ABB posts significant growth in earnings and orders

By Our Staff Correspondent

MUMBAI, FEB. 21. Asea Brown Boveri (ABB) has announced a net profit of Rs. 54.01 crores for the year ended December 2000 against Rs. 37.19 crores in the previous year. The company has announced 50 per cent dividend subject to approval. ABB's net sales for the year were at Rs. 793.27 crores (Rs. 775.8 crores) and other income Rs. 13.57 crores (Rs. 17.55 crores).

The company provided Rs. 3.9 crores (Rs. 6.12 crores) for interest, Rs. 16.76 crores (Rs. 15.8 crores) for depreciation and Rs. 16.5 crores (Rs. 16 crores) for tax.

For the year, ABB had orders worth Rs. 112.77 crores; an increase of 52 per cent compared to the previous year, despite tough market conditions and slower economic and industrial growth. Large infrastructure orders from customers such as WBSEB (Rs. 132 crores), MSEB (Rs. 44 crores), APTRANSCO (Rs. 20 crores), NTPC Talcher (Rs. 26 crores) and Delhi Metro Rail Corporation (Rs. 51 crores), mostly financed by multilateral funding agencies, contributed significantly to the order book. The significant orders received from industry include Hindalco (Rs. 58 crores), Chettinad Cement (Rs. 19 crores) and Nagarjuna Construction (Rs. 21 crores). Exports were to the extent of 7 per cent of turnover or Rs. 54 crores and the company hopes to improve on this.

ABB started the new year with an order backlog of Rs. 700 crores, according to Mr. John Clarke, Executive Vice President & Chief Financial Officer, ABB.

The company has a fairly large receivables position of 155-160 days or Rs. 400 crores. Mr. K.K.Kaura, managing director, ABB attributed this to the large percentage of sales done to government.

``We are not happy with this. There have to be some improvements from our side as well as the customers' side,'' Mr. Kaura said. Mr. Clarke said a sizable amount of business was done in December 2000 and there was a problem in receipts during the end of the year.

In line with global strategy, ABB India will pursue sustainable growth driven by the groups new customer-centric approach, continuing expansion in key areas and broadening its industrial IT offerings across the entire customer base.

According to Mr. Kaura, while about 12-13 per cent of ABB's revenues come from services, the main revenues are 40-45 per cent from its power transmission and distribution business, 40-45 per cent from business automation and the balance from its building systems and technology business.

For the current year, Mr. Kaura said the topline growth would improve ``given that the order book position is better than the past year we could at least maintain it.''

The company's growth strategy includes strategic marketing focus, providing value added solutions, managing for value and people development.

Mr. Kaura said the company has set up customer segments serving the end users including utilities, process industries, manufacturing and consumer industries and oil, gas & petrochemicals. The company will serve them `end to end' and they will be backed by two manufacturing divisions - automation technology products and power technology products. The company has also segmented financial services and new ventures.

The financial services division will operate mainly out of Europe but will also offer local solutions. It will support ABB's marketing efforts and will encompass project development, debt financing, project rate finance and leasing solutions.

For the fourth quarter ended December 2000, the company's net profit was at Rs. 29.06 crores (Rs. 24.78 crores) on net sales of Rs. 286.05 crores (Rs. 259.7 crores) and other income of Rs. 4.88 crores (Rs. 10.59 crores). The company provided Rs. 77 lakhs (Rs. 1.69 crores) for interest, Rs. 3.88 crores (Rs. 3.79 crores) for depreciation and Rs. 9.5 crores (Rs. 11.7 crores) for tax.

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