LOVELY PROFESSIONAL UNIVERSITY

MITTAL SCHOOL OF BUSINESS

ABB Ltd.
ASSIGNMENT- 1
Course: CORPORATE FINANCE
Submitted By
Student Name Registration No.
Vishvjeet Singh Panwar 12114157
Sagir Ehsan -
Md. Akram -
Sumit Kumar 12113434
Submitted To
Monika Kalani
Course Code: FINM542
Section: Q2141
Declaration:
We declare that this Assignment is our individual work. We have not copied it
from any other student’s work or from any other source except where due
acknowledgement is made explicitly in the text, nor has any part been written for
us by any other person.
Student’s Name Student’s Roll no. Student’s Signature

1. Vishvjeet Singh Panwar RQ2141A83

2. Sagir Ehsan - -
3. Md. Akram - -

4. Sumit Kumar RQ2140B79

Date of Allotment: 18/09/2021 Date of Submission: 04/10/2021

PEER RATING:
Student Name Rating
Vishvjeet Singh Panwar 05
Sagir Ehsan 0
Md. Akram 0
Sumit Kumar 05

Learning Outcomes: Students will understand the association between the

financial news and various finance function.
 INDEX

S. NO. Topic

1. Introduction of the Company

Launches and innovations of major

2. products

3. Corporate Governance

4. Financial Goals

5. ABB Financial Summary:

6. News Analysis

7. Conclusion:

8. REFRENCES
 ABB Ltd.
Introduction of the Company-
ABB Ltd, formerly ASEA Brown Boveri (German: ABB AG, French, Italian, Romansh:
ABB SA), is a Swedish–Swiss multinational firm headquartered in Zürich,
Switzerland, that specialises in robotics, power, heavy electrical equipment, and
automation technologies. It has been a global Fortune 500 company for 24 years
and is currently placed 341st on the Fortune Global 500 list of 2018. ABB was
Switzerland's largest industrial employment until the sale of its Power Grids
segment in 2020. The SIX Swiss Exchange in Zürich, Nasdaq Stockholm, and the
New York Stock Exchange in the United States all trade ABB.
ABB is a leading global technology business that drives societal and industrial
transformation for a more productive and sustainable future. ABB pushes the
boundaries of technology by integrating software to its electrification, robotics,
automation, and motion portfolios to drive performance to new heights. ABB's
success is fueled by nearly 105,000 outstanding workers in over 100 countries,
with a tradition of excellence spanning more than 130 years.
ASEA and BBC Brown Boveri announced their merger on August 10, 1987, forming
ABB Asea Brown Boveri. Each parent company would own 50% of the new
corporation, which would be based in Zurich, Switzerland, and Vasters, Sweden.
The merger created a global industrial conglomerate with $15 billion in revenue
and 160,000 employees. ABB's key businesses comprised power generation,
transmission, and distribution, electric transportation, and industrial automation
and robotics when it first opened its doors on January 5, 1988. ABB acquired 15
purchases in its first year, including the Swedish environmental control business
Flakt AB, the Italian contracting group Sadelmi/Cogepi, and the Danish railway
maker Scandia-Randers A/S. In 1989, ABB announced plans to buy another 40
companies, including Westinghouse Electric's transmission and distribution
assets, as well as Combustion Engineering of Stamford, Connecticut (C-E). The
next year, ABB acquired Cincinnati Milacron's robotics division in the United
States. ABB's footprint in automated spot-welding was expanded as a result of the
acquisition, and the business was better positioned to service the American
automobile sector.
The IRB 6000 robot, introduced by ABB in 1991, showcased the company's
expanded capacity in this field. The IRB 6000, the first modular robot, can be
customised to perform a variety of jobs. The IRB 6000 was the fastest and most
precise spot-welding robot on the market at the time of its release.
ABB began developing in Central and Eastern Europe in the early 1990s. The
enterprise employed 10,000 workers in the region by the end of 1991. That
number more than doubled the following year. A similar pattern emerged in Asia,
as Chinese economic reforms and the relaxation of certain Western sanctions
aided the region's opening to a fresh wave of foreign investment and industrial
expansion. ABB had 30,000 people and 100 manufacturing, engineering, service,
and marketing centres throughout Asia by 1994, a figure that would continue to
rise. ABB's planned expansion strategy in Eastern Europe, the Asia-Pacific region,
and the Americas continued throughout the 1990s. In 1995, ABB and Daimler-
Benz AG of Germany agreed to integrate their rail engineering divisions. The goal
was to become the world's largest locomotive and railway car manufacturer. ABB
Daimler-Benz Transportation (Adtranz), the new firm, had an initial global market
share of roughly 12%. The merger went into effect on January 1, 1996.
ABB declared aspirations to expand in Asia a few months following the Asian
financial crisis in July 1997. The corporation also took steps to improve the
productivity and profitability of its Western operations, taking a restructuring
charge of $850 million as it shifted more resources to emerging markets and
reduced the size of some facilities in higher-cost regions. ABB bought Alfa Laval's
automation unit in Sweden in 1998, making it one of Europe's top suppliers of
process control systems and automation equipment at the time. In 1999, the
directors unanimously accepted a plan to create a consolidated, single class of
shares towards the company as the final step in the unification of the firms
formerly known as ASEA and BBC. ABB finalised its $2.1 billion purchase of Elsag
Bailey Process Automation, a Dutch manufacturer of industrial control systems, in
the same year. ABB's foothold in high-tech industrial robots and factory control
systems grew as a result of the acquisition, lessening its reliance on traditional
heavy engineering areas like power production and transmission.
 Launches and innovations of major products-

Azipod, a family of electric propulsion devices that extend below the hulls of big
ships and provide both thrust and steering, was introduced by ABB in 1990.
Azipod, which was developed in collaboration with Masa-Yards, a Finnish
shipbuilder, has proven the practicality of hybrid-electric power in seagoing
vessels while simultaneously improving manoeuvrability, fuel efficiency, and
space efficiency.

1. ABB introduced the FlexPicker in 1998, a robot with a three-armed delta design
that was designed specifically for the picking and packing business.
2. At the Swedish port of Gothenburg in 2000, ABB introduced the world's first
commercial, high-voltage, shore-to-ship electric power. Providing electricity to
berthed ships from the shore allows them to turn off their engines while in port,
decreasing noise, vibrations, and carbon emissions dramatically.
3. The Extended Automation System 800xA, an industrial system for the process
industries, was introduced by ABB in 2004. The firm is now the world's leading
provider of distributed control solutions.
4. ABB introduced YuMi, a collaborative industrial robot, in 2014. People and
machines can work side by side with the dual-arm assembly robot, which opens
up new possibilities for automation in a variety of industries.
5. In 2018, ABB launched the Terra High Power charger for electric vehicles, which
is capable of charging an electric vehicle to 200 kilometres in eight minutes.
 Corporate Governance:

Owners and Share-Structure-

In the year 2000, ABB had 130.000 stockholders. The overall number of
shareholders will be around 210.000 if we include the number of owners who
control ABB shares through nominees. They held a total of 300.002.358 registered
shares, each with a nominal value of 2,5 CHF. In 2001, ABB completed a 4:1 stock
split, bringing the total number of outstanding shares to 1.200.009.432. The BZ
Holding Group Ltd was the principal owner in 2000, and it still owns more than
10% of the company today 3. No other stakeholder, according to ABB, controlled
more than 5% of the overall voting rights. The conclusion is that the ABB's
ownership is extremely fragmented. The Swiss Exchange SWX, Stockholm Stock
Exchange, Frankfurt Stock Exchange, New York Stock Exchange (ADS), and London
Stock Exchange are all cross-listed with ABB. This would imply that the ownership
is similarly diverse in terms of geography. Cross-listing entails access to more
liquid markets, i.e., overcoming mispricing in segmented markets by lowering
capital costs.

Governance System-
ABB's headquarters are in Switzerland, as previously indicated. Switzerland's
corporate governance system, like that of most Central European countries, is
based on banks. The corporation trades on five different stock exchanges at the
same time. I believe ABB is doing this in order to shift its corporate governance
system toward the Anglo-Saxon model. This notion is bolstered by ABB's decision
in 1999 to convert from a four-class stock to a single-class company, as well as
their shift in accounting procedures to a higher standard for more transparency.
 Financial Goals
Targets-
ABB has a value creation strategy 15 in place. Growth, they feel, is necessary for
the production of value for all stakeholders. In this section, I like to define the
goals in terms of numbers so that we can analyse them.

"We are committed to boosting the long-term worth of our shareholders. By

accomplishing
We will develop the most inventive and competitive solutions for our
customers.
To provide a greater return to our stockholders and attract capital investment,
we need to grow."
ABB draws connections between growth and profitability in the sentence above.
Excessive growth is considered as bad for shareholders in theory, but managers
prefer it to attain financial flexibility17. When I draw out the Balanced Growth
Line at the end of this paper, I'll try to investigate the explicit financial goals
presented in the Annual Report 2000 and determine if they align with ABB's value
creation goals using theoretical arguments.
The company's mid-term financial targets of 3-6 percent comparable revenue
growth per year, a 13-16 percent operational EBITA margin, a 100% cash
conversion rate, 15-20 percent ROCE, and EPS growing faster than revenue
growth remain unchanged. At the Group's Capital Market Day in November 2020,
an update on the strategy will be delivered, including long-term 2030
sustainability targets.
 ABB Financial Summary:
ABB India Ltd's revenues climbed 22 percent to RS30.54 billion in the six months
ended 30 June 2021. The company's net income before unusual items increased
from RS827.5 million to RS2.19 billion rupees. The Electrification segment had a
23 percent gain in revenue to RS12.1 billion, while the Motion segment saw an 18
percent increase to RS11.32 billion. Other expenses decreased by 9% to RS5.02
billion (expense), while finance costs decreased by 33% to RS47.8 million,
boosting net income (expense).

ABB is currently facing hard quarters due to the global epidemic of COVID-19 and
a reduction in the price of oil. This has resulted in a drop in demand in certain end
areas, such as automotive and power generation, as well as travel limitations and
supply chain difficulties. Nonetheless, the Chinese market is recovering, and the
transportation, food and beverage, and data centre sectors are holding up well.
Timo Ihamuotila, ABB's CFO, will speak on the company's capital allocation
priorities, which have not altered. The Power Grids business is planned to be sold
to Hitachi by the end of the second quarter of 2020, and ABB has committed to a
share repurchase programme with the net cash proceeds from the deal. ABB
intends to carry out this task in an efficient and responsible manner, taking into
consideration the current conditions. ABB also intends to maintain its "single A"
credit rating by returning cash to shareholders in the form of increased
sustainable dividends per share.
 News Analysis
1.
ABB India has partnered with Audi India to provide charging solutions for the
Audi e-tron and e-tron Sportback electric vehicles.

on Monday announced a partnership with Audi India to supply charging options

for the Audi e-tron and Audi e-tron Sportback, both of which are fully electric
vehicles. "To ensure a premium charging customer experience," ABB India said in
a statement. "The newly introduced Audi e-tron and Audi e-tron Sportaback are
offered with ABB's smart Terra AC wallbox charger along with the car to its
customers for smart charging at home."

INTERPRETATION
We are thrilled to offer our smart EV chargers for Audi India's fully electric vehicle
in India, as part of our commitment to bringing the world's best-in-class charging
technology to India." According to Kiran Dutt, President of ABB India's
Electrification Business.
Dutt went on to say, "With ChargerSync, we provide a variety of AC and DC fast-
charging solutions for EVs, as well as seamless back-end connectivity for AC
chargers. Owners of ABB Terra AC wall boxes who want to take their charging
experience to the next level will find it to be a trustworthy and convenient app."
This help’s ABB Ltd. more to achieve their goals and earn profit more.

2.
ABB India's second-quarter statistics show a four-fold increase in net
profit to Rs 68 crore.

ABB Ltd. reported a four-fold increase in net profit to Rs 68 crore in the June
quarter over the previous year, owing to greater revenues. The company's net
profit from continuing operations for the quarter ended June 30, 2021 was Rs 17
crore, according to a statement. ABB India operates on a January-December fiscal
year. The company's total sales increased to Rs 1,425 crore in the quarter, up
from Rs 986 crore a year ago.
The business has achieved a "solid recovery while leveraging growth market areas
with a good bounce back once the pandemic wave started to diminish in June,"
according to ABB Ltd.'s Managing Director.

INTERPRETATION
Despite the substantial increase in commodity costs during the quarter, solid
demand for ABB's products, solutions, and services portfolio in many of our
targeted market sectors ensured our profitability, assisted by operational
efficiency," he added.

3.
ABB Capital Markets Day 2021

Bjorn Rosengren, CEO, Timo Ihamuotila, CFO, and Theodor Swedjemark, Chief
Communications & Sustainability Officer, will deliver an update on the company's
strategic, financial, and sustainability initiatives at this year's ABB Capital Markets
Day. ABB's customer offering and position in the sustainable transportation sector
will also be discussed by officials from all four Business Areas. For diverse
customer sectors, this includes electric and hydrogen transportation solutions.

INTERPRATATION
ABB is a leading global technology business that drives societal and industrial
transformation for a more productive and sustainable future. ABB pushes the
boundaries of technology by integrating software to its electrification, robotics,
automation, and motion portfolios to drive performance to new heights. ABB's
success is fueled by nearly 105,000 outstanding workers in over 100 countries,
with a tradition of excellence spanning more than 130 years.
4.
RBC Bearings will buy ABB's Mechanical Power Transmission division
for $2.9 billion.
According to ABB, the deal will create a manufacturer of highly developed,
performance-critical bearings and motion control components. On Tuesday, ABB
announced that it has agreed to sell its Mechanical Power Transmission division
(Dodge) to RBC Bearings for USD 2.9 billion. According to ABB, the deal will create
a manufacturer of highly developed, performance-critical bearings and motion
control components. It was also stated that the acquisition would be completed
by the end of 2021. The Dodge business has been a leader in the design,
production, and marketing of mounted bearings, enclosed gears, and power
transmission components for more than 140 years, according to the company.
Dodge employs approximately 1,500 people worldwide and produced
approximately USD 600 million in revenue for the fiscal year ending June 30,
2021, with more than 90% of that coming from the Americas.

INTERPRETATION
ABB's balance sheet will be strengthened even more as a result of this
transaction. The company intend to use the funds from the deal to fund organic
growth, pay a rising sustainable dividend per share, and make value-creating
acquisitions first, in accordance with our capital allocation principles.

5.
Motilal Oswal recommends buying ABB with a target price of Rs 1030.
In its research report dated November 5, 2020, Motilal Oswal is optimistic on ABB
recommended buy rating on the stock with a target price of Rs 1030. The revenue
decline for ABB in 3QCY20 was only 8% (vs. a predicted 14% decline). The
company displayed good cost-cutting initiatives, resulting in a flat EBITDA YoY
(almost double our estimate) - a respectable achievement that suggests greater
revenue resilience. According to the firm, 85% of the demand from the previous
year is back in the system. Order intake, on the other hand, fell 19 percent year
over year, owing mostly to the Electrification and Industrial Automation divisions.
ABB is purely focused on long-term industrial automation and the "Make-in-India"
ethos. Our CY21E/CY22E estimates have basically remained unchanged. While the
drop in order inflow is concerning, we anticipate a speedy recovery in short-cycle
business.

INTERPRETATION
Our Buy recommendation is maintained, with a target price of INR1,030, based on
an unchanged target PE multiple of 45x for Mar'22E (in line with our target
multiple for pure automation firms and as supported by DCF, as well as a
minimum 1-year forward PE multiple for ABB during the past 10 years).
6.
ABB India Standalone Net Sales in June 2020 were Rs 985.78 crore, down 42.88
percent year over year.
In June 2020, net sales were Rs 985.78 crore, down 42.88 percent from Rs
1,725.75 crore in June 2019. Quarterly Net Profit in June 2020 was Rs. 16.28
crore, down 87.52% from Rs. 130.40 crore in June 2019. In June 2020, EBITDA was
Rs. 50.06 crore, down 65.29 percent from Rs. 144.24 crore in June 2019. ABB
India's earnings per share (EPS) fell from Rs. 6.15 in June 2019 to Rs. 0.77 in June
2020.

INTERPRETATION
The stock of ABB Ltd. closed at 934.80 on July 23, 2020 (NSE) and has returned -
28.99 percent in the previous six months and -32.01 percent in the last year.

7.
Sell ABB India; target of Rs 755: HDFC Securities
In a research report dated May 15, 2020, HDFC Securities, which is pessimistic on
ABB India, suggested a sell rating on the company with a target price of Rs 755.
The ABB business model is very sensitive to operating leverage, as a Rs 3.2 billion
revenue shortfall (due to a 10-day outage in March 20) resulted in a severe
erosion in profitability (a Rs 1.1 billion contribution shortfall), with
Rev/EBIDTA/APAT declining 18/90/90 percent year over year. With 1.5 months of
operations lost, we estimate a lower result in 2QCY20. The ABB 1QCY20
statement indicated that it is well positioned to supply clients only if demand
increases. The muted public/private capex remains a significant impediment.

INTERPRETATION
ABB India Ltd. (ABB) is still a SELL for us, with a target price of Rs 755/sh (42x Mar-
22E EPS).
8.

In the January-March quarter, ABB India's profit fell by 26%.

The company's total income fell to Rs 1,568.02 crore in the March quarter from Rs
1,869.37 crore the previous quarter, according to a statement. In the January-
March quarter of 2020, the company recorded an almost 26% drop in net profit to
Rs 66 crore, down from Rs 89 crore the previous quarter. The company's total
income fell to Rs 1,568.02 crore in the March quarter from Rs 1,869.37 crore the
previous quarter, according to a statement. "ABB has been responding to the
COVID-19 epidemic by focusing on health awareness and safety measures for our
entire eco-system, from staff to consumers and suppliers."

INTERPRETATION
To protect against supply disruptions and production downtimes, the Company's
contingency planning evolves every day in tandem with the government's daily
recommendation.
9.

ABB India's Q4 profit plummets by 80.5 percent due to a one-time loss

in the solar inverter business.
ABB India's earnings fell 40.61 percent to Rs 303.4 crore in 2019, compared to the
previous year, but revenue increased 9.34 percent to Rs 7,315.06 crore. ABB India,
an engineering services company, reported a significant 80.5 percent drop in
third-quarter earnings due to decreased value of solar inverter business in books
on February 12. The company declared a huge loss of Rs 69.7 crore because it
valued its solar inverter business, which it sold to an Italian firm, at a lower cost in
its books. The board gave in-principle permission for the sale of the solar inverter
business to an Italian company, FIMER S1p.A., on July 9 last year.

INTERPRETATION
As a result, ABB has accounted for an exceptional cost of Rs 69.70 crore for the
remeasurement of fixed assets and inventories at realisable values, according to
the company's BSE filing. The company's fiscal year runs from January to
December.
10.

Railways award ABB a contract worth Rs 270 crore.

The business said in a statement Tuesday that it has received a contract from
Diesel Locomotive Works, Varanasi, to supply converters for electric locomotives,
which will be constructed at its Bengaluru factory. The business said in a
statement Tuesday that it has received a contract from Diesel Locomotive Works,
Varanasi, to supply converters for electric locomotives, which will be constructed
at its Bengaluru factory. The Railways have awarded ABB, a leading power
equipment company, a contract for Rs 270 crore to boost the efficiency of the
national transporter and strengthen sustainable transportation.

INTERPRETATION
The business said that it has received a contract from Diesel Locomotive Works,
Varanasi, to supply converters for electric locomotives, which will be constructed
at its Bengaluru factory. ABB traction equipment is currently powering over 250
electric locomotives for the railways.
 Conclusion:

ABB is a global pioneer in power and automation technology that help utilities
and industries increase their efficiency while reducing their environmental
impact. Despite the fact that some brand names have changed, the spirit of
innovation that these great firms and their workers brought to ABB is still alive
and well. This is a tribute to our ancestors. In 2013, ABB opened two new power
product manufacturing facilities in India to commemorate the company's massive
Vadodara manufacturing base in the western state of Gujarat's 50th anniversary.
The additional units, which cover an area of nearly 15,000 square metres and cost
over Rs 250 crore to construct, are located in Savli, close to the Vadodara plant.
High–voltage switchgear and distribution transformers will be produced at the
new production plants. ABB has a long and storied history of innovation and
technological leadership in a variety of industries, dating back to the late 1800s.
ABB has transitioned from large–scale solutions to alternative energy and
advanced products and technologies in power and automation, which make up its
Industrial IT offering, after helping countries all over the world create, develop,
and maintain their infrastructures. ABB uses cutting-edge technologies and
applications to create products and systems for industrial, commercial, and
financial customers. The ABB Group was created in 1987 when the Swedish firm
Asea and the Swiss firm Brown Bovery merged. The main corporation is currently
divided into five segments, with the following percentages of gross revenues in
2002. ABB became a dominant player in the industrial electrical equipment
industry, competing with companies such as Emerson Electric, GE, ITT Industries,
and Nidec Co., with operations in over 100 countries and approximately 115,000
employees, thanks to his new management style and delegating responsibilities
to its managers.
 REFRENCES:

https://www.moneycontrol.com/india/stockpricequote/infrastructure-
general/abbindia/ABB
https://global.abb/group/en/about
https://new.abb.com/indian-subcontinent
https://global.abb/group/en/media/releases/group