ABB India Limited (500002) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the CY 2020 and Q4 2020 Analyst conference call of ABB India Limited. [Operator Instructions] Please note any form of unauthorized recording and publishing of this audio call is prohibited. Please note this conference is being recorded. I now hand the conference over to Mr. T. K Sridhar, Chief Financial Officer of ABB India Limited. Thank you, and over to you, sir.

Thank you. Thank you, Vikram. First of all, a very good happy new year to all of you for 2021. So this is the first time which we are talking to you, and also a very good morning to all of you, ladies and gentlemen, for this -- and welcome to the Q4 2020 analyst call and which also captures the full year performance of 2020. So taking into consideration the previous requests what has come from all of you, to give some time for you to underline what the numbers are and after we publish our results, right? At this time, we have made sure that we do it at least half a day later to the time of the conclusion of the Board meeting. And hopefully, going forward, we should be able to maintain a sufficient time for you to analyze how the numbers or the performance of the company is, right? So if there's any feedback around this logistics and other piece, please feel free to come back to us at any point of time to me or Sohini, we will try to get back the best way it is possible for us keeping in view the schedules of the people as well, right? So having said that, now without wasting time, I hand over to Sanjeev Sharma, CEO of ABB India Limited, for taking us through the Q4 and fiscal 2020 performance and also the full year performance. But in the meantime, on the call are Mr. Sanjeev Arora, the Head of Motion Division; C.P. Vyas, Head of Electrification Division; Subrata Karmakar, who leads Robotics, Automation; and also G. Balaji who represents Industrial Automation for ABB India. And in the room, I have the host of communication colleagues, right, Sohini, [ Darshini ] and everyone else. Over to you, Sanjeev. Thank you very much.

Thank you, Sridhar. And thank you, everyone, for joining in this call this morning. And I also thank my colleagues who are on this call. And later on, they can be heard against some specific questions that you may have. It's my pleasure to give some highlights about 2020 and specifically about quarter 4 for us in 2020. If you see the picture here, this simple diagram really paints the picture for 2020, how we saw the business moved when we started in quarter 1 and then what happened with the lockdown periods in the end of quarter 1 and middle of quarter 2. And then we started seeing that there was a demand recovery, and then in quarter 4, we really found ourselves in the middle of a solid recovery and a solid performance by the company. During this particular period, I think we -- what stood out for us, how our employees, our suppliers, our customers, how they collaborated and prepared themselves well during the lockdowns and post-lockdown period while keeping our people and our contractors safe. We continue to serve our customers and deliver what we promise to them and also serve certain urgencies and emergency with certain customers who are facing across the country. During this time, there was a lot of work which was done remotely. We did decommissioning of robotics projects, energy projects, chemical, oil and gas projects, and many other projects remotely with our engineers working from home, but helping the customers and doing it successfully. And it really created a new level of confidence in our customers and our employees and our colleagues how we can be more productive, not only during this period, but also this has created new productive models for us in future because the customer confidence is in place and our processes and our technologies in place to help our customers much more speedily and from remotely. So we ended the year on a solid note with cautious optimism for what lies ahead. And why I say cautious, right now, we are -- all of us are experiencing low infection rate in the country. But at the same time, our headquarters are in Europe. And we know that in Europe, it's been completely in lockdown again because they have second wave of infections. So that's what we are informing our employees and contractors to keep the same level of caution as we had for last 9 months, and I would rather advise each one of you who is on this call to observe the same because this is something which is not so well understood. So I think I'm sure you are taking all the precautions, as you have done for the last 9 months, not only for you at the place of work, but also with your families to see this thing through since the COVID vaccine is around the corner. Let me look into key takeaways for the quarter. You can clearly see a resilient performance of the company based on the resilient performance of the economy, that starts showing the signs of recovery. Quarter-on-quarter, from quarter 3 to quarter 4, 2020, we have witnessed growth across key financial parameters, a good traction in orders, solid performance in operational EBITDA, and we had 40% increase in cash performance compared to 2019. So this is something which really stands out, how well we are connected with the market and also how markets positively responded to us and how operations kind of showed the performance with respect to cash conservation as well as collection from the market. And our new portfolio, which is more product dominant than projects dominant really has started showing very good conversion from sales to revenues to cash into the books. And I think that's a new story of ABB India Limited with the new portfolio having a lot of divestments we have carried out in the last 2 to 3 years. And along with my colleagues, that's the story we see building up for us as we go forward. There has been sequential growth across key segments. Orders were up by 12%. Revenues are up by 5%. And also, we had strong sequential growth in our operating margins. Our Motion and Electrification division or Electrification business areas specifically maximized the performance. And while we were -- we have been investing in robotics, we saw very good response to our robotics offering in the market, and we really see new market segments started consuming robotics. And we are very, very pleased with that trend. Early signs of revival is in key segments like data centers, renewables, electronics manufacturing, food and beverage, pharmaceuticals. And then there are some large-scale manufacturing, which is moving into the country. I can't talk about it because we are under NDA, and we are seeing advent of a lot of the robotics being demanded there, and we are in the forefront of supplying to all these opportunities. We will continue our focus on cash to fuel growth and future investments. Now when you look at the customer highlights, so we completed a large-scale remote commissioning of a winder drive for major paper producer in India. That is for ITC. ABB India was recognized as the Technology of the Year Supplier or the local manufacturer for the wind generators. We also launched a new series of high output motors in India for our Motion business, which is already doing very well. And this really is a portfolio of IC induction motors, which are compact and they are designed to a lower footprint. So it really helps our OEMs, the equipment manufacturers to pack it and make their machineries even smaller. And this kind of equipment and this kind of technology and possibilities has a very high demand in the marketplace. And the total cost of ownership also reduces for the end users. So with this portfolio of high output series motors, ABB has launched a new range of motors for industrial customers. And we foresee that this launch will further strengthen ABB's presence in segments as metals, cement, pulp and paper, water and wastewater and applications like fan, pump, compressor, crusher and crane, and any growing economy or any growing industry has a huge demand for it. And I congratulate our colleagues in Motion division. They have done a tremendous job in 2020 despite pandemic because the market demand was steady. And these kind of introductions further strengthens our position in the market. And likewise, we have some good orders in Sri Lanka from the electricity board and also ABB India became first company to offer low-voltage motors on our online marketplace called eMart along with our electrification products. We also had helped the JSW commission the longest conveyor, and that again shows the strength of our domain expertise as well as the confidence of our customers on us. Now as far as the financial metrics are concerned, what I can tell you is these numbers are in front of you. But what we see is there are -- 30 out of 48 high-frequency indicators are already operating above pre-COVID level as on December 2020 for us. Pent-up demand and early signs of recovery is visible for us. And the last quarter was especially good for us in power distribution, renewables, construction, energy and mining segments. Factors like export performance and service revenue through the year was muted. And we see the signs of recovery, and that will also add to our growth as well as profitability as we go forward as service and the export revenues recover. Company posted a profit before tax of INR 80 crores for the quarter. The reported profit is after considering the onetime impact of INR 93 crore in certain businesses of industrial automation. We had exposure to power generation, some legacy projects sitting with our books for a long period of time. And we were hoping, and we were really pushing those to be moving in the market. We took a very strong and a critical view on all those projects, both with our local expertise and global expertise. And we found that it is appropriate for us to take this charge to have our liabilities, our exposure absolutely clean as we go forward. We took it and that's what we always do whenever we detect something. And now we find that this is behind us. But if you exclude that, exclude the onetime impact, the profit for the quarter stood at INR 173 crore, an increase of 16% year-on-year and 52% quarter-on-quarter, compared to INR 150 crore same quarter last year on a like-for-like basis. Now when we talk about pandemic period of COVID, we didn't stop investing, we opened a very large robotics facility in Bangalore. And we -- and our timing was so good because just about that time, we found there are a lot of customers who are expanding their capacity and putting some greenfield possibilities. You will see maybe later in the day, our communication team will announce a large opportunity that we are working with a very large-scale manufacturing in the country. There are quite a few. We are already selected, and we are working on it. So you will hear them over a period of time. But robotics is tracking very well for us at the moment, which shows also the signs that the so-called Aatmanirbhar Bharat or sustained manufacturing locally actually has started kicking off. When we look at the self-reliant and end-to-end manufacturing, I think our product portfolio is quite deep. All our 16 divisions in the country are highly localized in terms of how -- what we manufacture locally. In fact, we are not only manufacturing locally for domestic market, many business lines are exporting gradually. And this is really creating a good base for us to participate in forthcoming growth in the marketplace. And also, as we see that the different PLI schemes that are being promoted, those are the PLI schemes which are helping the consumer-facing industries, and we are the ones who supply to these industries. So as the demand grows in front of us, we will see a kickup of all the product portfolio because that's very industrial- and infrastructure-oriented as we go forward. When we look at the focus areas of growth segments as are visible to us, in this picture, you can see the data centers, renewables, electronics and food and beverage and et. al. And then we see that the -- though you see certain segments in the orange, but it is good to note that all these segments are positively impacted by the budget. So that means all the market segments which are relevant for us, they are foreseen to be kicking up by the government initiatives and also with the existing demand we have. So if I count the number of market segments, there are 3, and then we have 6, that is 9. And then we have about 5 on top. So that is about 15 market segments, which are really core focus area for us. And then we have 16 business divisions, which focus on it, and all of them supply something or the other or service something or other. So we have a very solid matrix of multiple product lines and multiple market segment exposure. And you always have something -- some cyclicity going up and down, and that's what keeps this company resilient, and that's what we feel -- going forward, that's how ABB's resilient story will build up. When we look into the sustainability, that is something which is a high focus area for ABB globally and ABB in India. We have a high focus on safety. We have daily reporting of hazards, and we keep around 98% to 99% resolving of the hazards to keep everybody safe, not only our employees, our customers as well as our contractors. We have a lot of programs that we run in the company for health and well-being of our employees as well as contractors. We have a lot of society projects with CSR, wherein over 1 lakh lives with focus on contributing towards pandemic, they were positively impacted by us. We wish we could do even more. We recycle 93% of the waste that gets generated in our operations. At the moment, we are using 40% of green power, and we already have plan in place wherein we will convert our campuses to the highest possible level of the green energy usage. And water consumption last year reduced by 30%, and we also focus on the supplier sustainability as we go forward. As we start this year, we already have started an initiative in all our 5 locations and 22 country offices and 27 factories, and the campuses, we have started the green initiative. And our ambition is to convert all our buildings as well as our campuses as the green campuses with the proper certification in place within this year or/and next year. In the case of CSR, the one part of higher profitability I personally like as the head of the company is that we are able to contribute more towards our CSR program. And we do know that we make some impact. [Audio Gap] a very large impact across the country, but we are very focused on the impact that we can make in the areas where our influence is absolutely available and we can make a difference. And we do try to make a difference. There are multiple projects which are being run across different market segments or different segments of our focus. So at this point, I'll stop, and I'll hand it over to our CFO Mr. T. K. Sridhar to take you through financial highlights.

Thank you. Thank you, Sanjeev, for giving us a brief overview of what's happening around. So financial performance. I think the numbers are there, but I could tell you some stories behind it, which is more important for us to understand how the performance has been, right? So we -- our order intake for the fourth quarter actually is better than sequentially from the third quarter. I mean this -- we see the numbers in -- are resonating with the parabola slide, which we showed you initially. And so the orders sequentially grew by 12% and the revenues by 5% sequentially. And then the profit before tax, excluding exceptional one-off items that we had on a like-for-like basis increased by 52%. But the reported numbers of PBT and PAT after taking all the impact, right, was down by 29% and 27%, respectively, for the -- sequentially between Q3 and Q4. When it comes to the Q4 2020 versus Q4 of 2019, I think the orders fell down by 7%. Revenues dropped by 13%. PBT before exceptionals improved by 16%, on an overall basis remained flat, and the PAT was reduced by 4%, right? So this is something which is a quarter-on-quarter plus sequential performance overview. But the highlights of it for Q4 2020, I think we saw a recovery in the overall momentum of business. Motion and Electrification divisions, actually, we had an opportunity to maximize the performance due to pent-up demand which was coming up, right? And robotics, after a long lull period, looked at some uptick, which was happening in their relevant segment. Industrial Automation, which was having legacy projects and also with a strategic decision to ramp down our business in conventional power generation segment, I think we had to take an one-off impact so that we could accelerate closure of those particular projects, release back the monies which are being locked up over there. And we could release the resources locked up over there to put to more better projects and converting it into better profitability going forward. And needless to say, in all these activities what we did, our focus on cash flow was absolutely on target. And so we could see good cash coming in. So therefore, we closed it with an all-time high of INR 2,200 crores in the last 10 years of ABB operations as such, right? So I mean, some commentary about how it was compared to the previous quarter, which is -- sequentially, there is also a relevant point because we are undergoing through a recovery phase. So I think the pace of execution definitely improved. And there was a planned execution by all the business lines. So that means the predictability has definitely been better compared to Q3, right? And one-offs I've already told about how we booked it in industrial automation. And the efforts to improve cash and collections and receivables, making the balance sheet pretty agile is one of the top focus areas, right? So going forward, what should -- what we as a team believe should be a focus area for us. Of course, the order intake, both with speed and quality, something which we need to watch out for and make sure that we are there quarter-on-quarter, so that it builds up the backlog with us to deliver the future revenues. And we definitely will sharpen our focus on service and exports, which were sort of held back because of mobility challenges on account of challenges outside India, right? And also, when it comes to cash collections, we will never let go the good momentum what we have put in, right? And also we look at how we improve upon from there. And while we do so because normally, when the growth kicks in, and there are a lot of flurry of activities, right, it is very important that we, as an organization, have a very sharp focus on our internal controls, on our governance processes. And therefore, it's very apt to say that we maintain billions in basics, which will be a founding block for all of us to take forward this organization from where we are in the growth period, which is anticipated in 2021. Moving over to the next slide. This gives probably a summary of how the financial operations panned out in 2020. So the numbers are small by compare -- on my screen at least, so let me read through it for you. So when it comes to material costs, we remained steady with 66%. If I remove the so-called one-offs, we are better off than that, right? And personal expenses as what we had embarked during the pandemic period where we had taken certain optimization actions and rationalization, right, ended with 2020. So that was a special fee, and that's how even the organization contributed to make sure that we remain competitive in the market. So that period ends because normalcy is picking in from at this point of time, right? And other expenses are also benefited because of lower travel cost, freights and services and from third parties. But if you look at the waterfall, right, so this is something which gives you the entire story of how the profit, I mean, grew into the organization, right? So we started with a PBT of INR 80 crores last year in Q4, right, but we took a solar -- impact on account of solar -- impairment for solar business to the extent of INR 70 crores. So it was also in one-off. So we believe that should also be added back. So that without that, we are at INR 150 crores. So it was what is a starting point for Q4 2019, right? And from there, if you look at the elements which impacted us negatively as well as positively, definitely -- the volume loss definitely impacted us negatively because we lost so much of contribution on that. But we see it on the personnel expenses, on other expenses and the depreciation and interest costs, which we spent because depreciation was on account of capitalization of the robotics new plant, which we had and some of the projects what we did. And also on the interest costs, we had the accounting standard, which had to be treated differently. And with that, we arrive at a PBT of INR 173 crores, and that's how we are saying INR 170 crores to INR 150 crores, 16% increase. And to that, we have to take a onetime impact of Industrial Automation business. So that is kind of the INR 93 crores. And therefore, we are at INR 80 crores, which is a similar number compared to the previous year same quarter, right, but as a percentage, we improved. Going to the next slide. I think this gives a bit deeper impacts about how each of the divisions performed, right, and you could really see that Electrification and Motion division chugging along pretty well, right? Orders, which were booked by Motion division during this particular quarter, was INR 631 crores and for the full year is INR 2,325 crores. They are sitting on a backlog of INR 1,300 crores, which provides good visibility for revenues for at least next 6 months. And their revenues or the orders are focused, their markets are focus around data centers, metro rail, food and beverage. And they also did a launch of mid-range formula air LV breakers, and they also got a lot of repeat orders from data centers and this is, again, another story. I think 2 years before, we identified that this is one of the markets which will grow, and it has clearly now result -- I mean we could see the results of that investment effort. And the customer connect and engagements, what the team made in the last 2 years. So it was a very standout example for this. And of course, we also have a new market which has increased for them in terms of panel for packaging. Revenues, INR 647 crores for the quarter. For the full year, INR 2,022 crores (sic) [ INR 2,222 crores ]. And a very strong performance, export performance, right? Service business, yes, they had a certain constraint which is still there, and which is now focusing more on remote services and wherever customers have allowed it, hopefully doing it. And the backlog, which was there was executed as per plan. There was no hiccups -- limited hiccups in terms of customers lifting the material. So I think that -- again, I take clue from what Mr. Sanjeev Sharma was saying about, we are more becoming high product-oriented organization, so thereby, the predictability of revenues. The short-cycle orders remain the key. And the profit before tax, INR 91 crores, and this is more evidenced through capacities which have been utilized for rationalization that helped as you have seen from the P&L account. And the previous year included solar business, which was not so attractive. And also, we took good pricing actions within the market. So Motion was [Technical Difficulty]

We now have the management line back in the conference. Sir, please go ahead.

Thank you, and sorry for the technical tag, which dropped us out, rather kicked us out of the system. So I think they wanted to hear the story of Motion more clearly. That's why I think it was a natural stoppage. So Q4 2020 for Motion is, I think, I would say, a stellar performance quarter for the Motion division. So we could see all the parameters in a very steady direction of -- towards -- developing towards the north. So orders, INR 535 crores. For the full year, INR 2,300 crores. Backlog, INR 1,500 crores, so pretty solid backlog. And the impact came from more on focus on transportation, digitalization and service. And motor business orders, motor business grew pretty rapidly, and they have a good order basket from channel partners and export market subsidiaries. Revenues, I think we saw good growth momentum in products and remote services, right, and focus -- strong focus on backlog execution was the hallmark of this particular success. The net profit then improved substantially due to 2 major reasons: one, great capacity utilization and also cost optimization measures, which went in behind how to deliver the projects and systems and also small product orders. And also, they had a very favorable product mix in terms of export and the markets to which they would have better profits. So it's more about how they managed the portfolio with profitable mix. Industrial Automation, yes, they were impacted by one-offs, absolutely. And -- but to be honest, I think these are the themes which are putting in the highest, what we call efforts, in the market, intense efforts in the market to make sure that we are able to carry through this challenging period. And probably given 2 quarters from now, I think they should be able to see some benefits of those investments in terms of efforts of what is being done by the team today, right? And a lot of hard work. And very focused effort is helping us to make sure that Industrial Automation as a division is able to sustain this challenge in the market. So in fact, of all this, they also had a good uptick in the orders for the quarter 4, which was better than sequentially. And revenues, I think, were also in line with expectations what we had. But they definitely had, when it comes to profitability, an unfavorable mix. Their service was down by 20% for the quarter-on-quarter. So that's something which is a bread and butter of Industrial Automation. So that really impacted them pretty badly and also the impact what we took. So I think this was a quarter where they had to take this and it cannot be sort of -- we clearly arrived a decision in consultation with the Board that this is some of the projects which we will not continue going forward, and this segment is no more attractive to us for the reason that PG also moved out and become a separate company, and this is also more related with PG business. So slowly from the conventional power generation is what we will be very selective or not very relevant over there going forward. Robotics, I think they saw a good uptick in the orders, so INR 47 crores and better than Q3, definitely and better than the previous quarters as well. And revenues also, we were able to execute as planned, and profit was definitely better than Q3. So the next slide is about how is our pie of businesses, which we will clearly see from this particular chart. It's dominated by products, and it can only become more intense going forward. That's what I perceive from here. We are with the right mix and this also gives better predictability for us. So we work on a very diversified business model. And if you look at it, our domestic to export, product, services and projects as well as the channels to the market are pretty solid, the way we are. And we are making sure that we are staying very relevant, very engaged with the customer and able to take the business what we should be in these particular segments. So -- and this is probably last slide, yes. So while we did this, we also made sure that we build value for our stakeholders. So the dividend percentage has been increased by 250%, right? So we will declare it -- I mean dividend after approval, it has been recommended -- it was proposed to the Board. The Board has recommended the 250% as what you'd have seen in the press release yesterday. It will go to the shareholders for approval in the AGM in April, and afterwards it gets paid. So I think we made sure that even in spite of the challenging period, that we remain consistent and more rewarding to our shareholders, and that's how we decided that we should definitely consider this particular scenario to pay out more. And operationally, our focus will be on seamless execution, and cost optimization efforts will never wean down. And focus will remain on the key growing segments like data centers, electronics, food and beverage and renewables, right? So while I say so, I also would like to call out certain risks, which we see for 2021, which is really relevant. So -- and I would categorize them under 2 categories, one, which is -- which falls under the macro event, one is, of course, as Sanjeev was mentioning, the pace of vaccination coverage and the reduction of the slowdown of the pandemic impact. So that's some of the -- one of the key risk, which we see the longer the time it takes, then the assumptions of growth could be impacted. And also the bounce back of investment agenda by the government as what has been announced, is also a major key factor, which will remain for us to watch out. And while on this, we also have the geopolitical risk, like the India-China border conflict, which will remain open for some time and volatility that may be observed in the trade agreements between countries. So these are some things which we look at the political and the country sort of risks. And when we look at the operational risk, I mean, we will see that inflation could inch towards the north. And that is something which is always a key factor for us and along with side of the interest as well. And we also foresee definitely or we're also experiencing quite a good increase, a strong increase in the commodities, which is basically steel, copper, oil and aluminum, which are key ingredients for our material costs. And definitely, the next would be the currencies gaining against Indian rupees and the CHF, the euros and the dollars. If you have seen, it has almost been double-digit increase over the previous year. And so that means that the businesses with high import content, but less of exports could be impacted. And similarly, we also see in order to have a focus on PLI, it should not happen that import duties are increased by government to support local manufacturers. So while I called out these particular risks are there are the back of the mind, we also have mitigation strategies to deal with it, right? And we will make sure that we put the best efforts to give a more credible performance going forward. So with this, thank you very much for the patient listening. So we could open up the call. Vikram?

[Operator Instructions] We have our first question from the line of Bhavin Vithlani from SBI Mutual Fund.

Congratulations for the performance despite challenging environment. So I have a couple of questions. First is on the robotics. In the previous quarters, you mentioned about how ABB is trying the effort to go deeper into India and the SME, MSME channel and we have set up a manufacturing segment. Could you give us an update on that? How are we progressing on that front? The second question is on the Industrial Automation side. Wherein your presentation, you mentioned about conventional power gen as a defocus area. And some time back, turbochargers was also being mentioned as defocus area by the parent. What's the contribution of these segments? And what should be taken as a growth area? And the last question is, a couple of quarters back, you had mentioned that in line with the target EBITDA set by the parent of 15%, ABB India is also striving towards that effort. If you could give us an update on that, will be useful. These are my questions.

Yes. Bhavin, the last one was the third question. So I think first 2 questions, hopefully we answer, but anyhow, we'll give a color to it. So Sanjeev, on the robotics piece?

So on the robotic side, as you said, we have been making investments, and I will also invite my colleague, Subrata, who leads this division, who has been front leading the expansion of robotics, not only in automotive, which has been the traditional segment, but also diversifying into new opportunities in SMB, in the area of electronics manufacturing, and that really is expanding quite well in the country. And so our efforts to expand robotics into new market segments as well as segments which can automate itself to not only for productivity reasons but also for repeatability and high quality, which is demanded by domestic consumers as well as when the large-scale manufacturing is moving into the country, the -- their reference point is, how it gets manufactured in Japan, how it gets manufactured in China, where already the scales are very high. So the moment the impact comes into India or the manufacturing come in India, the demand is to the same scale. And so far, our experience of interacting with certain customers is that once they visit our facility and then they work with our team, we have not seen them going anywhere else. I think they stay with ABB. Subrata, you want to add some color to the market segments that are working well and which are the growth areas that you're seeing?

Good. Good morning, everyone. First of all, we see a lot of technology shift into even robotics side. And we are continuing to invest in this. Basically, our current location in the Nelamangala, which is about to -- around 1,000 robots, acceptance test, factory acceptance test, we are capable to do it. And with having very good training centers and with demo sales, it is giving us a lot of advantages in the market as well as reach customers there. So now I talk about the technology shift, and ABB is continuing to grow into this and to capable more and more flexible and collaborative technologies. And ABB is going to launch the new product on 24th of February and which is -- which will be accelerating the growth of fully automated production facility. So in India, also, I have seen, there's a huge response from the customer side when we work on the digital-equipped facilities. And also the customer experience centers and the demo centers, the customers are coming and having hands-on experiences as well as with the education sector. Even education sectors are quite interested, responding very fast. And I feel that it's -- 2021, coming up with the robotics is a more good level of interest into the -- among the industries and the education.

Thank you, Subrata. So we see that -- if you have been watching the ratio of robotics per 10,000 workers globally, you will see that the density of robotics in Japan, Korea and China is far, far higher than India. So it's just a -- the gap building will take place, and we see that acceleration bridging itself as we go forward. And as the corporate and all the large-scale manufacturing, which is moving into the country in certain segments, I think we see a good traction there. Okay. The second question was for Industrial Automation. So I hope -- Industrial Automation is a very important piece for us, especially we serve the core industries like energy industry, power generation, which we talked about a little bit. We have a shift of focus there. We have mining, metals, cement, all the automation and electricals go from us to them. And we continue to focus there. And that business is led by 2 divisions. One is for the process industries and other is for the energy industry. So Balaji is on the call. Balaji, did you capture the question on the process automation, and would you like to respond to that?

Yes. Sanjeev, for clarity, if the question could be repeated, it would be good, please?

Bhavin, do you mind repeating the question?

Yes, please. So in the presentation, it was mentioned that conventional power gen is our defocus area. And the parent also spoke about turbochargers also as an area which is not core. So what could be the contribution of these 2 subsegments? And which are the industries that you are seeing increased traction within the IA segment?

Okay. So Balaji, you could answer the first one, which is the conventional power generation. So how we are sort of defocusing and how we are adding different markets to that. And on the other one, I would give a color to that. So if you could do it quickly, please.

Sure. Like you've seen, the conventional power gen as a market, the focus is generally to move towards much more renewable sources of energy. That's how the market is moving. So the impact of -- over the period of time has been considerably lowering because we have also seen that the number of conventional greenfield project that comes up is quite lower. We will, of course, keep our continuing -- to keep our focus on the services portion of the installed bases that we would cover. But when it comes to greenfield, as Sridhar had explained in the presentation and in his talk earlier, we would be extremely selective. And now this gives an opportunity to focus on a few areas that we have seen are growing, especially around the pharmaceutical, definitely is one which is growing. There is also increased focus on renewables, and we have an attractive piece of automation for the renewables. We are also looking at a few opportunities to bring newer technologies in chemicals and especially in the paints and the grease segments.

Yes. Thank you, Balaji. So Bhavin, coming to your next question, right? So because what is the share of turbo business in our this thing. So we normally don't give that because -- but I could definitely give you a range within which the 3 business areas, which has been identified as the group, which has been said. It would be less than 5% of the total turnover of the organization.

And the last question, where 2 quarters back, it was mentioned that we will be striving towards achieving the 15% margin overall. If you could help us, where are we? And are we on track on that target?

So you have heard our global CEO, I think that's what you are mentioning. And that's the global organization ambition and aspiration. That's how the -- all the simplification of the organization and agility infused in each and every division is going to lead us there, and we see very good signs of that. And we see the same thing in India, wherein we have very well entrenched 16 local divisions, and all of them have now the end-to-end, not only responsibility, but also resources to drive their business model in the market, and they are best-in-class. And also, we are -- we have committed not only the margin corridor. We have also committed that we'll be #1 or #2 in each of those businesses. That also is the global aspiration. So some of the businesses in the country are quite mature, and they're already performing at a very good level. And we see, as the market rate recovers and as our capacity utilization goes up, it will start inching towards the expected targets. And then there are certain businesses, which are high-growth areas, but then they are not to the scale at the moment. Like robotics, for that matter, is a very exciting area, but it's not to the scale as we expect, given the absorption level in India relative to China and other places. And we will see they will also move in that direction because that's, again, is a value-added business. So I would say that's a common target for us. And given the solid balance sheet we have, solid local expertise that we have built into each division and the markets recovering in face of us, I do see a good perspective going forward in all -- for all of our divisions. And wherever we find any particular division or any submarket segment is not performing for us, like we did in December, we don't hesitate taking an action on it. So -- but that's very clear at the global as well as local level, Bhavin.

We have next question from the line of Renu Baid from IIFL.

My first question is to understand that now that we have almost INR 2,200 crores of cash on books and the current business working capital has substantially reduced. So how do we plan to utilize this cash for capacity expansion? If you can share any targets for '21, '22, which areas are we targeted for, or it could be used for dividend buybacks or M&A? That's the first question.

Thank you, Renu. Very nice question and very interesting question. So we'll also want to explore how to use it. So I think we have our plans very clear. First of all, I think this INR 2,200 crores what we have and the growth scenario, which will pan out in the middle of a pandemic situation where we need to manage, right, will be a big support for the businesses to plan itself, right? So in other words, in this other -- see this cash will definitely be a strong support for the businesses to plan their investment in the market, number one. So that's number one. And number two is around the capital -- CapEx investment, right? So when we build our strategies going forward, as the pandemic situation normalizes, and that could be in Q3 or Q4 of this particular year, right, so wherein we will have a more long-term view of the market, I think the businesses will definitely look at -- and globally also, they will look at India as a place of investment. And to be -- to complement that, it's not only cash, but we also have good amount of land in Nelamangala, [ Vadodara ] as well as Faridabad. So I think we are very clear this is going to be a very big advantage for the global as well, right? So with Morten on the Board who is in -- who leads the MO business and has very deep insights in the country, I think we will -- I mean, it's definitely a no-brainer for us that India will play a major investment destination going forward. But I think we need to give time for the situation to normalize. I mean Europe has to come out of it. So U.S. has to come out of it. India is definitely in the right direction. So let's give some time. So probably 3 quarters down the line could be a good question to see what the cash provision at the point of time and what the growth which is then playing out in the market. And that's how do we sort of balance our capital allocation to fuel for the investments in the country, right, for ABB as such. This is my...

Right. Sir, my second question is, if we see sequentially moving from 3Q to 4Q, the growth across segments has been relatively soft, not as strong as a typical fourth quarter, despite end markets almost stabilizing now. And order inflows also in the last 2 or 3 quarters have not been as good because of the pandemic. So when we move towards CY '21, growth looks a bit itchy in terms of volume scale up. So what would be your inputs in terms of growth outlook for the next 12, 15 months and combination of short-cycle orders, which can support you might come back to FY '17, '18 levels?

Yes. So I think I recall the slide of what Sanjeev has shown in different markets, which is a green -- dark green, light green and the orange side of it, right? We see that the government initiatives should help those markets which are there in the orange scheme, right? So our view -- I mean, the investments from the government if it is channelized and activated in the right momentum should reach those particular markets. And that in turn should pick up, which should impact positively ABB offerings to the market, right? So to answer your question very directly, the next 2 quarters, we can only anticipate that the order intake would be soft -- would continue to remain soft because we have few markets to play with, which are very well identified. But when these initiatives realize into actions to the results in the market, so then probably is where you could see the second half of '21 with more clarity at this point of time.

Sure. Got it. So probably we might be able to cross CY '19 towards the end of the year in terms of business volumes?

Yes, that's what we are looking for.

We have next question from the line of Nitin Arora from Axis Mutual Fund.

Sir, generally, just to elaborate on the data centers and the opportunities, which you talked about. Renewable, we understand you are still there in big way. But in terms of data centers and apart from the sector which has been remitting cash flows, I mean to say whether it's pharma, whether it's auto, whether it's other segments like food and beverages, if you leave aside that, what are the drivers? What are the segments which is now coming back? Or where do you see next 6 to 8 months or, let's say, 1 year, because you talked a lot about government initiatives? These government initiatives are more towards the infra or, let's say, the road capital expenditure and all, where we are not there. So what are these drivers? Are these SMEs you are seeing are driving now? They are in a better shape, which will get some orders to you? If you can elaborate on these end segments that will be helpful, apart from the segments which already generated cash flows in the last 10 years? So that will be helpful. That's my first question.

Okay. So Sanjeev here. So I give you the pecking order of the market segments, which we see are tracking well and the budget impact of it, what it is. So you have rightly said, so if you really just even for sake of repeating it, but just to create a hierarchy of market segments. So top of the market segment in terms of growth we see is in data centers, followed by renewables. And the electronics is another one which was never talked about. I think that's another area wherein there is a high growth. So for data center renewables, there is nothing specific in the budget. But on the electronic manufacturing, there's quite a boost coming in that area. It's already tracking well, and there will be a further boost in this area. Food and beverage comes into the next pecking order. It is, again, growing double digits, above -- mid-double digits. There's not specific budget impact on this. Pharmaceuticals, you have talked about, there's a contribution from the budget. Power distribution is another one, which impacts our electrical distribution portfolio. There, again, we see a lot of initiative by the government, a lot of allocation of money in that area. That will have a positive impact due to the budget as well. Already, it is tracking on its own above double digits. Water and waste, that's another area where we see traction and there's a positive impact. Railway and metro, again, there's a positive impact because of budget. It's growing 10%. Automotive is coming back now. And also the way the government has set up the policies in the budget, it really has a very plus-plus-plus impact on the automotive sector as we go forward. So we will see revival of it. Some of the muted segments, as we talked about, buildings and infrastructure, I think it is muted, but we see going forward traction coming into it. Same thing goes for oil and gas, chemicals, which is muted. But again, we see now good activity, good project pipeline adding up to that. Same way goes to cement, it is muted. But there is some budgetary support, not a lot, but it should track well with the industry as well as infrastructure changing. And then same thing goes for steel. And metals and mining is really at the bottom, and the conventional power generation is also at the bottom level. And we don't see very strong budgetary support for these market segments. But we are very, very specific and selective with our customers, the large-scale customers and they continue to kind of spend in the OpEx and occasional expansion in this particular area. So that's how we see it. I hope that gives you some color.

Sir, actually, my question was that when we look at auto or, let's say, food and beverages or pharma, these are already driven in the last 10 years and despite that, our order backlog, or let's say, the sales to backlog has been one time. The question was more on the direction. When you talk about data centers, the data centers definitely can grow. But how big is for us right now? If you can quantify, what will drive, which will take your, let's say, growth on the higher side? Because these are the segments if anyway which is growing, and we have been not able to grow more than a onetime sale. So the question was more on the direction that how are you sizing the other businesses? How are you looking at those opportunities, which can really drive growth? But I got your answer on that.

So probably, I can make a very short brief. I think I can speak in your language. So our business model doesn't work on 1 market segment or 1 product. Just like say, when you invest in the stock market, you don't invest in 1 stock, and you don't expect all the recoveries from there. So we are well diversified. We work -- our play is more the diversity of our market segment and the product offerings goes into the multi-market segment. And this matrix plays itself out with the sagacity of those segments, and that's what it is. So we don't really tag ourselves across one. We do look at the penetration level we have in those segments, whether they are tracking very high or even if they are low tracking, but if our penetration level is low, our efforts are still doubled up in that area so that we can gain more market share and more footing in it. So I'm not able to answer to you very specifically the way you are asking that question.