ABB India Ltd (NSE: ABB) Q4 2025 Earnings Call dated May. 12, 2025
Corporate Participants:
TK Sridhar — Chief Financial Officer
Sanjeev Sharma — Managing Director
Kiran Dutt — President, Electrification
Analysts:
Renu Baid Pugalia — Analyst
Mahesh Bendre — Analyst
Subramaniam Yadav — Analyst
Mohit Kumar — Analyst
Parikshit Kandpal — Analyst
Umesh Raut — Analyst
Jonas Bhutta — Analyst
Amit Mahawar — Analyst
Aditya Mongia — Analyst
Presentation:
Operator
Ladies and gentlemen, good morning and welcome to the ABB India’s Limited, Q1 January to March Quarter CY 2025 Earnings Conference call. [Operator Instructions Please note that this conference is being recorded, and any unauthorized recording of this call is strictly prohibited. The recording will be made available on the company’s and SEBI’s website subsequently.
I now hand the conference over to Mr. TK Sridhar, Chief Financial Officer of ABB India Limited. Thank you, and over to you, sir.
TK Sridhar — Chief Financial Officer
Thank you, Ryan. Very good morning, once again to all of you. Thanks for joining the Q1 2025 call.
So, along with me on the call is Mr. Sanjeev Sharma, the Country Managing Director, and we have Kiran Dutt, who — and Ganesh Kothawade who lead Electrification Divisions, and then we have G. Balaji who leads the Process Automation, and Subrata Karmakar from Robotics. Sanjeev Arora could not join this call as he is traveling, but therefore we will handle the queries relating to Motion by ourselves.
Okay. So over to you, Sanjeev.
Sanjeev Sharma — Managing Director
Thank you, Sridhar. Good morning to all of you for joining us to know more about January to March 2025 quarter. This is our first quarter of CY 2025. Just to give you an idea about what happened in this quarter — so, just to give you a glance about how we are structured as a company, we operate with four business areas, namely Electrification, which all deals with the distributed solutions which distributes electricity in large cities, industrial complexes, large infrastructure projects, be it commercial buildings, tunnels, and residential buildings.
Then we have the products which also go into the manufacturing which is the installation products which are kind of add-on products to the industrials, so electrification portfolio is quite full, and it’s one of the — it’s the largest business area for us in ABB India. Followed by Motion, which has Drive Products, System products, System Drives, NEMA Motors, IEC LV Motors, Large Motors & Generators, Traction and Service, it’s all about energy efficiency and mobility-based solutions. And Process Automation, which caters to Energy Industries, Process Industries, Marine & Ports, Measurement & Analytics, this is all about productivity and energy efficiency for our customers in the large process operations.
Robotics & Discrete Automation is all about robotics that is we supply for automotive, ancillaries of automotive, electronics manufacturing and many other applications as manufacturing expands in the country, robotics is expanding as well. We operate our operations in India, which is in the 75th year of manufacturing. We operate out of five manufacturing locations, namely two plants in Bangalore, Nashik, Faridabad, Maneja, and we have 25 shop floors, operate with 28 sales offices, and also combined with the service offerings to the customers spread across the country. And we have more than 750-plus partners who take us to the deeper end of the market so that we can cater to and serve our customers in the — even in the remotest part of the country, and we continue to expand that. And as we speak, we are expanding our capacities, and as and when we are ready, we will also announce those to you.
Next please. So, for the January-March quarter, the financial performance is that our orders expanded 4%, revenues expanded by 3%, and profit after tax by 3%, on comparable basis year-on-year, and our cash balance stands at INR5,756 crores. We expanded our portfolio with low-voltage, frame-proof motors in higher frame sizes for IE2, IE3, and IE4 efficiency classes, and we are seeing a good uptake of this class of offering that we have in the market. They offer much higher reliability, safety, and efficiency. We also recently we also launched the range of modular LIORA switches from electrification smart building for commercial and residential spaces. It expands our portfolio to really near retail experience for our customers.
On the sustainability side, on Scope 1 and Scope 2 GHG emissions, we have reduced by 87%, comparable to our baseline in 2019. And our Nelamangala campus in Bangalore has achieved Mission to Zero status as part of ABB global sustainability journey to deliver net-zero emissions. We were also awarded Best Sustainability and CSR Practices company by Asian Center for Corporate Governance and Sustainability. We don’t apply for such awards, we were just picked up by their own independent research. So that shows that our focus of doing the right thing in this area gets recognized by the serious third-party companies, which really analyze the publicly declared data as well as the data available through the databases.
Now, in the quarter one we had a stronger momentum in core segments, and also complemented by few emerging segments, namely in transport, building and infrastructure, discrete process and our exports grew by 40% in this quarter, order backlog is up by 11%, and INR9,958 crores. That gives us a very good visibility going forward for the revenues that we have planned for year 2025.
Some of the highlights to you just to give you an idea about how this company with 18 divisions operating with 23 market segments impact customers in different segments of society and applications, like in the case of Indian Oil centralized pipeline information management system, we have provided automation digital solutions. We have also provided for an electronics industry major, some localized user language-based standing automation solutions. We have revamped distributed control system for a flue gas desulfurization for a leading energy company. We have for an integrated energy major we have supplied SCADA and PLC for a major offshore project, and of course the traction systems for railways were also part of our significant wins. And switchgear and other power distribution technology for a data center major was part of our kind of win and smart power solution for a water treatment plant and technology from System Drives for a tire company.
So you can see it gives you a kind of a spectrum of applications and industries that we serve. And that gives us the basic resilience in different cycles of the market, because we are exposed with multiple businesses to multiple market segments, and that’s why we have the confidence always to continue to navigate whatever changes that come into one segment to the other because economic cycle play through different market segments at different times, and we continue to have portfolio which applies in multiple market segments, and we continue to navigate ourselves forward.
Now, when it comes to the part of our business ethos is to continue to find new customers, and continue to serve our existing customers effectively. So we always have very wide and deep engagements with our customers in multiple forums, and each of the businesses engages with the customers, and also sometimes they come together and then they have the common customers together so that the customers know what our offering and business proposition is. And in these forums, we detect lot of new customers, and we start the journey with them for many years to come.
Now, when it comes to the diverse businesses which are catering to ’23 market segment I mentioned. So this gives you a picture in terms of which market segment from our portfolio point of view are on the high growth side, moderate growth side, and the low growth side.
Growth level doesn’t mean that the low growth segments, so-called growth segments, still form a large part of our offerings. And these cycle, and they sometimes are in low, they go to moderate, and the moderate segments can switch between high and low, and that’s the reason we continue to maintain focus on our offerings, including our service offerings to all these segments and the customers in these segments, so that we are effective and customers always appreciate whenever their cycle turns, that they have a consistent partner with them.
We will take a bit of a theme for this quarter deep dive, which is cement. So just to give you a granularity, so India is the second largest cement producer in the world and accounts for over 8% of global installed capacity. Cement volumes are increasing by 6% to 7% year-on-year. And as of 2024, India green cement market is valued at approximately $2.31 billion, and is projected to grow at CAGR of 5.85% through 2029. So we have a lot of offerings in this, and there are key drivers and trends, as you can see, which are led by spend by the government and also expansion of infrastructure, transport, mobility. And we see that this is a long runway and long highway for us to travel, and our solutions, which are essentially aid in supplying energy-efficient technologies for cement plant, because it’s a very energy-intensive process. And also the process automation and export systems, which helps cement manufacturers not only produce cement efficiently, but also manage the grades based on the market demands that come from the marketplace. So we have a quite a good suite of portfolio in this particular area.
Now, when we look into sustainability in practice and our goals. So as I mentioned before, we have the Scope 1 and Scope 2 GHG emission 87% reduced compared to 2019 level. Zero waste to landfill units, in 2025, we will have four units qualifying for that. And in supplier engagement, we are increasing and it will be — we will be training our suppliers to be also focused in this particular area.
Now our CSR activities, be it climate change module for teachers, developing an external road project to make sure that the communities around the industrial areas have a more safer access to their locations, and the children, the women, they can walk around in a much more safer environment, well-lit roads, well-carved out road, and there’s no mixing of traffic with the pedestrian, we continue to develop such projects so that the communities are safe and the women have confidence to come to industrial units to work, so that we can expand even our diversity range.
Green school campus programs, then, skilling 400 youth across locations, aiding and modernizing the hospitals in Nelamangala, which we handed over, and of course, special health camps including assistive devices distribution across location for specially abled people. And also sponsoring a project in Himalayas, wherein it helps waste collection and recovery center, because a lot of tourists bring a lot of stuff which cannot be left in — plastic cannot be left in the hills. So there are volunteers who collect it, and we sponsor collections and distribution of it in the right places.
So factors to watch out for in 2025, we see, well, there are different years and different cycles, and we are experiencing that cycle. So we are building ourselves upon consumption, investments, premiumization, domestic economic strain, and global trade uncertainty, a mix of this is on our table, and that’s where we decide where the opportunities are, and we focus on the opportunities rather than we get too worried about macros. And there are always opportunities, we have done it for a long period of time and we focus in the right areas to make sure that we navigate the uncertainties and at the same time keep making most out of the opportunities.
So with this, I will hand the presentation over to TK Sridhar to take you through financial highlights, and I’ll join you back later when we have a question-and-answer session. Thank you.
TK Sridhar — Chief Financial Officer
Thank you. Thank you, Sanjeev. So I think we get into another interesting part of how did we perform in Q1 ’25. So the first slide, so base orders grew up by 10%, I think this despite the fact that we had also had a large order in the last quarter, and we could make it in this quarter as well. So I think overall, I think which more encouraging is to see the grid-based orders growing while the large orders definitely are something which come as per the CapEx cycle, which get decided. So this is something which is healthy part of it. If you — if I remember correctly, the market was concerned in the last quarter in 2024, why were the orders not growing? And we did say that some of the orders were delayed, and it went into Q1, it may go into Q1 ’25. And that’s the reason why we could see a large order of INR200 crores, which is there for the particular quarter.
So I think the order backlog INR9,958 crores gives us a good visibility of what would get executed and for the future revenues two-thirds of it will get executed in the coming quarters, and the balance will go to the next year based on the project schedules and the long-term service order what we have for traction converters in the years to come.
So revenues 3% up, and I think this was more because the market were a bit volatile, so customers had a preference to schedule their supplies according to the tune of the market. They were slightly lesser but I think — but having said that, we are clear that as the volatility topics seize down, so I think they should also pick up going forward. So, profit before tax 20%, as what we are able to maintain at this point of time, again, coming from a good mix operating leverages and also a price realization, which we had.
And not to forget, we did have a favorable ForEx impact in this particular quarter, contrary to an unfavorable one in the last quarter. But it’s basically more to the movement of the foreign exchanges and the commodity prices which we do. So this is something which impacted the margin. But operational EBITA, which excludes all the foreign exchange variations or any other one-time impacts is what we see, still standing robust at 16.7%, 16.4% for the quarter, and it is in line with what we had done in the previous quarter.
So Q1 ’24 it is definitely lesser, and that’s more because the volumes in Q1 — Q4 ’24 was INR3,300 crores which is up INR400 crores roughly compared to INR3,160 crores in the current quarter. So, in other words, we did not lose out on any of the structural issues, it was only more about operating leverage, which was missing due to lower revenues.
So cash balance INR4,700 crores, I think our collections were able to keep speed with the revenues and also the overall collectability, we did not find any drastic liquidity issues in the market as what we go forward. So that’s something which we think we will continue to focus on, and we will definitely go forward to have different options to how to use this cash.
Next slide. Just to give a bit of a trend as to what it has been, I think what it used to be at INR3,000 crores, INR2,500 crores, we are now stabilizing at a base order of INR3,500 crores. That’s what we could see on an overall — at this point of time, and plus some large orders which came in, in this particular quarter. So there have been large orders in the last several quarters in the past, and that’s more from the demand which was coming up after the COVID CapEx cycle, which was rejuvenated in those particular quarters, and that helped us as well. And also the market focus into fast-growing market. The medium and large also has a reflection in this particular large orders, what we have been receiving. So on a backlog, 11% up year-on-year. So all — I mean, two-thirds of them are executed in the next quarters to come, and the balance would go to the — I mean, the year after. Yeah.
So this is an academic slide for those who follow the press release and also try to convert, I mean, look at what is the correlated with the local performance. So overall ABB group would have announced 1% or a flat demand environment from India, whereas we declared 4% including the large orders what we have in India [Phonetic]. [Technical Issues] So, a bit of a view into the I mean, P&L account. So material cost held at 58%, 58.3% holding robustly at that point of level, and it’s more coming from the point of mix of revenues, I mean, operational efficiencies, and also some price realizations, which are — which are favorable during the quarter. So that was something which helped to keep the material cost 58%.
Personnel expenses, higher than the previous quarter, and slightly, definitely slightly higher than the previous quarter. I think the deviation to this effect is more from the point of view of, a, number of people we have recruited more, and also we had certain salary revision which was done in this quarter and accordingly, the actual variations — valuations get done once in every year in the month of March because that’s a financial year which is applicable for all actual valuations. And so that gets recalculated based on a higher salary base. And that has a momentary impact for that particular quarter, and is consistent across all the first quarters in several years to come, at least since I’ve been the CFO in this organization, that is quite typical of it.
And other expenses with the same level, so I think there have been no, I would say one-off expenses, which has more, is more in line with the volumes and the inflationary trend, what has happened, and also in line with the marketing efforts, what has been going on to make sure that we are — we remain competitive and relevant to the market. The exchange rate case that is what I told, there is a swing of almost INR20 crores compared to the previous quarter, same year, and in the last year, so same quarter previous year. So that’s something which is on more account of mark-to-market impact which we have on the derivatives, commodities, and the foreign exchange reinstatements. And it is momentary, sometimes we have a gain, sometimes we have a profit. But at the end of the day, operating profit what it is important for us, and we are steady and strong on the operational profitability. So this — this is something which is there on the financial statement as what we see. Yeah, go to the next.
Yeah. Getting a bit deeper into business segments at this point of time, electrification continuing its strong run of INR1,600 crores minimum. So I think — and to be honest in INR1,791 crores of Q1 ’24 they had a large order from a data center, which is not there in this particular order, it is more base orders. So that way Kiran is very happy that he is able to get more of base orders in this particular quarter.
So I think overall electrification is able to have its focus on the sector which is relevant for them, and able to get their share of business over there. And revenue is slightly lesser. And of course, Q4, 2024 is always a good quarter for us because that’s the last quarter of the year, and therefore there is something which is very strong actions which happened to make sure that we reach the business performance levels compared to the previous year. So that’s something. But on an overall basis, INR1,200 crores revenues in the last four quarters, and now we are talking of INR1,300 crores revenues overall, I think an upward trend has been maintained, and the profitability we are 25.7%, so good, I would say it’s an — in all standards pretty, pretty much decent from the electrification division from where they were coming from.
Yeah. Motion again, we had a large order of INR200 crores from railway segment now again. So I think that’s above [Phonetic] from the tax — for the Traction converter business. And so we’re able to keep up that particular momentum of INR1,200 crores. Revenue steady at INR1,000 crores, INR1,100 crores every year, every quarter, and that should slightly go up going forward as the backlog starts to execute itself from the project orders, which is there, and profitability remains solid at 22%.
Process automation, I think this is where I think people would be interested to understand, we have Balaji as well, so there could be any direct questions to him while doing the Q&A. But overall, I think process automation is dependent on the CapEx in our decisions, which are very much relevant for them. A large-scale CapEx decisions, right. So, and due to the, as I was mentioning, due to the volatile factors which were there, which were hovering in the market, I think there was a bit of a cautious approach which were taken by the customers in the core segments, and that resulted in decisions getting delayed number one. Number two, and also April to March being a year-end for quite a few private industries, that is also considered to be a place where they could have decided to preserve cash, and watch out for the moments in the macro factors, as it’s supposed to play out.
So, and we don’t — there is no opportunity decline in the market, but it’s more a — I mean, definition of decision making, which is slightly moving up the quarter as we go forward. Yeah, I think this helps, and that has definitely left — I mean, resulted in a backlog which is lesser than the previous year. But I’m sure that with the orders what would in case if we are successful and it gets decided in the future, this should also help us to do it. But the good part of it is that even though the orders are down, we are definitely on the revenues, we’re not so bad off, because we had a good service revenues, which came up over there, which definitely helped the profitability as well.
Next slide. Robotics and Discrete Automation. Large order from an electronics sector so helped up — shore-up the orders. And this was also something which we expected in the last quarter, but from an effective side in this quarter. And I think all of them trending in the same — in the right direction, including the profitability for robotics. This is just another slide, which is good to understand where are we and how we are. In this particular slide, if you look at it, so PA and — sorry, MO and EL still dominate the product offerings of us. So we are at 74%, 75% of the business, which comes from this particular two segments, and the balance is driven by process and robotics, process automation robotics. So it remains constant here and there, couple of percentages quarter-on-quarter, but I think overall it’s better.
In terms of offerings, I mean, again, products are 73% and projects 13% and 14% is what we see. Definitely in line with what used to happen in the previous in terms of channels as well as constant. And in terms of exports, this quarter was slightly definitely higher in exports, that’s what we could see. And there is an order in revenues — but in orders, we were higher in exports is what we see. So this is something which is pretty interesting, and as we see another thing, which I would definitely look at it is that our — the orders from Tier 3 and Tier 4 have improved substantially compared to the previous quarter. This is an welcome fact, and is also resonating with our efforts, which is happening by reaching out to the hinterlands of the country to be more relevant in those particular markets as well.
So overall, I think a good quarter according to us. Other than revenues, which was slightly off the mark, and that’s more driven by the macro factor. But all the other factor, I mean, all the other topics in place. That’s what I would say. Yeah. So this is the last slide, if I’m not wrong. Yeah. So now I think we can open up the meeting for Q&A.
Questions and Answers:
Operator
Thank you. [Operator Instructions First question comes from the line of Renu Baid Pugalia from IIFL Capital Services. Please go ahead.
Renu Baid Pugalia
Thank you. Good morning, team. My first question is, Sanjeev, you did mention that macro is not looking so exciting, but you’re concerned more, you are focusing more bottom up. But what we saw in PA in the last quarter with respect to orders getting postponed from customers in execution, does that phenomena concern you in terms of the likely execution for this year that we missed it from double digit growth to single digit or flattish execution this year or bottom-up, we have fair amount of confidence that double-digit revenues growth trend should be intact. That’s the first question.
Sanjeev Sharma
Thank you, Renu. So in our view, the Process Automation business represents largely the project business, which is about 10% of our total portfolio. And they do depend upon how the customers feel confident in the process industries as well as in the large government infrastructure projects in the, say, in the oil and gas and the other power generation area. So there, many projects which were on pipeline are still on the pipeline. But because of the uncertainties which are floating across the world and also domestically, I think certain customers held back the decisions, and we do believe those projects are still in the pipeline, and those decisions will. So I think that’s what it is.
So it’s very difficult. We have just finished the first quarter briefing, so it’s difficult to say what happens end of the year. But as far as our base business is concerned, that continues to be robust. But it is to be acknowledged that as far as the large projects are concerned in the market, they are there, but they are sluggish in decision making at least in the first quarter, and we will see how the second quarter for us and third quarter plays out, and then that’s how we will be able to comment to you more specifically when we have the commentary for second quarter and third quarter.
Renu Baid Pugalia
Got it. The second question is just pulling few inputs from the annual report. Within the product segment, others as a category in the last two years have grown very smartly from INR1,400 crores to INR2,400 crores plus revenues, fastest CAGR. So, can you share some insights in terms of what type of product portfolios become a part of others here, and what is the kind of localization efforts which ABB has put in to improve the local manufacturing footprint of this fastest growing segment for us?
Sanjeev Sharma
So if you have been, Renu, you’ve been hearing our commentary for last, almost at least in my history, about 38 quarters. And so we have maintained that we play the market from three or four angles. So one angle is, we continue to expand our portfolio, and then we continue to localize it so that it becomes more attractive price point-wise to the customers.
And as the economy is growing, it continues to kind of become more sophisticated. So more and more ABB sophisticated products keep coming, and we kind of localize and spread it in the market. So that’s one effect which is playing out in this year as well. And other part is our geographical penetration because the India growth is moving into Tier 2, Tier 3 cities, and Sridhar mentioned that, that expansion is causing expansion of our portfolio intake from the market. And last but not the least, the economy continues to expand and the market segment which were moderate in size earlier or small size, I think they have become substantial size now as we go forward.
So these are the few things which cater to it. But you are absolutely right, especially in the electrification and motion, we have expanded our portfolio, and that portfolio is playing out in favor for us, yes. And definitely as you mentioned, localization of the product after we have tested the product in the market, that there is a good demand and acceptance, then we go ahead and we manufacture, localize, and we expand on top of it. Yeah.
Renu Baid Pugalia
Any particular products to call out or nothing specific there?
Sanjeev Sharma
In the case of the motors, if you can see that we have expanded our portfolio there, you can see that in the case of MO, LM, I think we have good intake of export orders there. I think that has contributed, and that’s on back of localization. Likewise, in MO, DP, which is our drives product, there again we have expanded our portfolio, and also have localized, and same thing goes for the traction side again we have expanded our portfolio for mass transit locomotives, electric bus, truck, and they are playing out in our field. Now, just to give you some granularity on the electrification side, I have Kiran Dutt with us. Maybe he can paint some color around it.
Kiran Dutt
Thank you, Sanjeev. Thank you, Renu. I think that’s a very good question in terms of expansion of portfolios. On the electrification side, what we have done is there are two parts of it, one in terms of energy management solutions, where we started expanding our portfolio there. So, which is very, very important for customers in terms of finding out in what way the buildings are efficient or the industries are efficient. So that’s one part of the portfolio which we expanded. It is also related with the digital portfolio work we have expanded as well.
The second part of the story is the launch of LIORA, which was also explained during the presentation, LIORA is a modular switch range which is for the commercial buildings and the residential buildings. This portfolio has really expanded a lot and we are seeing lot of traction in terms of orders and revenues coming in during quarter one.
Sanjeev Sharma
In the case of ELDs, our distribution solutions, Ganesh, would you like to mention? Ganesh? Ganesh, we’re not able to hear you. All right, maybe he is not. So If you recall that we had inaugurated an expansion of our facilities in Nashik 1.5 year, two years back, and that production of GIS facility is on, and that really has created quite a large base for us to serve the market, wherein the market has become sophisticated because they require small footprint switch gear which can go into the basement of buildings, or it can be small urban areas because the land is something which is more premium in those areas. So we are seeing quite a good expansion of our portfolio and the investments that we made in that area.
And also, we continue to expand in Nashik, our localization effort, and there are certain products which I can’t say directly the name of it, but those are the products which are only produced in one country in Europe, and another country here which is India, and we have started exporting that as well. Apart from very high consumption within our own product, which has localized our product as well as you have a much better uptake in the market, and that also reflects in our profitability and growth. Yeah.
Renu Baid Pugalia
Sure. Thanks much, team, and best wishes. Thank you.
Sanjeev Sharma
Thank you. Thank you, Renu.
Operator
Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant and rejoin the question queue.
The next question comes from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead.
Mahesh Bendre
Hi sir, thank you so much for the opportunity. Sir, Industrial the Process Automation business is showing weakness in terms of negative growth for last three quarters. So, when do you think we’ll be able to come back on a growth path in this segment?
Sanjeev Sharma
Thank you, Mahesh. So, as far as when we talk about ABB present in this market with 18 divisions and 23 market segments, so we are the true reflection of what market is doing. So I think what we do is when the market kind of and the customers that we are trying to serve, they are ready for decisions, they show up in our books.
So as I said, Process Automation is 10% of our large projects of the Process Automation is 10% of our portfolio, and largely, we have fast-moving industrial goods. So that base order continues to perform well because the country is expanding and is absorbing those products quite effectively. But when it comes to large projects, they are cyclic in nature, and it all depends upon how the private CapEx and the government CapEx is forming in the marketplace. So I would say indirectly, if we watch these market segments and see the CapEx formation there, and the government CapEx release, I think that should have a direct correlation with when the recovery in the Process Automation businesses will come.
Mahesh Bendre
Sir, last question from my end. Last two quarters, the order inflow has been soft, overall. We had a single-digit growth this quarter, and previously we had a negative growth. So going into next two, three quarters, will be the momentum remain the same?
Sanjeev Sharma
So we are coming on back of last five years wherein we grew CAGR 22% in last five years and our revenues grew 20.5%, on back of economy growing 6%, 6.5%. So we have had a fairly strong run over a period of time. And then what happens is that once you have a strong run, just like in the markets, you have a time correction and you also have a price correction, but in this case, you can say that certain market segments take a breather, and then the next cycle of investment comes, and that’s where it reflects in it. I believe there has been a bit of — 2024 has been quite eventful, and 2025, as you can imagine right from new government coming in US, and also now the recent week event, so there are a lot of events which are playing out in the minds of our customers, and that reflects into our books at the moment.
But I believe the moment these uncertainties clear out, we believe the underlying of Indian economy as well as Indian spend capacity is quite high, and that will — it will pick up, whether it happens in running quarter or it happens in next quarter, it’s difficult to say. But we are very optimistic in going forward that we will have reasonable rates of growth in this market for us.
Mahesh Bendre
Sure. Thank you so much, sir.
Operator
Thank you. The next question comes from the line of Subramaniam Yadav from SBI Life Insurance. Please go ahead.
Subramaniam Yadav
Thank you sir. Sir, just wanted to have a color on this chart of high, moderate, low, what we give every quarter. So how do we read into this? [Foreign Speech] When we see Q-on-Q changes in couple of sectors moving to moderate, what is the view we take? Is it a quarterly view we take or a yearly view we take on the sector, and then we move that segment to moderate from the low?
Sanjeev Sharma
So that’s an interesting question. So one is that this particular picture is both for our internal as well as external consumption. Internally what we do is, we make sure that all our sales team and businesses are laser-focused on all these segments in the low, medium and high, because that’s where the capital formation takes place, and the serviceability offers have to be very high both on the sales side and also post order side. So that’s one part.
And on the second side, we look at it from a kind of a holistic trend that these particular market segments are relevant for us for long to medium-term, and we will stay focused on that. So ideally, it is not quarter-to-quarter because this capital formation of the size we look for and we track doesn’t change quarter-to-quarter. I would say calendar year basis is a reasonable way to look at it.
And also another way to look at the high, medium and the low is that these high segments are the ones which are relatively new market segments they say like datacenters started picking up in 2016 and ’17, they were next to nothing. Now it is a substantial part of our portfolio and the rate of growth is still quite high. So that’s where they stay.
So I think we have a bit of a metrics and more granularity to it which we track, but yes, to your — question to your answer, I think yearly adjustment is more relevant for it rather than quarterly adjustment.
Subramaniam Yadav
Okay. Sir, but when we look at the number of sectors moving from low to medium, but in terms of our inflows which are not matching to that thing, so hence my question was related to that.
Sanjeev Sharma
Yes. So as far as you will see the low segment, I think still they form quite a substantial percentage, I think it’s almost 45% since then?
TK Sridhar
45%.
Sanjeev Sharma
45% of the volume comes from the low market segment. So we see that as an opportunity because those segments are actually primed to spend more in CapEx because they haven’t done it for a very long period of time. So if you look at it from that angle, it’s just a matter of time when those kick in, and when the market conditions and the confidence in the large CapEx spender is there, then this low segment starts priming both on the OpEx and CapEx side.
So you can just imagine that given the growth that we had of 22% CAGR in last five years, how well it will play out once these low market segment or some of those segments also start joining the medium side of it. Yeah.
Subramaniam Yadav
Thank you, sir. Sir finally, if you can give some color on the service income because that pie have been increasing and leading to a better margin for us. So, how do we look at that service mix going ahead? Thank you.
TK Sridhar
Service is almost every time between 12% to 13%. But ideally I think our aim is to get to 15%, but at the — but with more orders coming in, so service as a percentage looks pretty much the same. But if you look only at the growth of services and exports, they are more, very robust, I would say.
Subramaniam Yadav
Okay. Thank you, sir.
Sanjeev Sharma
Thank you.
Operator
Thank you. The next question comes from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Mohit Kumar
Yeah. Good afternoon, sir, and thanks for the opportunity. My first question is on the motor side. As per the annual report, the penetration of IE3 and IE4 was 54%. What was this number for CY23? And what were your market share in IE3 and IE4 motors — IE4 motors? Yeah.
Sanjeev Sharma
So Mohit actually it’s a very good question. I am also interested in those numbers. But today, Sanjeev Arora is not here. He is traveling. He is responsible for that business. We may not be able to give that answer immediately. Plus, we typically don’t go to that granular — granularity of information because it’s very kind of sensitive to the business. Yeah.
Mohit Kumar
Sir, any color on the what was the number for CY23?
Sanjeev Sharma
Sorry?
TK Sridhar
No. He was asking for CY23 — [Speech Overlap]
Mohit Kumar
[Speech Overlap] CY23 versus CY24. 54%, how does this compare?
TK Sridhar
We — As Sanjeev was mentioning, we don’t give those numbers. Otherwise, then I think we will have different set of calls.
Mohit Kumar
Understood.
Sanjeev Sharma
[Speech Overlap] Or if you can, next time you can bring the base reference, our competitors’ numbers and say, hey, how they compare against them, then perhaps we can bring some granularity.
Mohit Kumar
Understood, sir. Sir, how does the acquisition of Siemens Gamesa renewables electronics portfolio can help ABB India? What are the revenue for this business in India in CY24? And how does this expands our portfolio? Yeah.
Sanjeev Sharma
What’s the question? [Speech Overlap]
TK Sridhar
I’m not able to understand the question.
Mohit Kumar
So you acquired the Siemens Gamesa Electronics portfolio, right?
TK Sridhar
Okay. Okay. So I think Siemens Gamesa — [Speech Overlap]
Mohit Kumar
What was the revenue for the business in India in CY24? And how does it expands our product portfolio?
TK Sridhar
Okay, that is a global acquisition, what has happened, in India we have not great footprint about it. So we are buying only some inventories and capital equipment as what we informed the stock exchange in the last quarter. So they are very much, they are players in wind right, and that’s how we need to find out — and wind and renewable players, we need to find out how it works out going forward. So not much of relevance for India at least that’s what it is. [Speech Overlap]
Sanjeev Sharma
At the moment. I think it becomes a product part of the global portfolio and the global team will guide our local teams how to — how relevancy of that portfolio in the market becomes. I think we should allow it some time before we can be more specific about it.
Mohit Kumar
Understood, sir. Thank you and all the best. Thank you.
Sanjeev Sharma
Thank you.
Operator
Thank you. The next question comes from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Parikshit Kandpal
Sir, hi. Congratulations on a decent number. My first question is given slight sluggishness in the market and the muted growth, so how are the prices for the products holding on? So have you seen any price cut or has the competitive intensity increased?
Sanjeev Sharma
Well, generally on a overall basis you’re right, I think there is a bit of a sluggishness in the marketplace more especially on the large project side, I would say. In certain product categories of course there is an increased competitive intensity. Whenever there is an increased competitive intensity, you will see an effect on the prices, price realization.
But I would say that is on the minor side of the portfolio. I would say the main story is that the large projects which are being held back they should be released in coming quarters. That’s something we watch, and we are working with the clients. As far as the price adjustment, there are in minor product categories there are definitely the pressures which we are seeing, mainly due to the competitive intensity as well.
Parikshit Kandpal
Any commentary on the margin guidance? I mean, you still maintain that 13%, 15% band or like, how it will move now on the net margin levels.
TK Sridhar
I think we have been saying that 12% to 15% is where we are talking at the PAT margins at this point of time. So that’s how it is. So now we are reaping the benefits of the earlier quarters of good, priced orders we are getting secured at this point of time, and also the leverage on the capacities which is playing out. So that’s something which we will continue to watch out for.
Parikshit Kandpal
Okay. Just the last question sir, on exports, so any benefit you’re getting on export because this quarter growth has been strong, and any impact of the global trade friction which is currently going on with the US. So will it likely benefit us in India because we don’t have much of exposure to the US parent company?
Sanjeev Sharma
Too early to say. I think the global landscape is under formation with too many conflicts both on the economic trade and some kind of hot spots in the market. And all of them, at least in this week, we find some resolution is being found. I think US was talking to China last week in Geneva. Some positive news is coming there next Monday, coming Monday, Ukraine and Russia is talking to each other, some maybe resolution comes there.
And we also had day before yesterday, the hot shooting war going on our Western borders that came to a halt. So these things have to play out. And for a company like us, or rather simple people like us who just look at the customers when they are going to decide orders, I think it’s too difficult to decipher how that will play out on our portfolio.
But on export side, we have allocated certain export markets. We are doing quite well there, and India as such. I think the way the trade system is looks to be, it seems to be net positive for us, for our industries, and whatever portfolio that we are exporting, we are not seeing any kind of dampening effect. In fact we had quite a good expansion of our export orders compared to last quarter, I think it was about 40% increase. So our exports increased 40% year-on-year basis.
TK Sridhar
In orders.
Sanjeev Sharma
In orders. Yeah.
Parikshit Kandpal
Yeah, yeah. Okay sir. Sure, thank you.
Sanjeev Sharma
Thank you.
Operator
Thank you. The next question comes from the line of Umesh Raut from Nomura India. Please go ahead.
Umesh Raut
Hi sir, good morning. My first question is pertaining to exports and services only. So if I look at your trend as a percentage of contribution from exports and services, [Technical Issues] it is remaining range bound in the range of about 10% to 14% since last few quarters. So, how do you see a pickup happening here, whether your install base can lead more of uptick in the services business for you in the medium to longer term? And would there be any change in strategy from parent side as well in terms of supply dynamics, so that you can have better traction on the export side?
Sanjeev Sharma
So a growth of 40% on export side I believe is a quite a healthy growth. And this is something which is available. When we talk about percentages, as long as the domestic market growth is strong, then the percentages of export even after 40% growth looks nominal, right? So I think that’s what, as long as the domestic side is stronger, I think it will continue to be, percentages will continue to be playing out that way. But we are quite happy in terms of how our export markets are developing.
As far as the group is concerned, yes, our prime focus is on Indian market being a multinational corporation present in India, but given our — the facilities here are world class. More and more global divisions are using our base for opening new export market. It is a gradual, but very steady process, so that we are able to serve both domestic as well as global markets, and our teams are doing a good job there. And we will see it will be a more steady path. But at the same time, there’s a long path of continue to gain on the export markets from India.
Umesh Raut
[Technical Issues] Okay. And my second question is with respect to capital allocation — [Speech Overlap]
Operator
Umesh, I’m sorry to interrupt you there. Your audio is not coming in clear right now. Could you please use your handset?
Umesh Raut
Hello? [Technical Issues] Is it better?
Sanjeev Sharma
Yeah, better. Go ahead.
Operator
Please go ahead.
Umesh Raut
Yeah. So given that you have cash balance of INR57 billion, and sometime back you have also mentioned that you are looking forward to inorganic opportunities in domestic market. But nothing has fructified in last two years. So any color here, how you want to utilize this capital going forward?
Sanjeev Sharma
So we are expanding our capacities organically to meet the market demand. So that’s how some of the balances are. We have increased our dividend, so that’s how our shareholders are benefiting out of our cash balances. And as we speak, there are quite a few inorganic opportunities in our crosshairs, but then it takes two to tango. So, as and when we are able to kind of secure them, I think we will announce it to you.
But yes, definitely there is a plan both organic, rewarding shareholders and plus inorganic opportunity. And there is no rush for us. We will wait for the right opportunities at the right price, so that, that creates more value for our portfolio as well as value for our customers. But definitely it is on the plans. Yeah.
Umesh Raut
Okay, sir. Thank you so much. I’ll join back the queue.
Operator
Thank you. The next question comes from the line of Jonas Bhutta from Birla Mutual Fund. Please go ahead.
Jonas Bhutta
Hi gentlemen. Congratulations on a great set of results considering the environment. Just a question on the stickiness of the electrification segment margins. You know, when I look at it from a recent quarterly perspective or even from an annual perspective, drawing on information from the annual report, just could you help us connect the dots in terms of while the last two quarters order inflows for this segment have sort of moderated, and were the base quarters are sitting with large project orders, that coupled with a higher or, let’s say no deterioration or — you know, the foreign exchange used or the import content remaining more or less the same as a percentage of sales, the margin for the segments seem to be really sticky and probably even trending upwards.
So would appreciate if you can give us some strategic decisions that you’ve taken that has put electrification as a segment at these margin levels. And what happens when growth resumes in order inflows directionally? Do margins for these — for the segment sort of trend even higher from these levels? That’s the only question. Thank you.
Sanjeev Sharma
So, as you know Jonas, the profitability is a net result of multiple factors that flow through order margins, and then how productivity measures that we do within our location and that’s where a lot of investments go. So every year our units are more productive than previous years. Plus how we manage our supply chain, our suppliers, that’s another factor. And also how we are kind of localizing continuously our portfolio.
So it’s like a combination effect that comes, and sometimes it is largely aided by the margin realization and at times it is realized by the supply chain realization and sometimes, it also is a localization and a combination of those factors. So going forward we feel we are committed to this journey, and we do see that the volumes will continue to come. So it means the utilization rate of our plants should remain good going forward, and also the quality of customers and the market segments that we are dealing with, they reward the people with good portfolio right?
But at the same time, as far as the factor of pricing is concerned, it stabilizes after some time. But then we continue to use the other leverages which are available.
Anything Kiran, you would like to add?
Kiran Dutt
Thanks, Sanjeev. I think very similar to that, one point to be noted is with respect to the order inflow, if you look at it with respect to even Q4 of ’24 and then Q1, we are at around 71% growth compared to that. So the order inflows are always there. And when I look at the order backlog, the order backlogs have really increased by 36%. So for sure, which is going to give us a good visibility in terms of the revenues which are going to happen, and we are sure that, that would support in terms of the profitability as well.
Jonas Bhutta
Got it. And if I can just squeeze in one quick one for Sridhar. Sir if you can help us, you know, when we see this line item called foreign exchange used, which tantamount to roughly 50% of sales at INR60 billion-odd, most of these imports can be attributed to which segments, sir? If at all you have to put in, you know, some directional thing, not asking for exact numbers.
TK Sridhar
Jonas, Imports [Foreign Speech] Right? So it’s only a question of in which division is higher and which division is lower. So I think — [Speech Overlap]
Jonas Bhutta
Yeah, as the intensity is higher.
TK Sridhar
Exactly, right. So technically what happens is in the projects division, it is slightly lesser on a direct import basis because they do more of projects, but they also draw from the motion and electrification, wherever needed, who import, right? So definitely, I would say in terms of imports could be pretty higher in robotics because they depend quite a lot on the air [Phonetic] and the imports from the outside countries, because the ecosystem for robotics in the country is yet to be developed as what is needed.
And the next one is the power electronics, which is the system drives and drives products, which depend quite a bit on exports. And also definitely in EL, where we have the electronics piece, which is required. So overall, just to sort of sum it up for you, I think while on the export, if you look at exports per se, I would say because the volumes are pretty much higher in EL and MO, they would do almost 70% of the ex — imports will come only from these two segments. And the balance 25%, 30% come from robotics.
Jonas Bhutta
Understood. Thank you, and all the very best.
TK Sridhar
Thank you.
Operator
Thank you. Ladies and gentlemen, in the interest of time, we request you to restrict to one question per participant.
The next question comes from the line of Amit Mahawar from UBS. Please go ahead.
Amit Mahawar
Yeah, hi, Sridhar and Sanjeev. Good morning, and congratulations on stable profitability. I just have one question, sir. You know, the outlook for CY25, particularly on base orders, can you throw some light on some high-growth segments? Particularly, propulsion, semi high speed propulsions and renewable low voltage and motion orders, do you think there’s a risk of this year being 10% or less growth in orders? That’s my question. Thank you.
TK Sridhar
So you’re talking of base orders, right? If I’m not wrong.
Amit Mahawar
Yes. Sridhar.
TK Sridhar
Yeah. So I think it is very difficult to predict, let me be very honest, because given the, I mean [Phonetic], the situation, lot of moving parts at this point of time, which one would never have — I mean, expected. So naturally, so then at this point of time, Amit, we’re not able to say that whether it will go at 10% or less than 10% is what we see, right?
But our intent has been always been to be aiming for a double-digit growth, right, and then be in line with what the market could sort of decide as a — I mean, as a result of these particular macro factors, which is beyond our control, right? So that’s how I see it, to be honest, I mean, Amit.
Amit Mahawar
Sure. And second and quick one is on capacity creation. ABB has always been realistic and measured when they think of capacities, and we’ve seen that many times and which also helps in a time of low growth. This year and next year, anything particularly one or two items where we are thinking of adding capacity or capability, if you can be specific without, going into much details, whatever is allowed if possible.
Sanjeev Sharma
Yeah. Since you asked, so we will have a capacity expansion, especially in the units which are relatively small in the business. So now they are coming off the age, so we have to put them into the larger units because their volumes have grown and they are — they are demanding much more space. So there are some in the Process Automation. We also see the same in the electrification on back of growth as well as on back of expanded portfolio, which needs to be localized. We also see something similar in Motion, and you will hear from us once we are ready for it and willing to kind of, show that as an available capacity to the market. Yeah.
TK Sridhar
So Amit, as you alluded to, I mean, we are definitely before we go through with our CapEx plans, we are very measured in that to understand what capacities which we have, which we could first leverage upon, and what are the other options available and then it’s a well thought through decision before we start to invest in organic or inorganic options.
Amit Mahawar
Thank you, Sridhar and Sanjeev, lovely to hear always. Good luck.
TK Sridhar
Thank you.
Sanjeev Sharma
Thank you. Last question, probably I think so we are six minutes past 11.
Operator
Right. So we take the last question from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Aditya Mongia
Thank you, everyone, for the opportunity. My question was linked to — so I wanted to get a sense from you, across your segments on the level of sophistication of the product as you suggested on the call, I wanted to understand A, in which segments is it driving our margins up because on a relative basis we are fairly strong. And B, from here on, as you see the customers directionally which all segments can incrementally benefit as the customers further moves in this direction?
TK Sridhar
Okay. So if you go back to that slide where we have these 18 divisions coming across 23 market segments, I think the margin accretion would be definitely be very attractive in the first sector where we are growing faster because that’s the place where technology play — I mean, plays a differentiating factor to quite a large extent, right, and where the speed of execution is also important, and also new solutions are very relevant in those particular market segments.
Therefore, the margins there would definitely be at this point of time attractive, for the reason is because they’re also starting from a lower base and trying to set up their shops in India as what we see. So I think this run should come in, can continue for some more time till the base expands and comes to an stabilization level.
In the second category, where it’s called, I mean, realistic growth of between 8% to 10%, 12%, I think there it’s a bit of an mixed bag where you have sectors which offer a margin for the value which we deliver and some of the sectors go by tendering model which could be more competitive in nature. And while we come to the last sector, which is the low growth sector, but a high volume impact there, there I think margin accretion comes not more from the leveraging on the capacities and the delivery and the volumes what we build rather than just by ability to push prices over there.
So according to me Aditya, yes, all these three segments have characteristics which are quite different, right? And while the first one is very good to be in because it has the highest margin potential, but it does not have the base through which we could really drive the margin. So naturally we need to have a good balance between all the three market segments and which give us the growth, what we are in today at a pattern of 12% to 15% what we see.
Aditya Mongia
Got that. Thank you so much for the response. That is my only question, yeah.
Sanjeev Sharma
Thank you very much.
TK Sridhar
Yeah.
Operator
Thank you. Ladies and gentlemen, we take that as the last question and conclude the question-and-answer session. I will now hand the conference over to Mr. TK Sridhar for his closing comments.
TK Sridhar
Thank you. Thank you very much once again on behalf of ABB for taking time out to understand what’s happened in Q1 2025, and definitely we look forward to interacting with you more and more, and as we go into Q2 2025, and also the other macro factors, as what we see today sort of ease out, and it becomes a more level playing field for all of us.
So thank you very much for joining the call, and thanks to the ABB management also, who could take time out to listen — I mean, listen-in and also to answer appropriately to the investors. Thank you very much.
Operator
[Operator Closing Remarks]