicated service business units in each of these particular divisions, catering to the installe d base of the country. So therefore, the focus is very sharp, very widespread across the market with more innovative solutions. So that is something which is aiding the profitability also.

A lot of customers are through opex cycle, which affects the service or upgrading their installed base, that shows up in our service business, which again is a high-quality business for us.

The next question is from the line of Jonas Bhutta from Birla Mutual Fund.

Congratulations on a great set of numbers and not just this quarter, probably now 4 quarters running. My first question was somewhat similar to what the previous participant checked and I'll try to sort of approach it from a different angle. So if you can s ort of talk about on which products particularly are seeing such a superior pricing power? And I would appreciate if you can give a slightly more nuanced understanding to the extent possible on the sales mix. Because if I were to sort of rationalize all the reasons mentioned in the press release for higher profits, something does not seem to add up because your service and export revenues as a percentage of sales is the same as last year. So they have grown at the same pace at the consol entity has grown. Second, your scale efficiencies or operating leverage is not visible because employee cost and other expenses growth in both these line items are higher than your sales growth this quarter. So that effectively leaves us with largely pricing power as commodity costs have largely remained flat in this period. And the nuance that I'm sort of looking at is because, sir, on the Process Automation side, the presentation mentions that given that energy as a percentage of sales within that segment was higher, and hence, we've been able to reflect this kind of margins. Our understanding was on the energy side, there's another MNC that sort of was a market leader. So have you sort of gained market share? Have you localized? So some more nuanced would really be appreciated across at least EL, MO and Process Automation, longest question, but I would appreciate your answer on this.

Jonas, I think to maintain the profitability and the performance of the company, it is important that we have the secret sauce with us, number one. So we cannot be diverging information by business, by divisions and all the stuff, it is the interest of all of us, okay? That's number one and we maintain it very consistently, okay, number one. And number two -- but I think I gave you a bit of a colour as to why did you did a nice pickup obviously in the P&L, looking at the expenses and all the stuff, right? The major contributor, if you look at it from the structure of the P&L, you could see the largest gain has been due to reduction in the material cost, where we have moved 6% of almost 61%, 62%, 63% levels to 57%, 57.5% right? And I did touch upon this as to how did we gain this material cost improvement. I did say that it was a combination of both externally led actions and internally led initiatives as well, right? So I said that from externally -led actions with respect to accessing different markets, different customer base and also with the variety of the mix of services and exports and the margins thereon, we've got almost 300 basis points or 350 basis points improvement right? So 3.5% over there. And then when it comes to what are the internal-led initiatives in terms of supply chain, in terms of localization, capacity leveraging and all these stuff and also looking at how do you mitigate the risk on projects and long -term service orders, right? So there, we gained almost another balance 3% right? So I think these are the factors. So now will these factors sort of play out the same going forward, right? I think there is a limit to which you could always expect this particular improvements to happen. What will remain definitely, the advantage of a higher capacity, the leverage we should get because of more revenues and the better cost ratios we have. So I think going forward, this would sort of stable out in an environment at what we are playing today.

Got it. Sir, my second question was on the share of IE3 and IE4 motors in our CY '23 sales and in our first half. So what percent of our Motor sales largely comes from these two product lines given that we are further expanding our offerings here, even a rough cut ballpark number would help? And that's my final question.

Sanjeev Arora, who's here, is eager to reply to your question. So he will give you all the stuff.

Thank you. First of all, this subject is very close to my heart. And our customers have shown a great confidence in our Motor business. And if we see more than half of our production, that means roughly 52% to 53% of our production is of IE3, IE4 motors, even though as per norms in India as per minimum efficiency norms, we are still at IE2 as a country. And this clearly shows that we are serving the customers, their causes of sustainability, we are really partnering them in their goals of energy saving as well. So giving you the prospective of production and means anything else if you want to ask, please go ahead.

The next question is from the line of Amit Mahawar from UBS.

Congratulations on great structural journey on margins beyond you can see on the stable cost and benefit, et cetera. First question is on capacity. We have some major segments, right, like power distribution units for data center, propulsion sports, high speed and metro, isolators and circuit breakers for a lot of new applications, including hydrogen that you highlighted. Next 3 to 5 years, when we plan our capacity creation which are the areas where we will see maximum capacity creation, if you can highlight? That's my first question.

Just to give you an overview, we are in the 74th or 75th year of manufacturing in the country. So that means we have a long time to set up the manufacturing facilities. And it is always ahead of the curve, what the market is asking for and what we need to offer. So what happens is our manufacturing expansion is always incremental in nature. So whatever we expand is always either within the same space, you have more better productivity measures by automation, robotics, et cetera, so that we can produce from the same space more. That's one. And the second is we continue to sectionally expand the plant in the same location. So that's the kind of a nature of expansion that we have been doing. But going forward, we now are reaching the point given the growth rates we have seen. And at this point in time, all the divisions, when we talk to them, they are quite okay for coming years, right? So we have the capacity that we need. We are already look ing forward for next 5 to 10 years. And there, there are certain divisions who want this capacity expansion. So you may have seen some announcement that we did yesterday, wherein we are adding a plant here in Bangalore, wherein the units which were relati vely small earlier in our business, they are expanding at a much rapid pace. So we are providing the much larger space and more sophisticated facilities, not only for Indian market because they also have got mandate to do the export. So that's the one part, which is very clearly which we have gone forward. Otherwise, other areas in EL, we have a continuous upgradation and expansion in Nashik with ELDS. Also in ELSP, ELSB, all these are based on the market requirement and gap that we see now and next 3 years, I think those expansion plans are already in place. And same thing goes for MO . MOTR has expanded substantially in the railway and metro segment, motors, low - voltage motors, medium-voltage motors, all of them are expanding. Process Automation, as I already mentioned, that they are expanding in the new location. And Robotics, we already invested quite well in 2020. So we already have a state -of-the-art plant there, but then we always keep investing, getting closer to the customers as well as making sure that we are able to serve them more effectively. So in all, we have plan in place mostly incremental, but wherever the capacity expansion is required by scale, there we go for the newer facilities and all that.

Just adding to what Sanjeev said, I think you're all aware that we still have land banks in Baroda as well as in Faridabad, right, so which is definitely a stage where we could add capacity. And the capacity expansion would have been announced for PA will help in unlocking space for the expansion of the MOTR as well. So I think the traction in this thing also. So that could probably answer your question with the large impetus on railways and the same order inflows from them, how do we cater to that, and this would help us doing this. So there's sort of churn of the volumes between the locations will help us figure out how we could address the growing market.

Very helpful, Sanjeev and Sridhar. And second question is coming from the group now Bjorn had a very fabulous tenure, which also impacted ABB India materially beyond what the India story management has driven beautifully. New management seemingly is contin uing the strategies of the last CEO. But anything that you want to highlight in terms -- so the way ABB operates is very different from players like Siemens globally when they think of global factories, division-wise versus segment wise ? Anything that, Sanjeev, you want to highlight on the management -- message from the new management, which is worth sharing here?

So as far as the credit for performance, we give it all for India as well as group to Bjorn. We were just the holder of that strategy and executor of it as disciplined soldiers here in India. And I think each one of us embrace that change. And I think India is seen when Bjorn used to visit India, he saw, and he commented that India is expecting example of the philosophy he wants to promote within ABB. And that's the reason he, last year, even had the Board -- ABB Group Board came in to see how ABB India operates and empower as well as focused manner. So Bjorn was all about performance. And he had three tier thinking towards the businesses. That is all of our divisions, that you should be stable first. You should be profitable, second; and when you are stable and profitable, then you can grow. And I think that discipline he kept for the last 4.5 years, and that's where you can see all the global divisions, their allocations and their focus was getting the stability not only overall, but also in each location and each business location, you have to have stability, profitability and that you do either by portfolio, by management or new expansions or also by taking out certain portfolio within the company which are not core to us. So all those things were done. Now given that we have our colleague, Morten Wierod who has taken over a CEO from 1st of August, and he was, by the way, also Chairman of ABB in India. He frequents India very well. He knows India very well. So we do feel that going forward, we will have a natural support available from the Group CEO. But the Group CEO, as per the Chairman's statement, Peter Voser, he has a mandate for growth. So he has been given a mandate that the growth is the focus for him while maintaining the profitability that group has achieved and growth, in last Capital Markets Day, as you have noted, they have already given the margin corridor ABB Group wants to maintain. And on top of it, the mandate for the new CEO is growth.

The next question is from the line of Shrinidhi Karlekar from HSBC.

Congratulations on good set of numbers. Two questions actually -- What I want to know sir is what percentage of your backlog is really a fixed price contract? And how much is the price variation? And the second related question is, sir, would you say the part of positive surprise you saw in the material margin is due to commodity stability or commodity deflation from the point of order booking to the point of execution of sales, as well as probably due to stability of Indian currency from the point of booking of the order to the execution of the order? Otherwise, you would have built some deflation? Those are related questions.

I, again, go back to the colour which I gave you on the split of the order backlog between long- term orders and short -cycle orders. So long cycle orders are definitely, I said 40% to 45% of backlog comes from projects and long cycle orders, which as in mechanism have the price variation process built in because it goes over a long period. So this is basically normal commercial terms and conditions. But when it comes to the balance, it's 45% to 50% is orders, which comes from short -cycle orders and which gets executed over a period of 6 to 9 months. I think there in very few cases, we have it, but majority of them are fixed-price contracts.

Okay. So would you say it is base orders that you do, it's still a very large portion? Some of the margin benefit that we have seen on the material margin is partly because of time of booking, the commodity what were there at the time of booking and how they have been stable or deflating to the point of execution?

Yes. I think we had said that in the past as well. I think the current margin expansion also due to advantage of higher price at which we book the orders because of the raw material prices are higher, and basically on the fixed price contracts, what we're having. And as they stabilize, you get to have an advantage coming into the P&L account. But I think now that the prices are stabilizing at this point of time as what we see, that particular difference between the order booking to the execution time advantages will start to thin down going forward.

We'll take the next question. Ladies and gentlemen, this will be the last question from the line of Aditya Mongia from Kotak Securities.

My question was more kind of comparing the amount of value creation that you can do in the Motion segment versus the Electrification segment. I wanted to get through a sense that eventually when things kind of even out on margins. Would Motion segment, bec ause of its value addition, higher services component, energy efficiency be having higher margins versus the switchgear-driven electrification segment? Or would you have a different view?

We have a different view. Both Motion and Electrification are nearly same size. Electrification, now being the largest division and closely followed by Motion. Now you may have heard us saying that they follow this pattern of a fast moving industrial goods background. Just like you are used to FMCG, I think we –a following a FMIG model, wherein we do certain products, which are -- we call it as ETO, engineered-to-order, wherein we use our own products to create a subsystem and supply. But larger portion of it is moved as a product into the market. And then you have the value adders with our partners, OEMs, machine builders, who create value in the market. And in a market which is growing rapidly and as India is growing and you have an expansion taking place geographically and in multiple market segments at the same time, these businesses tend to do quite well. And these are high -quality products. And most o f our customers are not only supplying to high -end, very high -quality, high -end supply end users, but also they're exporting a lot. So what happens is that the price point that is realized by us, there's a willingness to pay for what we supply in the marketplace, right, which is very different from the retail type of participation you do in certain market segments. But we are talking about mostly our industrial customers, their appreciation of our quality and reliability, availability locally as well as ou r ability to service them and maintain their product, I think that has a kind of a perceived preference for our portfolio. So as the EL, MO is concerned, we do see they will continue to perform this journey going forward. But we are not alone in the market. We see the similar trends with the others as well who are participating in this market segment. And I would say this is a n early cycle of India. Not many people have a comparative, but I have a comparative in my career wherein I saw China grow right from mid-90s, 95 onwards. And I see India is almost lagging 20 to 25 years where China was 20, 25 years ago and we still have another 5 to 10 years ahead of us wherein the growth rate and the demand for our products and solutions will expand and also industry is willing to pay for the quality of the product, which is world-class.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. T.K. Sridhar for closing comments. Over to you, sir.

Thank you very much, Michelle, and thank you very much, ladies and gentlemen, for participating in this particular call. Very interesting questions, I could say. I think hopefully, we again meet the next quarter with a similar set of results is what we cou ld see. And also, I wish you a very happy quarter closing as well as in good and healthy life. And I also thank the management who are there with me on this particular call with who's -- without whose support this could not have happen. Thank you very much.

Thank you, members of the management. On behalf of ABB India Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you. ----------------------- (This document has been edited for improving readability) ----------------------- Investor / Analyst contact: TK Sridhar Chief Financial Officer and Chief Investor Relations Officer sridhar.tk@in.abb.com Sohini Mookherjea Country Communication Manager sohini.mookherjea@in.abb.com

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