ABB India Ltd:Annual Report 2023-24 Analysis

ABB India Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History: ABB in India traces its roots back to 1949 when ASEA Brown Boveri (ABB) started operations in the country.

Headquarters Location and Global Presence: ABB India is headquartered in Bangalore, India. As a part of the global ABB Group, it benefits from a presence in over 100 countries.

Company Vision and Mission: While the specific vision and mission statements can evolve, generally, ABB focuses on enabling a more productive and sustainable future through its technologies. This involves:

• Vision: To be a leading technology company that delivers innovative and reliable solutions for electrification, automation, robotics, and motion, serving customers globally.
• Mission: To provide customers with superior products, services, and solutions that improve their operations and reduce their environmental impact.

Key Milestones in Their Growth Journey:

• Early Years (1949 - 1980s): Established initial operations, focusing on power generation and transmission.
• Liberalization Era (1990s): Expanded product portfolio and market presence due to economic reforms in India.
• 2000s: Focused on automation and robotics solutions for various industries.
• Recent Years: Increased focus on digitalization, sustainability, and strategic acquisitions.

Stock Exchange Listing Details and Market Capitalization: ABB India Ltd. is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Recent Financial Performance Highlights: (Specific financial data should be updated with the most current reports available.)

• Revenue growth
• Profit margins
• Order backlog
• Key financial ratios

Management Team and Leadership Structure: ABB India follows the structure of the global ABB Group.

Notable Awards or Recognitions:

• AWARDS data not available

Their Products #

Complete Product Portfolio with Categories:

• Electrification: Includes products and solutions for power distribution, protection, and control, as well as low- and medium-voltage products.
• Automation: Encompasses industrial automation solutions, process automation, and measurement and analytics.
• Motion: Includes electric motors, generators, drives, and related services.
• Robotics: Industrial robots and collaborative robots (cobots) for various applications.

Flagship or Signature Product Lines:

• Industrial Robots: Notably, IRB series of robots for diverse applications like welding, painting, and assembly.
• Variable Speed Drives (VSDs): Used in industrial applications to control motor speed and optimize energy consumption.
• Power Distribution Solutions: High-quality switchgear and related equipment for reliable power distribution.

Key Technological Innovations or Patents:

• ABB has a vast portfolio of patents across its product lines, constantly innovating in robotics, automation, electrification, and motion.
• Focus on digitalization and IoT solutions for remote monitoring, predictive maintenance, and optimization.

Manufacturing Facilities and Production Capacity: ABB India has multiple manufacturing facilities across the country.

Quality Certifications and Standards: ABB adheres to international quality standards such as ISO 9001, ISO 14001, and OHSAS 18001 (or ISO 45001).

Unique Selling Propositions or Technological Advantages:

• Global Expertise: Leverages the global ABB Group’s technology and expertise.
• Integrated Solutions: Offers integrated solutions across electrification, automation, motion, and robotics.
• Digitalization: Strong focus on digital solutions and IoT integration.

Recent Product Launches or R&D Initiatives:

• ABB has been focusing on solutions that drive digitalization, improved automation, and increased energy efficiency for customers.

Primary Customers #

Target Industries and Sectors:

• Automotive
• Cement
• Metals and Mining
• Oil and Gas
• Food and Beverage
• Pharmaceuticals
• Power Generation and Distribution

Geographic Markets (Domestic vs. International): Predominantly focused on the Indian domestic market but also exports to other regions.

Major Client Segments:

• Industrial
• Infrastructure
• Utilities

Distribution Network and Sales Channels:

• Direct sales force
• Channel partners and distributors
• Online platforms

Major Competitors #

Direct Competitors in India and Globally:

• Siemens
• Schneider Electric
• Rockwell Automation
• Honeywell
• Mitsubishi Electric

Comparative Market Share Analysis:

• Market share data not available

Competitive Advantages and Disadvantages:

• Advantages: Global brand recognition, strong technology portfolio, integrated solutions.
• Disadvantages: Potential for higher price points compared to some local competitors, challenges in adapting global solutions to specific local needs.

How They Differentiate From Competitors: ABB differentiates itself through its integrated solutions approach, its focus on digital technologies, and its commitment to sustainability.

Industry Challenges and Opportunities:

• Challenges: Intense competition, fluctuating raw material prices, and evolving regulatory landscape.
• Opportunities: Growing demand for automation and digitalization, infrastructure development, and renewable energy projects.

Market Positioning Strategy: ABB positions itself as a technology leader that provides innovative and sustainable solutions for a wide range of industries.

Future Outlook #

Expansion Plans or Growth Strategy:

• Focus on expanding its presence in high-growth sectors.
• Strengthening its digital offerings.
• Increasing its focus on sustainability solutions.

Upcoming Products or Innovations: Focus on innovative technologies, specifically in the areas of robotics, automation, digitalization, and sustainability.

Sustainability Initiatives or ESG Commitments: ABB Group has ambitious sustainability targets, including reducing its own carbon footprint and helping customers achieve their sustainability goals.

Industry Trends Affecting Their Business:

• Increasing adoption of automation and robotics.
• Digital transformation of industries.
• Growing demand for energy-efficient and sustainable solutions.
• Electrification of transportation and industry.

Long-Term Vision and Strategic Goals: ABB’s long-term vision is to be a leader in electrification, automation, robotics, and motion, enabling a more productive and sustainable future.

Financial Performance Overview #

Financial Performance Trend Analysis (2022-2024) #

• Revenue Growth: Revenue from operations reached ₹12,188 Crores in 2024, up from ₹10,447 Crores in 2023 and ₹8,568 Crores in 2022. This represents a 17% YoY increase in 2024 and a 22% YoY increase in 2023. The company reported a CAGR of 20% in topline over the last five years.
• Profitability: Profit Before Tax (PBT) before exceptional items surged to ₹2,509 Crores in 2024, compared to ₹1,651 Crores in 2023 and ₹1,011 Crores in 2022. Profit After Tax (PAT) followed a similar trajectory, increasing to ₹1,872 Crores in 2024 from ₹1,242 Crores in 2023 and ₹1,016 Crores in 2022, marking a 50% YoY growth in 2024. Bottom-line growth has doubled over the last four years.
• Order Intake: Orders received reached ₹13,079 Crores in 2024, a 6% increase from ₹12,319 Crores in 2023. This follows a significant 23% increase from ₹10,028 Crores in 2022. The order backlog grew 12% YoY to ₹9,380 Crores as of Dec 31, 2024, up from ₹8,404 Crores in 2023 and ₹6,468 Crores in 2022, providing strong revenue visibility. The company achieved a 21.9% CAGR in orders over the last four years.
• Shareholder Returns: Earnings Per Share (EPS) rose significantly to ₹88.46 in 2024 from ₹58.90 in 2023 and ₹48.00 in 2022. The total recommended dividend for 2024 is ₹44.16 per share (including interim dividend), a 51% increase over ₹29.30 in 2023 (₹5.50 in 2022).
• Efficiency: Return on Capital Employed (ROCE) reached a record 26.5% in 2024, an improvement from 20.9% implied by PBT and Funds Employed in 2023. Profit After Tax as a percentage of average net worth was 29% in 2024, up from 23% in both 2023 and 2022.

Business Segment Performance (2024) #

• Electrification: Showed strong growth driven by core industries (Buildings, Chemicals, O&G, Metals) and growing segments (Data Centers, Renewables, Railways). Recorded orders of ₹6,150 Cr (vs ₹4,941 Cr in 2023) and revenue of ₹5,073 Cr (vs ₹4,237 Cr in 2023). Results (PBIT) were ₹1,002 Cr (vs ₹678 Cr in 2023).
• Motion: Delivered strong performance with robust order bookings, particularly in HVAC (Data Centers) and PLC automation. Recorded orders of ₹4,981 Cr (vs ₹5,103 Cr in 2023), revenue of ₹4,941 Cr (vs ₹3,989 Cr in 2023), and results (PBIT) of ₹1,090 Cr (vs ₹818 Cr in 2023).
• Process Automation: Performance varied, with strength in Pharma, Chemicals, Energy Transition (Gas), Metals & Mining, EV Battery, and Green Hydrogen. Recorded orders of ₹2,414 Cr (vs ₹2,886 Cr in 2023), revenue of ₹2,538 Cr (vs ₹2,548 Cr in 2023), and results (PBIT) of ₹359 Cr (vs ₹387 Cr in 2023).
• Robotics & Discrete Automation: Experienced continuous growth fueled by customer demand for flexible automation, particularly in Automotive (major share), Electronics, F&B, and Service industries. Recorded orders of ₹534 Cr (vs ₹389 Cr in 2023), revenue of ₹444 Cr (vs ₹416 Cr in 2023), and results (PBIT) of ₹60 Cr (vs ₹53 Cr in 2023).

Strategic Initiatives and Progress #

Brand Positioning #

• Launched new positioning centered on ‘Outrun’ and tagline ‘Engineered to Outrun’, emphasizing helping industries perform better (‘Leaner’) and more sustainably (‘Cleaner’) through leadership in automation and electrification.

Manufacturing & Localization (‘Make in India’) #

• Continued investment in manufacturing facilities for upgrades and expansion. Successfully localized global technologies. Introduced ABB-free@home® wireless smart home system.

Market Focus & Expansion #

• Increased focus on high-growth segments. Expanded footprint in Tier II & III cities. Conducted Technology Days across 31 cities engaging over 5,000 customers.

Innovation & Technology Leadership #

• Introduced next-gen energy-efficient motors, ACH180 compact drive for HVACR, ChloroStar™ sensors. Deployed robotics PixelPaint technology for automotive EV manufacturing. Continued supply of propulsion technology for railways and electrification for metros/airports. Advanced digital solutions like ABB Genix™ platform leveraging AI and Industrial IoT.

Partnerships & Collaborations #

• Established strategic partnerships with NAMTECH (robotics education), Witt India (tunnel ventilation), PwC India (digital transformation consulting), and IIT Bombay (energy science research lab).

Sustainability Integration #

• Embedded sustainability across operations and value chain. Progressed on RE100, EV100, EP100 initiatives. Achieved significant GHG emission reductions and advanced water/waste management goals. Increased supplier engagement in ESG.

Risk Landscape #

Identified Risks #

• Key risks include macroeconomic uncertainties, geopolitical tensions, commodity price volatility, climate risks, and cybersecurity threats.

Mitigation Strategies #

• Employing a diversified portfolio. Strengthening local manufacturing and supply chains. Maintaining disciplined financial strategy. Utilizing hedging instruments. Implementing robust Enterprise Risk Management (ERM) processes. Adhering to strong governance, internal controls, and cybersecurity measures.

ESG Initiatives and Metrics #

Environmental #

• Achieved ~86% reduction in Scope 1 & 2 GHG emissions (vs. 2019 baseline).
• 50% of manufacturing facilities certified water positive; >350 million liters annual rainwater harvesting potential.
• 50% of manufacturing facilities certified ‘Zero Waste to Landfill’; >98% waste recycled/recovered.
• All 5 manufacturing locations certified ‘Green Factory Buildings’ (IGBC).
• Progressing on RE100, EP100, and EV100.
• Increased sustainable sourcing to >50%.

Social #

• Employee well-being initiatives (LTIFR at 0.5 in 2024).
• Focus on Diversity & Inclusion: 10% gender diversity overall; growing Employee Resource Groups; STEM scholarships for women.
• Community Engagement (CSR): Spent ₹26.23 Crores in FY2024. Initiatives include infrastructure upgrades, healthcare access, education, skilling, and support for differently-abled persons.

Governance #

• Strong governance framework with decentralized operations (ABB Way).
• Emphasis on integrity and ethics through Code of Conduct, training, and Integrity Champion network.
• Robust Vigil Mechanism/Whistle Blower Policy.
• Compliance with highest standards of corporate governance.
• Increased supplier participation in sustainability awareness and assessment.

Management Outlook #

Global Economy #

• Expects continued resilience but acknowledges persistent geopolitical tensions and macroeconomic uncertainties. Global GDP growth anticipated around 3.3% in 2025.

Indian Economy #

• Projected to remain the fastest-growing major economy (FY25 GDP growth ~6.4-6.5%). Positive drivers include government capital expenditure, improving consumption, services sector growth, rural demand recovery, and traction in value-added manufacturing/exports.

Market Opportunities #

• Strong potential seen in data centers, renewables, electronics, semiconductors, energy transition, specialty chemicals, EV infrastructure, railways/metros, water, and pharmaceuticals.

Challenges #

• Monitoring global geopolitical situations, commodity price volatility, inflation trends, potential private capex revival pace, and impact of global tariff changes.

Company Positioning #

• Confident in ABB India’s position due to its diversified portfolio, ’local for local’ strategy, 75 years of manufacturing experience, strong R&D and localization capabilities, and focus on high-growth, sustainable solutions. The robust order backlog provides good visibility. Management remains focused on profitable growth, operational excellence, and stakeholder value creation.

Detailed Analysis #

Operating Performance Analysis #

Revenue Analysis (FY 2024 vs FY 2023) #

Overall Revenue #

Total revenue from operations grew by 16.7% YoY, reaching ₹12,188 Cr in FY 2024 from ₹10,447 Cr in FY 2023. Including other income, total income grew by 17.4% YoY.

Segment Revenue (External Sales) #

• Electrification: ₹5,193 Cr (FY24) vs ₹4,272 Cr (FY23) - Growth: 21.6%
• Motion: ₹4,176 Cr (FY24) vs ₹3,675 Cr (FY23) - Growth: 13.6%
• Process Automation: ₹2,578 Cr (FY24) vs ₹2,227 Cr (FY23) - Growth: 15.8%
• Robotics & Discrete Automation: ₹444 Cr (FY24) vs ₹416 Cr (FY23) - Growth: 6.7% Note: Segment revenue growth rates calculated based on external sales data from Note 42(a)(vi).

Geographic Revenue #

• India: ₹10,824 Cr (FY24) vs ₹9,358 Cr (FY23) - Growth: 15.7%
• Rest of World (Exports): ₹1,365 Cr (FY24) vs ₹1,089 Cr (FY23) - Growth: 25.3% Note: Geographic revenue data from Note 42(b).

Cost Structure Analysis (FY 2024) #

• Cost of Materials/Components/Project Bought Outs: 47.7% of Total Income (FY23: 49.9%)
• Purchases of Stock-in-Trade: 14.6% of Total Income (FY23: 14.8%)
• Changes in Inventories: -0.3% of Total Income (FY23: -1.0%) - Negative indicates increase in inventory value.
• Employee Benefit Expenses: 10.5% of Total Income (FY23: 10.9%)
• Other Expenses: 14.7% of Total Income (FY23: 15.6%) - Major components include Freight, Legal & Professional, IT expenses, Royalty & Tech fees.
• Depreciation & Amortization: 1.7% of Total Income (FY23: 1.7%)
• Finance Costs: 0.1% of Total Income (FY23: 0.1%)

Note: Percentages calculated based on data from the Statement of Profit and Loss (page 215) relative to Total Income.

Margin Analysis (FY 2024 vs FY 2023) #

• Gross Margin: While not explicitly stated, an indicative Gross Profit (Total Income - Cost of Materials/Purchases/Change in Inv.) suggests a margin improvement YoY, driven by revenue growth outpacing the relative cost of goods.
• Operating Profit Margin (PBIT/Total Income): 20.7% in FY24 vs 15.9% in FY23. Significant improvement indicating enhanced operational efficiency and leverage.
• Net Profit Margin (PAT/Total Income): 15.0% in FY24 vs 11.7% in FY23. Substantial increase driven by higher operating profits and stable tax rates.

Operating Leverage #

• Revenue (from Operations) grew by 16.7% YoY.
• Profit Before Tax (from Continuing Operations) grew by 51.9% YoY (₹2,513 Cr vs ₹1,651 Cr).
• The significantly higher growth rate in Profit Before Tax compared to Revenue indicates strong positive operating leverage during FY 2024.

Non-recurring / Exceptional Items #

• No exceptional items impacting profit from continuing operations were reported for FY 2024 or FY 2023.
• Losses from discontinued operations amounted to ₹ Nil in FY24 and FY23 (Note 33).

GAAP vs Non-GAAP Reconciliation #

• The financial statements are prepared according to Indian Accounting Standards (Ind AS), which constitutes Indian GAAP.
• Key metrics discussed like PBT, PAT, and EPS are standard GAAP measures under Ind AS.

Earnings Per Share (EPS) Analysis #

• Basic EPS (Continuing + Discontinued Operations): ₹88.46 in FY 2024 vs ₹58.62 in FY 2023.
• Diluted EPS: Same as Basic EPS (₹88.46 vs ₹58.62) as there were no potential dilutive instruments outstanding.
• EPS showed significant growth of 50.9% YoY, reflecting the strong profit increase.

ABB India Limited - Financial Analysis (FY 2024) #

Cash Flow Analysis #

• Operating Cash Flow (OCF): Net cash flow from operating activities was ₹1,709 Crores. This was generated primarily from profit before tax (₹2,509 Crores), adjusted for non-cash items (like depreciation/amortization of ₹185 Crores and loss allowance of ₹81 Crores) and offset by interest income (₹303 Crores). Working capital movements also influenced OCF, with notable changes in trade payables, trade receivables, and inventories. Income taxes paid amounted to ₹639 Crores.
• Investing Cash Flow (ICF): Net cash used in investing activities was substantial at ₹3,027 Crores. Key activities included the purchase of Property, Plant, and Equipment (₹165 Crores) and significant net investment in bank deposits with maturities over three months (Net outflow of ₹7,154 Cr inflow vs ₹6,513 Cr outflow = ₹641 Cr net outflow from this specific activity, although the summary shows a much larger net figure likely due to large gross flows not fully detailed). Interest received contributed ₹303 Crores.
• Financing Cash Flow (FCF): Net cash used in financing activities was ₹730 Crores, dominated by dividend payments (₹730 Crores) and payments for lease liabilities (principal ₹40.14 Cr, interest ₹5.43 Cr).

Working Capital Management Efficiency #

• Debtors Turnover: Decreased slightly to 4.41x in FY2024 from 4.51x in FY2023, indicating a marginal slowdown in receivable collection efficiency relative to turnover.
• Inventory Turnover: Decreased to 4.25x in FY2024 from 4.43x in FY2023, suggesting slightly slower inventory movement relative to turnover. Strategic inventory management was noted as supporting backlog execution.
• Payables Management: Accounts payable days increased slightly to 115 days in FY2024 from 112 days in FY2023.
• Cash Conversion Cycle (CCC): Data provided in the excerpts is insufficient to calculate the full CCC. However, the available turnover ratios suggest a potential slight lengthening of the cycle.
• Overall: Working capital management appears stable, supporting operations despite minor efficiency shifts. The company maintained a positive cash position throughout the year.

Capital Expenditure (Capex) Analysis #

• Total Capex (PPE Purchase): The Statement of Cash Flows indicates ₹165 Crores was spent on purchasing Property, Plant, and Equipment (PPE) in FY2024.
• Segment Capex (Based on Segment Notes):
  • Electrification: ₹81.29 Crores
  • Motion: ₹25.52 Crores
  • Process Automation: ₹34.30 Crores
  • Robotics & Discrete Automation: ₹9.11 Crores
  • Note: The sum of segmented capex reported (₹150.22 Cr) differs slightly from the total PPE purchase figure in the cash flow statement, potentially due to unallocated/corporate capex or timing.
• Key Investments: Upgradation and expansion occurred at Faridabad (motors factory/office), Nashik (GIS shopfloors), and Nelamangala (admin building). Vadodara saw office/warehouse modernization.

Dividend and Share Buyback Trends #

• Dividends:
  • FY2024: Total Dividend ₹730 Crores (₹44.16 per share - ₹10.66 interim + ₹33.50 proposed final). This represents a 51% YoY increase in payout.
  • FY2023: Total Dividend ₹233 Crores (₹29.3 per share).
  • Trend: Significant upward trend in dividend per share and total payout over the last five years (FY20: ₹5 DPS, FY21: ₹5.2 DPS, FY22: ₹5.5 DPS, FY23: ₹29.3 DPS, FY24: ₹44.16 DPS), reflecting strong profit growth. The Dividend Distribution Policy is in place.
• Share Buybacks: The company has not undertaken any share buybacks during the reporting period or the preceding five years. Share capital has remained constant.

Debt Service Coverage #

• Debt Position: The company reported no borrowings for the past five years (FY2020-FY2024). The Debt-Equity ratio is 0.00:1.
• Traditional DSCR: Not applicable due to the absence of interest-bearing borrowings.
• Lease Liability Coverage (Proxy): Lease liabilities exist (Non-current ₹66.32 Cr, Current ₹36.45 Cr). A proxy coverage ratio [(PBIT + Lease Interest) / (Lease Principal Payments + Lease Interest Payments)] can be calculated: (₹2,525 Cr + ₹5.43 Cr) / (₹40.14 Cr + ₹5.43 Cr) ≈ 55.5x. This indicates a very high capacity to cover lease payment obligations from operating profit.

Liquidity Position #

• Cash Balance: Strong liquidity with Cash and Cash Equivalents at ₹294 Crores and Other Bank Balances (including deposits > 3 months) at ₹4,802 Crores as of Dec 31, 2024. The MDA mentions a total net cash balance (including fixed deposits) of ₹5,390 Crores.
• Current Ratio: Improved to 2.04x in FY2024 from 1.90x in FY2023, indicating enhanced short-term solvency.
• Operating Cash Flow: Consistently positive OCF (₹1,709 Cr in FY2024) supports liquidity.
• Overall: The company maintains a robust liquidity position with significant cash reserves and positive operating cash generation.

Free Cash Flow (FCF) Yield Trends #

• Free Cash Flow Calculation: Defining FCF as OCF minus Capex

ABB India Limited - Financial Analysis Report (FY 2024) #

Overview of Financial Performance (FY 2024) #

ABB India Limited reported a record financial performance for the year ended December 31, 2024. Key highlights include:

• Orders: ₹13,079 Cr (highest-ever)
• Revenue: ₹12,188 Cr (highest-ever)
• Profit After Tax (PAT): ₹1,875 Cr (50% YoY increase)
• Profit Before Tax (PBT): ₹2,513 Cr
• Order Backlog: ₹9,380 Cr (12% YoY increase)
• Earnings Per Share (EPS): ₹88.46 (Significant increase from ₹58.90 in FY2023)
• Return on Capital Employed (ROCE): Reached an all-time high
• Net Cash Balance: ₹5,390 Cr (as of December 31, 2024)
• Dividend Payout: 51% YoY increase

Profitability Analysis #

Return on Equity (ROE) #

• FY2024: 29% (PAT as % to Average Net Worth per Five-Year Summary) / 28.75% (Calculated per Note 45)
• FY2023: 23% / 22.82%
• FY2022: 23%
• Trend: Significant improvement in FY2024, indicating enhanced profitability relative to shareholders’ equity.

Return on Capital Employed (ROCE) #

• FY2024: 35.93% (Calculated per Note 45) / 26.5% (Stated in Financial Highlights & pg 57)
• FY2023: 28.24% (Calculated per Note 45)
• Trend: Markedly improved ROCE in FY2024, reflecting more efficient use of capital to generate profits. Note the discrepancy in reported ROCE figures within the annual report.

Profit Margins #

Operating Profit Margin (PBIT/Turnover) #

• FY2024: 20.76%
• FY2023: 16.%

ABB India Limited - Financial Analysis FY2024 #

Revenue and Profitability Metrics #

• Revenue Growth: ABB India reported record revenue from operations of ₹12,188 Crores for FY2024, a 17% increase compared to ₹10,447 Crores in FY2023. This continues a strong growth trajectory, with a 5-year topline CAGR of 20%.
• Order Intake: Orders reached an all-time high of ₹13,079 Crores, compared to ₹12,319 Crores in FY2023, indicating sustained demand. The order backlog grew 12% YoY to ₹9,380 Crores, providing significant revenue visibility. The 4-year CAGR for orders stands at 21.9%.
• Profitability: Profit Before Tax (PBT) increased substantially to ₹2,513 Crores (before exceptional items: ₹2,509 Cr) from ₹1,651 Crores in FY2023. Profit After Tax (PAT) surged by 50% YoY to ₹1,875 Crores from ₹1,242 Crores. Earnings Per Share (EPS) rose to ₹88.46 from ₹58.90. The bottom line has doubled over the last four years.
• Return Metrics: Return on Capital Employed (ROCE) achieved a new record of 26.5%, a significant improvement from pre-COVID levels and up 560 bps YoY. Return on Net Worth improved to 28.75% from 22.82% in FY2023.
• Dividend: Total dividend payout increased by 51% YoY, with a proposed final dividend of ₹33.50 per share supplementing the interim dividend of ₹10.66 per share.

Market Share and Competitive Position #

• ABB India leverages its 75-year manufacturing presence and broad portfolio across 23 market segments.
• The company holds significant positions in key infrastructure areas, stating its technology is used in >80% of India’s metro networks and supports power distribution across 26 states.
• Specific market penetration includes ~30% of hyperscale data centers and 60% of mobile phone manufacturers utilizing ABB solutions (primarily robotics). Approximately 30% of installed wind and solar projects deploy ABB technology.
• The “Engineered to Outrun” brand positioning emphasizes leadership in automation (‘Leaner’) and electrification (‘Cleaner’), aiming to differentiate based on performance, efficiency, and sustainability.
• The ’local for local’ strategy, combining global technology with local engineering and manufacturing (Bengaluru, Nashik, Vadodara, Faridabad), supports competitiveness in the Indian market.

Key Products/Services Performance #

• Electrification: Demonstrated strong growth driven by demand in data centers, renewables, railways, buildings, and core industries. Launched new products like ABB-free@home®.
• Motion: Showcased robust performance with increased demand for energy-efficient motors (IE3 & IE4 constituting nearly 55% of motor orders in 2024). Launched ACH180 drives for HVACR. Strong traction in railways (propulsion) and contributions to ‘Jal-Jeevan Mission’.
• Process Automation: Secured key orders in oil & gas pipeline management, power plant modernization, and DCS for various industries. Measurement & Analytics division saw steady demand, launching ChloroStar™ sensors.
• Robotics & Discrete Automation: Growth fueled by automotive (especially EV transition) and electronics sectors adopting automation. PixelPaint technology adopted by a major auto OEM.
• Service: Service divisions across all business areas performed well, focusing on expansion, digitalization (remote monitoring), and circularity offerings (end-of-life services).

Geographic Distribution and Market Penetration #

• Primarily focused on the Indian market, aligning with national priorities like ‘Make in India’, digitalization, and infrastructure development.
• Exports contribute 11% of turnover, reaching over 30 countries.
• Significant focus and traction observed in Tier II & Tier III cities, driven by channel partners and infrastructure growth. Engaged with over 5,000 customers across 30+ such markets in 2024.

Segment-wise Capex and ROCE #

• Overall ROCE: Record 26.5% indicates strong capital efficiency across the business.

Capital Expenditure (Capex) #

• Investments were made in upgrading and expanding manufacturing facilities and offices:
  • Nelamangala: Administration building renovation.
  • Faridabad: Motor factory and office upgrades/expansion.
  • Vadodara: Office modernization, warehousing for large motors.
  • Nashik: GIS shop floor, testing, and office upgrades/expansion.
  • Mumbai: New sales and marketing office.
  • These investments support the ‘Make in India’ initiative and strengthen the manufacturing foundation.

Segment Profitability (PBIT) #

• Electrification: ₹1,021 Cr
• Motion: ₹1,208 Cr
• Process Automation: ₹269 Cr
• Robotics & Discrete Automation: ₹60 Cr

Operational Efficiency Metrics #

• Manufacturing & Supply Chain: Facility upgrades, localization efforts, and development of a diversified local supply chain enhance resilience and efficiency.
• Cost Management: Disciplined cost management and strategic pricing contributed to margin expansion.
• Sustainability Efficiency: Achieved ~86% reduction in Scope 1 & 2 GHG emissions (vs. 2019). 50% of manufacturing facilities are certified water-positive and zero waste to landfill. >98% of waste is recycled/recovered. Focus on energy-efficient product sales contributes to customer operational efficiency. Supplier ESG program participation increased by 33%.
• Process Improvement: Stabilization of the Central Finance SAP platform aims to improve productivity, internal control, and transparency.

Growth Initiatives and Challenges #

Growth Initiatives #

• Focus on high-growth segments: Data Centers, Renewables, E-mobility, Electronics, Semiconductors, Green Hydrogen.
• Leveraging government initiatives: ‘Make in India’, PLI schemes, infrastructure spending (rail, metro, roads, ports).
• Expanding portfolio with localized global technology (e.g., IE4/IE3 motors, smart home automation).
• Deepening penetration in Tier II & III cities.
• Strategic partnerships (NAMTECH, Witt India, PwC, IIT Bombay) for innovation and market access.
• Strengthening digital offerings (ABB Ability™ platform, AI).

Challenges & Risks #

• Macroeconomic & Geopolitical Uncertainties: Global slowdown, inflation, fluctuating commodity prices, geopolitical tensions impacting supply chains and demand.
• Market Volatility: Managing cyclicality across 23 diverse market segments.
• Competitive Pressures: Maintaining leadership requires continuous innovation and cost efficiency.
• Execution Risk: Ensuring efficient execution of large order backlog.
• Talent Management: Attracting and retaining skilled workforce in a competitive market.
• Cybersecurity: Protecting digital infrastructure and customer data.
• Climate Risks: Physical and transitional risks associated with climate change.

ABB India Limited: Risk Analysis (Based on Annual Report 2024) #

This analysis outlines the key risk categories identified or implied within the ABB India Limited Integrated Annual Report 2024, evaluating them based on the provided text.

Strategic Risks #

• Description: Risks affecting the long-term strategy, market position, and achievement of business objectives, stemming from external market dynamics and internal strategic choices.
• Severity: High. Macroeconomic and geopolitical uncertainties are explicitly mentioned as shaping investment trends and impacting growth. Failure to adapt to megatrends like digitalization and sustainability could significantly impact long-term viability.
• Likelihood: High. Global economic uncertainties, inflation volatility, geopolitical tensions, and rapid technological shifts (Digitalization, AI, Sustainability) are presented as active factors influencing the business environment.
• Trend: Ongoing/Uncertain. While India shows resilience, global uncertainties persist. The pace of technological and sustainability transitions is accelerating.
• Mitigation Strategies:
  • Diversified Portfolio: Operating across 23 market segments with different growth cycles enhances resilience against sector-specific downturns (p. 46, 143).
  • Market Focus: Aligning with high-growth segments (Data Centers, Renewables, Electronics, Automation, Energy Transition) driven by megatrends and government policies (p. 9, 44-45, 143, 148).
  • Localisation Strategy: ‘Local for local’ approach and strong local supply chain reduces dependency and tariff risks (p. 10, 44, 46, 143).
  • Innovation & Adaptation: Continuous introduction of new products (IE4/IE3 motors, ACH180 drive, free@home®, ChloroStar™) tailored to local needs and market trends (p. 25, 145).
  • Strategic Partnerships & Alliances: Collaborations with NAMTECH, Witt India, PwC India, IIT Bombay to enhance capabilities in key areas like robotics, ventilation, digital transformation, and R&D (p. 29, 145).
  • Brand Positioning: Repositioning (‘Engineered to Outrun’) to align with customer needs for efficiency and sustainability (p. 5, 9, 51).
  • ERM Process: Holistic identification and management of risks impacting strategic objectives (p. 54-55, 153).
• Control Effectiveness: Implied high effectiveness demonstrated by record financial performance (orders, revenue, margins), consistent CAGR (20% topline over 5 years), and doubling of bottom-line (4 years) despite market dynamics (p. 9, 19, 57). Agility in navigating cycles is noted (p. 46).
• Potential Financial Impact: Failure to manage strategic risks could lead to market share loss, reduced growth, lower profitability, and inability to meet long-term stakeholder value creation objectives. Conversely, successful management leads to growth as evidenced by performance (p. 9, 57).
• Quantitative Metrics: CAGR (21.9% orders over 4 years), ROCE (26.5%), Revenue (₹12,188 Cr), PAT (₹1,875 Cr) (p. 9, 18, 19, 57).
• Year-over-Year Changes: Continued growth trajectory despite uncertainties, increased exposure to high-growth segments, strengthened partnerships, successful brand repositioning.

Operational Risks #

• Description: Risks associated with the day-to-day running of the business, including manufacturing, supply chain, project execution, technology, human resources, and safety.
• Severity: Medium to High. Supply chain disruptions (linked to geopolitics), project delays (impacting revenue recognition), cybersecurity threats, and health & safety incidents can have significant operational and financial impacts.
• Likelihood: Medium. Geopolitical tensions make supply chain disruptions likely. Project complexity inherently carries execution risks. Cybersecurity threats are pervasive. H&S risks are actively managed but remain inherent in manufacturing.
• Trend: Stable to Increasing. Geopolitical risks persist. Cybersecurity threats are increasing globally. Focus on complex projects may increase execution risk exposure. H&S performance shows improvement (LTIFR trend).
• Mitigation Strategies:
  • Supply Chain Management: Strong local supply chain, diverse supplier base, sustainable supply base management (SSBM) program (p. 10, 44, 62, 143, 152). Supplier ESG assessments (p. 62).
  • Project Management: Percentage of completion method with robust estimation processes for costs and risks (liquidated damages, warranties) (p. 201-202). Strong order backlog execution (p. 46).
  • Operational Excellence: Investments in upgrading manufacturing facilities (Nelamangala, Faridabad, Vadodara, Nashik), smart manufacturing (Industry 5.0 factory), automation, and efficiency improvements (p. 20-24, 144, 146).
  • Health & Safety: HSE&S Management System (ISO 45001 certified), Guiding Principles (Lead with care, Engage and involve, Learn and improve), risk assessments (ABRA, Stop Take 5), internal audits, training, incident investigation (p. 66-67, 146, 181-182).
  • Cybersecurity: Mentioned as a key risk area monitored by RBI (p. 148); alliance with PwC includes cybersecurity initiatives (p. 29); ABB Group policies imply focus (p. 186).
  • Talent Management: Focus on employee well-being, engagement, onboarding, D&I initiatives, learning & development (LCG Day, Learn-O-Holic), succession planning mentioned as improvement area (p. 64-65, 95, 147, 152).
  • Internal Controls & Audit: Adequate internal controls framework (COSO aligned), internal audit function reporting to Audit Committee, testing of controls (p. 96, 154, 202, 210).
• Control Effectiveness: Implied effective through successful project deliveries (p. 26-27), capacity utilization, low LTIFR (0.5), high hazard resolution rate (>95%) (p. 67, 146). Successful stabilization of new finance system (SAP Central Finance) (p. 152). Independent auditor confirms adequacy of internal financial controls (p. 210).
• Potential Financial Impact: Supply chain issues can increase costs and delay revenue. Project execution failures impact profitability (loss orders provision noted p. 241). Safety incidents lead to costs and reputational damage. Cybersecurity breaches can cause significant disruption and financial loss. Talent attrition impacts productivity.
• Quantitative Metrics: LTIFR (0.5) (p. 67), Hazard resolution rate (>95%) (p. 146), Supplier sustainability assessment participation (40.5%, up 33% YoY) (p. 62, 152). Inventory Turnover (4.25), Debtor Turnover (4.41) (p. 154).
• Year-over-Year Changes: Improvement in LTIFR noted (p. 67). Increased focus on supplier ESG (p. 62, 152). Facility upgrades completed/underway (p. 20-21). Roll-out of new systems (SAP Central Finance) (p. 152).

Financial Risks #

• Description: Risks related to financial stability, including currency fluctuations, commodity price volatility, credit defaults, liquidity constraints, and impairment of assets.
• Severity: Medium to High. Significant exposure to foreign currency and commodity price fluctuations. Trade receivables form a significant part of assets, carrying credit risk.
• Likelihood: High. Currency and commodity markets are inherently volatile. Credit risk exists with a large customer base, although diversified.
• Trend: Stable/Managed. Active hedging programs are in place. Credit risk managed via ECL model. Strong liquidity position maintained.
• Mitigation Strategies:
  • Foreign Exchange (FX) Risk Management: Hedging foreign currency exposures using forward contracts. Policy against speculative trading (p. 150, 254-255).
  • Commodity Price Risk Management: Using commodity future contracts (Copper, Silver) to hedge against price fluctuations (p. 150, 254).
  • Credit Risk Management: Diversified customer base. Use of Expected Credit Loss (ECL) model for impairment assessment based on historical data, customer creditworthiness, and forward-looking estimates. Provision matrix and specific allowances used (p. 202, 232-233, 255-256).
  • Liquidity Risk Management: Maintaining sufficient liquidity through operational cash flows. Surplus cash placed in Fixed Deposits. No borrowings during the year (p. 57, 151, 207, 256-257). Monitoring maturity profile of liabilities (p. 257).
  • Capital Management: Monitoring return on capital and dividend levels to safeguard continuity and support business growth. Funding operations through internal accruals (p. 257).
  • Impairment Testing: Annual impairment testing for Goodwill based on value-in-use calculations using budgets and reasonable assumptions (growth rate, margins, discount rate) (p. 225). Assessment of other assets for impairment indicators (p. 232).
• Control Effectiveness: Implied effective, evidenced by strong profitability (PAT up 50%), positive cash flow generation (₹1,580 Cr from operations), strong cash balance (₹5,390 Cr), high ROCE (26.5%), and controlled loss allowances (p. 9, 19, 57, 151, 216, 256). No impairment of goodwill identified (p. 225).
• Potential Financial Impact: Unhedged FX/commodity exposure can impact margins and profitability. Credit defaults lead to write-offs and reduced profits. Liquidity issues could hinder operations and investments. Asset impairments reduce net worth.
• Quantitative Metrics: FX exposure breakdown and sensitivity (p. 254-255). Commodity contract details (quantity, value) (p. 254). Trade receivable ageing and ECL allowance (p. 233, 256). Cash balance (₹5,390 Cr) (p. 151). Maturity profile of liabilities (p. 257). Goodwill carrying amount (₹13.87 Cr) (p. 224).
• Year-over-Year Changes: Improved profitability and ROCE. Maintained strong liquidity and zero debt status. Continued active hedging programs.

Compliance and Regulatory Risks #

• Description: Risks arising from non-compliance with laws, regulations, standards, and internal policies, including environmental, labor, tax, corporate governance, data privacy, anti-corruption, and human rights regulations.
• Severity: Medium to High. Non-compliance can lead to significant fines, penalties, legal action, reputational damage, and operational disruptions. Specific fines reported for contract labor rules, POSH Act violations, etc.
• Likelihood: Medium. Complex regulatory landscape in India and internationally. Ongoing requirements for certifications (BIS) and standards (environmental, safety). Human error or oversight can lead to breaches.
• Trend: Increasing. Growing focus globally and in India on ESG (BRSR reporting mandated), data privacy, human rights in supply chains, and stricter environmental norms.

ABB India Limited: Strategic and Management Analysis - FY2024 #

Long-term Strategic Goals and Progress #

• Goals: ABB India aligns with the global ABB purpose of enabling a “more sustainable and resource-efficient future” through technology leadership in electrification and automation. The strategic positioning “Engineered to Outrun” emphasizes helping industries enhance performance, productivity, efficiency, and sustainability (’leaner and cleaner’). Key focus areas include energy transition, digitalization, electronics, and advanced manufacturing, underpinned by a ’local for local’ strategy adapting global technology.
• Progress: The company demonstrated strong progress in FY2024, achieving record orders (₹13,079 Cr), revenue (₹12,188 Cr), and profitability. A healthy order backlog (₹9,380 Cr, +12% YoY) provides future revenue visibility. Consistent growth is evident with a 5-year topline CAGR of 20% and bottom-line doubling over four years. Expansion into Tier II/III cities and penetration across 23 market segments indicate successful market adaptation. Significant strides were made in sustainability targets, notably an ~86% reduction in Scope 1 & 2 GHG emissions (vs. 2019 baseline) and achieving 50% of manufacturing facilities being water-positive and zero waste to landfill.

Competitive Advantages and Market Positioning #

• Advantages: ABB India leverages its 75-year history in the country, providing deep market understanding. Its extensive manufacturing footprint (Bengaluru, Nashik, Vadodara, Faridabad) supports the ‘Make in India’ initiative and localization efforts. A diversified portfolio across 23 market segments offers resilience. Access to ABB Group’s global technology leadership, adapted locally, is a key differentiator. A strong network of 750+ channel partners enhances market reach. Established dominance in critical infrastructure segments like railways (electric locos), metro networks (80%), renewable energy (300+ projects, ~30% wind/solar), and data centers (~30% hyperscale) solidifies its position.
• Positioning: The company is positioned as a leader in electrification and automation. The ‘Engineered to Outrun’ tagline effectively communicates its value proposition of enhancing customer performance and sustainability. The brand is associated with trust, quality, and technological leadership.

Innovation Initiatives and R&D Effectiveness #

• Initiatives: FY2024 saw the launch of locally relevant, advanced products like IE4/IE3 energy-efficient motors, ACH180 compact HVACR drives, AquaMaster flowmeters, ChloroStar™ sensors, and the ABB-free@home® smart home system. Strategic collaborations with institutions (NAMTECH, IIT Bombay) and industry partners (Witt India, PwC) focus on skill development, joint solutions, and digital transformation, indicating a push towards ecosystem innovation. Focus areas include AI, digital solutions (ABB Ability™), and robotics (PixelPaint).
• R&D Effectiveness: The company follows a model of leveraging global R&D while focusing local efforts on adaptation, localization, and cost optimization to meet Indian market needs (“best of global technology with local engineering”). While major R&D is centralized at the Group level (Annexure C), the successful launch of localized and adapted products demonstrates the effectiveness of this approach. India’s #2 global rank in internal learning platform usage suggests a strong focus on workforce upskilling, crucial for absorbing and deploying new technologies.

Management’s Track Record in Execution #

• Management has demonstrated strong execution capabilities, delivering consistent financial performance (record FY2024 results, multi-year high CAGR in revenue and profit) despite market volatilities.
• Successful expansion into 23 diverse market segments and deeper penetration into Tier II/III cities highlight effective strategic implementation and market adaptability.
• The ’local for local’ strategy is being effectively executed through product localization and manufacturing upgrades.
• Efficient backlog execution (₹9,380 Cr backlog) converted into record revenue (₹12,188 Cr).
• Successful rollout and stabilization of major transformation programs like the Central Finance SAP platform indicate effective project management.
• Strong progress on sustainability goals reflects operational discipline in non-financial areas.

Capital Allocation Strategy #

• Strategy: The company employs a disciplined capital allocation approach focused on sustainable growth, operational efficiency, and long-term value. Priorities include investing in organic growth, high-growth market segments (e.g., data centers, renewables, automation), innovation, smart manufacturing, digitalization, and sustainability initiatives. Maintaining financial resilience and flexibility is key.
• Execution: Investments were made in upgrading manufacturing facilities and offices (Nelamangala, Faridabad, Vadodara, Nashik, Mumbai). The company maintains a strong balance sheet with zero debt and a significant net cash balance (₹5,390 Cr). A substantial 51% YoY increase in the proposed total dividend reflects confidence in performance and cash flow generation, aligning with the Dividend Distribution Policy. The ROCE improved significantly to a record 26.5%.

Organizational Changes and Their Impact #

• Changes: Board refreshment occurred with the appointment of Mr. Shobinder Duggal as an Independent Director, replacing Mr. V K Viswanathan upon term completion. Senior management was strengthened with a new business head appointment in Process Automation. Key Managerial Personnel remained stable. Implementation of HR transformation programs and a new onboarding process were undertaken.
• Impact: Board composition remains compliant with regulatory requirements, incorporating necessary skills and expertise. The senior management appointment aims to drive growth in the specific business division. HR initiatives are focused on improving employee integration, experience, and operational efficiency. Ongoing transformation programs in Finance and HR are designed to enhance productivity, internal controls, and transparency across the organization.

Overall Analytical Summary #

ABB India Limited demonstrated robust performance in FY2024, driven by effective execution of its strategic goals focused on electrification, automation, and sustainability. The company leverages its strong market position, technological capabilities (global adapted locally), and diverse portfolio to capitalize on India’s growth trends. Disciplined capital allocation, consistent operational execution, and a focus on innovation and localization underpin its financial success and position it well for future opportunities, despite acknowledged macroeconomic and geopolitical risks.

ESG Framework #

Environmental Metrics and Targets #

Greenhouse Gas (GHG) Emissions: #

• Targets: 80% reduction in Scope 1 & 2 emissions by 2030 (vs. 2019 baseline); 100% reduction by 2050. 25% reduction in Scope 3 emissions by 2030 (vs. 2022 baseline); 90% reduction by 2050. Commitment to achieve Net-Zero across the value chain by 2050, validated by SBTi.
• Performance (2024): Achieved approximately 86% reduction in Scope 1 & 2 GHG emissions compared to the 2019 baseline. Progress made on RE100 (renewable electricity), EV100 (electric vehicle fleet), and EP100 (energy productivity) initiatives.

Waste Management: #

• Target: Achieve Zero Waste to Landfill (ZWL) across all operations by 2030.
• Performance (2024): Over 98% of waste diverted from landfill (recycled/energy recovery). 50% of manufacturing facilities certified as ZWL (>99% diversion rate).

Water Management: #

• Target: Expand water stewardship based on the Alliance for Water Stewardship (AWS) standard.
• Performance (2024): 50% of manufacturing facilities certified as Water Positive. Over 350 million liters of annual rainwater harvesting potential created. Water table increased threefold at the Nelamangala campus due to conservation efforts. Water recyclability improved to ~47%.

Energy Efficiency: #

• Initiatives: Implemented Building Management Systems (BMS), upgraded HVAC systems, replaced motors with high-efficiency IE3/IE4 models, enhanced use of natural light (sky lighting).
• Impact: Supplied solutions enabling ~19GW of solar SCADA and VCBs for renewable projects. ABB motors and drives estimated to have saved 20 TWh annually over the last decade.

Certifications: #

All 5 manufacturing locations certified as ‘Green Factory Buildings’ by IGBC/LEED. Sites certified for ISO 14001 (Environmental Management), ISO 45001 (Occupational Health & Safety), and ISO 50001 (Energy Management).

Sustainable Sourcing: #

51. 5% of inputs (by value) sourced sustainably based on internal criteria. Supplier participation in sustainability assessments and awareness programs increased by 33% YoY, covering 40.5% of suppliers.

Social Responsibility Programs #

Focus Areas: #

Education (foundational literacy, numeracy, STEM labs, teacher training, green school concepts), Diversity & Inclusion (women’s empowerment, skills training for marginalized groups), and Community & Environment (healthcare access, infrastructure development, water management).

Key Initiatives (2024): #

• Healthcare: Operated mobile healthcare units across 5 locations, supported cancer care and congenital heart disease screening, benefiting nearly 1 lakh individuals cumulatively.
• Skilling: Supported ‘Skill India’ through Smart Electrician Centers, IT skills training, multi-skill certifications, and women engineering scholarships. Partnered with IIT Bombay for an electrical machines lab.
• Infrastructure: Undertook rural road upgrades (Nelamangala, Nashik) and constructed water check dams (Nashik).
• Education: Implemented Foundational Literacy and Numeracy programs in 148 schools, established Teacher Tech Resource Centers, and supported a school for children with special needs.

CSR Expenditure: #

FY2024 CSR liability was ₹21.96 Crores. The company spent ₹26.23 Crores (including ₹12.56 lakhs administrative overheads). Excess spend from the previous year (₹4.27 Crores) was available for set-off.

Impact Assessment: #

Conducted third-party impact assessments for major ongoing projects covering road safety, rural roads, women’s scholarships, mobile healthcare, and support for specialized schools and medical facilities.

Governance Structure and Effectiveness #

Board Composition: #

Comprises 6 directors (3 Independent, 3 Non-Independent). Meets Regulation 17 (SEBI LODR) and Companies Act requirements. Includes 3 women directors. Independent Directors meet criteria under Sec 149(6) and Reg 16(1)(b).

Committees: #

Audit, Nomination & Remuneration (NRC), Stakeholders Relationship, Risk Management, and Corporate Social Responsibility (CSR) Committees established with defined terms of reference compliant with the Act and Listing Regulations. Majority members/chairs are independent directors as required.

Ethics & Integrity: #

Governed by the ABB Code of Conduct and supported by an Integrity Program with training modules (e-learning, face-to-face), Integrity Champions, and analytics for monitoring.

Risk Management: #

Employs an Enterprise Risk Management (ERM) process integrated into the ABB Way operating model. The Risk Management Committee oversees the process, reporting to the Board.

Internal Controls: #

Maintains adequate internal financial controls relative to company size and complexity, aligned with COSO 2013 framework and IFC requirements (Companies Act). An independent Internal Audit function reports to the Audit Committee.

Whistleblower Mechanism: #

Provides multiple channels (including an independent third-party helpline) for reporting concerns regarding ethics, fraud, or Code violations, ensuring confidentiality and non-retaliation. Direct access to Audit Committee Chair available.

Sustainability Investments and ROI #

Investment Areas: #

Focus on local R&D adaptation, advanced/smart manufacturing, energy efficiency (IE3/IE4 motors, BMS, HVAC), renewable energy integration (solar), water conservation (rainwater harvesting, ZLD), waste reduction (ZWL), circularity initiatives, and supplier ESG capacity building.

Capital Expenditures (2024): #

Upgrades and expansions at Faridabad, Nelamangala, Vadodara, and Nashik facilities focused on modernization, capacity enhancement, and sustainable operations (e.g., PV Solar addition, IE5 compressor).

R&D Investment: #

5. 89% of total CAPEX invested in technologies improving environmental/social impacts (up from <1% in FY2023). Primary R&D pooled at Group level; local focus on adaptation and efficiency.

Quantifiable Benefits/Outcomes: #

• Environmental: ~86% Scope 1&2 GHG reduction (vs. 2019); >98% waste diversion; 50% facilities ZWL & Water Positive; >350M liters/year rainwater harvesting; 3x water table increase (Nelamangala).
• Efficiency: IE3/IE4 motors offer 20%/35% lower energy losses; Solar pump drives cut energy costs by up to 65% in one application.
• Value Chain: 33% YoY increase in supplier participation in sustainability programs.

ESG Ratings and Peer Comparison #

External Recognition (2024): #

• Ranked 4th among top 5 most sustainable companies in India (Business World Conclave).
• Received ‘Outstanding Performance Award for Green Buildings 2024’ (IGBC - Peenya campus).
• Awarded by Frost & Sullivan (Smart Power Division) and HINDALCO (Collaborative Innovation).

Internal Assessment: #

Utilizes a Group-level double materiality assessment (conducted 2023) identifying 1

ABB India Limited: Financial Analysis and Future Outlook (2024) #

Management Guidance and Assumptions #

• Strategic Direction: Position as a leader in electrification and automation, enabling a “leaner and cleaner” industrial future aligned with India’s growth and sustainability goals. “Engineered to Outrun” tagline emphasizes performance, productivity, efficiency, and sustainability.
• Growth Focus: Leverage India’s economic growth, government initiatives (Make in India), and rising demand in Tier 2/3 cities. Target segments include utilities, industry, infrastructure, transportation, data centers, renewables, electronics, water, chemicals, and pharmaceuticals.
• Operational Strategy: “Local for local” strategy, adapting global technology for Indian market relevance. Emphasis on innovation, R&D localization, and expanding the product portfolio. Building a robust value chain with local partners.
• Financial Outlook: Record 2024 performance (orders, revenue, margins) and strong order backlog (₹9,380 Crores as of Dec 31, 2024). Past performance (20% CAGR topline last 5 years) indicates ambitious growth targets. 51% YoY increase in dividend payout signals confidence.
• Key Assumptions:
  • Continued robust Indian economic growth and infrastructure investment.
  • Sustained government focus on energy transition, digitalization, and local manufacturing.
  • Stable commodity price and foreign exchange volatility.
  • Successful execution of strategic initiatives.
  • Maintaining technological leadership and effective R&D localization.
  • Goodwill Impairment Test Assumptions (Note 5): Growth rate 5-6%, operating margins 6-13%, discount rate 9-10%.
  • Employee Benefit Assumptions (Note 35): Discount rate 6.70%, salary increase 7.75% (for Gratuity).

Market Growth Forecasts #

• Macro Environment: Continued global GDP growth (3.3% in 2025) and India as the fastest-growing major economy (RBI/Govt estimates around 6.4% for FY25). Strong FDI inflows (USD 1 Trillion since 2020).
• Sectoral Growth Drivers:
  • High Growth (>20%): Data Centers, Renewables, Automotive, Water & Wastewater.
  • Moderate Growth (7-20%): Railways & Metro, Electronics & Logistics, Power Distribution, Buildings & Infrastructure.
  • Low Growth (<7%): Metals & Mining, Cement, Food & Beverage, Marine & Ports, Oil, Gas & Chemicals, Pharma & Healthcare, Pulp & Paper, Textiles, Rubber & Plastics.
• Manufacturing: India Manufacturing PMI remained expansionary (>50) throughout 2024. Capacity utilization rose to 75.8% (Q3 2024).
• Sustainability Focus: National goals for non-fossil fuel energy (50% by 2030) drive demand for energy-efficient solutions.

Planned Strategic Initiatives #

• Market Positioning: Implementation of the “Engineered to Outrun” brand.
• Localization & Innovation: Investment in adapting global technologies locally and expanding the product portfolio.
• Market Expansion: Deepening penetration into Tier 2 and Tier 3 cities and leveraging channel partner network. Targeting high-growth segments.
• Sustainability Integration: Progress towards 2030/2050 GHG reduction targets, RE100, EP100, EV100 goals. Expanding Zero Waste to Landfill and Water Positive certifications. Increasing supplier engagement in ESG.
• Digital Transformation: Leveraging ABB Ability™ platform, AI (Genix™), and digital solutions. Strategic alliance with PwC.
• Partnerships & Collaboration: Strengthening ties with academic institutions and industry partners.
• Operational Excellence: Focus on safety, process efficiency, and quality through the ABB Way operating model. Implementation of new Finance and HR transformation programs.

Capital Expenditure Plans #

• The report does not provide specific quantitative forecasts for future capital expenditure.
• Recent investments indicate ongoing commitment to upgradation/expansion at Faridabad, Nashik, and Vadodara.

Financial Analysis Report: ABB India Limited (Year Ended December 31, 2024) #

Auditor’s Opinion and Key Audit Matters (KAMs) #

Opinion and Basis for Opinion #

The statutory auditors (B S R & Co. LLP) issued an unqualified opinion, stating that the financial statements give a true and fair view of the company’s state of affairs as of December 31, 2024, and its profit, changes in equity, and cash flows for the year, in conformity with Indian Accounting Standards (Ind AS) and the Companies Act, 2013 (Act). The audit was conducted in accordance with Standards on Auditing (SAs) specified under the Act.

Key Audit Matters #

• Revenue Recognition (Fixed Price Contracts): Recognition using the percentage of completion method involves significant judgment and estimation regarding total contract costs, costs to completion, and evaluation of operational/contractual risks. This area is critical due to its significance and focus as a key performance indicator. (Ref: Note 2.3a, 2.6, Auditor’s Report Pg 201)
• Recoverability of Trade Receivables: Assessing the recoverability of significant trade receivables requires critical evaluation, including specific customer assessments and applying the Expected Credit Loss (ECL) model under Ind AS 109, involving significant judgment. (Ref: Note 2.3c, 2.12a, Auditor’s Report Pg 202)

Auditor’s Remarks on Other Legal/Regulatory Requirements #

A modification was noted regarding the maintenance of books of account. Specifically, the audit trail (edit log) feature was not enabled at the database layer for the primary accounting software (excluding receipts/payments) for the period Jan 1, 2024, to Apr 22, 2024. Additionally, the auditor could not comment on the enablement for software related to journal entries (third-party provider with no independent report) and customer/vendor master data due to lack of evidence. The back-up of the audit trail for the database layer (receipts/payments) was noted as not being maintained on a server physically located in India. (Ref: Auditor’s Report Para 2A(b), 2B(f), Pages 204-205)

Accounting Policies and Changes #

Compliance and Basis #

Financial statements are prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015. (Ref: Note 2.1A) Prepared on a historical cost basis, except for certain financial instruments (derivatives) and defined benefit plan assets/obligations measured at fair value. Accrual basis is followed. (Ref: Note 2.1C)

Key Policies #

• Revenue Recognition (Note 2.6): Based on Ind AS 115. Product sales recognized on transfer of control. Fixed-price contracts use the percentage-of-completion method based on cost incurred relative to total estimated costs. Service revenue also uses percentage-of-completion. Provisions made for foreseeable losses.
• Impairment (Note 2.12): Financial assets assessed using ECL model (simplified approach for trade receivables). Non-financial assets (PPE, Intangibles) tested when impairment indicators exist or annually for goodwill.
• Provisions & Contingencies (Note 2.14): Provisions recognized for present obligations from past events where outflow is probable and estimable (e.g., warranties, onerous contracts, litigation). Contingent liabilities disclosed but not recognized.
• Leases (Note 2.22): Follows Ind AS 116, recognizing Right-of-Use (ROU) assets and lease liabilities for most leases, depreciating ROU assets over lease term/useful life. Short-term and low-value leases expensed on a straight-line basis.

Critical Estimates & Judgments #

Significant estimation is involved in project revenue/costs (percentage-of-completion), provisions for litigation/contingencies, ECL on trade receivables, and warranty provisions.

Changes #

No new standards or amendments applicable for the financial year starting January 1, 2025, were notified by MCA as of the report date. No significant voluntary changes in accounting policy were highlighted for the current year. (Ref: Note 2.23)

Internal Control Effectiveness #

Auditor’s Opinion on IFC #

The auditors issued an unqualified opinion stating the company has, in all material respects, adequate internal financial controls (IFC) with reference to financial statements, and such controls were operating effectively as of December 31, 2024. (Ref: Annexure B, Pg 211)

Management Assessment and Framework #

Management and the Board assert responsibility for establishing, maintaining, and assessing the effectiveness of IFC. (Ref: Auditor’s Report Pg 203, Annexure B Pg 211) The Directors’ Responsibility Statement confirms adequate IFC and operating effectiveness. (Ref: Board’s Report Pg 97) The company employs a framework aligned with COSO principles and compliant with IFC requirements under the Act, supported by internal audit and assurance processes. (Ref: MD&A Pg 154)

Identified Deficiency #

Notwithstanding the overall unqualified opinion on IFC, the auditors specifically noted deficiencies in the implementation and operation of the audit trail (edit log) feature in certain accounting software for specific periods/functions, as detailed in section 1 above. This indicates a control gap concerning record-keeping integrity and compliance with Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. (Ref: Auditor’s Report Para 2B(f), Pg 205)

Regulatory Compliance Status #

Audit Reports #

• Secretarial Audit: The Secretarial Audit Report indicates compliance with the specified provisions of the Companies Act, SCRA, Depositories Act, FEMA (relevant aspects), SEBI Act and associated regulations, and specifically applicable laws (Factories Act, Environment Acts, etc.). It also notes proper Board processes and compliance mechanisms. No qualifications were noted. (Ref: Annexure D, Pg 103)
• SEBI LODR Compliance: The Annual Secretarial Compliance Report confirms compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and related circulars/guidelines. (Ref: Annexure E, Pg 106) The Corporate Governance Compliance Certificate also confirms compliance with mandatory Corporate Governance conditions. (Ref: Annexure G, Pg 138)

Statutory Dues #

Auditors report that undisputed statutory dues (GST, PF, ESI, Income Tax, Customs, Cess) have generally been regularly deposited. No undisputed amounts were in arrears for more than six months. Details of disputed dues are provided. (Ref: Annexure A Para vii, Pg 209)

Companies Act Compliance #

Auditors confirm compliance with requirements regarding disclosure of pending litigations, provisions for foreseeable losses, IEPF transfers, director disqualifications, dividend payment, and related party transaction provisions (Sec 177/188). (Ref: Auditor’s Report Para 2, Pg 203-205, Annexure A Para xiii, Pg 210) Compliance with applicable Secretarial Standards is affirmed. (Ref: Board’