ET NowIn a chat with ET Now, Bazmi Husain, Managing Director, ABB India Limited, shares his business outlook. Excerpts:
ET Now: You have seen a decline in the top line on a yearly as well as quarterly basis. What is the main reason behind the weak earnings this time around?
Bazmi Husain: The top line is flat despite about Rs 150 crore of revenue which we did not ship out of the door. Financial arrangements were not put in place by our customers. So going with our motto of putting cash over revenue, we held back the shipment. But despite that, it has been flat.
Having said that, our profitability is up. It is up about 16%.
ET Now: Margins have come in higher than what they were last time around. But it seems that the boost is not from operations, but from cost controls. Is this the trend we can expect for the next few quarters too?
Bazmi Husain: It is a reflection of the efficiency which we have been trying to shore up. Cost control is certainly one aspect of it. We have been talking about new and more efficient designs, supply chain reductions and productivity improvements. In this quarter a lot of that came together.
Also, there was an impact of the euro softening a bit. But it was not the most significant factor. It is a combination of several factors, but the key highlight is that profitability has continued to improve driven by new efficiency measures.
ET Now: What can we expect for the rest of 2015?
Bazmi Husain: The speed of implementation of reforms is more important than mere reforms as such. There are several reforms that have already been announced. Now, it is the speed of implementation which is going to decide how the rest of this year pans out.
It is no longer just an issue of investment being revived. First the demand has to pick up, and then will come the investment revival.
ET Now: With the currency in favour of the parent company, can we anticipate a delisting soon?
Bazmi Husain: ABB has had a long-term commitment towards India. As of now, there is no plans for delisting.
As far as Swiss franc appreciation is concerned, we had hedged all our exposure at the time of the commitment itself. So, any impact of the likely variation is already covered for us.
ET Now: You have seen a decline in the top line on a yearly as well as quarterly basis. What is the main reason behind the weak earnings this time around?
Bazmi Husain: The top line is flat despite about Rs 150 crore of revenue which we did not ship out of the door. Financial arrangements were not put in place by our customers. So going with our motto of putting cash over revenue, we held back the shipment. But despite that, it has been flat.
Having said that, our profitability is up. It is up about 16%.
ET Now: Margins have come in higher than what they were last time around. But it seems that the boost is not from operations, but from cost controls. Is this the trend we can expect for the next few quarters too?
Bazmi Husain: It is a reflection of the efficiency which we have been trying to shore up. Cost control is certainly one aspect of it. We have been talking about new and more efficient designs, supply chain reductions and productivity improvements. In this quarter a lot of that came together.
Also, there was an impact of the euro softening a bit. But it was not the most significant factor. It is a combination of several factors, but the key highlight is that profitability has continued to improve driven by new efficiency measures.
ET Now: What can we expect for the rest of 2015?
Bazmi Husain: The speed of implementation of reforms is more important than mere reforms as such. There are several reforms that have already been announced. Now, it is the speed of implementation which is going to decide how the rest of this year pans out.
It is no longer just an issue of investment being revived. First the demand has to pick up, and then will come the investment revival.
ET Now: With the currency in favour of the parent company, can we anticipate a delisting soon?
Bazmi Husain: ABB has had a long-term commitment towards India. As of now, there is no plans for delisting.
As far as Swiss franc appreciation is concerned, we had hedged all our exposure at the time of the commitment itself. So, any impact of the likely variation is already covered for us.
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