ABB India Annual Report 2007

Energy efciency for a connected world ABB Limited - Annual Report 2007 India
Contents 1 2 4 5 Board of Directors and Other Information 5 Year Highlights Corporate Management Committee Welcome to ABB
11 Notice to Members 16 Directors Report 31 Managements Discussion and Analysis 36 CEO/CFO Certication 37 Auditors Report 40 Balance Sheet, Prot & Loss Account and Schedules 51 Notes to Accounts 66 Cash Flow Statement 68 Balance Sheet Abstract and Companys General Business Prole
ABB Limited
Board of Directors Ravi Uppal, Chairman (w.e.f. 26.07.2007) Biplab Majumder, Managing Director (w.e.f. 26.07.2007) K. Rajagopal, Whole-time Director (w.e.f. 19.02.2008) Nasser Munjee N. S. Raghavan D. E. Udwadia A. K. Dasgupta (w.e.f. 26.04.2007) Bernhard Jucker Peter Leupp (w.e.f. 26.07.2007) Veli-Matti Reinikkala (w.e.f. 26.07.2007) Dinesh Paliwal (upto 25.05.2007) Tom Eric Sjoekvist (upto 05.07.2007)
Auditors S. R. Batliboi & Co. Chartered Accountants
Registered Ofce 2nd Floor, East Wing Khanija Bhavan 49, Race Course Road Bangalore - 560 001
Company Secretary B. Gururaj
Registrar & Share Transfer Agent Karvy Computershare Private Limited No. 51/2, T.K.N. Complex
Corporate Management Committee Biplab Majumder I. K. Sadhu K. Rajagopal Ramesh Shankar Shyam Karmarkar Pankaj Sachdeva Madhav M. Digraskar N. Ravi Prakash Nayak Prakash Kanagalekar S. Karun Ranjan De
Opp. National College Basavanagudi Bangalore - 560 004
Bankers ICICI Bank Limited Canara Bank The Hongkong & Shanghai Banking Corporation Limited ABN Amro Bank HDFC Bank Limited Deutsche Bank Industrial Development Bank of India Limited State Bank of India Citibank N.A. Union Bank of India
ABB Limited, India, Annual Report 2007
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5 Year Highlights
(Rs in Millions) Description 2007 2006 2005 2004 2003
Sources of Funds Share Capital Reserves Net Worth Borrowings Funds Employed 423.8 15,694.2 16,118.0 5.6 16,123.6 423.8 11,386.5 11,810.3 15.5 11,825.8 423.8 8,466.7 8,890.5 27.3 8,917.8 423.8 6,669.4 7,093.2 14.9 7,108.1 423.8 5,461.6 5,885.4 101.0 5,986.4
Income and Prots Sales & Other Income Operating Prot Before Interest and Depreciation Prot Before Tax Tax Prot After Tax Dividend / Dividend Tax Retained Earnings 60,013.6 7,632.7 7,564.6 2,647.9 4,916.7 558.0 4,358.7 43,477.0 5,504.0 5,232.1 1,829.0 3,403.1 483.3 2,919.8 30,141.4 3,692.6 3,394.8 1,208.0 2,186.8 389.4 1,797.4 23,055.7 2,582.3 2,365.2 860.0 1,505.2 335.4 1,169.8 15,030.6 1,722.8 1,528.9 520.0 1,008.9 319.5 689.4
Other Data Gross Fixed Assets Debt Equity Ratio Net Worth Per Equity Share - Rs Earnings Per Equity Share - Rs Dividend Per Equity Share - Rs Prot After Taxes as % to Average Net Worth 6,627.1 0.00:1 76.1 23.2 2.2 35.2 5,190.0 0.01:1 55.7 16.1 2.0 32.9 4,324.4 0.01:1 42.0 10.3 1.6 27.4 3,428.1 0.01:1 33.5 7.1 1.4 23.2 3,037.9 0.02:1 27.8 4.8 1.2 18.6
Excludes revaluation of xed assets, revaluation reserve and exceptional items.
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5 Year Highlights
Revenues
Rs. in Millions 75000
Profit After Tax

Rs. in Millions 6000
60000
60,014 4500
4916.7
45000
43,477
3403.1 3000
30000 23,056 15,031
30,141 2186.8
1500 1008.9
1505.2
15000
0 2003 2004 2005 2006 2007
0 2003 2004 2005 2006 2007
Return on Capital Employed (%)
Employees & Productivity

Revenue per employee (Rs. in Thousands) Number of Employees 9000 10,842 7500 10000
60 54.6 50.5
12500
45
43.2 8,382 36.3 7,439 7500 6,704 5,187 5,535 6000
30
27.8 5000 4,690 3,205 3,439
4,052
4500
3000 15 2500 1500
0 2003 2004 2005 2006 2007
0 2003 2004 2005 2006 2007
Excludes revaluation of xed assets, revaluation reserve and exceptional items.

ABB Limited, India, Annual Report 2007 3
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Corporate Management Committee
Left to right (Front row) - Shyam Karmarkar, Head - Marketing & Sales, Prakash Kanagalekar, Head Operational Excellence, K Rajagopal, Chief Financial Ofcer, Biplab Majumder, Country Manager & Head Automation Products, Prakash Nayak, Head - Global Services, S Karun, Head - Service Left to right (Behind) - Inder Sadhu, Head - Power Generation, Pankaj Sachdeva, Head - Power Systems, Madhav Digraskar, Head - Power Products, N Ravi, Head - Process Automation, P C Rajiv, Head - Human Resources, Ranjan Kumar De, Head - Account Management
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Welcome to the world of ABB
ABB is one of the worlds leading power and automation engineering companies. We provide solutions for energy-efcient generation, transmission and distribution of electricity, and for increasing productivity in industrial, commercial and utility operations. Our portfolio ranges from light switches to robots for painting cars or packing food, and from huge electrical transformers to control systems that manage entire power networks and factories. We help our customers meet their challenges with minimum environmental impact delivering Power and Productivity for a better world. Technology & Innovation ABBs leading position in power and automation technologies results from strengths such as quality, commitment to customers and above all, successful innovation in our R&D activities. Our approach to technology is based on our key aims of enhancing electrical power reliability, industrial productivity and energy efciency. We work closely with our customers, suppliers and leading academic institutions around the world to develop technologies that will meet both existing and future challenges. ABB has eight research centers, 6,000 scientists and 70 university collaborations - all working to develop and improve technologies that will make our customers more competitive. We spent $1.2 billion
globally on research and development (including order-related) in 2007, and more than half of our efforts were aimed at improving energy efciency. Our strategy for the future is to focus on developing products and services that use energy more effectively and maximize returns on capital investments. We will continue to invest in existing technologies to ensure their reliability for years to come, while developing new technologies to meet future needs for power and automation systems. ABB and energy efciency Did you know that as much as 80 percent of available energy is lost in the process of making and distributing electricity, and in its inefcient consumption? That means just one-fth of the energy we have becomes the power we need. As the global leader in power transmission and distribution technology and one of the worlds leading automation companies, ABB has found ways to optimize energy use at every step. From harvesting primary energy resources to transporting, distributing and using electrical power, proven ABB technologies reduce waste by 20 to 30 percent.
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ABB in India
ABB has over 5,500 employees and 14 manufacturing facilities across India. We serve customers through an extensive countrywide presence of around 30 marketing ofces, 8 service centers, 3 logistics warehouses and a network of over 775 channel partners. The ABB Group is increasingly leveraging the Indian operations for projects, products, services, engineering and R&D. Also, as part of ABBs new regional approach, India has been designated as the hub for the South Asia region. ABB India continues to bring value to customers through leading-edge technologies, domain expertise and project execution abilities. The products focus continues in the form of range expansion and market penetration. To meet growing demand, capacity and range expansion is underway across businesses and locations. Several new products and technologies were introduced in the Indian market during 2007. In addition to enhancing the capacity of existing plants, many new manufacturing units are being set up across the country. This includes a global factory for distribution automation in Vadodara commissioned recently. The companys technology strengths, wide offering portfolio and unique ability to package solutions and provide a single window approach to verticals continue to be a key differentiator. While the top-line grows, focus on productivity, operational efciencies and working capital management continues unabated.
Strong macro economic fundamentals, integration with the world economy, industrial growth and the signicant work that still remains to be done with reference to the power sector, continue to offer bright prospects for power and automation technologies. ABB is well positioned to leverage these market opportunities based on its intrinsic technology strengths, market presence, track record, extensive manufacturing base and skill competence.

HARIDWAR FARIDABAD DELHI
~ 5500 Employees ~ 775 Channel

Partners
VADODARA KOLKATA NASHIK Corporate Ofce Registered Ofce BANGALORE Global Corporate Research Power Technology Centers CHENNAI Global Operations Centers Manufacturing facilities Marketing Ofces Training Centers Service Centers Logistics Warehouses
HALOL MUMBAI
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Grid Reliability
Power Systems Our Power Systems division is a market leader in the engineering of grid systems, power generation systems, network management solutions and substations. Power Systems deliverables include network management, utility communication, transmission and distribution substations, Flexible Alternating Current Transmission Systems (FACTS), High-Voltage Direct Current (HVDC) systems and automation and electrical solutions for power plants. This division also offers automation, control and protection systems and related services for power transmission and distribution networks, power plants and water pumping stations. Our FACTS and HVDC businesses offer technologically advanced solutions designed to increase transmission capacity and stability in power networks. ABB also delivers endto-end solutions for urban and rural electrication projects. The Power Systems customer base includes central, state and private power utilities as well as industry clients.
Power Products Our Power Products division is a leading supplier of power transmission and distribution products and services, serving electric, gas and water utilities, as well as industrial and commercial customers, with a broad range of products and services across the power value chain. ABBs offering includes a broad range of indoor and outdoor circuit breakers, air and gas insulated switchgear, including hybrid switchgear, instrument transformers, disconnectors, high and low voltage capacitors, reactive power compensators, power and distribution transformers and a range of distribution products including Compact Secondary Substations (CSS) and Ring Main Units (RMUs). ABB also provides a full range of lifecycle services from spare parts and equipment repair to training, migration, remote monitoring and technical support.
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Industrial Productivity
Process Automation Our Process Automation divisions products, systems and services give our customers complete automation and optimization solutions and this includes industry-specic solutions for plant automation and electrication, energy management, process and asset optimization, analytical measurement and telecommunication. Major industries served include oil and gas, metals and minerals, pulp and paper, chemicals and pharmaceuticals. For product life cycle support, we offer eld services, spare parts, remote monitoring, training and upgrades. For asset optimization we offer services for engineering, design, consulting, compliance, validation, benchmarking, plant performance improvement, safety and hazardous operation analysis and reliability analysis. Using our full service program we also offer plantwide, performance-based maintenance contracts, which provide customers an opportunity to outsource their plant maintenance. The Process Automation division also delivers specialized solutions for turbo charging, as well as propulsion and electrication systems for the marine industry. In addition, the division delivers stand-alone control system products sold through distributors, system integrators and OEMs. Automation Products The Automation Products division offers a wide range of products and services including low-voltage switchgear, breakers, switches, control products, DIN-
rail components, enclosures, line protection devices, wiring accessories, instrumentation, drives, motors, generators and power electronics systems. All these products help customers to improve productivity, save energy and ensure safety. The majority of these products are used for industrial applications, but also in buildings, utilities and rail transportation. Channel partners such as distributors, wholesalers, machine builders, system integrators and electrical panel builders form an important customer segment with direct OEM sales comprising the rest. Robotics Our Robotics division offers robots, services and modular manufacturing solutions for use in assembly, nishing and machine tending. Key markets include the automotive and manufacturing industries, in addition to applications in foundry, packaging and material handling. The division develops standardized manufacturing cells for machine tending, welding, cutting, painting and nishing and provides packaged systems to automobile manufacturers for press automation, paint process automation, body-in-white systems (automation systems for adding components to automobile bodies) and power train assembly.
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Sustainability
ABB follows a triple bottom line approach aimed at achieving a balance in the economic, environmental and social impact of the companys business to benet all our stakeholders. The company has a dedicated Sustainability team, with location-based representatives, headed by a Country Sustainability Controller. The ABB India Foundation, a registered charitable Trust ensures dedicated focus, independence, regular monitoring and continuity of social initiatives in a planned manner. ABB in India has put in place a focused sustainability programme with clearly dened pillars. Education The education pillar focuses on primary education for economically and socially underprivileged children, by supporting schools in the proximity of the companys major manufacturing locations. At the same time it also focuses on building academia partnerships with higher education technical universities. As part of its primary education initiative, ABB now supports ve government schools across the country and helps them with infrastructure development and basic amenities like drinking water, toilets, classrooms, teaching aids etc. Deeper engagement initiatives like midday meals, educational excursions, training & development programmes focus on enhancing the quality of education and enriching the learning environment. Two new schools were taken into the fold in 2007 i.e. the Fatehpura School at Vadodara and the Rajiv
Gandhi Nagar School in Bangalore. New classrooms and benches, revamped facades, improved lighting, drinking water, toilet facilities and provision for play areas have been undertaken at these schools. The existing schools namely Nellagadaranahalli Government (NGH) School in Peenya, Goverdhan School at Nashik and Makarpura School at Vadodara saw continued support in the form of infrastructure enhancement, provision of benches, value education programmes for teachers and students, educational trips, painting competitions and medical camps. On the high level education engagement, ABB in India strives to foster industry-academia relationships and works with several renowned academic institutions such as the RV College of Engineering, Bangalore, MS University, Vadodara and Indian Institute of Technology - Delhi. Besides facilitating research and development, these relationships also encourage student interface especially in elds related to power and automation technologies. Scholarships, provision of lab facilities, visits and placements are some of the initiatives taken under this programme. Supporting the Differently-abled Project Roshni is a novel initiative, where ABB in India works with NGO-run institutions for the differentlyabled, around its major locations. Physically, visually and mentally challenged people are trained in putting together simple components and sub-assemblies which are subsequently absorbed by the companys manufacturing units. Projects underway include
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working with physically and visually impaired at Prerana in Bangalore and the mentally challenged in Prabodhini in Nashik. The latest project added as part of this initiative was Seva Tirth in Vadodara. Besides the obvious benet of providing an honourable means of livelihood for these differently abled people, the project is also playing a vital role in their rehabilitation. Access to Electricity Access to Electricity is a global ABB programme aimed at providing access to electricity and bringing light to those in darkness, especially in areas not connected by the grid. ABB Indias access to electricity programme has already brought light to around 900 households and 6,500 people in the interior desert areas of Rajasthan. Scattered dwellings across ve hamlets, have been equipped with solar panel units that help bring light to their homes. Besides resulting in an increase of productive hours, thereby boosting earnings and protecting traditional trades, the simple village folk are now adopting new livelihoods by training and maintaining the units. Moreover, the women can cook at leisure now and the children can study longer. Special Projects With special projects, ABB springs into action when there is a need for help from communities affected by natural disasters, calamities or epidemics. ABB was actively involved at the time of the Gujarat earthquake and the more recent tsunami. Welfare / Awareness ABB India strongly focuses upon the welfare of its employees and providing them a conducive work environment. Towards this effort, the company has appointed a dedicated Country Occupational Health and Welfare Ofcer. Several training & awareness programmes, welfare workshops and health checks are also conducted on a regular basis for the employees and the neighbouring communities. Environment ABB Indias commitment to the environment extends beyond its own products and legal compliance requirements. All major manufacturing units of ABB in India are ISO14001 certied. Some of the environmental initiatives underway across the companys locations include greening programmes, recycling, energy conservation, rainwater harvesting, vermiculture, treatment plants etc. In addition to environment related activities at the companys own locations. ABB helps with greening initiatives in its main areas of operation
by extending support to programmes such as tree plantation, maintaining trafc islands, providing tree guards etc. Safety Safety is accorded the highest priority by the company. A clear safety policy, several training programmes and communication tools have been put in place. A dedicated Country Safety Controller and a nationwide network of safety ofcers ensure that safety is never compromised - be it the companys own locations or project sites. Compliance standards and certication processes help extend this commitment beyond employees and the strictest safety regime is followed even with sub-contractors and business partners. Regular audits and ongoing communications help enforce a zero-tolerance policy when it comes to violating safety norms. In a unique initiative, the company has recently set up an outdoor-cumindoor safety training school in Jaipur which helps familiarize and train many of the companys erection/ commissioning employees, contract workers and even customer personnel actively engaged in power transmission and distribution projects. Safety at ABB goes beyond the professional realms to encompass even the personal safety of employees - for instance wearing of helmets and seat-belts in mandatory.
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Notice to Members
NOTICE is hereby given that the FIFTY-EIGHTH ANNUAL GENERAL MEETING of the Members of ABB Limited will be held at The Atria Hotel, Chancery, No.1, Palace Road, Bangalore 560 001, on Tuesday, June 3, 2008 at 11.00 A.M. (IST) to transact the following business: Ordinary Business: 1. To receive, consider and adopt the Audited Balance Sheet as at December 31, 2007 and the Audited Prot & Loss Account for the year ended on that date and the Reports of the Directors and the Auditors thereon. To declare a dividend on equity shares. To appoint a Director in place of Mr. D. E. Udwadia, who retires by rotation at this Annual General Meeting, and being eligible, offers himself for re-election. To appoint a Director in place of Mr. Bernhard Jucker, who retires by rotation at this Annual General Meeting, and being eligible, offers himself for re-election. To appoint M/s. S.R. Batliboi & Co., Chartered Accountants, as Statutory Auditors of the Company to hold ofce from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to authorize the Board of Directors to x their remuneration. 9.
1956 and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the ofce of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation. To consider, and if thought t, to pass, with or without modication, the following resolution as an Ordinary Resolution: RESOLVED THAT pursuant to and in accordance with the provisions of Sections 198, 269, 309, 316, 317 and other applicable provisions, if any, of the Companies Act, 1956, including any statutory modication(s) or re-enactment thereof for the time being in force, (Act), read with Schedule XIII thereto, consent of the Company be and is hereby accorded for appointment and payment of remuneration to Mr. Biplab Majumder as the Managing Director of the Company (hereinafter referred to as Mr. Majumder), for a period of 3 (three) years from July 26, 2007 to July 25, 2010 (both days inclusive), on the terms and conditions as set out in the draft agreement to be entered into between the Company and Mr. Majumder, a copy whereof initialed by the Chairman for the purpose of identication has been placed before the meeting, which agreement is hereby specically approved with liberty to the Board of Directors to alter, vary and modify, from time to time, the terms and conditions of the said appointment and / or agreement including review of remuneration annually and / or otherwise, in such manner as may be agreed upon by the Board of Directors and Mr. Majumder, and in accordance with the limits prescribed under Schedule XIII to the Companies Act, 1956 or any statutory amendment(s) and modication(s) thereto. RESOLVED FURTHER THAT pursuant to the provisions of Sections 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, the remuneration payable to Mr. Biplab Majumder as the Managing Director by way of salary, perquisites, commission and other allowances, shall not exceed 5% of the net prots of the Company and if there are more than one such director, 10% for all of them together in that nancial year. RESOLVED FURTHER THAT in the event of any loss or inadequacy of prots in any nancial year of the Company during the tenure of Mr. Biplab Majumder, Managing Director of the Company, the remuneration, perquisites and other allowances shall be governed by the limits prescribed in Section II of Part II of Schedule XIII to the Companies Act, 1956, as amended from time to time. RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board of Directors of the Company, be and is hereby authorized to do all such acts, deeds, matters or things and they may take such steps necessary, expedient or desirable in this regard. 10. To consider and if thought t, to pass with or without modication(s), the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. K. Rajagopal, who was appointed as an Additional Director by the Board of Directors of the Company on February 19, 2008, pursu-ant to Article 152 of the Articles of Association of the Company and who holds the ofce upto the date of the ensuing Annual General Meeting under Section 260 of the Companies Act, 1956, and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the ofce of Director, be and is hereby appointed as a Director of the Company.
2. 3.
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5.
Special Business: 6. To consider and if thought t, to pass with or without modication(s), the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. Arun Kanti Dasgupta who was appointed as Director by the Board of Directors of the Company on April 26, 2007, pursuant to Article 151 of the Articles of Association of the Company to ll in the casual vacancy caused on the Board, due to the resignation of Mr. K. Sridhar and who holds ofce up to the date of this Annual General Meeting pursuant to Section 262 of the Companies Act, 1956 and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the ofce of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation. 7. To consider and if thought t, to pass with or without modication(s), the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. Ravi Uppal, who was appointed as an Additional Director by the Board of Directors of the Company on July 26, 2007, pursuant to Article 152 of the Articles of Association of the Company and who holds ofce upto the date of the ensuing Annual General Meeting under Section 260 of the Companies Act, 1956 and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the ofce of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation. 8. To consider and if thought t, to pass with or without modication(s), the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. Veli-Matti Reinikkala, who was appointed as an Additional Director by the Board of Directors of the Company on July 26, 2007, pursuant to Article 152 of the Articles of Association of the Company and who holds ofce upto the date of the ensuing Annual General Meeting under Section 260 of the Companies Act, ABB Limited, India, Annual Report 2007
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RESOLVED THAT pursuant to and in accordance with the provisions of Sections 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, including any statutory modication(s) or re-enactment thereof for the time being in force, (Act), read with Schedule XIII thereto, consent of the Company be and is hereby accorded for appointment and payment of remuneration to Mr. K. Rajagopal as the Whole-time Director of the Company (hereinafter referred to as Mr. Rajagopal), for a period of 3 (three) years from February 19, 2008 to February 18, 2011 (both days inclusive), on the terms and conditions as set out in the draft agreement to be entered into between the Company and Mr. Rajagopal, a copy whereof initialed by the Chairman for the purpose of identication has been placed before the meeting, which agreement is hereby specically approved with liberty to the Board of Directors to alter, vary and modify, from time to time, the terms and conditions of the said appointment and / or agreement including review of remuneration annually and / or otherwise, in such manner as may be agreed upon by the Board of Directors and Mr. Rajagopal, and in accordance with the limits prescribed under Schedule XIII to the Companies Act, 1956 or any statutory amendment(s) and modication(s) thereto. RESOLVED FURTHER THAT pursuant to the provisions of Sections 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, the remuneration payable to Mr. Rajagopal as the Whole-time Director by way of salary, perquisites, commission and other allowances, shall not exceed 5% of the net prots of the Company and if there are more than one such director, 10% for all of them together in that nancial year. RESOLVED FURTHER THAT in the event of any loss or inadequacy of prots in any nancial year of the Company during the tenure of Mr. Rajagopal, Whole-time Director of the Company, the remuneration, perquisites and other allowances shall be governed by the limits prescribed in Section II of Part II of Schedule XIII to the Companies Act, 1956, as amended from time to time. RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board of Directors of the Company, be and is hereby authorized to do all such acts, deeds, matters or things and they may take such steps necessary, expedient or desirable in this regard. By Order of the Board For ABB Limited B. Gururaj Senior Vice President Legal & Compliance and Company Secretary
NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE DULY FILLED, STAMPED, SIGNED AND SHOULD BE DEPOSITED AT THE COMPANYS REGISTERED OFFICE NOT LATER THAN FORTYEIGHT HOURS BEFORE THE COMMENCEMENT OF THE MEETING. PROXIES SUBMITTED ON BEHALF OF LIMITED COMPANIES, SOCIETIES, PARTNERSHIP FIRMS, ETC., MUST BE SUPPORTED BY APPROPRIATE RESOLUTION / AUTHORITY AS APPLICABLE, ISSUED ON BEHALF OF THE APPOINTING ORGANISATION. 3. Members should bring the duly lled in attendance slip sent herewith for attending the meeting. The Register of Members and the Share Transfer Books of the Company will remain closed from May 28, 2008 to June 3, 2008 (both days inclusive) for the purpose of payment of dividend. The dividend, as recommended by the Board of Directors of the Company, if declared at the Annual General Meeting, will be paid on or after June 6, 2008, to those Members whose names stand registered on the Companys Register of Members:a) as Benecial Owners as at the end of business hours on May 27, 2008 as per the list to be furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) in respect of shares held in dematerialized form. as Members in the Register of Members of the Company after giving effect to valid share transfers lodged with the Company, on or before May 27, 2008.
4.
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b)
6.
Members are requested to note that dividends not encashed or remaining unclaimed for a period of seven (7) years from the date of transfer to the Companys Unpaid Dividend Account, shall be transferred, under Section 205-A of the Companies Act, 1956, to the Investor Education and Protection Fund, established under Section 205C of the said Act. Members who have not yet encashed the dividend warrant(s) from the nancial year ended 31st December 2000 onwards are requested to forward their claims to the Companys Registrar and Share Transfer Agents. It may be noted that once the unclaimed dividend is transferred to the Investor Education and Protection Fund as above, no claim shall lie with the Company in respect of such amount. It may also be noted that the unclaimed dividend amounts which were lying with the company upto the year ended on December 31, 1999, have been transferred to the Investor Education and Protection Fund. Members are requested to intimate, indicating their folio number, the changes, if any, in their registered addresses, either to the Company or to its Registrar and Share Transfer Agent, viz. Karvy Computershare Private Limited, Unit: ABB Limited, 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081, or to their respective Depository Participant (DP) in case the shares are held in dematerialised form. Members holding shares in physical form can avail of the nomination facility by ling Form 2B (in duplicate) with the Company or its Registrar & Share Transfer Agent which will be made available on request and in case of shares held in dematerialised form, the nomination has to be lodged with their DP. As required under clause 49 (IV) (G) of the Listing Agreement of the stock exchanges, the relevant details of persons seeking appointment / re-appointment as directors are furnished in the Corporate Governance Section of this Annual Report. ABB Limited, India, Annual Report 2007
Place: Vadodara Date: April 25, 2008 Registered Ofce: 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bangalore 560 001
7.
8. Notes: 1. The relative Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, setting out the material facts in respect of special business under item Nos. 6 to 10 is annexed hereto. 9. 2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT ONE OR MORE PROXY (IES) TO ATTEND AND VOTE INSTEAD OF HIMSELF / HERSELF AND A PROXY NEED
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Annexure to Notice
Explanatory Statement under Section 173(2) of the Companies Act, 1956 Item No. 6 The Board of Directors at its meeting held on April 26, 2007, appointed Mr. Arun Kanti Dasgupta as a Director pursuant to Article 151 of the Articles of Association of the Company, to ll in the casual vacancy caused on the Board by the resignation of Mr. K. Sridhar. Since Mr. K. Sridhar was to retire by rotation at the ensuing Annual General Meeting, Mr. Arun Kanti Dasgupta would also cease to hold the ofce of Director at the ensuing Annual General Meeting, pursuant to Section 262 of the Companies Act, 1956. The Members may note that Mr. Arun Kanti Dasgupta is the Managing Director of Life Insurance Corporation of India. The Company has received a notice under Section 257 of the Companies Act, 1956, along with the deposit of Rs.500/- from a member, proposing the candidature of Mr. Arun Kanti Dasgupta for the ofce of Director. The Board considers that the association of Mr. Arun Kanti Dasgupta as a Director of the Company will be benecial and in the interest of the Company The Directors recommend the passing of the resolution set out at Item No.6 of the accompanying Notice. Except Mr. Arun Kanti Dasgupta, none of the other Directors is, in any way, concerned or interested in the said resolution. Item No. 7 & 8 The Board of Directors of the Company at its meeting held on July 26, 2007, appointed Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala as Additional Directors on the Board effective that date. At the same meeting, the Board appointed Mr. Ravi Uppal as the Chairman of the Company. In terms of Section 260 of the Companies Act, 1956 and Article 152 of the Articles of Association of the Company, Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala hold ofce as Directors upto the date of the ensuing Annual General Meeting of the Company and are eligible for re-appointment as Directors. The Company has received notices under Section 257 of the Companies Act, 1956, along with the deposit of Rs 500/- from members proposing the candidature of Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala, for the ofce of Director. The Board considers that their association as Directors will be benecial and in the interest of the Company. The Directors recommend the passing of resolutions set out at Item Nos.7 and 8, respectively, of the accompanying Notice. Except Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala, none of the other Directors is, in any way, concerned or interested in the said resolution. Item No.9 At its meeting held on July 26, 2007, the Board of Directors had, subject to the approval of members in general meeting, appointed Mr. Biplab Majumder (hereinafter referred to as Mr. Majumder) as the Managing Director of the Company for a period of 3 years from July 26, 2007 to July 25, 2010 (both days inclusive). At the said meeting, the Board had also xed a total remuneration of Rs.12,500,000/- per annum, payable to Mr. Majumder, for the period from July 26, 2007 to February 29, 2008, subject to annual revision by the Board of Directors every year during the entire tenure of his appointment. Accordingly, the remuneration xed earlier fell due for revision effective March 1, 2008. Therefore, the Board at its meeting held on April 25,
2008 reviewed the current remuneration of Mr Majumder xed earlier and approved an increase in the total remuneration payable to him from Rs. 12,500,000/- to Rs.15,625,000/- per annum effective March 1, 2008. The break-up of the total increased remuneration of Rs. 15,625,000/- and other terms & conditions of appointment as approved by the Board are set out in the draft agreement, a copy whereof duly initialed by the Chairman is placed in the meeting for the purpose of identication and is subject to the approval of the Members of the Company, as required under Section 269 read with Schedule XIII to the Companies Act, 1956. The principal terms and conditions as contained in the draft agreement are as under: 1. Tenure of appointment The appointment is for a period of three years from July 26, 2007 to July 25, 2010. Mr. Majumder whilst holding the ofce of Managing Director of the Company is not subject to retirement by rotation. 2. Subject to such orders and directions as may from time to time be given to him by the Board of Directors of the Company (hereinafter referred to the Board), Mr. Majumder shall promptly and faithfully obey, observe and comply with in all respects and subject also to such restrictions as the Board may in its sole and uncontrolled discretion from time to time impose on him, Mr. Majumder shall have the management of the whole of the affairs of the Company with power to appoint and dismiss employees of the Company, to enter into contracts on behalf of the Company in the ordinary course of business and to do and perform all other acts and things, which, in the ordinary course of business, he may consider necessary or proper or in the interest of the Company. During the period of his employment, Mr. Majumder shall whenever required by the Company, undertake such travelling in India and abroad as the Board may from time to time direct in connection with or in relation to the business of the Company. Remuneration and Perquisites Mr. Majumder shall be entitled to the following remuneration and perquisites: (a) Salary Rs.7,030,800/- per annum (b) Commission Mr. Majumder shall be entitled to an annual performance related commission based on the results achieved against the targets xed and determined by the ABB Group and the Board of Directors. Under the best performance targets, the commission amount shall not exceed Rs.3,516,000/- per annum at 100% achievement level of the performance target. (c) Perquisites Mr. Majumder shall be entitled to perquisites like furnished accommodation or house rent allowance in lieu thereof, reimbursement of medical expenses incurred in India or abroad for self and family, leave travel concession, contribution to Provident Fund, Superannuation Fund and Gratuity Fund, and other amenities and all other payments in the nature of perquisites and allowances as agreed to between Mr. Majumder and the Board of Directors, from time to time, subject however, that the aggregate monetary value of all perquisites of whatsoever nature, in any nancial year shall not exceed Rs.5,078,200/- per annum.
3.
4.
13
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In addition to the above, Mr. Majumder is also eligible for Companys car(s) with chauffeur, membership / subscription fee for two clubs, personal accident insurance coverage, telephone / telefax and other suitable communication facilities at residence. (d) Leave Leave with full pay or encashment as per rules of the Company. (e) Overall Remuneration The aggregate of salary, commission and perquisites in any nancial year shall not exceed the limits prescribed from time to time under Section 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act, as may for the time being be in force. (f) Minimum Remuneration In case of loss or inadequacy of prots in any nancial year during the currency of tenure of his service, the payment of salary, commission and perquisites shall be governed by the limits prescribed under Section II of Part II of Schedule XIII to the Companies Act, 1956. (g) Revision in Remuneration The remuneration payable to the Managing Director shall be subject to revision, from time to time (annually and / or otherwise), by the Board of Directors of the Company at their discretion and that the next revision in remuneration shall fall due on March 1, 2009. (h) Mr. Majumder shall be entitled to: (i) the reimbursement of entertainment expenses actually and properly incurred by him in the course of the legitimate business of the Company in accordance with the rules and regulations of the Company in force from time to time or as may be approved by the Board of Directors; and the reimbursement of travelling, hotel and other expenses incurred by him in India and abroad exclusively on the business of the Company in accordance with the rules and regulations of the Company in force from time to time or as approved by the Board of Directors.
permissible and if deem t, with liberty to the Board for review of remuneration annually and / or otherwise, so as not to exceed the limits specied in the Act or any amendments made thereto. This explanatory statement together with the accompanying notice is to be regarded as an abstract of terms of the agreement and memorandum of concern or interest under the provisions of Section 302 of the Companies Act, 1956. The Agreement referred to in the resolution at Item No.9 of the accompanying notice is open for inspection by the Members at the Registered Ofce of the Company during ofce hours on any working day of the Company, upto the date of the Annual General Meeting. Mr. Majumder is interested in the said resolution since it relates to his appointment as the Managing Director of the Company and to the remuneration payable to him as such. A notice pursuant to Section 257 of the Act along with a deposit of Rs.500/- has been received from a member in writing, proposing the candidature of Mr. Majumder as the Managing Director of the Company. The Directors recommend the passing of the resolution set out at Item No.9 of the accompanying Notice. Item No.10 At its meeting held on February 19, 2008, the Board of Directors had, subject to the approval of members in general meeting, appointed Mr. K Rajagopal (hereinafter referred to as Mr. Rajagopal) as the Whole-time Director of the Company for a period of 3 years from February 19, 2008 to February 18, 2011 (both days inclusive). At the said meeting, the Board had also xed a total remuneration of Rs. 8,000,000/per annum, payable to Mr. Rajagopal, for the period from February 19, 2008 to February 29, 2008, subject to annual revision by the Board of Directors every year during the entire tenure of his appointment. Accordingly, the remuneration xed earlier fell due for revision effective March 1, 2008. Therefore, the Board at its meeting held on April 25, 2008 reviewed the current remuneration of Mr Rajagopal xed earlier and approved an increase in the total remuneration payable to him from Rs. 8,000,000/- to Rs.10,000,000/- per annum effective March 1, 2008. The break-up of the total increased remuneration of Rs 10,000,000/- and other terms & conditions of appointment as approved by the Board are set out in the draft agreement, a copy whereof duly initialed by the Chairman is placed in the meeting for the purpose of identication and is subject to the approval of the Members of the Company, as required under Section 269 read with Schedule XIII to the Companies Act, 1956. The principal terms and conditions as contained in the draft agreement are as under: 1. Tenure of appointment The appointment is for a period of three years from February 19, 2008 to February 18, 2011. Mr. Rajagopal whilst holding the ofce of Wholetime Director of the Company is not subject to retirement by rotation. 2. During the period of his employment, Mr. Rajagopal shall whenever required by the Company, undertake such travelling in India and abroad as the Board may from time to time direct in connection with or in relation to the business of the Company. Remuneration and Perquisites Mr. Rajagopal shall be entitled to the following remuneration and perquisites: (a) Salary Rs.2,700,000/- per annum ABB Limited, India, Annual Report 2007
(ii)
5.
Mr. Majumder shall not, during the term of this Agreement with the Company, engage himself, either directly or indirectly or be interested in any capacity whatsoever or render assistance to any rm, company or persons whatsoever whether a manufacturer, dealer or trader in goods or products which are of the same or similar kind and nature as those of the Company. Notwithstanding anything to the contrary contained in the Agreement, either party shall be entitled to terminate the Agreement at anytime by giving to the other party 180 days notice in writing in that behalf without the necessity of showing any cause and on the expiry of the period of such notice, this Agreement shall stand determined and in view thereof and as a consequence of such termination by notice, Mr. Majumder shall cease to be a Director of the Company. The terms and conditions in the draft Agreement may be altered or varied or modied, from time to time, by the Board, as may be
6.
3.
7.
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(b)
Annual Variable Pay (performance related) Mr. Rajagopal shall be entitled to an annual performance related variable pay based on the results achieved against the targets xed and determined by the Board of Directors. Under the best performance targets, the commission amount shall not exceed Rs.2,000,000/- per annum at 100% achievement level of the performance target.
business of the Company in accordance with the rules and regulations of the Company in force from time to time or as may be approved by the Board of Directors; and (ii) the reimbursement of travelling, hotel and other expenses incurred by him in India and abroad exclusively on the business of the Company in accordance with the rules and regulations of the Company in force from time to time or as approved by the Board of Directors.
(c)
Perquisites Mr. Rajagopal shall be entitled to perquisites like furnished accommodation or house rent allowance in lieu thereof, re-imbursement of medical expenses incurred in India or abroad for self and family, leave travel concession, contribution to Provident Fund, Superannuation Fund and Gratuity Fund and other amenities viz., Companys car with chauffeur etc., and all other payments in the nature of perquisites and allowances as agreed to between Mr. Rajagopal and the Board of Directors, from time to time, subject however, that the aggregate monetary value of all perquisites of whatsoever nature including Retiral benets, in any nancial year shall not exceed Rs.5,300,000/- per annum. In addition to the above, Mr. Rajagopal is also eligible for membership / subscription fee for two clubs, personal accident insurance coverage, telephone / telefax and other suitable communication facilities at residence.
4.
Mr. Rajagopal shall not, during the term of this Agreement with the Company, engage himself, either directly or indirectly or be interested in any capacity whatsoever or render assistance to any rm, company or persons whatsoever whether a manufacturer, dealer or trader in goods or products which are of the same or similar kind and nature as those of the Company. Notwithstanding anything to the contrary contained in the Agreement, either party shall be entitled to terminate the Agreement at anytime by giving to the other party 180 days notice in writing in that behalf without the necessity of showing any cause and on the expiry of the period of such notice, this Agreement shall stand determined and in view thereof and as a consequence of such termination by notice, Mr. Rajagopal shall cease to be a Director of the Company. The terms and conditions in the draft Agreement may be altered or varied or modied, from time to time, by the Board, as may be permissible and if deem t, with liberty to the Board for review of remuneration annually and / or otherwise, so as not to exceed the limits specied in the Act or any amendments made thereto. This explanatory statement together with the accompanying notice is to be regarded as an abstract of terms of the agreement and memorandum of concern or interest under the provisions of Section 302 of the Companies Act, 1956. The Agreement referred to in the resolution at Item No.10 of the accompanying notice is open for inspection by the Members at the Registered Ofce of the Company during ofce hours on any working day of the Company, upto the date of the Annual General Meeting. Mr. Rajagopal is interested in the said resolution since it relates to his appointment as the Whole-time Director of the Company and to the remuneration payable to him as such. A notice pursuant to Section 257 of the Companies Act, 1956, along with a deposit of Rs.500/- has been received from a member in writing, proposing the candidature of Mr. Rajagopal as a Whole-time Director. The Directors recommend the passing of the resolution set out at Item No.10 of the accompanying Notice. By Order of the Board For ABB Limited B. Gururaj Senior Vice President Legal & Compliance and Company Secretary
5.
6.
(d)
Leave Leave with full pay or encashment as per rules of the Company.
(e)
Overall Remuneration The aggregate of salary, commission and perquisites in any nancial year shall not exceed the limits prescribed from time to time under Section 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act, as may for the time being be in force.
(f)
Minimum Remuneration In case of loss or inadequacy of prots in any nancial year during the currency of tenure of his service, the payment of salary, commission and perquisites shall be governed by the limits prescribed under Section II of Part II of Schedule XIII to the Companies Act, 1956.
(g)
Revision in Remuneration The remuneration payable to the Whole-time Director shall be subject to revision, from time to time (annually and / or otherwise), by the Board of Directors of the Company at their discretion and that the next revision in remuneration shall fall due on March 1, 2009.
Place: Vadodara Date: April 25, 2008 Registered Ofce: 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bangalore 560 001
(h)
Mr. Rajagopal shall be entitled to: (i) the reimbursement of entertainment expenses actually and properly incurred by him in the course of the legitimate
15
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Directors Report
Your Directors have pleasure in presenting their Fifty-eighth Annual Report and Audited Accounts for the year ended December 31, 2007. Financial Results (Rs in Thousands) For the year ended December 31, 2007 Prot Before Taxation Less: Provision for Tax - Current Tax - Deferred Tax - Fringe Benet Tax Prot After Tax Balance Brought Forward from last year Amount available for Appropriation Appropriations General Reserve Proposed Dividend Corporate Dividend Tax Corporate Dividend Tax 2006 Balance Carried Forward 7,564,569 2,563,879 (11,000) 95,000 4,916,690 519,255 5,435,945 For the year ended December 31, 2006 5,232,062 1,671,000 81,000 77,000 3,403,062 349,450 3,752,512
4,250,000 466,198 79,230 12,587 627,930 5,435,945
2,750,000 423,817 59,440 519,255 3,752,512
Dividend Your Directors recommend payment of a dividend at the rate of Rs.2.20 (Rupees two and paise twenty only) per share (previous year Rs 10/- per share on 42,381,675 equity shares of Rs.10/- each) for the year ended December 31, 2007 on 211,908,375 equity shares of Rs 2/- each. Sub-division of the Face Value of Equity Shares In accordance with the approval of the shareholders at the 57th Annual General Meeting of the Company held on May 25, 2007, each equity share of the face value of Rs.10/- each was sub-divided into 5 equity shares of the face value of Rs.2/- each, effective July 6, 2007. Consequently, the sub-divided equity shares of the face value of Rs.2/- each have been issued to such shareholders who held the equity shares of the face value of Rs.10/- each of the Company, as on July 6, 2007. Performance Review Orders received during the year at Rs 76,682 million were 36% higher compared to Rs 56,236 million in the previous year. Order backlog at the end of 2007 was healthy at Rs 50,260 million compared to Rs 33,723 million at the end of the previous year. Sales and other income for the year were higher by 38% at Rs 60,014 million compared to Rs 43,477 million in the previous year. Prot before tax was signicantly higher at Rs 7,565 million compared to Rs 5,232 million in the previous year. Growth in prot was mainly attributable to volume growth and operational efciencies. Prot after tax at Rs 4,917 million for the year has improved by 44% compared to Rs 3,403 million in the previous year. Earning per equity share of face value of Rs 2 correspondingly improved to Rs 23.20 compared to Rs 16.06 in the previous year. 16
Operating performance of all the segments, power system, power products, process automation and automation products was signicantly better than previous year. For detailed analysis of the performance, please refer to the managements discussion and analysis section of the annual report. Transfer to Investor Education and Protection Fund In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs.825,720/- lying with the Company for a period of seven years pertaining to year ended on December 31, 1999, was transferred during the year 2007, to the Investor Education and Protection Fund established by the Central Government. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure A, forming part of this report. Environment, Health and Safety The Company has in place a system for controlling and monitoring pollutants at all factories complying with environmental standards and legislation. All the manufacturing units of the Company have received certicates for ISO 14001 (EMS). Environment, health and safety are given high priority. All the units of the Company have been awarded OHSAS18001 certication for the health and safety system. Several environmental management projects are underway across the locations. Some of these include energy conservation, waste management, rain water harvesting and greening initiatives. ABB Limited, India, Annual Report 2007
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Delisting of Equity Shares In accordance with the approval of the shareholders at the 56th Annual General Meeting of the Company held on May 26, 2006, the equity shares of the Company have been voluntarily delisted from Calcutta Stock Exchange Association Limited with effect from August 10, 2007. The voluntary delisting of equity shares from Ahmedabad Stock Exchange Limited and Delhi Stock Exchange Association Limited had been completed by the Company during the year 2006. Particulars of Employees The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended and forming part of this report is given in Annexure - B. The said Annexure - B shall, however, be provided to the Members on request to be made to the Company Secretary. Directors Responsibility Statement Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief conrm that: i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company; appropriate accounting policies have been selected and applied consistently and such judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2007 and of the prot of the Company for the year ended on that date; proper and sufcient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and the annual accounts have been prepared on a going concern basis.
Mr. Tom Eric Sjoekvist resigned as a Director of the Company effective July 5, 2007 and the Board of Directors at its meeting held on July 26, 2007, appointed Mr. Peter Leupp as a Director of the Company, in the casual vacancy caused due to the resignation of Mr. Tom Eric Sjoekvist. The Board of Directors also appointed Mr. Veli-Matti Reinikkala as an Additional Director of the Company, effective July 26, 2007. The Board of Directors at its meeting held on February 19, 2008, appointed Mr. K. Rajagopal as an Additional Director and also as Whole-time Director of the Company for a period of three years with effect therefrom. Your Directors place on record their appreciation of the valuable services rendered by Mr. K. Sridhar, Mr. Dinesh Paliwal and Mr. Tom Eric Sjoekvist, during their tenure as Directors of the Company. Mr. D. E. Udwadia and Mr. Bernhard Jucker, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The particulars of Directors who are seeking appointment at the ensuing Annual General Meeting are furnished in the Corporate Governance section annexed to this report. Auditors The Companys Auditors - M/s. S.R. Batliboi & Co., Chartered Accountants, holds ofce upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certicate from them pursuant to Section 224(1B) of the Companies Act, 1956, conrming their eligibility for re-appointment as Auditors of the Company. For and on behalf of the Board
ii.
iii.
New Delhi February 19, 2008
Ravi Uppal Chairman
iv.
Corporate Governance As required under Clause 49 of the listing agreement of stock exchanges, a report on corporate governance and a certicate from M/s D. R. Shressha & Associates, Practicing Company Secretaries, conrming compliance with the requirements of corporate governance are given in Annexure C and Annexure D respectively, which forms part of this report. Board of Directors Mr. Arun Kanti Dasgupta was appointed as a Director of the Company with effect from April 26, 2007 in the casual vacancy caused due to the resignation of Mr. K. Sridhar. Mr. Dinesh Paliwal resigned as the Chairman and Director of the Company effective May 25, 2007. Consequent to taking over as the Head of Global Marketing and the base being shifted to Zurich, Switzerland, Mr. Ravi Uppal resigned as the Vice Chairman & Managing Director with effect from July 26, 2007. The Board of Directors, however, at its meeting held on July 26, 2007, appointed Mr. Ravi Uppal as an Additional Director and also as Chairman of the Company with effect therefrom. Mr. Biplab Majumder, Executive Director, has been appointed as the Managing Director of the Company for a period of 3 years, with effect from July 26, 2007.
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Annexure - A to Directors Report
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo - Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988. 1. Conservation of energy The operations of the Company are not energy intensive. However, energy conservation is priority area for the Company. Energy conservation measures taken during the year included, Usage of optimise thermic uid system, air cooling plant and air conditioning system. Adopting servo controlled voltage stabilizer for lighting. Replacement of HPMV lamps with Metal Halide Lamps and use of CFLs. 3 Various training programmes were also conducted across the organisation to increase the awareness for reduction in energy consumption. 2. Technology absorption, adaptation and innovation 2.1 Technical Development New Products Developed: Numeric relays for over current - earth fault protection NI40/41, REF601 and REJ601. Self powered Numeric relay - REJ603. LV motors for hazardous area suitable for an ambient temperature 50 degree Celsius. 250/60 kW, 4/6P wind generator. Energy efcient cast iron motors in frame 71 to 132 for EFF1 & EFF2 level. 25 kVA Natural Cooled under slung auxiliary inverter for Railways. 3.1 2.3
been reected in terms of improvement of product reliability and quality, standardization of design of assemblies/ subassemblies/ components among various products, cost reduction and increased acceptability of products in global markets. Expenditure on Research & Development (Rs in Thousands) i) ii) iii) iv) Capital Revenue Total Total R & D expenditure as a percentage of turnover 7,005 43,761 50,766 0.09
Imported Technology (imported during last ve years) Technology imported High voltage circuit breakers (36kV to 420kV) Instrument transformers (36kV to 420kV all types) Miniature circuit breakers Power capacitor units and Banks HT Motors LV Capacitors Transformer Bushings 3100 HP Supercharger INDACTIC 1425 telemetering equipment Air circuit breakers A range contactors up to 40A Residual current circuit breakers PR521 and PR512 relays SPAD 346C relays Operating mechanism- BLK222 245 kV CB ACS 550 Drives Residual Current Device (RCD) Localisation of TMAX/EMAX MCCBs TA 25 Relays HT Motors M3BM Three phase LV induction Motors up to 7.5 KW 2003 2003 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2007 2007 2007 2007 2007
Product Improvements: Increase in voltage range of capacitor unit - 21 kV capacitor unit is developed. Development of fuse-less capacitor units. Increase of kVAR rating of capacitor unit - 1000 kVAR capacitor unit is developed. Higher kVAR and improved design for the presently available dynamic reactive power compensator -150 kVAR STATCON. Instrument transformer design and processes. Higher voltage 1380 V dc for an Aluminium smelter. Benets derived as a result of the R&D efforts Multifold benets were accrued as a result of R & D activities. Apart from strengthening of technical base, benets have also
2.2
Above technologies have been fully absorbed except for three phase LV induction Motors up to 7.5 KW.
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3.2
Foreign exchange earnings and outgo (a) Activities related to Exports; initiative taken to increase exports; development of new export markets for products and services; export plans Revenues from exports during the year were Rs 3,630 million. Power products segment consolidated its position in the export market with coverage of over 90 countries. Signicant growth in export of Disconnectors and 72 kV circuit breakers was achieved. Few large value orders were booked during the year from Vietnam and Philippines for circuit breakers, disconnectors and instrument transformers. Introduction of new range of indoor panel type unigear for primary and secondary distribution helped in doubling the exports of indoor panels. Markets have been developed for cougar relays; ring main units and compact secondary substations, which will help in increasing exports in South Asian countries and other parts of the world from 2008. Strategic thrust and several sales promotional activities helped in increasing export of automation products. Development of channel partners, sales and after sales service support in Sri Lanka, Bangladesh and Mauritius helped in increasing exports. Signicant orders were received from China for low voltage drives for wind generator project, from Abu Dhabi for service of motors, from South Africa for generator upgrade and static excitation system. Exports for process automation system grew over 100%. Signicant orders for metals, minerals, turbo charging, cement and analytical products were received from Indonesia, Malaysia, Singapore, Sri Lanka, Bangladesh and Middle East. A large order for Rs 933 million was received for turnkey electrics and automation solution for 5,000 tonnes per day for a cement plant in Jordan. With management focus, strategies and increasing sourcing of components, products and services from India by the ABB Group companies, prospects for growth in export volumes in coming years are very high. (b) Total foreign exchange used and earned (Rs in Millions) a) Foreign Exchange earned (including deemed exports) Foreign Exchange used
4,664 15,474
b)
For and on behalf of the Board
Ravi Uppal Chairman
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Annexure C to Directors Report
Report on Corporate Governance 1. Corporate Governance Philosophy The Company is committed to good Corporate Governance. The Company fully realises the rights of its shareholders to information on the performance of the Company and considers itself a trustee of its shareholders. The Company provides detailed information on various issues concerning the Companys business and nancial performance, to its shareholders. The basic philosophy of Corporate Governance in the Company is to achieve business excellence and dedicate itself for increasing long-term shareholder value, keeping in view the needs and interests of all its stakeholders. The Company is committed to transparency in all its dealings and places emphasis on business ethics. 2. Board of Directors (i) Composition/ Category of Directors/ Attendance at Meetings/ Directorships & Committee Memberships in Other Companies as on December 31, 2007 Directorships/Mandatory Committee Memberships in Other Companies Directorship in Public Companies Committee Chairmanships 1 2 4 NA NA
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Attendance
No. of Board Meetings held during 2007
Name
Category of Director
Mr. Ravi Uppal (*) (Chairman) Mr. Biplab Majumder (**) (Managing Director) Mr. N. S. Raghavan Mr. Nasser Munjee Mr. D. E. Udwadia Mr. Bernhard Jucker Mr. A .K. Dasgupta (***) Mr. Peter Leupp (@) Mr. Veli-Matti Reinikkala (#) Mr. Dinesh Paliwal ($) Mr. Tom Eric Sjoekvist (&) (*)
Non-executive Executive Non-executive & Independent Non-executive & Independent Non-executive & Independent Non-executive Non-executive & Independent Non-executive Non-executive Non-executive Non-executive
4 4 4 4 4 4 4 4 4 4 4
4 4 4 2 3 2 3 1 1 -
YES YES YES NO NO NO YES NO NO NO NO
5 2 1 14 14 1 3 1 1 NA NA
2 6 8 NA NA
Mr. Ravi Uppal resigned as the Vice Chairman & Managing Director of the Company on July 26, 2007. The Board of Directors, however, at its meeting held on July 26, 2007, appointed Mr. Ravi Uppal as an Additional Director and also as Chairman of the Company, with effect therefrom. Mr. Biplab Majumder, Executive Director, was appointed as the Managing Director of the Company with effect from July 26, 2007.
(**)
(***) Mr. A. K. Dasgupta was appointed as a Director of the Company, with effect from April 26, 2007, in the casual vacancy caused by the resignation of Mr. K. Sridhar on June 23, 2006. (@) (#) ($) (&) Mr. Peter Leupp was appointed as a Director of the Company, with effect from July 26, 2007, in the casual vacancy caused by the resignation of Mr. Tom Eric Sjoekvist on July 5, 2007. Mr. Veli-Matti Reinikkala was appointed as an Additional Director of the Company with effect from July 26, 2007. Mr. Dinesh Paliwal resigned as the Chairman and Director of the Company on May 25, 2007. Mr. Tom Eric Sjoekvist resigned as a Director of the Company on July 5, 2007.
None of the Non-executive Directors has any pecuniary relationship or transactions with the Company except Mr. D. E. Udwadia, where the Company has paid Rs 49,100/- to the law Firm of Udwadia & Udeshi as fees for professional services that were provided by the rm to the Company on specic legal matters entrusted by the Company to it for legal advice. Mr. D.E. Udwadia, a Director of the Company, is a Partner of the above Firm. The Board does not consider the law Firms association with the Company to be of a material nature so as to affect independence of judgement of Mr. Udwadia as a Director of the Company. 20 ABB Limited, India, Annual Report 2007
Committee Memberships 1 5 8 1 NA NA
No. of Board Meetings attended
Directorship in Private Companies
Last AGM attendance
(ii)
No. of Board Meetings held in the Financial Year 2007 and dates on which held The Board meets at least once in a quarter to consider amongst other business, the quarterly performance of the Company and the nancial results. The Board has held four meetings during the nancial year 2007 i.e., on February 16, April 26, July 26 and October 25, 2007.
3.
Audit Committee (i) Terms of Reference The Audit Committee is responsible for overseeing the Companys nancial reporting process, reviewing the quarterly/half-yearly/annual nancial statements, reviewing with the management on the nancial statements and adequacy of internal audit function, recommending the appointment/re-appointment of statutory auditors and xation of audit fees, reviewing the signicant internal audit ndings/related party transactions, reviewing the Management Discussion and Analysis of nancial condition and result of operations and also statutory compliance issues. The Committee acts as a link between the management, external and internal auditors and the Board of Directors of the Company. The Committee discussed with the external auditors their audit methodology, audit planning and signicant observations/suggestions made by them. The Committee also discussed major issues related to risk management and compliances. In addition, the Committee has discharged such other role/function as envisaged under Clause 49 of the Listing Agreement of the Stock Exchange and the provisions of Section 292A of the Companies Act, 1956. (ii) Composition, name of members & Chairperson, meetings held during the year and attendance at meetings The Company has complied with the requirements of Clause 49 of the Listing Agreement of the Stock Exchange and Section 292A of the Companies Act, 1956, as regards composition of Audit Committee. The Audit Committee presently consists of four Non-executive Independent Directors. The Committee has held four meetings during the nancial year 2007 i.e. on February 15, April 26, July 25 and October 25, 2007. The Composition of the Audit Committee as on December 31, 2007 and the attendance of members at the meetings of the Audit Committee held during the nancial year 2007 were as follows: Members of Audit Committee Mr. Nasser Munjee (Chairman) Mr. N. S. Raghavan Mr. D. E. Udwadia Mr. A. K. Dasgupta (*) (*) No. of meetings attended 3 4 3 1
Mr. A. K. Dasgupta was appointed as a Member of the Committee with effect from July 26, 2007.
4.
Remuneration Committee (i) Terms of Reference The role of the Remuneration Committee is to recommend to the Board, the remuneration package for the Managing/Executive Directors. (ii) Composition, name of members & Chairperson, meetings held during the year and attendance at meetings The Remuneration Committee presently consists of 3 Non-executive Directors, the Chairman being Non-executive and Independent. No meeting of the Committee was held during the nancial year 2007. The Composition of the Remuneration Committee as on December 31, 2007 is as under: Members of Remuneration Committee Mr. N. S. Raghavan (Chairman) Mr. Ravi Uppal Mr. A. K. Dasgupta (iii) Remuneration Policy/Criteria of payments to Non-executive Directors The Company has a credible and transparent policy in determining and accounting for the remuneration of the Executive/Non-executive Directors. Their remuneration is governed by the external competitive environment, track record, potential, individual performance and performance of the Company as well as industry standards. The remuneration determined for the Executive/Non-executive Directors is subject to the approval of the Remuneration Committee of the Board of Directors and the Members.
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The Non-executive Independent Directors are compensated by way of a commission and the criteria being their attendance in the Board/ Committee Meetings. As a policy, the Non-Independent Directors are neither paid sitting fee nor paid any commission. (iv) Details of remuneration to all the Directors during the nancial year 2007 (Rs in Thousands) Name Mr. Ravi Uppal Mr. Biplab Majumder Mr. N.S. Raghavan Mr. Nasser Munjee Mr. D. E. Udwadia Mr. A. K. Dasgupta (*) subject to the approval of the Board. Sitting Fees Nil Nil 110 50 85 40 Salary & Perquisites 11,467 7,254 NA NA NA NA Commission (*) 3,033 2,080 300 300 300 300 Stock Option Nil Nil Nil Nil Nil Nil Pension Nil Nil Nil Nil Nil Nil Total 14,500 9,334 410 350 385 340
Fixed Component/ Performance Linked Incentive/ Criteria The Managing Director is entitled to an annual performance related commission based on the results achieved against the targets xed and determined by the Board. Under the best performance targets, the commission amount payable to the Managing Director for the year 2007 is not to exceed Rs.2,812,500/- per annum at 100% achievement level of the performance target. Service Contract/ Notice Period/ Severance Fees a) The Contract of Service entered into by the Company with Mr. Biplab Majumder, Managing Director, provides that the Company and Mr. Biplab Majumder shall be entitled to terminate the agreement by giving 180 days notice in writing to the other. No severance fee is payable by the Company on termination of the agreement.
b) 5.
Shareholders Committee The Board of Directors of the Company had set up an Investors Grievance Committee which has been authorised to approve the transfer/ transmission/ transposition of shares. In order to expedite the process, the Board of Directors has also delegated the authority to the Managing Director (MD) and the Company Secretary to approve the share transfers and accordingly, the MD or the Company Secretary approves the transfer/transmission of shares at a frequency of about twice a month. Six meetings of Investors Grievance Committee were held during the nancial year 2007 i.e., on January 5, February 16, April 26, July 26, October 25 and December 24, 2007. Mr. B. Gururaj, Vice President Legal & Company Secretary is the Compliance Ofcer of the Company. The composition of Investors Grievance Committee as at December 31, 2007 and attendance of the Committee members at these meetings were as follows: Members of Investors Grievance Committee Mr. D. E. Udwadia (Chairman) Mr. N. S. Raghavan Mr. Biplab Majumder No. of meetings attended 5 6 2
The details of investors complaints received and resolved during the nancial year 2007 is as under: No. of investors complaints received during 2007 433 No. of investors complaints resolved during 2007 433 Investors complaints pending at the end of 2007 NIL
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6.
General Body Meetings (i) Location and time where last three Annual General Meetings (AGMs) held For the Year 2006 2005 2004 (ii) Venue The Atria Hotel, Chancery, No.1, Palace Road, Bangalore 560 001 ITC Hotel Windsor Sheraton & Towers, Regency, No.25, Golf Course Road, Bangalore 560 052 ITC Hotel Windsor Sheraton & Towers, Windsor Square, No.25, Golf Course Road, Bangalore 560 052 Day & Date Friday, May 25, 2007 Friday, May 26, 2006 Tuesday, May 24, 2005 Time 3.00 p.m. (IST) 3.00 p.m. (IST) 3.00 p.m. (IST)
Special Resolution passed in the previous three Annual General Meetings Two Special Resolutions were passed in the last Annual General Meeting of the Company held on May 25, 2007, wherein the approval of the members was obtained for (a) amendment to Articles of Association of the Company and (b) payment of Commission to Non-executive Directors. A Special Resolution had been passed in the Annual General Meeting of the Company held on May 26, 2006, wherein approval of the members was obtained for voluntary delisting of equity shares of the Company from Ahmedabad Stock Exchange Limited, Delhi Stock Exchange Association Limited and Calcutta Stock Exchange Association Limited. A Special Resolution had been passed in the Annual General Meeting of the Company held on May 24, 2005, for keeping the register of members, index of members, register & index of debenture holders, records relating to annual returns of allotment from time to time, copies of annual returns etc., at the Ofce of Karvy Computershare Private Limited, the Registrar and Share Transfer Agents of the Company, situated at #51/2, TKN Complex, Vanivilas Road, Opp. National College, Basavanagudi, Bangalore 560 004, instead of being kept at the Registered Ofce of the Company.
(iii)
Postal Ballot No postal ballot was conducted in the year 2007. As on date, the Company does not have any proposal to pass any special resolution by way of postal ballot.
7.
Disclosures (i) Disclosures on materially signicant related party transactions. There was no materially signicant related party transaction during the year having potential conict with the interests of the Company. (ii) Details of non-compliance by the Company, penalties and strictures imposed on the Company by the Stock Exchange or SEBI or any statutory authorities or any matter related to capital markets during the last three years. The Company has complied with all the requirements of the Listing Agreement of the Stock Exchanges as well as regulations and guidelines of SEBI. Neither any penalty nor any stricture has been passed by SEBI, Stock Exchanges or any other Statutory Authority on matters relating to capital markets, in the last three years. (iii) Whistle Blower Policy and afrmation that no personnel have been denied access to the audit committee. The Company has adopted Whistle Blower Policy of ABB Group. The employees of the Company have access to approach the Management on any issues relating to Code of Conduct/Business Ethics. (iv) Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of this clause. The Company has fully complied with the mandatory requirements of Clause 49 of the Listing Agreement of the Stock Exchange. Further, the Company has adopted two non-mandatory requirements of clause 49 of the listing agreement, viz. Remuneration Committee of the Board which has been constituted to determine the remuneration package of the Executive Directors and maintenance of Ofce of Non-executive Chairman.
8.
Means of Communication (i) Quarterly Financial Results The quarterly/ half-yearly/ annual nancial results are published in The Economic Times/ Business Standard/ Financial Express (English Daily) and Samyukta Karnataka (Kannada Daily). The nancial results and the ofcial news releases are also placed on the Companys website www.abb.com/in. The Company has a dedicated help desk with e-mail ID: investor.helpdesk@in.abb.com in the Secretarial Department for providing necessary information to the investors.
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(ii)
Ofcial News Releases The Company holds press analyst meets and makes necessary presentation, to apprise and make public the information relating to the Companys working and future outlook.
9.
General Shareholder Information (i) Annual General Meeting Day, Date, Time and Venue : The Company will be holding its 58th Annual General Meeting on Tuesday, June 3, 2008 at 11.00 a.m. (IST) at The Atria Hotel, Chancery, No.1, Palace Road, Bangalore 560 001. Agenda: a) b) c) d) e) f) g) (ii) Adoption of Audited Accounts, Directors and Auditors Report Declaration of Dividend Re-election of Directors retiring by rotation Re-appointment of M/s. S. R. Batliboi and Co., Chartered Accountants, as Auditors Appointment of Directors Consent of Members for appointment and payment of remuneration to the Managing Director Consent of Members for appointment and payment of remuneration to the Whole-time Director
Prole of Directors seeking re-appointment/appointment The prole of Directors who are seeking re-appointment/appointment at the Annual General Meeting is furnished below: Brief resume of Directors and nature of their expertise in functional areas Mr. Bernhard Jucker Mr Bernhard Jucker, aged 53, holds Degree in Electrical Engineering from Swiss Federal Institute of Technology (ETH) Zurich, Switzerland. He has been with the ABB Group since 1980 and has held several key positions in various capacities. Currently, he is the Head of Power Products Division and Member of the Group Executive Committee of ABB Limited, Zurich - Switzerland. Mr. Arun Kanti Dasgupta Mr. Arun Kanti Dasgupta, aged 56, holds Degree in Science from Dibrugarh University and also holds Post Graduate Diploma in Business Management from Punjab University. Currently, he is the Managing Director of Life Insurance Corporation of India (LIC). Previously, he had held various important positions in LIC. 1. Life Insurance Corporation of India (Managing Director) 2. LIC (Nepal) Ltd. 3. LIC (Mauritius) Offshore Ltd. 4. LIC Pension Fund Ltd. Committee Memberships A) Audit Committee: 1. LIC (Nepal) Ltd. NIL Directorships/Committee Memberships in other companies 1. ABB Global Services Limited Shareholding in ABB Limited NIL
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Brief resume of Directors and nature of their expertise in functional areas Mr. D. E. Udwadia Mr. Udwadia, aged 68, has obtained Post Graduate Degree from the University of Mumbai. He has nearly 48 years of active law practice and has acquired invaluable knowledge, experience and expertise in various matters viz., corporate laws, mergers/acquisitions & takeovers, corporate restructuring, foreign collaboration, joint ventures etc. He is a solicitor by profession and is a senior partner of a law rm Udwadia & Udeshi, which is one of the leading law-rms in Mumbai. He is also the Chairman of AstraZeneca Pharma India Limited and Vice Chairman of Macmillan India Limited. He is also on the boards of several reputed public as well as private companies.
Directorships/Committee Memberships in other companies 1. ADF Foods Ltd. 2. AstraZeneca Pharma India Ltd. 3. Bombay Burmah Trading Corp. Ltd. 4. Coromandel Fertilisers Ltd. 5. Development Credit Bank Ltd. 6. Eureka Forbes Ltd. 7. ITD Cementation India Ltd. 8. JM Financial Limited 9. Macmillan India Ltd. 10. Mechanalysis (India) Ltd. 11. MPS Technologies Ltd. 12. Sundaram-Clayton Ltd. 13. Wyeth Ltd. 14. Avesta Nordic Research Pvt Ltd 15. Avesthagen Limited 16. Habasit Lakoka Pvt. Ltd. 17. JM Financial & Inv. Consultancy Services Pvt. Ltd. 18. JM Financial Trustee Co. Pvt. Ltd. 19. JM Financial Consultants Pvt. Ltd. 20. Nitesh Estates Private Ltd. 21. Quantum Advisors Pvt. Ltd. 22. Rossi Gearmotors (India) Pvt. Ltd. Committee Memberships A) Audit Committee: 1. AstraZeneca Pharma India Ltd. 2. Bombay Burmah Trading Corp Ltd. 3. Coromandel Fertilisers Ltd. 4. Development Credit Bank Ltd. 5. ITD Cementation India Ltd. 6. Macmillan India Ltd. 7. Sundaram-Clayton Ltd. 8. Wyeth Ltd.
Shareholding in ABB Limited 2,250 shares
Mr. Ravi Uppal Mr. Ravi Uppal, aged 55, is a B-Tech from Indian Institute of Technology (IIT), Delhi and did his Post Graduation Diploma in Business Administration from Indian Institute of Management (IIM), Ahmedabad. He started his career with BHEL in 1975. He joined Asea Limited in 1980. In the merged entity Asea Brown Boveri Limited, he held the position of Vice President (Power Projects) and then of (Industrial Electronics and Systems Segment). After serving 16 years in ABB Group, in 1996, he took the assignment as the Managing Director of Volvo India Private Limited. During September 2001, he joined ABB Limited as its Managing Director and held the position of Vice Chairman and Managing Director of the Company till he resigned on July 26, 2007, consequent to taking global assignment as Head of Global Marketing. He is also a Member of the Group Executive Committee of ABB Asea Brown Boveri Limited, Switzerland. Currently, he holds the position of the Non-executive Chairman of the Company.
1. 2. 3. 4. 5. 6. 7.
ABB Global Services Ltd. (Chairman) ST-CMS Electric Co. Pvt. Ltd. Page Industries Limited Asea Brown Boveri Limited, Mauritius ABB (Pvt.) Limited, Pakistan ABB Lummus Global Inc Raman Boards Limited
1,525 shares
Committee Chairmanships: 1. Page Industries Limited (Audit Committee)
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Brief resume of Directors and nature of their expertise in functional areas Mr. Veli-Matti Reinikkala Mr. Veli-Matti Reinikkala, aged 50, holds Diploma in Accounting and has completed Masters of Business Administration from Helsinki School of Economics, Finland. Currently, he is Head of Process Automation Division and Member of the Group Executive Committee of ABB Limited, Switzerland. Mr. Biplab Majumder Mr. Biplab Majumder, aged 59, holds Bachelors Degree in Chemical Engineering from Jadvapur University and also holds Masters Degree in Chemical Technology, from Regional Engineering College, Durgapur.He has been with the ABB Group since 1978 and has held several key positions in various capacities, including that of Local Division Manager Automation Technologies Division and Executive Director.Currently, he is the Managing Director of ABB Limited and ABB Holdings (South Asia) Limited. Mr. K. Rajagopal Mr K. Rajagopal, aged 51, holds a Commerce Degree and is an Associate Member of the Institute of Chartered Accountants of India. He has over 24 years of experience in the eld of nance, most of which has been spent with ABB.Mr Rajagopal began his career at ABB India (February 1991) as a Business Unit Controller and has since served in various capacities including Divisional Finance Controller and Head of Corporate Finance. Since September 2001 he is functioning as Chief Financial Ofcer of ABB India and since 2005 he is having additional responsibilities as Regional Finance Manager of ABB Group companies in South Asia Region.Currently, he is the Whole-time Director of the Company. (iii) Financial Year
Directorships/Committee Memberships in other companies 1. ABB Global Services Limited
Shareholding in ABB Limited NIL
1. 2.
ABB Global Services Ltd. ABB Holdings (South Asia) Ltd. (Managing Director)
NIL
Committee Chairmanships: 1. ABB Holdings (South Asia) Ltd. (Audit Committee) 2. 1. 2. 3. 4. 5. 6. ABB Global Services Ltd. (Audit Committee) ABB Global Services Limited ABB Holdings (South Asia) Limited Raman Boards Limited Integra Hindustan Controls Limited Asea Brown Boveri Limited, Mauritius ABB Inc. Philippines 200
Indicative calendar of events for the year 2008 (January - December) excluding Extra Ordinary General Meeting(s), if any, is as under: Fourth Quarter Financial Results (Year 2007) First Quarter Financial Results Annual General Meeting Second Quarter Financial Results Third Quarter Financial Results (iv) Date of Book Closure The Companys Register of Members and Share Transfer Books will remain closed for the purpose of payment of dividend from May 28, 2008 to June 3, 2008 (both days inclusive). (v) Dividend Payment Date The dividend, as recommended by the Board of Directors, if declared at the ensuing Annual General Meeting will be paid on or after June 6, 2008, to those shareholders whose names appear on the Companys Register of Members as on May 27, 2008. (vi) Listing on Stock Exchanges The equity shares of the Company are currently listed at National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Company has paid till date, appropriate listing fee to both the stock exchanges where the Companys equity shares are listed. In accordance with the approval of the shareholders at the 56th Annual General Meeting of the Company held on May 26, 2006, the Company had voluntarily delisted its equity shares from Ahmedabad and Delhi Stock Exchange during the year 2006. Further, voluntary delisting of equity shares from Calcutta Stock Exchange Association Limited, was completed on August 10, 2007. February 2008 April 2008 June 2008 July 2008 October 2008
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(vii) Stock Code National Stock Exchange ABB (viii) Market Price Data The market price data and volume of the Companys shares traded in the Mumbai Stock Exchange and the National Stock Exchange, during the year 2007 was as follows BSE (Rs.) High January February March April May June July August September October November December 3776.00 4000.00 3685.00 4160.00 4630.00 4845.00 1175.00 1158.00 1345.00 1625.00 1670.00 1649.90 Low 3440.00 3455.00 3190.00 3381.00 4080.00 955.00 1046.10 981.00 1131.00 1215.50 1453.00 1435.00 BSE Sensex Index High Low 14325.92 14723.88 13386.95 14383.72 14576.37 14683.36 15868.85 15542.40 17361.47 20238.16 20204.21 20498.11 13303.22 12800.91 12316.10 12425.52 13554.34 13946.99 14638.88 13779.88 15323.05 17144.58 18182.83 18886.40 NSE (Rs.) High 3779.00 3999.00 3689.90 3479.95 4631.05 4841.00 1174.80 1160.00 1330.00 1624.00 1744.00 1649.90 Low 3420.00 3500.00 3190.25 3381.00 4082.15 950.05 1046.00 981.50 1105.65 1290.00 1456.60 1445.00 High 4167.15 4245.30 3901.75 4217.90 4306.75 4362.95 4647.95 4532.90 5055.80 5976.00 6011.95 6185.40 NSE Nifty Index Low 3833.60 3674.85 3554.50 3617.00 3981.15 4100.80 4304.00 4002.20 4445.55 5000.95 5394.35 5676.70 Mumbai Stock Exchange 500002
Period 2007
Note: Effective July 6, 2007, each equity share of the face value of Rs.10/- each was sub-divided into 5 equity shares of the face value of Rs.2/- each. Hence, the share price statistics provided above for the period July December 2007 is with respect to sub-divided equity share of the face value of Rs.2/- each. (ix) Performance in comparison to broad-based indices viz., BSE Sensex and NSE Nifty
ABB SHARE PRICE MOVEMENT VS BSE SENSEX JANUARY - DECEMBER 2007
20238.16
20498.11
20000
14723.88
20204.21 14383.72 14683.36 15542.40 17361.47
15000
14325.92
14576.37 13386.95
15868.85
10000 5000 0
3776.00 4000.00 3685.00 4630.00 4845.00 1158.00 1175.00 1345.00 1625.00 1670.00 1649.00
4160.00
Jan
Feb
Mar
Apr
May Jun
BSE Sensex
Jul
Aug Sep
ABB
Oct
Nov Dec
Market price of ABBs scrip for the period July December 2007 is based on face value of Rs 2/- each per share.
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ABB SHARE PRICE MOVEMENT VS NSE S&P CNX NIFTY INDEX JANUARY - DECEMBER 2007
7000
5976.00
6185.40 6011.95
6000 5000 4000 3000 2000 1000 0 Jan Feb Mar Apr
1174.80 1160.00 3779.00 4167.15 4245.30 3999.00 3901.75 4631.05 4217.90 4841.00 4532.90 4647.95 5055.80
4306.75 4362.95 3689.90 3479.95 1744.00 1330.00 1624.00 1649.90
May Jun
Jul
Aug Sep
ABB
Oct
Nov Dec
NSE S&P CNX Nifty Index
Market price of ABBs scrip for the period July December 2007 is based on face value of Rs 2/- each per share. (x) Registrar and Transfer Agents Karvy Computershare Private Limited, (Unit: ABB Limited) 17-24, Vittal Rao Nagar Madhapur Hyderabad - 560 081 E-mail: mailmanager@karvy.com Share Transfer System The Companys shares being in compulsory demat list, are transferable through the depository system. However, shares in the physical form are processed by the Registrar & Transfer Agent, and approved by the Investors Grievance Committee. In order to expedite the process, the Board of Directors has also delegated the authority to the Managing Director (MD) and the Company Secretary to approve the share transfers and accordingly, the MD or the Company Secretary approve the transfer/transmission of shares at a frequency of about twice a month. The share transfer process is reviewed by the said Committee. (xii) Shareholding Pattern As on 31.12.2007 Shareholders ABB Asea Brown Boveri Ltd. Zurich & ABB Norden Holdings AB, Sweden Non-Resident Individuals/OCBs Directors and their relatives LIC/UTI/ Other Insurance Cos. Nationalised Banks/Other Banks Mutual Funds Foreign Institutional Investors Bodies Corporate/Trust General Public Total No. of shares of Rs. 2/- each 110420285 370777 4525 26489003 410482 7942000 36759908 4609999 24901396 211908375 % 52.11 0.17 0.00 12.50 0.19 3.75 17.35 2.18 11.75 100.00 As on 31.12.2006 No. of shares of Rs. 10/- each 22084057 63064 755 6412915 89299 1323096 7305329 590667 4512493 42381675 % 52.11 0.15 0.00 15.13 0.21 3.12 17.24 1.39 10.65 100.00
(xi)
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(xiii) Distribution of Shareholding as on December 31, 2007 Category 1 5000 5001 10000 10001 50000 50001 100000 100001 and above Total (xiv) Dematerialisation of Shares and liquidity The equity shares of the Company are available under dematerialised form with National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd., (CDSL). The Companys equity shares are compulsorily traded in the dematerialised form. Consequent to sub-division of the face value of equity share of the Company, the Company has been allotted with new ISIN i.e., INE117A01022. As on December 31, 2007, 101071275 equity shares of the Company have been dematerialised representing 47.70% of the total shares. (19818770 equity shares were in dematerialised form representing 46.76% of the total shares as on December 31, 2006). (xv) Outstanding GDRs/ ADRs/ Warrants or any Convertible Instruments, conversion date and likely impact on equity As on date, the Company has not issued GDRs, ADRs or any other Convertible Instruments and as such, there is no impact on the equity share capital of the Company. (xvi) Code of Conduct The Company has in place a Code of Conduct applicable to the Board Members as well as the Senior Management and that the same has been hosted on the Companys website. All the Board Members and the Senior Management Personnel have afrmed compliance with the Code of Conduct, as on December 31, 2007. (xvii) Plant Locations The Companys plants are located at Bangalore, Faridabad, Haridwar, Mumbai, Nashik and Vadodara. (xviii) Address for Correspondence ABB Limited 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bangalore - 560 001. Phone: 080-22949150 to 22949154 Fax: 080-22949148 Corporate Secretarial E-mail ID: investor.helpdesk@in.abb.com Corporate Website: www.abb.com/in (xix) Non-Mandatory Requirements Remuneration Committee of the Board to determine the remuneration package for the Executive Directors. Maintenance of the Ofce of Non-executive Chairman. For and on behalf of the Board No. of Shareholders 92309 413 262 49 116 93149 No. of Shares held 19126377 2896430 5492964 3642755 180749849 211908375 %age of equity capital 9.03 1.37 2.55 1.75 85.30 100.00
Ravi Uppal Chairman
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Annexure - D to Directors Report

Corporate Governance Compliance Certicate
To, The Members of ABB Limited We have examined all relevant records of ABB Limited (the Company) for the purpose of certifying compliance of the conditions of Corporate Governance under Clause 49 of the Listing Agreement with National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) for the nancial year ended December 31, 2007. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of certication. The compliance of the conditions of Corporte Governance is the responsibility of the management. Our examination was limited to the procedure and implementation thereof. This certicate is neither an assurance as to the future viability of the Company nor the efcacy or effectiveness with which the management has conducted the affairs of the Company. On the basis of our examination of the records produced, explanations and information furnished, we certify that the Company has complied with: (a) (b) all the mandatory requirements of the said Clause 49 of the Listing Agreement. the following non-mandatory requirement of the said Clause 49 Constitution of Remuneration Committee For D. R. Shressha & Associates Company Secretaries D. R. Shressha Place: Bangalore Date: February 19, 2008 Proprietor C.P. No. 6119
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Managements Discussion and Analysis
Operating Results of the Company During the year 2007, the Company secured orders worth Rs 76,682 million, 36 percent higher than the previous years orders of Rs 56,236 million. There had been signicant growth in orders across all the segments of the Company. Higher GDP growth, focussed infrastructure development action taken by the Government and capacity built up in various industries has given overall favourable economic environment in the country to operate. This coupled with strategic initiatives on market and product portfolio front adopted by the Company helped to realise this exceptional growth. New business/product lines introduced during last few years have also contributed signicantly towards overall business growth. As a result of healthy order intake, the Companys order backlog was further augmented by 49 per cent to Rs 50,260 million as compared to Rs 33,723 million at the beginning of the year. The Company also achieved a signicant growth in revenues at Rs 60,014 million for the year, registering a growth of 38 per cent over the previous year. Volume growth and operational efciencies have resulted in healthy prot improvement. Prot before tax was Rs 7,565 million as compared to Rs 5,232 million in the previous year. Net prot after tax at Rs 4,917 million for the year was 44 percent higher than last year. Earnings per equity share (face value Rs 2) was also signicantly higher at Rs 23.20 compared to Rs 16.06 in the previous year. The Company has carried out and also currently executing signicant manufacturing capacities expansion projects and continued to expand its range of offering, introducing several new products during the year. In addition to capacity and range expansion, the Company also upgraded and modernised many of its manufacturing, ofce and employee welfare facilities in order to enhance efciency and productivity. During the year, the Company has upgraded its ERP system from SAP 4.7 to mySAP Business Suite and has implemented several new modules such as Business Intelligence Warehouse, Customer Relations Management, Employee Health Services and Governance Risk and Compliance. Outlook for the Company Indias current state of economy and expectation of GDP growth remaining around 9%, continued investment in power and other infrastructure sector and booming globalising industrial sector offers an excellent opportunity to the Company to operate. Several strategies towards market penetration, product and range expansion, manufacturing and engineering capacity augmentation, operational excellence, focused organisation structure, IT and other system development, human resource development and retention actions are expected to further strengthen Companys position. Moreover, the ABB Group remains committed to increasingly leverage the Indian operations for projects, products and services within the region and globally. In line with this strategy, the Company will continue to grow its core businesses, expand its portfolio and augment manufacturing and engineering capacities as required. The Company remains resolute in its objective to pursue the path of protable and sustainable growth, maximising operational efciencies and striving to attain the highest standards of quality, safety and productivity. The overall outlook for the Company continues to be positive and the management remains optimistic with regards to continued protable growth. Business Segment Analysis Please refer to note 4, Schedule 16, for detailed description of the Companys business segments. The relative distribution of revenues amongst the segments is as under, which has broadly remained static. 2007 Power Systems (PS) Power Products (PP) Process Automation (PA) Automation Products (AP) Power Systems Segment (PS) The summarised performance of the segment is as under. (Rs in Millions) 2007 Orders Received Order Backlog Revenues Result 30,029 23,366 22,514 2,323 2006 22,057 15,851 16,919 1,762 36% 26% 17% 21% 2006 37% 27% 16% 20%
The Governments increased focus on power sector growth and introduction of the National Electricity Policy over the past few years is reected in increased investments in this sector. The Government of Indias 11th plan envisages addition of 78,000 MW power generation capacity, formation of a strong national power grid as well as continued focus on modernisation and up-gradation of urban and rural power networks.
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With capacity additions in existing power plants, setting up of new power plants, realisation of the ultra mega power projects, development of transmission networks and power distribution improvements and reforms on domestic front have resulted in strong orders and revenue growth during the year. Orders received grew by 36% and revenues were higher by 33%. The growing domestic market and additional overseas market opportunities have shown positive signs in most areas of the segments operations and the future outlook of the business continuous to remain promising. With signicant orders in the domestic market and orders from exports for the transmission and distribution substations business saw robust growth. Major orders included the 400 kV GIS substation at Chamera and 400 kV substation in Bihar from PGCIL, 220 kV substation orders from KPTCL as well as several orders from GETCO and private customers such as Adani Power; a major railway electrication order was received from DMRC and power distribution orders from BESCOM, HESCOM & GESCOM under Rural Load Management Schemes (RLMS). Newly established business EBoP (Electricals for Balance-of-Plant) has established well for providing solution at power generation end with order booking for 1,905 MW of generating capacity including Tata Projects Kota and Zawar thermal power projects, JSW Energy Limited 8 x 135 MW power plants and Endures Suratgarh power plant. Several substation automation systems were supplied and installed based on the latest IEC 61850 protocols, where the segment has a technology edge, as well as various services and retrot orders were executed. With the setting up of a regional focused factory for numerical IEDs and a global focused feeder factory in the Group for combiex relays, the substation automation products business is set to play a greater role globally. With a major order for SCADA systems from KPTCL and responsibility for the South Asia region the network management business is also poised for signicant growth. Major projects commissioned during the year include 400 kV GIS substations at Maharani Bagh for PGCIL and the 66 kV GIS substation for DMRC. The segment supplied and commissioned a number of distribution substations and APDRP projects for BESCOM, GEB, DVVNL, and JVVNL. Newly developed substation automation system based on REX 670 platform with IEC 61850 protocols were supplied to PGCIL for a number of 400 kV substations. Strategic actions were initiated and implemented to improve operational efciencies and excellence in project management. This helped in improving protability of the business. However, areas of concern remain rising prices of raw materials such as structural steel, copper and aluminum. Additionally, the distribution business faced operating cash-ow problems as funding for various RGGVY Projects from REC had been delayed. Power Products Segment (PP) The summarised performance of the segment is as under. (Rs in Millions) 2007 Orders Received Order Backlog Revenues Result 20,433 13,684 16,326 2,121 2006 15,295 9,577 12,130 1,382
Buoyancy in the transmission and distribution sector continued during the year with higher level of investment in this sector. Ordering for ultra mega power generation projects has started and it has given a boost to demand for power products manufacture by the segment. Capacity addition in industries and services sector continued at a fast pace and rural electrication is a focus area of the Central and the State Governments leading to broad based demand for the products offered by the segment. Overall environment for the segment during the year was very good. To foster investments in power generation, transmission and distribution segments, Central Government has provided several policy frame work. Demand for improving power quality and energy efcient technologies is also on increase. A very high target has been set at 78,000 MW of power generation in the XIth ve year plan (2007-12) of the country. Power generation capacity addition of 86,500 MW is expected in XIIth plan period. This will have corresponding demand for power transmission and distribution systems. Increase in inter-regional capacity from 9,000 MW to 30,000 MW is planned in XIth plan period. New opportunities are on offer in the eld of 765 kV switchgear and transformer products as well as large volume low end products. Growing partnership with local contractors for global projects is expected to contribute to the overall growth in exports. Market trends are very bullish for power transformers, high and medium voltage switchgears and GIS in metros and large industries. Overall performance of the segment during the year 2007 was satisfactory. Orders and revenues grew by 34% with signicant improvement in the protability and operating cash ows. This improved performance was across all its product lines i.e. transformers; HV switchgears and MV switchgears. Major orders received during the year included 3 x 355 MVA, 420/20 kV generator transformers, 2 x 315 MVA, 400/220/33 kV auto transformers and 3x 50 MVA, 220/6.9 kV station transformers for JSW Energy Limited, 218 units of EMUs for MRVC project, 2 x 315 MVA, 400 /220 kV auto transformers and 3 x 105 MVA, 400/220 kV auto transformers from PGCIL, a large order for HV capacitors from NALCO , for 498 MV panels from NTPC for Dadri, Korba and Farakka projects, for 353 MV panels from DMRC and from IRCON a/c KSEB for 1,474 outdoor RMUs. Power products exports consolidated its position in the export markets with exports to over 90 countries with order booking of Rs 2,242 million during the year 2007 compared to Rs 1, 545 million in the previous year. A state of the art factory for manufacturing a complete range of distribution relays including static numerical and electro-mechanical relays was inaugurated in December, 2007 at Vadodara plant. This is also a global focused feeder factory for cougar series of relays and will give strategic advantages in the domestic as well as global markets. Currently several power products capacity expansion projects are under implementation at Vadodara and Nashik plants. Segment also has plans to commence manufacturing of 765 kV circuit breakers and CVTs in the year 2008.
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Domestic demand for power products is expected to continue on the ascent. The surge in global demand for power products will continue to support exports. The focus on enhancing power capacity and expanding grid networks will continue to feed the demand for power products. Segment will also tap the growing demand for new technologies with introduction of new products in all businesses. Focus area for further growth for the segment will remain capacity expansion, product range expansion, operational excellence, cost reduction and on time deliveries. Promotion of GIS, GCB and PASS in the Indian market, will cater to the growing demand for modular solutions and new technologies. A new group has been established to develop cable accessories business. Outlook for the segment continues to be positive. Demand for HT capacitors continues to remain low. That remains an area of concern. Focussed efforts are being made to secure new projects for SVC, HVDC and TCSR in the coming years to grow this business. Shortages of components including insulators for HV switchgears and tanks and bushings for transformers are constraints on increasing capacities and providing faster deliveries. New competition from the domestic and the Chinese manufacturers has effected in short run price realisation of MV switchgears. Process Automation Segment (PA) The summarised performance of the segment is as under. (Rs in Millions) 2007 Orders Received Order Backlog Revenues Result 14,600 10,893 10,666 1,330 2006 11,401 6,959 7,317 852
Industrial climate in country remained buoyant with strong growth across all most all the industries. With current low capita consumption of several metals, paper and other industrial products and demand from infrastructure development gives excellent growth opportunities to industries. Most industries have announced investment plans for augmentation of capacities and efciency improvement. This environment augurs well for the Process Automation Segment. Growth in orders and revenues during the year was 28% and 46% respectively. Operating prots during the year improved signicantly. Investments are taking place for manufacture of all types of steels in both public and private sectors. Global steel majors like POSCO and Mittals have also announced plans for setting up Greeneld steel projects in India. Construction boom in Middle East has lead to investments in prole mills. With growth in real estate and infrastructure development across the country, demand for cement has gone up leading to several investments in green and brown eld projects. Paper industry is investing in new machines to meet the growing demand for tissue and other types of papers. Several investments are announced also in material handling, oil and gas and marine sectors. Segment has received several large orders for electricals and automation solutions during the year. This includes in metals sectors from Jindal Stainless Limited, JSW Limited, Jindal Tubes Limited, Salem and Vizag Steel plants, Tata Steel Limited and Essar Group. In cement and mineral sectors important orders booked includes from Grasim Industries Limited from OEMs L&T and Sandvik. In pulp and paper sector major orders booked during the year includes from Ballarpur Industries Limited, ITC Limited and HEC Limited. Major projects commissioned during the year includes cold roll mill for JSW Limited, upgrade of NET90 system for Durgapur Steel plant, AC drive solution for Tata Steel Limited, rst phase of SCADA system for Oil and Natural Gas Corporation, 800XA installation and safety system for Essar Group. Exports for process automation system grew over 100%. Signicant orders for metals, minerals, turbo charging, cement and analytical products were received from Indonesia, Malaysia, Singapore, Sri Lanka, Bangladesh and Middle East. A large order for Rs 933 million was received for turnkey electrics and automation solution for 5,000 tonnes per day for a cement plant in Jordan. During the year a turbocharger service station was established at Bangladesh. With large number of prospects emerging in the country, several local and international players have become active. OEMs are also consolidating their offerings with electrical solution to give a complete package to the end customers. With large order backlog, segment has challenge in timely execution of orders, particularly from steel and cement sectors. Segment will continue to remain customer focused to sustain its competitive advantage through constant innovation and technology solutions. It will also focus on employee training, strengthening of project management processes and safety. The overall business outlook for the segment remains positive.
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Automation Products Segment (AP) The summarised performance of the segment is as under: (Rs in Millions) 2007 15,395 4,234 13,332 1,784 2006 9,933 2,171 9,179 1,145
Orders Received Order Backlog Revenues Result
With signicant investments taking place in industrial sector capacity augmentation and efciency improvement, segment witnessed surge in demand for automation products during the year. A positive market environment coupled with a strategic thrust on product range and capacity expansion, formation of business verticals and market penetration helped in registering 55% growth in orders and 45% growth in revenues during the year. During the year several orders for automation products were received from steel, cement, paper, telecom, food and beverages, water and waste water and oil and gas industries and OEMs. During the year the segment was able to sustain and consolidate its market position for all its product ranges. There was focus on all major OEM segments including HVAC, pumps and compressor, boiler machinery manufacturers, food and beverages and wind sector. Segment has received several large orders during the year from all sectors of the industry. This includes orders from Tata Steel Limited for their Kalinganagar project, JSW Steel Ltd. for their capacity expansion at Bellary and Bhusan Steel Limited for their blast furnace project in the steel sector. An order for high current rectiers was received from Vedanta Aluminum Limited for 2 x 250,000 TPA Greeneld aluminum smelter plant. Major orders received from cement industries included Jayaprakash Industries Limited. The segment also received increased orders from building electrical sector from telecom, IT and SEZ parks and other infrastructure projects which resulted in over 100% growth from this sector. Execution and commissioning of large orders during the year included high current rectiers at Hindustan Zinc Limited, LD shop converter and sinter plant at Tata Steel Limited. A 10 MW, 40 pole compressor motor for SAIL, Bokaro was rewound and commissioned during the year. Major capacity expansion projects under execution include LT motors and instrumentation at Faridabad and machine service facility at Navi Mumbai. Expansion and renovation of HV machines at Vadodara plant was completed during the year and plant is operating at rated capacity of 100 machines per month. Other capacity augmentation plans includes global factory for LV breakers, LV systems, LV and MV drives and power electronics at Nelamangala, Bangalore and wind generator motors factory at Vadodara. Product range expansion during the year included manufacturing of R4 range of ACS 550 drives, testing and offering of new series of EFF1 and EFF2 motors in small frames, for both domestic and export markets. During the year 5 million MCB poles per annum capacity factory was commissioned and operating at rated capacity at Haridwar. The channel partner network was further expanded to over 775 during the year which contributed to revenues of Rs 10 billion. E-initiatives continued to yield good results with the B2B transactions crossing the Rs 4 billion mark setting an industry benchmark. To ensure off the shelf deliveries and to be nearer to the customers, during the year two new warehouses were established at Faridabad and Pune. Concern areas for the segment include increase in competition, with several competitors building new capacities, and increase in commodity prices. The industrial scenario continues to look buoyant with several new Greeneld and brown eld capacity expansions planned in several sectors. The increased thrust on marketing efforts in newer areas of railways, wind, water and waste water, SEZ, ports and harbours coupled with continued addition in capacity and range expansion is expected to support business growth momentum of the segment. The overall outlook for the segment remains positive. Finance During the year there was higher requirement of nance due to business growth and delay in collection from customers, particularly relating to power system segment, coupled with nancing needs for large xed assets investment programme. This required sporadic short-term borrowings from the banks during the year. However collection from customers improved in later part of the year which resulted in a further improvement in the cash position. Net cash position (cash and bank balances less loan fund) at the end of the year had further increased to Rs 6,423 million compared to Rs 5,449 million at the end of the previous year. Surplus funds, not committed in operation, were deployed in short-term xed deposits with reputed banks, ensuring security and liquidity of the fund. The Company continued to hedge all its foreign currency exposures for imports and exports to protect contact stage margins. As in the past, Company has maintained excellent relationship with major banks operating in India and was able to negotiate favourable terms for various banking facilities used. Human Resources Attracting and retaining high performing talent continued to remain the prime focus of the HR function. While assimilating the new entrants quickly into the ABB way of working has been a challenge on one hand and on the other, developing, motivating, engaging and retaining dedicated and skilled employees has become a specialised domain in HR. To meet these needs, the HR organisation has been re-structured, wherein the transactional and volume related activities such as recruitment, pay-roll, employee induction, employee information management have been clustered into a HR service centre and the role of Business HR has been redened. The ratio of HR professionals to the employee strength was also increased to around one for every 100 employees. The industrial relations function has been brought under a separate country IR head thereby providing the required focus on blue-collar employee productivity and standardisation of practices across the organisation. The corporate HR staff provides support to the different wings of the HR 34 ABB Limited, India, Annual Report 2007
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organisation by facilitating embedding of bench-marked world-class processes down to the grass root level. Leadership development programmes at different levels has been in full swing covering all business and functional roles. As in the past, industrial relation continued to remain cordial at all the locations of the Company. The Company had 5,535 employees at the end of 2007. Internal Control Systems The Company has in place effective systems of internal control ensuring accurate, reliable and speedy compilation of nancial information, safeguarding the assets and interests of the Company and ensuring compliance with laws and regulations. The Company has an exhaustive budgetary control system and the management regularly reviews actual performance. The Company has also put in place a well-dened organisation structure, clear authority levels and detailed internal guidelines for conducting business transactions. The Company has an internal audit department that conducts regular audits to ensure adequacy of the control system, adherence to management instructions and legal compliance. The Audit committee of the Board of Directors periodically reviews the audit plans, observations and recommendations of the internal and external auditors with reference to signicant risk areas and adequacy of internal controls. As per the requirements of Sarbanes Oxley Act, 2002 and clause 49 of the listing agreement with the stock exchanges, the management has established adequate internal control procedures over nancial reporting. Based on detailed review and testing of various processes and transactions effecting nancial reporting, the managements has concluded that internal control over nancial reporting as effective as at December 31, 2007. During the year, the Company has upgraded its ERP system from SAP 4.7 to mySAP Business Suite and has implemented several new modules including the Governance Risk and Compliance (GRC) module to help the Company to strengthen internal control environment. During the year, nancial accounting processes such as journal entries, handling Income-tax deductions at source and additional nancial closing processes were centralised at the shared accounting service center. The processes of vendor bill booking, vendor payment, costing, capital expenditure management and travel management continued to be centrally managed at this centre. The master maintenance of general ledger accounts, customers and vendors, role based authorisation for SAP system access remained centrally controlled based on well dened rules.
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CEO/CFO Certication
To The Board of Directors ABB Limited We certify that; 1. We have reviewed the nancial statements and cash ow statement of ABB Limited for the year ended December 31, 2007 and to the best of our knowledge and belief; (i) (ii) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; these statements together present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations.
2.
To the best of our knowledge and belief, there are, no transactions entered into by the Company during the year, which are fraudulent, illegal or violating the Companys code of conduct. We accept responsibility for establishing and maintaining internal controls over nancial reporting and we have evaluated the effectiveness of internal control systems of the company over nancial reporting and we have disclosed to the auditors and the audit committee, deciencies in the design or operation of internal controls over nancial reporting, if any, of which we are aware and the steps we have taken, propose to take to rectify these deciencies. In our opinion, there are adequate internal controls over nancial reporting. We have indicated to the auditors and the audit committee that there are: (i) (ii) (iii) signicant improvement in internal controls over nancial reporting during the year; signicant changes in accounting policies made during the year as have been disclosed in the notes to the nancial statements. no instances of fraud of which we have become aware and the involvement there in, if any, of the management or an employee having a signicant role in the Companys internal control system on nancial reporting.
3.
4.
Biplab Majumder Chief Executive Ofcer Managing Director
K. Rajagopal Chief Financial Ofcer Whole-time Director
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Auditors Report To The Members of ABB Limited
1.
We have audited the attached balance sheet of ABB Limited as at December 31, 2007 and also the prot and loss account and the cash ow statement for the year ended on that date annexed thereto. These nancial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements. An audit also includes assessing the accounting principles used and signicant estimates made by management, as well as evaluating the overall nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specied in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; The balance sheet, prot and loss account and cash ow statement dealt with by this report are in agreement with the books of account;
iv.
In our opinion, the balance sheet, prot and loss account and cash ow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; On the basis of the written representations received from the directors, as on December 31, 2007, and taken on record by the Board of Directors, we report that none of the directors is disqualied as on December 31, 2007 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; a) in the case of the balance sheet, of the state of affairs of the Company as at December 31, 2007; in the case of the prot and loss account, of the prot for the year ended on that date; and in the case of cash ow statement, of the cash ows for the year ended on that date.
v.
2.
vi.
3.
b)
4.
c)
For S.R. BATLIBOI & CO. Chartered Accountants per Sunil Bhumralkar Partner Membership No.: 35141 New Delhi, India February 19, 2008
ii.
iii.
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Annexure referred to in paragraph 3 of our report of even date

Re: ABB Limited
(i)
(a)
The Company has maintained proper records showing full particulars, including quantitative details and situation of xed assets. (v) The Company has a regular programme of physical verication of xed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain xed assets were physically veried by the management during the year and we are informed that no material discrepancies were noticed on such verication. (vi) There was no substantial disposal of xed assets during the year. The management has conducted physical verication of inventory at reasonable intervals during the year. In respect of stocks lying with the third parties, conrmation for most of the stocks has been received. The procedures of physical verication of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verication. As informed to us, the Company has not granted any loans, secured or unsecured to companies, rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. As informed to us, the Company has not taken any loans, secured or unsecured from companies, rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (vii)
has been noticed in the internal control system in respect of these areas. According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered. None of the transactions made in pursuance of such contracts or arrangements exceed the value of Rupees ve lakh in respect of any one such party in the nancial year. The Company has not accepted any deposits from the public. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
(b)
(c)
(ii)
(a)
(b)
(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. (ix) (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales-tax, excise duty, wealth-tax, service tax, customs duty and cess with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:
(c)
(iii)
(a)
(b)
(b)
(iv)
In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and xed assets and for the sale of goods and services. During the course of our audit, no major weakness
(c)
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Name of the statute
Nature of dues
Excise Act Service Tax Sales Tax Act
Freight charges for valuation Service tax on freight charges and erection services Works contract tax charged Differential tax charged Submission of Statutory Forms
Amount * (Rs in Thousands) 589 2,403 13,929 11,740 13,526 108,391 55,461 900 30,400
Period to which the amount relates 1997-98 1997-06 1996-02 1992-01 2003-04 1996-05 2002-04 1994-95 1986-94
Forum where dispute is pending
Central Excise and Service Tax Appellate Tribunal Central Excise and Service Tax Appellate Tribunal Deputy Commissioner (Appeals) Sales Tax Appellate Tribunal Deputy Commissioner Deputy Commissioner (Appeals) Joint Commissioner (Appeals) High Court High Court
Faridabad Development Act [Octroi]
Product classication
* - Net of Rs 67,042 thousand, paid under protest. (x) The Company has no accumulated losses at the end of the nancial year and it has not incurred cash losses in the current and immediately preceding nancial year. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a nancial institution, bank or debenture holders. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet and cash ow statement of the Company, we report that no funds raised on short-term basis have been used for long-term investment. (xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised any money through a public issue during the year.
(xi)
(xii)
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benet fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or nancial institutions.
(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the nancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit. For S.R. BATLIBOI & CO. Chartered Accountants per Sunil Bhumralkar Partner Membership No.: 35141 New Delhi, India February 19, 2008
(xvi) The Company did not have any term loans outstanding during the year.
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Balance Sheet
As at December 31, 2007 Sources of Funds Shareholders Funds Share Capital Reserves and Surplus Loan Funds Finance Lease Obligations Deferred Tax Liability (net)
Schedule
2007
(Rs in Thousands) 2006
1 2
423,817 15,839,626 16,263,443
423,817 11,534,601 11,958,418 15,457 165,271 12,139,146
16(9) 16(10)
5,660 128,034 16,397,137
Application of Funds Fixed Assets Gross Block Less: Depreciation and Amortisation Net Block Capital Work in Progress including Capital Advances Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Notes to Accounts The Schedules referred to above form an integral part of the accounts. As per our report of even date For S.R. BATLIBOI & CO. Chartered Accountants per Sunil Bhumralkar Partner Membership No. 35141
3 5,769,125 2,249,827 3,519,298 1,059,418 4 5 6 7 8 9 4,887,102 24,235,625 6,428,636 2,753,603 2,802,023 41,106,989 29,314,878 678,236 29,993,114 11,113,875 16,397,137 16 4,578,716 704,546 5,145,167 2,073,446 3,071,721 246,217 3,317,938 773,546 3,546,995 15,702,677 5,464,424 1,474,409 1,778,220 27,966,725 19,363,315 555,748 19,919,063 8,047,662 12,139,146
10 11
For and on behalf of the Board Ravi Uppal Chairman Biplab Majumder Managing Director K Rajagopal Whole-time Director & Chief Financial Ofcer Peter Leupp Director Nasser Munjee Director N S Raghavan Director A K Dasgupta Director D E Udwadia Director Veli-Matti Reinikkala Director B Gururaj Company Secretary New Delhi, February 19, 2008 ABB Limited, India, Annual Report 2007
New Delhi, February 19, 2008 40
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Prot and Loss Account
For the year ended December 31, 2007 Income Sales and Services Less: Excise Duty Sales and Services (Net) Other Income Expenditure Cost of Materials and Erection Services Personnel Expenses Other Expenses Depreciation/ Amortisation Less: Transfer from Revaluation Reserve Interest Expenses Prot Before Tax Provision for Tax: Current Tax Deferred Tax Fringe Benets Tax Prot After Tax Add: Balance brought forward Prot available for appropriation Appropriations General Reserve Proposed Dividend Corporate Dividend Tax Corporate Dividend Tax - 2006 Balance carried forward
Schedule
2007
63,832,682 4,529,568 12 13 59,303,114 710,454 60,013,568 42,920,333 3,060,684 6,075,802 326,752 2,695 324,057 68,123 52,448,999 7,564,569 2,563,879 (11,000) 95,000 4,916,690 519,255 5,435,945 4,250,000 466,198 79,230 12,587 627,930 5,435,945 16(3) 16 23.20
46,045,615 3,305,522 42,740,093 736,929 43,477,022 31,445,493 2,414,186 4,113,353 267,341 2,666 264,675 7,253 38,244,960 5,232,062 1,671,000 81,000 77,000 3,403,062 349,450 3,752,512 2,750,000 423,817 59,440 519,255 3,752,512 16.06
14 15
Basic and Diluted Earnings per Equity Share (in Rs) (Face value Rs 2/- per share) Notes to Accounts The Schedules referred to above form an integral part of the accounts. As per our report of even date For S.R. BATLIBOI & CO. Chartered Accountants per Sunil Bhumralkar Partner Membership No. 35141
For and on behalf of the Board Ravi Uppal Chairman Biplab Majumder Managing Director K Rajagopal Whole-time Director & Chief Financial Ofcer Peter Leupp Director Nasser Munjee Director N S Raghavan Director A K Dasgupta Director D E Udwadia Director Veli-Matti Reinikkala Director B Gururaj Company Secretary New Delhi, February 19, 2008 41
New Delhi, February 19, 2008 ABB Limited, India, Annual Report 2007
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As at December 31, 2007 Schedule 1 - Share Capital Authorised 212,500,000 750,000
2007
Equity Shares of Rs 2 each * (Previous Year - 42,500,000 equity shares of Rs 10 each) 11% Redeemable 10 year, Cumulative Preference Shares of Rs 100 each
425,000 75,000 500,000
425,000 75,000 500,000
Issued, Subscribed and Paid Up 211,908,375 Equity Shares of Rs 2 each * (Previous Year - 42,381,675 equity shares of Rs 10 each) 423,817 423,817
Notes: Share Capital includes: a) 46,185,525 equity shares of Rs 2 each (Previous Year - 9,237,105 equity shares of Rs 10 each) allotted as fully paid up at par, pursuant to contracts for consideration other than cash. 1,000,000 equity shares of Rs 2 each (Previous Year - 200,000 equity shares of Rs 10 each) issued to the holders of 40,000 - 8.57% cumulative preference shares of Rs 100 each on cancellation of the preference shares in terms of a Scheme of Compromise between the Company and its preference/equity shareholders in 1988. 42,219,465 and 51,772,945 equity shares of Rs 2 each (Previous Year - 8,443,893 and 10,354,589 equity shares of Rs 10 each) issued as fully paid up bonus shares by capitalisation of the General Reserve Account and Securities Premium Account respectively. 97,879,955 equity shares of Rs 2 each (Previous Year - 19,575,991 equity shares of Rs 10 each) are held by ABB Asea Brown Boveri Limited, Zurich, Switzerland, the ultimate holding company and 12,540,330 equity shares of Rs 2 each (Previous Year - 2,508,066 equity shares of Rs 10 each) are held by ABB Norden Holdings AB, Sweden, a subsidiary of the ultimate holding company.
b)
c)
d)
During the year face value of each equity shares of Rs 10 each was sub-divided (stock split) into 5 equity shares of face value of Rs 2 each.
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As at December 31, 2007 Schedule 2 - Reserves and Surplus Capital Reserve Account Capital Redemption Reserve Account Revaluation Reserve Account As per last Balance Sheet Transferred to Prot and Loss Account Securities Premium Account Foreign Projects Reserve Account As per last Balance Sheet Transferred to General Reserve Account General Reserve Account As per last Balance Sheet Transferred from Foreign Projects Reserve Account Less: Charge on account of transitional provisions under Accounting Standard (AS) 15 (revised 2005) - Provident Fund (Net of tax Rs 14,212 thousand) - Other long term benets - Leave (Net of tax Rs 12,025 thousand) Transferred from Prot and Loss Account Prot and Loss Account Balance carried forward
2007
10,971 75,000
10,971 75,000
148,082 (2,695) 145,387 593,990
150,748 (2,666) 148,082 593,990
7,500 (1,000) 6,500 10,179,803 1,000
12,500 (5,000) 7,500 7,424,803 5,000
(27,602) (23,353) 4,250,000 14,379,848 627,930 15,839,626
2,750,000 10,179,803 519,255 11,534,601
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As at December 31, 2007 Schedule 3 - Fixed Assets

Gross Block Description As at January 1, 2007 Additions Deductions As at December 31, 2007 As at January 1, 2007 Depreciation/ Amortisation For the Year Deductions
(Rs in Thousands)
Net Block As at As at As at December 31, December 31, December 31, 2007 2007 2006
A.
Tangible Assets 1. Own Assets Freehold Land Leasehold Land Leasehold Improvements Factory Buildings Other Buildings Residential Quarters Plant and Machinery Furniture and Fixtures Vehicles 2. Leased Assets Plant and Machinery Vehicles Total Tangible Assets 83,141 11,068 94,209 4,645,442 350,798 148,927 499,725 5,145,167 Previous Year 4,141,636 747,665 23,943 22,757 46,700 794,365 1,098,468 170,407 170,407 94,937 83,141 11,068 94,209 5,222,700 374,741 171,684 546,425 5,769,125 5,145,167 55,005 3,427 58,432 1,713,315 256,673 103,458 360,131 2,073,446 1,875,025 11,249 499 11,748 277,690 29,138 19,924 49,062 326,752 267,341 150,371 150,371 68,920 66,254 3,926 70,180 1,840,634 285,811 123,382 409,193 2,249,827 2,073,446 1,059,418 4,578,716 246,217 3,317,938 16,887 7,142 24,029 3,382,066 88,930 48,302 137,232 3,519,298 28,136 7,641 35,777 2,932,127 94,125 45,469 139,594 3,071,721 137,515 9,826 63,194 618,190 296,325 14,390 3,123,630 268,545 19,618 4,551,233 92,021 111,832 30,440 475,170 36,442 1,760 747,665 3,490 538 190 164,430 1,360 399 170,407 137,515 9,826 155,215 726,532 326,227 14,200 3,434,370 303,627 20,979 5,128,491 297 30,712 152,265 20,899 4,745 1,360,223 78,522 7,220 1,654,883 90 10,522 21,218 4,982 233 208,170 15,606 5,121 265,942 1,570 225 22 147,072 1,083 399 150,371 387 41,234 171,913 25,656 4,956 1,421,321 93,045 11,942 1,770,454 137,515 9,439 113,981 554,619 300,571 9,244 2,013,049 210,582 9,037 3,358,037 137,515 9,529 32,482 465,925 275,426 9,645 1,763,407 190,023 12,398 2,896,350
B.
Intangible Assets Technical Know-how Fees Capitalised Software Total Intangible Assets
Capital Work in Progress including Capital Advances Grand Total Notes: 1. 2. Certain freehold and leasehold land, factory and other buildings and residential quarters were revalued during 1985, 1986 and 1996 respectively. Residential Quarters include cost of shares in Lotus Court Private Limited Rs 56 thousand (Previous Year - Rs 56 thousand).
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As at December 31, 2007 Schedule 4 - Investments Long-term (At Cost): Trade: Quoted : 280,500 Equity Shares of Rs 10 each fully paid up in Integra Hindustan Control Limited Non Trade: Government Securities Quoted: 6.25% Government of India Bonds Others Quoted: 853,064 6.75% Tax Free US64 Bonds of Rs 100 each fully paid up in Unit Trust of India 200 5.25% 10 Year Tax Free Nuclear Power Corporation Limited Infrastructure Bond of Rs 1,000,000 each fully paid up 2,386,496 6.60% Tax Free Bonds 2009 of Rs 100 each fully paid up in Unit Trust of India Unquoted: 5.15% 5 Year Non - Cumulative Non-Convertible Redeemable Bonds of Rural Electrication Corporation Limited 5.95% 15 Year Non-Cumulative Bonds of Karnataka Water & Sanitation Pooled Fund Trust 1,000 Shares of Rs 25 each fully paid up in Co-operative Bank of Baroda 6.5% Non-Redeemable Debentures of Bengal Chamber of Commerce and Industry
2007
2,805
2,805
159,600
159,600
90,497
90,497
200,000 241,617 532,114
200,000 241,617 532,114
10,000 25 2 10,027 704,546
69,000 10,000 25 2 79,027 773,546 694,519
Notes: Quoted Investments aggregate (Market value - Rs 764,464 thousand; Previous Year - Rs 714,776 thousand) Unquoted Investments aggregate
694,519
10,027
79,027
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As at December 31, 2007 Schedule 5 - Inventories Stores and Spares Raw Materials and Components Goods in Transit - Raw Materials and Components Finished Goods Work-in-progress
2007
3,360 2,704,332 434,622 482,730 1,262,058 4,887,102
6,283 2,012,756 303,898 341,227 882,831 3,546,995
Schedule 6 - Sundry Debtors Unsecured : Debts outstanding for a period exceeding six months - Considered Good - Considered Doubtful Other Debts - Considered Good Less: Provision for Doubtful Debts
6,928,634 588,589 7,517,223 17,306,991 24,824,214 588,589 24,235,625
4,167,006 332,821 4,499,827 11,535,671 16,035,498 332,821 15,702,677
Schedule 7 - Cash and Bank Balances Cash and Cheques on hand Balances with Scheduled Banks - On Current Account - On Deposit Account - On Margin Account With Non-Scheduled Banks - On Current Account Current Accounts with Non-Scheduled Banks include As at December 31, 2007 As at December 31, 2006 Maximum amount outstanding at any time during the year 3,359 17,155 Maximum amount outstanding at any time during the previous year 4,616 14,570 2,315 4,398,307 2,005,460 10,134 6,413,901 12,420 6,428,636 2,409 2,843,587 2,605,341 5,448,928 13,087 5,464,424
a) b)
Hongkong & Shanghai Banking Corporation Ltd., Sri Lanka. Hongkong & Shanghai Banking Corporation Ltd., Bangladesh.
1,902 10,518
3,359 9,728
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As at December 31, 2007 Schedule 8 - Other Current Assets Contract Revenue in Excess of Billing and Unbilled Revenue Interest Accrued on Investments and Fixed Deposits
2007
2,602,067 151,536 2,753,603
1,338,530 135,879 1,474,409
Schedule 9 - Loans and Advances Unsecured : Loans, Considered Good Advances recoverable in cash or in kind or for value to be received: - Considered Good - Considered Doubtful Less: Provision for Doubtful Advances Advance Tax (net of provision) Balances with Customs, Port Trusts and Excise authorities
2,286 2,080,595 39,711 2,120,306 39,711 2,080,595 394,324 324,818 2,802,023
11,841 1,441,978 43,472 1,485,450 43,472 1,441,978 298,695 25,706 1,778,220
Schedule 10 - Current Liabilities Acceptances Sundry Creditors - Dues to Micro and Small Enterprises - Others Advance Payment from Customers Billing in Excess of Contract Revenue Investor Protection and Education Fund shall be credited for unclaimed dividends amount when due 7,009,498 64,341 15,628,714 15,693,055 5,016,479 1,586,993 8,853 29,314,878 5,026,789 10,705,826 10,705,826 2,887,537 735,482 7,681 19,363,315
Schedule 11 - Provisions Proposed Dividend Corporate Dividend Tax Fringe Benets Tax (net of advance tax) Provident Fund Other long-term benets - Leave 466,198 79,230 20,277 44,157 68,374 678,236 423,817 59,440 24,678 47,813 555,748
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For the year ended December 31, 2007 Schedule 12 - Capacities, Production, Stock and Turnover (Refer Note 11 of schedule 16 )
(Figures in brackets are in respect of previous year) Class of goods Quant. Denom. Motors and Other Machines Switchgear of all types PLCC Equipment Multiplexures Telemetering Equipment Turbochargers Transformers Electronic Control and Supply Units for Variable Speed Drives and other applications Mini Computer/Microprocessor based Systems HP Nos. Nos. Nos. Nos. Nos. MVA Nos. Annual Capacities Installed 3,124,484 (2,527,433) 15,277,350 (10,180,350) 2,850 (2,850) 100 (100) 150 (150) 200 (200) 12,000 (12,000) 100,000 (100,000) 2,300,000 (2,300,000) 70,000 (70,000) Opening Stock of Production of Finished Goods Finished Goods Rupees in Quantity Thousands Quantity 66,565 (46,480) 462,107 (189,885) (-) (-) (-) (-) (-) (-) (-) (-) 80,622 (35,590) 197,561 (38,012) (-) (-) (-) (-) (-) (-) (-) (-) 2,992,875 (2,068,611) 10,188,676 (5,541,175) 1,857 (1,443) 7 (38) 20 (15) 208 (189) 8,944 (8,127) 82,416 (78,271) 1,717,970 (2,259,133) (9,823) Closing Stock of Finished Goods Rupees in Quantity Thousands 96,403 (66,565) 234,740 (462,107) (-) (-) (-) 9 (-) (-) (-) (-) (-) 144,836 (80,622) 304,184 (197,561) (-) (-) (-) 8,539 (-) (-) 18,277 (-) (-) (-) Turnover of Finished Goods Rupees in Quantity Thousands 2,912,452 (1,977,871) 9,658,423 (3,692,105) 1,857 (1,311) 7 (38) 5 (6) 199 (189) 7,501 (7,050) 81,890 (77,285) (-) (-) 3,657,535 (2,243,891) 10,947,263 (9,215,265) 229,151 (214,401) 7,165 (19,572) 8,249 (5,220) 517,157 (481,356) 3,738,371 (2,703,177) 3,252,367 (2,223,434) 1,717,970 (2,259,133) (9,823)
Value Rs in Thousands
Non-Microprocessor Based Electronics Value Rs in (Analog and Digital) for Weighing, Thousands Batching and Force Measuring Systems and Sub-Systems Power Capacitors of all types Robotics Gas Analysers and Systems Process Control Instruments Others Project Items Erection and Other Services MVAR Nos. Nos. Nos.
3,700 (3,700) 30 (15) 300 (300) 30,225 (30,225)
(-) (-) (-) (-)
(-) (-) (-) (-) (-) 63,046 (69,656)
3,724 (2,579) 30 (5) 246 (202) 29,227 (28,139)
(-) (-) (-) (-)
(-) (-) (-) (-) 6,894 (-) (63,046)
3,687 (2,507) 30 (5) 246 (202) 28,538 (27,220)
399,485 (323,825) 217,067 (90,893) 378,787 (229,685) 641,845 (549,315) 635,821 (630,781) 29,464,924 (19,408,228) 3,489,957 (2,132,094)
341,229 (143,258)
482,730 (341,229)
59,303,114 (42,740,093)
Note: The Companys products are exempt from licensing requirement under the industrial policy by virtue of notication No. 477 (E) of 25.07.91.
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For the year ended December 31, 2007 Schedule 13 - Other Income Dividend Long-term Investments - Trade Long-term Investments - Others
2007
281 281
421 8 429
Interest Long-term Investment Deposit with Banks (Tax deducted at source Rs 40,189 thousand; Previous Year Rs 36,409 thousand) Others (net) Prot on Sale of Fixed Assets (net) Scrap Sales Commission Income Miscellaneous Income 40,967 277,014 99,876 81,474 251,809 710,454 Schedule 14 - Personnel Expenses Salaries, Wages and Bonus Gratuity Provident Fund Contribution to Superannuation and other Funds Workmen and Staff Welfare Expenses Other Personnel Expenses 2,584,049 45,667 66,279 98,502 158,906 107,281 3,060,684 2,014,446 58,859 54,287 87,569 123,731 75,294 2,414,186 6,405 216,685 7,134 85,228 88,085 339,368 736,929 44,996 191,051 44,472 165,808
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(Rs in Thousands) For the year ended December 31, 2007 2007 2006
Schedule 15 - Other Expenses Tools and Stores Royalty Freight and Forwarding (net) Postage and Telephone Commission Discount Power, Fuel and Water Travelling and Conveyance Insurance Rates and Taxes Rent Repairs: Buildings Plant and Machinery Others Provision for Doubtful Debts and Advances Bad Debts/Advances Written Off Loss on Sale of Fixed Assets (net) Printing and Stationery Bank Charges Legal and Professional Trade Mark Fees Technology Fees Exchange Rate Difference - Loss Miscellaneous 349,636 101,221 488,875 111,908 227,978 29,733 223,333 726,506 170,306 77,773 131,652 35,976 84,404 22,562 252,007 31,014 207 60,970 102,142 114,150 296,516 508,786 550,801 1,377,346 6,075,802 320,467 60,852 472,785 96,009 142,985 21,377 190,068 551,037 173,596 41,508 90,941 32,816 63,985 30,710 (47,470) 129,163 52,721 93,703 77,658 213,700 363,063 49,992 891,687 4,113,353
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Schedule 16 - Notes to the Accounts 1. Nature of Operations ABB Limited (the Company) has served utility and industry customers for over 50 years with the complete range of engineering, products, solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in the global market. 2. Signicant Accounting Policies 2.1. Basis of Preparation of Financial Statements The nancial statements have been prepared to comply in all material respects with the notied accounting standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The nancial statements have been prepared under the historical cost convention on an accrual basis except for revaluation of certain xed assets, in accordance with the accounting principles generally accepted in India. The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year. 2.2. Change in Accounting Policies The Company has changed its accounting policy for revenue recognition for large transformers from recognition on dispatch basis to recognition on achievement of contractual milestone basis, with effect from January 1, 2007. This has resulted in additional revenue recognition and higher prot before tax of Rs 434,030 thousand and Rs 60,002 thousand respectively with corresponding increase in Unbilled Revenue during the year ended December 31, 2007. In current year, the Company has adopted Accounting Standard (AS) 15 (revised 2005), Employee Benets. Pursuant to the adoption, the transitional obligations as at January 1, 2007, for Provident Fund and Other long term benets Leave, amounting to Rs 50,955 thousand (net of tax) have been adjusted against the opening balance of General Reserves. This change is not having material impact on the prot for the current year. 2.3. Use of Estimates The preparation of nancial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the nancial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. 2.4. Fixed Assets Fixed assets are stated at the cost of acquisition, except for revaluation of certain land and building, less accumulated depreciation and impairment losses, if any. Cost of xed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the asset to its working condition for the intended use. Borrowing costs related to the acquisition or construction of the qualifying xed assets for the period up to the completion of their acquisition or construction are capitalised. Advances paid towards the acquisition of xed assets outstanding at each balance sheet date and the cost of xed assets not ready for their intended use before such date are disclosed under capital work in progress. Capitalised software includes costs on Enterprise Resource Planning (ERP) Project and other costs relating to software, which provide signicant future economic benets. ERP Project costs comprise licence fees and cost of system integration services. All costs relating to upgradations/ enhancements are generally charged off as revenue expenditure unless they bring signicant additional benets of lasting nature. Assets acquired under nance lease from April 1, 2001 are capitalised at the lower of their fair value and the present value of the minimum lease payments. The carrying amounts are reviewed at each balance sheet date when required to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. 2.5. Depreciation/Amortisation Depreciation on assets (except those described below) is provided on the straight-line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, which management considers as being representative of the useful economic lives of such assets. Depreciation is provided from the date of capitalisation till the date of sale of assets.
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The following assets are depreciated/amortised on the straight line method over a period of their estimated useful lives: Leasehold land and leasehold improvements over the primary period of the lease. Technical know-how fees over a period of six years. Capitalised software costs over a period of ve years.
Assets individually costing Rs 5,000 or less are depreciated fully in the year of purchase. Assets under nance lease are depreciated over the lower of the lease term or the useful life of the asset unless there is reasonable certainty that the Company will obtain ownership, wherein such assets are depreciated on the straight-line method at the rates prescribed in Schedule XIV to the Companies Act, 1956. 2.6. Investments Investments that are readily realisable and intended to be held for not more than a year are classied as current investments. All other investments are classied as long-term investments. Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. 2.7. Inventories Inventories are stated at the lower of cost and net realisable value. The cost of various categories of inventories is arrived at as follows: Stores, spares, raw materials and components - at rates determined on the moving weighted average method. Goods in Transit at actual cost. Work-in-progress and nished goods - at full absorption cost method based on annual average cost of production. Excise duty is included in the value of nished goods inventory.
Provision for obsolescence is made wherever necessary. 2.8. Employee Benets Contribution to Superannuation Fund, a dened contribution scheme, is made at pre-determined rates to the Superannuation Fund Trust and is charged to the prot and loss account. There are no other obligations other than the contribution payable to the Superannuation Fund Trust. Contributions to the recognised Provident Fund/ Gratuity Fund and provision for other long term employee benets - leave, dened benet schemes, are made on the basis of actuarial valuations made at the end of each nancial year and are charged to the prot and loss account during the year. Actuarial gains and losses are recognised immediately in the prot & loss account. 2.9. Revenue Recognition Sales of products and services are recognised when signicant risks and rewards of ownership of products are passed on to customers or when the service has been provided. In case of large transformers, revenue is recognised on achievement of contractual milestone. Sales are stated at contractual realisable values, net of excise duty, sales tax, service tax, value added tax and trade discounts. Revenues from long-term contracts are recognised on the percentage of completion method, in proportion that the contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs. Contract revenue earned in excess of billing has been reected under Other Current Assets and billing in excess of contract revenue has been reected under Current Liabilities in the balance sheet. Full provision is made for any loss in the year in which it is rst foreseen. Liquidated damages/penalties are provided for as per the contract terms wherever there is a delayed delivery attributable to the Company. Commission income is recognised as per contracts/receipt of credit note. Dividend income is recognised when the right to receive dividend is established. Interest income is recognised on the time proportion method. ABB Limited, India, Annual Report 2007
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2.10. Provisions A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made based on technical evaluation and past experience. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reect the current management estimates. 2.11. Research and Development All revenue expenses pertaining to research and development are charged to the prot and loss account in the year in which they are incurred and expenditure of capital nature is capitalised as xed assets, and depreciated as per the Companys policy. 2.12. Foreign Currency Transactions Foreign currency transactions are recorded by applying the respective monthly average rates. Exchange differences arising on foreign currency transactions settled during the year are recognised in the prot and loss account for the year. All foreign currency denominated monetary assets and liabilities are translated at the exchange rates prevailing on the balance sheet date. The resultant exchange differences are recognised in the prot and loss account for the year. The Company uses derivative nancial instruments such as forward exchange contracts to hedge its risks associated with foreign currency uctuations. The premium or discount on forward exchange contracts is recognised in the prot and loss account over the period of the contract. Gain or loss on restatement of forward exchange contracts for hedging purposes are recognised in the prot and loss account for the year in which it occurs. 2.13. Taxation Tax expense comprises current tax, deferred tax and fringe benets tax. The current charge for income tax and fringe benets tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Provision for current income tax is made on the basis of the results of the year although the actual liability will be computed and paid on the basis of the results for the year ending March 31, 2008. The deferred tax for timing differences between the book and tax prots for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is reasonable certainty that the assets can be realised in future. 2.14. Operating Leases Leases, where the lessor effectively retains substantially all the risks and benets of ownership of the leased item, are classied as operating leases. Operating lease payments are recognised as an expense in the prot and loss account on a straight-line basis over the lease term. For the year ended 31 December, 3. Earnings Per Share a) b) c) Weighted Average number of Equity Shares of Rs 2 each outstanding during the year * Net prot after tax attributable to equity shareholders (Rs in thousand): Basic and Diluted Earnings Per Share (in Rs) 211,908,375 4,916,690 23.20 211,908,375 3,403,062 16.06 2007 2006
* During the year face value of each equity shares of Rs 10 each was sub-divided (stock split) into 5 equity shares of face value of Rs 2 each. Accordingly, previous year gures have been restated. 4. Segment Reporting A) Primary Segment Reporting (by Business Segments) i) Composition of Business Segments The Companys business segments are organized around products and system solutions provided to its customers, which include utilities, industries, channel partners and original equipment manufacturers.
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Power Systems Segment (PS) offers turnkey systems and services for transmission and distributions for power grid and power plants. The segment offers the instrumentation, control and the entire balance of power plants, which improve performance and energy efciency through exible alternating current transmission systems (FACTS), high voltage direct current (HVDC) systems, network management systems (SCADA) and utility communications. Power Products Segment (PP) manufactures, engineers, supplies key components to transmit and distribute electricity, improving power supply and energy efciency. The segment produces transformers, high and medium voltage switchgears, circuit breakers, capacitors, distribution relays etc. Process Automation Segment (PA) provides customers with integrated solutions for control, plant optimization and industry specic application knowledge. The industries served include oil and gas, power, chemicals and pharmaceuticals, pulps and paper, metals and minerals, marine and turbo charging. Automation Products Segment (AP) provides products to improve customers productivity with high efciency motors, variable speed drives, low voltage products, instrumentation and power electronics. Others Segment consist of robotics systems. ii) iii) The accounting policies used in the preparation of the nancial statements of the Company are also applied for segment reporting. Segment revenues, expenses, assets and liabilities are those, which are directly attributable to the segment or are allocated on an appropriate basis. Corporate and other revenues, expenses, assets and liabilities to the extent not allocable to segments are disclosed in the reconciliation of reportable segments with the nancial statements. During the year revenues, expenses, assets and liabilities relating to heating, ventilation and air conditioning systems (HVAC) business has been reclassied from Process Automation to Power Systems segment. Inter Segment Transfer Pricing Inter segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business risks, within an overall optimisation objective for the Company. v) vi) Figures in brackets are in respect of the previous year. Segment Revenues, Results and Other Information Power Systems External Sales (net of Excise Duty) Inter Segment Sales Other Income Segment Revenues Segment Results Segment Assets Segment Liabilities Capital Expenditure Depreciation / Amortisation 22,175,534 (16,594,192) 162,429 (172,473) 176,434 (152,831) 22,514,397 (16,919,496) 2,323,407 (1,761,646) 15,042,240 (8,990,068) 10,859,313 (7,178,917) 33,145 (87,431) 10,156 (10,080) Power Products 14,137,876 (10,549,064) 2,072,697 (1,351,951) 115,259 (229,325) 16,325,832 (12,130,340) 2,121,026 (1,381,555) 9,570,546 (7,033,875) 7,052,381 (4,830,711) 604,578 (221,574) 119,893 (107,942) Process Automation 10,319,976 (7,065,139) 262,389 (210,380) 83,468 (41,609) 10,665,833 (7,317,128) 1,329,863 (851,869) 5,435,317 (3,784,203) 4,725,900 (3,154,999) 45,408 (15,369) 24,392 (17,903) Automation Products 12,263,391 (8,387,140) 1,032,545 (753,344) 36,117 (38,446) 13,332,053 (9,178,930) 1,784,258 (1,145,178) 7,354,926 (4,640,672) 5,672,447 (3,539,119) 602,275 (526,584) 88,234 (58,927) (Rs in Thousands) Others Total Segment 338,952 (144,555) 1,850 (118) 3,142 (2,118) 343,944 (146,791) 12,441 (9,398) 106,161 (89,299) 184,219 (92,402) 8,441 (1,873) 863 (299) 59,235,729 (42,740,090) 3,531,910 (2,488,266) 414,420 (464,329) 63,182,059 (45,692,685) 7,570,995 (5,149,646) 37,509,190 (24,538,117) 28,494,260 (18,796,148) 1,293,847 (852,831) 243,538 (195,151)
iv)
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(Rs in Thousands) vii) Reconciliation of Reportable Segments with the Financial Statements Revenues 63,182,059 (45,692,685) 363,419 (272,603) -3,531,910 (-2,488,266) (-) (-) 60,013,568 (43,477,022) Results/Net Prot 7,570,995 (5,149,646) 61,697 (89,669) (-) -68,123 (-7,253) -2,647,879 (-1,829,000) 4,916,690 (3,403,062) Assets 37,509,190 (24,538,117) 8,881,061 (7,520,092) (-) (-) (-) 46,390,251 (32,058,209) Liabilities 28,494,260 (18,796,148) 1,632,548 (1,303,643) (-) (-) (-) 30,126,808 (20,099,791)
Total of Segments Corporate - Unallocated (net) Inter Segment Sales Interest Expense Provision for tax As per Financial Statements
B)
Secondary Segment Reporting (by Geographical Segments) Secondary segment disclosures are reported on the basis of geographical location of customers. India Revenues Total Assets Capital Expenditure 56,310,304 (39,106,997) 45,495,315 (31,164,637) 1,597,922 (960,072) Rest of World 3,703,264 (4,370,025) 894,936 (893,572) 9,644 (374) Total 60,013,568 (43,477,022) 46,390,251 (32,058,209) 1,607,566 (960,446)
(Rs in Thousands) As at 31 December, 5. 2007 2006
Amounts due from companies under the same management as dened in sub-section (1-B) of Section 370 of the Companies Act, 1956, are as under: a) Sundry Debtors - ABB Global Services Limited - Raman Boards Limited b) Loans and Advances - ABB Global Services Limited (Maximum amount due during the year Rs. 75,129 thousand, Previous Year Rs. 48,934 thousand) - ABB Holdings (South Asia) Limited (Maximum amount due during the year Rs. 5,330 thousand, Previous Year Rs. 5,330 thousand) - Raman Boards Limited (Maximum amount due during the year Rs 10,998 thousand, Previous Year Rs Nil) 62,583 48,934 72,171 3,891 13,751 -
6,537
5,330 -
55
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(Rs in Thousands) As at 31 December, 6. Contingent Liabilities i) ii) Claims against the Company not acknowledged as debts in respect of sales tax, excise and other matters Bills discounted The above excludes bills co-accepted by the customers bankers/guaranteed by the State Governments Rs 51,927 thousand (Previous Year Rs 143,491 thousand) Income tax matters in dispute 2007 2006
314,914 719
299,699 9,486
iii) 7.
272,981
371,803
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)
742,336
274,710
8.
The Company has no non-cancelable operating lease obligations as on December 31, 2007. Rental expenses towards cancelable and noncancelable operating leases charges to the prot and loss account amounts to Rs 131,652 thousand (Previous Year Rs 90,941 thousand). Finance Lease Obligations The Company normally acquires computers and vehicles under nance lease with the respective underlying assets as security. Minimum lease payments outstanding as of December 31, 2007 in respect of these assets are as follows: (Figures in brackets are in respect of the previous year): (Rs in Thousands) Due Total Minimum Lease Payments outstanding as on December 31, 2007 5,713 (11,296) 267 (6,036) 5,980 (17,332) Interest Not Due 310 (1,555) 10 (320) 320 (1,875) Present Value of Minimum Lease Payments 5,403 (9,741) 257 (5,716) 5,660 (15,457)
9.
Within one year
Later than one year and not later than ve years
10.
Deferred Tax The break up of net deferred tax liability as at December 31, 2007 is as follows: (Figures in brackets are in respect of the previous year): Deferred Tax Asset Timing differences on account of: Difference between book depreciation and depreciation under the Income-tax Act, 1961 Expenditure under Section 43B of the Income-tax Act, 1961 Lease Finance Provisions for doubtful debts and advances 12,177 (17,813) 1,924 (5,203) 213,559 (126,660) 7,150 (16,030) 26,237 (-) 261,047 (165,706) Net Deferred Tax Liability 389,081 (330,977) 128,034 (165,271) Deferred Tax Liability 389,081 (330,977)
Others Transitional Provision under revised AS 15
56
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11.
Capacities, Production, Stock and Turnover (Refer Schedule 12) 11.1 Capacities a) Installed capacities are as certied by the Managing Director, but not veried by the Auditors, being a technical matter.
11.2 Production a) b) Production of nished goods is inclusive of production for captive use. Others represent internally manufactured components, sold during the year. The Company considers these meant for sale when actually sold. Since the quantitative denominations of these items are dissimilar, it is impracticable to disclose the quantitative information in respect of production and turnover.
11.3 Project items a) These comprise sale of equipment and miscellaneous items meant for execution of projects and trading items. Since the quantitative denominations of these items are dissimilar, it is impracticable to disclose the quantitative information in respect thereof. Purchases of these items during the year aggregated to Rs 23,813,414 thousand (Previous Year Rs 16,673,924 thousand).
b)
11.4 Work -in-Progress The Work-in-progress at the beginning of the year amounted to Rs 882,831 thousand (Previous Year Rs 550,636 thousand). (Rs in Thousands) For the year ended 31 December, 12. Earnings in Foreign Exchange (on accrual basis) i) Export of Goods - Direct on FOB basis - Deemed Exports Goods supplied/services rendered locally against foreign exchange remittances Erection and other services Other Income: a. Commission b. Others 3,163,454 911,505 48,950 385,322 3,879,123 265,329 293,247 364,241 2007 2006
ii) iii) iv)
81,474 73,014 4,663,719
87,418 39,243 4,928,601
13.
Consumption of Raw Materials and Components (Rs in Thousands) 2007 Quantity Ferrous Metals Non-Ferrous Metals Components Others MT MT 338 2,131 * Amount 29,495 664,178 12,148,557 2,928,615 15,770,845 Imported Indigenously acquired % 38.26 61.74 100.00 6,034,652 9,736,193 15,770,845 % 40.51 59.49 100.00 Quantity 333 1,766 * 2006 Amount 36,096 552,546 9,692,829 2,373,479 12,654,950 5,126,274 7,528,676 12,654,950
For the purpose of para 4D (c) of Part II of Schedule VI to the Companies Act, 1956, components and spare parts are assumed to mean those incorporated in the product nally sold and not those used as spares for the repairs and maintenance of Plant and Machinery. * Since the quantity denominations and the type of components are dissimilar in nature, it is impracticable to disclose the quantitative information in respect thereof. ABB Limited, India, Annual Report 2007 57
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(Rs in Thousands) For the year ended 31 December, 14. Value of imports on CIF basis (on accrual basis) Raw Materials and Components including Spares Finished Goods Capital Goods including Technical Know-how Software Project items 7,767,616 2,325,306 232,352 433 3,557,963 13,883,670 6,060,330 1,425,545 76,393 55,664 3,429,398 11,047,330 2007 2006
15.
Expenditure in foreign currency (on accrual basis) Royalty Trade Mark Fees Commission and Discount Professional / Project Consultancy Others 101,059 296,516 1,329 11,461 959,258 1,369,623 60,852 213,700 5,322 100,782 884,492 1,265,148
16.
Amount remitted during the year in foreign currency, on account of dividend i) ii) iii) iv) Number of non resident shareholders Number of equity shares held by them on which dividend was paid Year ended to which the dividend related Amount remitted 3 22,084,198 December, 2006 220,842 3 22,084,198 December, 2005 176,674
17.
Managerial Remuneration a) i) ii) Directors fee Other remuneration Salary Commission to Managing Director and Executive Director Commission to Non-executive Directors Contribution to Provident and other funds Other perquisites 285 8,875 5,113 1,200 2,396 7,450 25,034 25,319 290 11,129 6,118 1,200 3,005 7,117 28,569 28,859
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(Rs in Thousands) For the year ended 31 December, b) Computation of Net Prot as per Section 349 of the Companies Act, 1956 Prot Before Tax as per prot and loss account Add: Managerial Remuneration Loss on Sale of Fixed Assets Provision for doubtful debts and advances 7,564,569 25,319 14,453 252,007 291,779 7,856,348 Less: Prot on sale of Fixed Assets Net Prot as per Section 349 of the Companies Act, 1956 Commission to Managing Director Commission to Executive Director Commission to Non-executive Directors 14,246 14,246 7,842,102 4,258 855 1,200 6,313 5,232,062 28,859 3,359 (47,470) (15,252) 5,216,810 10,493 10,493 5,206,317 4,950 1,168 1,200 7,318 2007 2006
Commission to Managing Director and Executive Director is subject to further recommendation and approval of Remuneration Committee and the Board. For the year ended December 31, 2006, Rs. 4,767 thousand was paid as commission to Managing Director and Rs 1,149 thousand was paid as commission to Executive Director based on recommendation and approval of Remuneration Committee and the Board. 18. Auditors Remuneration (excluding service tax) (i) (ii) (iii) Audit Fee Tax Audit Fee Other Services - SOX Fee - Quarterly Limited Review Fee - Others Reimbursement of out of pocket expenses 4,300 2,475 7,800 2,625 1,600 1,174 19,974 19. 20. Interest charge for the year includes Rs 1,555 thousand (Previous Year Rs 2,923 thousand) being interest on xed period loans. Research and development expenditure of Rs 43,761 thousand (Previous Year Rs 38,299 thousand) on revenue account has been incurred during the year. Construction Contracts (Rs in Thousands) 2007 Contract revenue recognised as revenue for the year ended December 31, 2007 Aggregate amount of contract costs incurred and recognised prots (less recognised losses) up to December 31, 2007 for all the contracts in progress The amount of customer advances outstanding for contracts in progress as at December 31, 2007 The amount of retentions due from customers for contracts in progress as at December 31, 2007 27,872,978 45,496,552 1,829,492 5,189,507 2006 19,295,977 28,997,716 1,352,747 2,915,207 4,300 1,975 7,800 2,625 1,600 2,251 20,551
(iv)
21.
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22.
Related Party Disclosures a) List of Related Parties Party where control exists: ABB Asea Brown Boveri Limited, Zurich (Holding Company) Other Related parties with whom transactions have taken place during the year: Fellow subsidiaries:
ABB (China) Ltd., Beijing, China ABB (Hong Kong) Ltd., Hong Kong ABB (P.J.S.C.), Teheran, Iran ABB (Pty) Ltd., Gaborone, Botswana ABB (Pvt.) Limited, Lahore, Pakistan ABB A/S, Skovlunde, Denmark ABB AB, Vsters, Sweden ABB AG, Mannheim, Germany ABB AG, Vienna, Austria ABB Agencies Pte. Ltd., Singapore ABB Arab S.A.E., Cairo, Egypt ABB AS Billingstad, Norway ABB Australia Pty Limited, Sydney, Australia ABB Automation GmbH, Mannheim, Germany ABB Automation L.L.C., Abu Dhabi, U.A.E ABB Automation Products GmbH, Ladenburg, Germany ABB Avangard AD, Sevlievo, Bulgaria ABB Bailley Beijing Controls Co. Ltd., Beijing, China ABB Beijing Drive Systems Co. Ltd., Beijing, China ABB Bomem Inc., Quebec, Canada ABB BV, Rotterdam, Holland ABB Capital, B.V., Amsterdam, Holland ABB Chongqing Transformer Company Ltd.,Chongqing City, China ABB CL Logistic S.A., Montevideo, Uruguay ABB Contracting Co. Ltd., Riyadh, Saudi Arabia ABB d.o.o., Belgrade, Serbia ABB Electrica SGPS, Lda., Luanda, Angola ABB Electrical Machines Ltd., Shanghai, China ABB Electroengineering Ltd., Moscow, Russia ABB Elektrik Sanayi A.S., Istanbul, Turkey ABB Elektro s.r.o., Bratislava, Slovakia ABB Energy Automation S.p.A., Milan, Italy ABB Engineering (Shanghai) Ltd., Shanghai, China ABB Engineering Trading and Service Ltd., Budapest, Hungary ABB France SAS, Rueil Malmaison cedex, France ABB Global Services Limited, India ABB Heifei Transformer Co. Ltd., Hefei, China ABB Holding A.S., Istanbul, Turkey ABB Holding AS, Billingstad, Norway ABB Holdings (Pty) Ltd., Sunninghill, South Africa ABB Holdings (South Asia) Limited, Bangalore, India ABB Holdings Inc., Norwalk, CT, United States ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia ABB Huadian High Voltage Switchgear (Xiamen) Co. Ltd., Xiamen, China ABB Inc., St. Laurent, Quebec, Canada ABB Industries (L.L.C.),Dubai, U.A.E ABB Industry Pte. Ltd., Singapore ABB Information Systems Ltd., Zurich, Switzerland ABB International Marketing Ltd., Zurich, Switzerland ABB K.K., Tokyo, Japan ABB Jiangjin Turbo Systems Company Limited, Chongqing, China ABB LV Installation Materials Co. Ltd., Beijing, China ABB Logistics Center Europe GmbH, Menden, Germany ABB Malaysia Sdn Bhd, Subang Jaya, Malaysia ABB Management Services Ltd., Zurich, Switzerland ABB Mexico S.A. de C.V., Tlalnepantla, Mexico 60
ABB N.V., Zaventem, Belgium ABB Near East Trading Ltd., Amman, Jordan ABB Norden Holding AB, Stockholm, Sweden ABB Oy, Helsinki , Finland ABB Power Technologies SpA, Hydra, Algeria ABB Process Solutions & Services SPA, Milan, Italy ABB Participation AB, Vsters, Sweden ABB Power Systems and Automation Technology S.A.E, Cairo, Egypt ABB Power Technologies S.p.A., Milano, Italy ABB Qatar LLC., Doha, Qatar ABB S.A., Buenos Aires, Argentina ABB S.A., Panama, Panama ABB S.A., Rueil-Malmaison, France ABB S.A., Santiago, Chile ABB s.r.o., Prague, Czech Republic ABB SACE S.p.A., Sesto S. Giovanni (MI), Italy ABB Sanghai Motors Co. Ltd., Shanghai, China ABB Schweiz AG, Baden, Switzerland ABB Scheron S.A., Satigny, Switzerland ABB Service Co. Ltd., Al Khobar, Saudi Arabia ABB South Africa (Pty) Ltd., Sunninghill, South Africa ABB Sp. zo.o., Warsaw, Poland ABB Stotz-Kontakt GmbH, Heidelberg, Germany ABB Turbo-Systems AG, Baden, Switzerland ABB Turbo Systems (Hong Kong) Limited, Hong Kong ABB Technology AB, Vsteras, Sweden ABB Technologies W.L.L., Bahrain ABB Technology Ltd., Zurich, Switzerland ABB Training Center GmbH & Co. KG, Mannheim, Germany ABB Transmission & Distribuition Automation Equipment (Xiamen) Co. Ltd.,China ABB Trasmissione & Distribuzione S.p.A., Milan, Italy ABB Turbocharger Servicios, S.A., Amatitlan, Guatemala ABB Xiamen Electrical Controlgear Co. Ltd., Fujian Province, China ABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen, China ABB Xiamen Switchgear Co. Ltd., Xiamen, China ABB Xinhui Low Voltage Switchgear Co. Ltd., Xinhui, China ABB Ltd., Seoul, South Korea ABB Ltd., Taipei, Taiwan ABB Ltd., Warrington, United Kingdom ABB Ltd., Zagreb, Croatia ABB Ltd., Zurich, Switzerland ABB Ltda., Osasco, Brazil ABB Limited, Auckland, New Zealand ABB Limited, Bangkok, Thailand ABB Limited, Dar Es Salaam, Tanzania ABB LLC, Al Hamriya, Oman ABB Ltd., Dublin, Ireland ABB Ltd., Hanoi, Vietnam ABB Ltd., Jordan, Amman ABB Ltd., Kiev, Ukraine ABB Ltd., Lusaka, Zambia ABBNG Limited, Abuja, Nigeria Asea Brown Boveri Holding Ltd., Bangkok, Thailand Asea Brown Boveri Ltda., Bogot, Colombia Asea Brown Boveri Ltda., La Paz, Bolivia ABB Limited, India, Annual Report 2007
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Asea Brown Boveri Ltd., Nairobi, Kenya Asea Brown Boveri Ltd., Port Louis, Mauritius Asea Brown Boveri S.A., Caracas, Venezuela Asea Brown Boveri S.A., Casablanca, Morocco Asea Brown Boveri S.A., Lima,Peru Asea Brown Boveri Inc., Norwalk, CT, United States Asea Brown Boveri Inc., Paranaque, Metro Manila, Philippines Asea Brown Boveri S.A., Madrid, Spain Asea Brown Boveri S.A., Metamorphossis Attica, Greece Asea Brown Boveri S.A., Quito, Ecuador Asea Brown Boveri S.A.E., Cairo, Egypt Busch-Jaeger Elektro GmbH, Mannheim, Germany Associate: Managing Director: Executive Director: Chief Financial Ofcer:
Electrical Materials Center, Riyadh, Saudi Arabia Entrelec Dveloppement SAS, Rueil Malmaison, France Integra Hindustan Control Ltd., Vadodara, India Lighting for Staffordshire Holdings Ltd., Staffordshire Oy Merinova AB, Vaasa PT ABB Installation Materials, Jakarta, Indonesia PT ABB Jasa Indonesia, Jakarta, Indonesia PT ABB Batam, Batam, Indonesia PT ABB Sakti Industri, Jakarta, Indonesia PT ABB Transmission and Distribution, Jakarta, Indonesia Pucaro Elektro-Isolierstoffe GmbH, Roigheim, Germany Raman Boards Ltd., Mysore, India Integra Hindustan Control Limited Mr. Ravi Uppal Mr. Biplab Majumder Mr. Biplab Majumder Mr. K. Rajagopal
(Rs in Thousands) 2007 b) Transactions with related parties i) Sales, Services and Other income Fellow Subsidiaries - Asea Brown Boveri Inc., Norwalk, CT, United States - Other fellow subsidiaries 531,099 1,976,036 2,507,135 Integra Hindustan Control Limited (an associate) ii) Purchases of Raw Materials, Components and Project items Fellow Subsidiaries - ABB AB, Vasteras, Sweden - ABB Oy, Helsinki, Finland - ABB SACE S.p.A., Sesto S. Giovanni (MI), Italy - Other fellow subsidiaries 1,981,709 1,786,465 1,124,005 4,886,716 9,778,895 Integra Hindustan Control Limited (an associate) iii) Expenditure on Royalty, Trade-mark, Technical and Consultancy Services Holding Company Fellow Subsidiaries - ABB Power Technologies AB, Ludvika, Sweden - ABB Oy, Helsinki, Finland - ABB AG, Mannheim, Germany - ABB Information Systems Ltd., Switzerland - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy - Other fellow subsidiaries 296,516 39,183 25,414 23,755 (14,654) 112,957 213,700 76,378 32,049 21,489 14,654 (8,547) 153,117 12,411 1,518,656 1,430,981 916,775 3,989,756 7,856,168 20,667 602,367 1,650,076 2,252,443 4,697 2006
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2007 iv) Expenditure on Other Services Holding Company Fellow Subsidiaries - ABB Information Systems Ltd., Zurich, Switzerland - ABB Technology Ltd., Zurich, Switzerland - Asea Brown Boveri S.A., Madrid, Spain - ABB Global Services Limited, India - Other fellow subsidiaries 7,322 185,152 508,786 162,120 178,950 1,035,008
(Rs in Thousands) 2006 17,678 82,135 346,555 116,086 88,784 633,560
v)
Capital expenditure for Technical Know how Fellow Subsidiaries - ABB Oy, Helsinki, Finland - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy - ABB Entrelec SAS, Villeurbanne, France - Other fellow subsidiaries 10,628 6,325 4,690 21,643 1,937 5,185 12,396 19,518
vi)
Capital expenditure Fellow Subsidiaries - ABB AB, Vasteras, Sweden - ABB AS Billingstad, Norway - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy - ABB Automation Products GmbH, Ladenburg,Germany - Other fellow subsidiaries 28,875 9,633 5,235 2,822 46,565 167 4,950 15,888 1,097 22,102
vii)
Outstanding balances Debtors and Advances Holding Company Fellow Subsidiaries - Asea Brown Boveri Inc., Norwalk, CT, United States - ABB Global Services Limited, Bangalore - ABB Oy, Helsinki, Finland - Other fellow subsidiaries 2,144 33,943 134,754 114,168 595,521 878,386 Integra Hindustan Control Limited (an associate) Creditors Holding Company Fellow Subsidiaries - ABB Oy, Helsinki, Finland - ABB, Vsters, Sweden - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy - Other fellow subsidiaries 83,407 586,108 763,894 403,673 1,936,106 3,689,781 Integra Hindustan Control Limited (an associate) 10,329 67,791 542,157 662,165 268,419 1,511,802 2,984,543 10,850 93,590 62,686 12,091 474,214 642,581 3,678
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2007 viii) Dividend Paid during the year Holding Company Fellow Subsidiaries ix) x) xi) xii) Remuneration to Managing Director* Remuneration to Executive Director * Remuneration to Chief Financial Ofcer * Dividend received from Associate 195,760 25,081 19,486 4,348 6,396 281
(Rs in Thousands) 2006 156,608 20,065 21,795 5,574 4,565 421
* The above does not include Provision for Leave Encashment and Gratuity as it is provided in the books on the basis of actuarial valuation for the Company as a whole and hence individual gures cannot be identied. The remuneration to Managing Director for 2007 comprises of Rs 14,500 thousand paid to Mr. Ravi Uppal and Rs 4,986 paid to Mr. Biplab Majumder, since the date of his appointment as Managing Director w.e.f July 26, 2007. The remuneration to Executive Director Mr. Biplab Majumder for the year ended December 31, 2007 is for the period upto July 25, 2007. 23. The pro rata difference between the forward contract rate and the exchange rate on the date of transaction to be charged to prot and loss account is Rs 70,942 thousand (Previous Year Rs 62,824 thousand). Provisions: a) Movement in provisions: (Figures in brackets are in respect of the previous year) (Rs in Thousands) As at January 1, 2007 400,333 (196,904) 46,860 (16,813) 62,160 (57,092) 66,697 (68,281) Additions Amounts used 110,205 (291,462) 31,587 (6,874) 4,284 (-) 324 (1,584) Unused Amounts reversed (-) 6,527 (-) 716 (-) (-) As at December 31, 2007 587,861 (400,333) 58,079 (46,860) 57,160 (62,160) 66,373 (66,697)
24.
Class of provisions Product Warranties Sales Tax Litigations Restructuring b) Nature of provisions: a.
297,733 (494,891) 49,333 (36,921) (5,068) (-)
Product Warranties: The Company provides warranties for its products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31, 2007 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. Part of the provision as at December 31, 2007 is towards preventive replacement of certain product components. Provision for Sales Tax represents mainly the differential sales tax liability on account of noncollection of declaration forms. Provision for litigation represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation. Provision for restructuring represents the liability that is expected to materialise in respect of units hived off in past.
b. c.
d. 25.
The employees of the Company are entitled to purchase shares of ABB Ltd, Zurich (the ultimate holding company) on the settlement date, at a price xed based on the fair market price on the grant date under ABB Employee Share Acquisition Plan. Guidance Note on Accounting for Employee Share-based Payments permits as an alternative the intrinsic value method of accounting with fair value disclosures. There is no discount on the intrinsic value and any settlement obligations as of date. Further, the scheme detailed above is assessed, managed and administered by the ultimate holding company, accordingly, the Company has not accounted/disclosed for the above plans as per the said Guidance Note.
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26.
Derivative Instruments i) ii) Forward cover for export debtors outstanding as of balance sheet date is Rs 867,250 thousand (Previous Year Rs 801,358 thousand). Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs 3,057,714 thousand (Previous Year Rs 350,199 thousand). Forward cover for import creditors outstanding as of balance sheet date is Rs 4,382,756 thousand (Previous Year Rs 3,623,557 thousand). Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 5,437,218 thousand (Previous Year Rs 2,981,428 thousand). Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is Rs 116,173 thousand (Previous Year Rs 345,187 thousand).
iii) iv)
v)
27.
The Company has amounts due to Micro and Small Enterprises under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at December 31, 2007. (Rs in Thousands) 2007 i) The principal amount and the interest due thereon remaining unpaid to any supplier as at December 31, 2007. Principal Amount : Interest : The amount of interest paid by the Company along with the amounts of the payment made to the supplier beyond the appointed day for the year ending December 31, 2007. The amount of interest due and payable for the period of delay in making payment (beyond the appointed day during the year) The amount of interest accrued and remaining unpaid for the year ending December 31, 2007. The amount of further interest remaining due and payable for the earlier years. 64,341 Nil Nil Nil Nil Nil
ii) iii) iv) v)
Note: The information has been given in respect of such suppliers to the extent they could be identied as Micro and Small enterprises on the basis of information available with the Company. As at December 31, 2006 there were no suppliers who were registered under The Micro, Small and Medium Enterprises Development Act, 2006 based on the information available with the Company. 28. In accordance with ASI 14 (Revised) on Disclosure of Revenue from Sales Transactions issued by Institute of Chartered Accountants of India, excise duty on sales amounting to Rs 4,529,568 thousand (Previous Year Rs 3,305,522 thousand) has been reduced from sales in prot and loss account and excise duty on increase in inventory of nished goods amounting to Rs 2,985 thousand (Previous Year Rs 27,279 thousand) has been accounted in the prot and loss account under the head Cost of Materials and Erection Services. The Company has dened benet gratuity plan and provident fund plan managed by trusts. The following table summarises the component of net benet expenses recognised in the prot and loss account and the funded status and amounts recognised in the balance sheet. (Rs in Thousands) Gratuity i) Change in benet obligations Projected benet obligations at beginning of the period Current Service Cost Contribution by plan participants ** Interest cost Benets paid Actuarial (gain / loss) Projected benet obligations (PBO) at the end of the period ii) Change in plan assets Plans assets at the beginning of the period at fair value Contributions Expected return on plan assets Actuarial gain / (loss) Benets paid Plans assets at the end of the period, at fair value 394,151 33,953 31,532 (38,810) 9,824 430,650 Provident Fund 1,279,270 67,833 202,054 108,738 (125,512) (5,230) 1,527,153
29.
364,958 56,462 31,088 (1,446) (38,810) 412,252
1,237,456 265,990 105,234 (172) (125,512) 1,482,996
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(Rs in Thousands) Gratuity iii) Actual return on plan assets Expected Return on plan assets Actuarial gain / (loss) on plan assets Actual return on plan assets iv) Present value of the dened benet obligation Plan assets at the end of the period, at fair value Liability recognised in the balance sheet v) Cost for the period Current Service cost Interest cost Expected return on plan assets Actuarial (gain) / loss Expense recognised in the statement of prot & loss vi) Investment Details (% invested) GOI Securities State Government Securities PSU Securities Special Deposit Scheme Others (including bank balances) Assumptions Interest rate for discount Estimated rate of return on plan assets 31,088 (1,446) 29,642 430,650 412,252 18,398* Provident Fund 105,234 (172) 105,062 1,527,153 1,482,996 44,157
33,953 31,532 (31,088) 11,270 45,667
67,833 108,738 (105,234) (5,058) 66,279
38.1 2.7 27.6 22.8 8.8 100.0
33.9 12.3 22.2 21.1 10.5 100.0 8.00% p.a. 8.00% p.a.
vii)
8.00% p.a. 8.00% p.a.
* since paid ** Employees contribution. Notes : i) Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as ination, market growth and other factors applicable to the period over which the obligation is expected to be settled. The Company expects to contribute Rs 49,091 thousand to Gratuity Fund and Rs 79,535 thousand in 2008. This being the rst year of implementation, previous year gures have not been given. The attrition rate for gratuity varies from 1% to 8% for various age groups.
ii)
iii) 30.
The gures of the previous year have been regrouped / reclassied, where necessary, to conform with the current years classications. For and on behalf of the Board Ravi Uppal Chairman Biplab Majumder Managing Director K Rajagopal Whole-time Director & Chief Financial Ofcer Peter Leupp Director Nasser Munjee Director N S Raghavan Director A K Dasgupta Director D E Udwadia Director Veli-Matti Reinikkala Director B Gururaj Company Secretary New Delhi, February 19, 2008 65
As per our report of even date For S.R. BATLIBOI & CO. Chartered Accountants per Sunil Bhumralkar Partner Membership No. 35141
New Delhi, February 19, 2008 ABB Limited, India, Annual Report 2007
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Cash Flow Statement
A.
Cash Flow from Operating Activities Net Prot Before Tax 7,564,569 5,232,062
Adjustments for Depreciation/Amortisation Unrealised Losses/(Gains) on Restatement of Monetary Assets (net) Unrealised Losses/(Gains) on Restatement of Monetary Liabilities (net) Loss/(Prot) on Sale of Fixed Assets, (net) Interest Income Dividend Income Interest Expense Operating Prot before Working Capital Changes 324,057 (100) (279) 207 (277,014) (281) 68,123 7,679,282 264,675 5,757 (1,973) (7,134) (216,685) (429) 7,253 5,283,526
Movement in Working Capital Decrease/(Increase) in Sundry Debtors Decrease/(Increase) in Inventories Decrease/(Increase) in Other Current Assets Decrease/(Increase) in Loans and Advances Increase/(Decrease) in Current Liabilities and Provisions Cash Generated from Operations Direct Taxes Paid (net of refunds) Net cash generated from Operating Activities (8,532,708) (1,340,107) (1,263,537) (928,314) 9,820,037 5,434,653 (2,758,909) 2,675,744 (5,415,973) (1,531,192) 812,716 (400,337) 5,550,542 4,299,282 (1,846,257) 2,453,025
B.
Cash Flow from Investing Activities Purchase of Fixed Assets Proceeds from sale of Fixed Assets Purchase of Investments Sale/Maturity of Investments Interest Received Dividends Received Net cash used in Investing Activities (1,489,407) 19,829 69,000 261,357 281 (1,138,940) (933,178) 33,151 (227,051) 325,008 207,888 429 (593,753)
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C.
Cash Flow from Financing Activities Proceeds from new Borrowings Repayment of Borrowings Interest Paid Dividend paid Net cash used in Financing Activities Net Increase/ (Decrease) in Cash and Cash Equivalents (A+B+C) Cash and Cash Equivalents (Opening Balance) Cash and Cash Equivalents (Closing Balance) 5,150,000 (5,159,797) (68,123) (494,672) (572,592) 964,212 5,464,424 6,428,636 2,100,500 (2,112,310) (7,253) (385,439) (404,502) 1,454,770 4,009,654 5,464,424
Components of Cash and Cash Equivalents as at December 31, Cash and Cheques on Hand Balances With Banks - On Current Account - On Deposit Account - On Margin Account
2007 2,315 4,410,727 2,005,460 10,134 6,428,636
2006 2,409 2,856,674 2,605,341 5,464,424
Notes:1) Cash and cash equivalents at the end of the year represent cash at bank and in hand and deposits with bank. 2) The gures of the previous year have been regrouped/reclassied, where necessary, to conform with the classication of the current year. As per our report of even date For S.R. BATLIBOI & CO. Chartered Accountants per Sunil Bhumralkar Partner Membership No. 35141 For and on behalf of the Board Ravi Uppal Chairman Biplab Majumder Managing Director K Rajagopal Whole-time Director & Chief Financial Ofcer Peter Leupp Director Nasser Munjee Director N S Raghavan Director A K Dasgupta Director D E Udwadia Director Veli-Matti Reinikkala Director B Gururaj Company Secretary New Delhi, February 19, 2008
New Delhi, February 19, 2008
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Balance Sheet Abstract and Companys General Business Prole
I.
Registration Details Registration No. Balance Sheet Date L32202KA1949PLC032923 31 Date 12 Month 07 Year State Code 0 8
II.
Capital Raised during the year (Rs in Thousands) Public Issue NIL Bonus Issue NIL Private Placement NIL Rights Issue NIL
III.
Position of Mobilisation and Deployment of Funds (Rs in Thousands) Total Liabilities 16397137 Sources of Funds Paid-up Capital 423817 Secured Loans 5660 Deferred Tax Liability 128034 Application of Funds Net Fixed Assets 4578716 Net Current Assets 11113875 Accumulated Losses NIL Misc. Expenditure NIL Investments 704546 Unsecured Loans Reserves and Surplus 15839626 Total Assets 16397137
IV.
Performance of the Company (Rs in Thousands) Turnover 60013568 +/- Prot/Loss Before Tax +7564569 Earnings per Share in Rs 23.20 Dividend Rate % 110 +/- Prot/Loss After Tax +4916690 Total Expenditure 52448999
V.
Generic Names of Three Principal products/Services of Company (as per monetary terms) Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description Item Code No. (ITC Code) Product Description 85.35 Switchgears of all types 85.04 Transformers 85.01 Motors and other machines ABB Limited, India, Annual Report 2007
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Energy efciency for a connected world ABB Limited - Annual Report 2007 India

Auditors S. R. Batliboi & Co. Chartered Accountants

Company Secretary B. Gururaj

Opp. National College Basavanagudi Bangalore - 560 004

ABB Limited, India, Annual Report 2007

(Rs in Millions) Description 2007 2006 2005 2004 2003

Excludes revaluation of xed assets, revaluation reserve and exceptional items.

ABB Limited, India, Annual Report 2007

Profit After Tax

30000 23,056 15,031

0 2003 2004 2005 2006 2007

0 2003 2004 2005 2006 2007

Return on Capital Employed (%)

Employees & Productivity

43.2 8,382 36.3 7,439 7500 6,704 5,187 5,535 6000

27.8 5000 4,690 3,205 3,439

3000 15 2500 1500

0 2003 2004 2005 2006 2007

0 2003 2004 2005 2006 2007

Excludes revaluation of xed assets, revaluation reserve and exceptional items.

Corporate Management Committee

ABB Limited, India, Annual Report 2007

Welcome to the world of ABB

ABB Limited, India, Annual Report 2007

~ 5500 Employees ~ 775 Channel

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

4,250,000 466,198 79,230 12,587 627,930 5,435,945

2,750,000 423,817 59,440 519,255 3,752,512

New Delhi February 19, 2008

Ravi Uppal Chairman

ABB Limited, India, Annual Report 2007

Annexure - A to Directors Report

ABB Limited, India, Annual Report 2007

For and on behalf of the Board

New Delhi February 19, 2008

Ravi Uppal Chairman

ABB Limited, India, Annual Report 2007

Annexure C to Directors Report

No. of Board Meetings held during 2007

YES YES YES NO NO NO YES NO NO NO NO

No. of Board Meetings attended

Directorship in Private Companies

Last AGM attendance

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

ABB Limited, India, Annual Report 2007

Shareholding in ABB Limited 2,250 shares

Committee Chairmanships: 1. Page Industries Limited (Audit Committee)

ABB Limited, India, Annual Report 2007

Directorships/Committee Memberships in other companies 1. ABB Global Services Limited

Shareholding in ABB Limited NIL

ABB Limited, India, Annual Report 2007

ABB SHARE PRICE MOVEMENT VS BSE SENSEX JANUARY - DECEMBER 2007

20204.21 14383.72 14683.36 15542.40 17361.47

ABB Limited, India, Annual Report 2007

4306.75 4362.95 3689.90 3479.95 1744.00 1330.00 1624.00 1649.90