ABB

ABB Ltd, when it had ended 2011 itself had issued a note of caution stating that there would be pressure in CY2012 due to rising input costs, tight liquidity situation, forex volatility and low price realization. And these words of caution proved prophetic. The company ended the year with a 26% fall in net profit at Rs.137 crore on a very flat revenue at Rs.7470 crore.  In a statement issued to the stock exchanges the company has stated that delays in receipt of payments due to tight liquidity in the market, inflexible terms and conditions in infrastructure projects, forex volatility and low price realization increased the risk level significantly and impacted project margins during the year. 35% of the company’s raw materials are imported and despite the volatile rupee fall, it managed to bring this cost down by around 1% in 2012.

The company has taken this lull to upgrade its facilities, existing as well as made new investments to improve its operational efficiencies. Its product segment did well in 2012 but project business suffered due to project delays on account of external factors.  In 2012, the company received orders worth Rs 6966 crore and this was 15% lower on a YoY. Looking ahead, the company has leveraged new business streams such as solar, data centers and energy efficiency solutions. It has decided to reposition its power systems business for higher profitability by adopting a business model in line with the global strategy of having higher ABB content in projects with appropriate risk return profile. Unlike what it said at the end of 2011, this time around at end of 2012, the company is cautiously optimistic about the long term potential of the Indian market