ABB India Annual Report 2009

Driving sustainable growth ABB India Annual Report 2009
Contents
01 Board of directors and other information 02 5 year highlights 07 Corporate Management Committee 11 Notice to members 12 Directors report 26 Managements discussion and analysis 31 CEO / CFO certification 32 Auditors report 36 Balance sheet, profit & loss account and schedules 47 Notes to accounts 65 Cash flow statement 67 Balance sheet abstract and companys general business profile
ABB Limited
Board of Directors Gary Steel, Chairman Biplab Majumder, Vice Chairman & Managing Director N.S. Raghavan Nasser Munjee D. E. Udwadia A. K. Dasgupta Peter Leupp Francis Duggan (w.e.f. 26.02.2010) Bernhard Jucker (upto 20.03.2009) Veli-Matti Reinikkala (upto 31.03.2009) K. Rajagopal, Whole-time Director (upto 31.07.2009)
Bankers Canara Bank Citibank N.A. DBS Bank Limited Deutsche Bank AG HDFC Bank Limited ICICI Bank Limited IDBI Bank Limited State Bank of India The Hongkong & Sanghai Banking Corporation Limited The Royal Bank of Scotland N.V. Union Bank of India Yes Bank Limited
Company Secretary B. Gururaj Corporate Management Committee Biplab Majumder Amlan Datta Majumdar S. Ramesh Shankar N. Venu B. Gururaj Prakash Nayak Madhav Digraskar R. Narayanan Venkatesh Prasad G.N.V. Subba Rao Madhav Vemuri Ranjan K. De S. Karun
Auditors S.R. BATLIBOI & CO. Chartered Accountants
Registered Office 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bengaluru- 560 001.
Registrar & Share Transfer Agents Karvy Computershare Private Limited No. 51/2, T.K.N.Complex, Vanivilas Road, Opp. National College, Basavanagudi, Bengaluru - 560 004.
ABB Limited, India, Annual Report 2009
5 Year highlights
(Rs in Millions) Description 2009 2008 2007 2006 2005
Sources of Funds Share Capital Reserves Net Worth Borrowings Funds Employed 423.8 23,673.5 24,097.3 24,097.3 423.8 20,622.9 21,046.7 0.2 21,046.9 423.8 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
Income and Prots Sales & Other Income Operating Prot Before Interest and Depreciation Prot Before Tax Tax Prot After Tax Dividend / Dividend Tax Retained Earnings 63,097.7 6,012.9 5,274.0 1,727.6 3,546.4 495.8 3,050.6 69,674.5 9,024.6 8,332.4 2,858.3 5,474.1 545.4 4,928.7 60,013.6 8,005.7 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
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 9,754.6 0.00:1 113.7 16.7 2.0 15.7 8,838.5 0.00:1 99.3 25.8 2.2 29.5 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
Excludes revaluation of xed assets and revaluation reserve.
5 year Highlights
Revenues (Rs in Millions) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 05 06 07 08 09
30,141 43,477 60,014 69,675 63,098
Profit after tax (Rs in Millions) 8,000 7,000 6,000

5,474.1
5,000 4,000
3,403.1
4,916.7
3,546.4
3,000 2,000 1,000 0 05 06 07 08 09

2,186.8
Return on capital employed (%)

54.6
Employees and Productivity 12,500

46.6
Number of employees Revenue per employee (Rs in Thousands)
50
43.2
50.5
10,000 8,000 6,000 4,000 2,000 0
40 30
24.5
10,000
8,382
10,842
10,726 6,496
10,141 6,222
7,500 5,000 2,500 0 05 06 07 08 09
7,439 5,187 4,052
5,535
20 10 0
05
06
07
08
09
Excludes revaluation of fixed assets and revaluation reserve.
This is ABB
ABB is one of the worlds leading power and automation engineering companies. We provide solutions for secure, energy-efficient generation, transmission and distribution of electricity and for increasing productivity in industrial, commercial and utility operations. Our portfolio ranges from light switches to robots 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. Thats why ABB stands for Power and productivity for a better world.
ABB in India
ABB operations in India are in excess of one billion US dollars and the company has 14 manufacturing facilities and over 6,000 employees in the country. ABB has an extensive countrywide presence with around 18 marketing offices, 8 service centers, 3 logistic warehouses and a network of over 850 channel partners. ABB continues to bring value to customers in India through leading edge technologies, domain expertise and project execution abilities. India is the largest engineering design and R&D resource base for ABB Group worldwide. 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 topline grows as we create value for customers, focus on productivity, operational efficiencies and working capital management continues to ensure profitability.
ABB India corporate management team
Biplab Majumder Vice Chairman & Managing Director
Amlan Datta Majumdar Chief Financial Officer
Ramesh Shankar Head Human Resources
N Venu Head Sales and Marketing
B Gururaj Head - Legal & Compliance and Company Secretary
Prakash Nayak Head Power Systems
Madhav Digraskar Head Power Products
R Narayanan Head Discrete Automation and Motion
Venkatesh Prasad Head Low Voltage Products
G N V Subbarao Head Process Automation
Madhav Vemuri Head Corporate Research
Ranjan K De Head Institutional Sales
S Karun Head Service and EHS
Our business Ensuring grid reliability

Power products Power products are the key components to transmit and distribute electricity. The division incorporates the ABB manufacturing network for transformers, switchgear, circuit breakers, cables and associated equipment. It also offers all the services needed to ensure products performance and extend their lifespan. The division is subdivided into three business units. Power systems Power systems offer turnkey systems and services for power transmission and distribution grids and for power plants. Substations and substation automation systems are key areas. Additional highlights include flexible alternating current transmission systems (FACTS), high-voltage direct current (HVDC) systems and network management systems. In power generation, power systems offer instrumentation, control and electrification of power plants. The division is subdivided into four business units.
Improving industrial productivity
Discrete automation and motion This division provides products, solutions and related services that increase industrial productivity and energy efciency. Its motors, generators, drives, programmable logic controllers (PLCs), power electronics and robotics provide power, motion and control for a wide range of automation applications. The leading position in wind generators and a growing offering in solar complement the industrial focus, leveraging joint technology, channels and operation platforms. Low voltage products The low voltage products division manufactures low-voltage circuit breakers, switches, control products, wiring accessories, enclosures and
cable systems to protect people, installations and electronic equipment from electrical overload. The division further makes KNX systems that integrate and automate a buildings electrical installations, ventilation systems and security and data communication networks. Process automation The main focus of this business is to provide customers with products and solutions for instrumentation, automation and optimization of industrial processes. The industries served include oil and gas, power, chemicals and pharmaceuticals, pulp and paper, metals and minerals, marine and turbocharging. Key customer benets include improved asset productivity and energy savings.
Sustainability
ABB contributes to society through its business activities, and their social, environmental and economic impact. Social performance - both within the company and in the communities where ABB operates - is a key element of the companys sustainability goals. Education ABB has adopted six schools covering over 5,500 children, near its major manufacturing hubs. The support includes facility upgradation covering school buildings, classrooms, toilets, library etc. and initiatives such as teachers training sessions, health camps and excursions. To support improved nutrition, ABB provides mid-day meals to the students from the schools in Bengaluru with the help of Akshaya Patra Foundation. Over 90% of the cost of this program is paid for by the employees. The ABB Jrgen Dormann Foundation for Engineering Education signed partnership agreements with two more universities in India - Jadavpur University, Kolkata and MS (Maharaja Sayajirao) University, Vadodara. Access to electricity project More than 7,000 people living in 1,137 homes in seven remote villages in the districts of Barmer and Jodhpur, in the desert region of Rajasthan have been given the gift of solar-powered residential lighting. In 2009, lighting facilities were extended to all schools, community centre and maternity centre. ABB constructed another water tank of capacity 30,000 litres at a village which will ease the water problem for 200 more families. With this project, in the last 3 years, income levels for families have increased by 25%,
attendance in schools has also seen a rise by 20% and new avenues for employment have been created. Supporting the differently-abled ABB has outsourced assembly of simple components to organizations, Prerana and Seva Tirth in Bengaluru and Vadodara respectively, to help over 100 colleagues live a life of dignity by facilitating a regular source of income. In 2009, ABB provided the centres with computers, extending the outsourcing initiative to making engineering drawings in AutoCAD. Environment ABB in India installed and commissioned its first photovoltaic solar plant at its Nelamangala facility, to support its lighting needs. Environment initiatives include green-cover maintenance, rain water harvesting and vermiculture. In 2009, over 10 million litres of water was collected to improve the water table while supporting the greenery. For the third time in a row, the ABB greening initiatives in Bengaluru received awards for the Best Maintained Garden and Traffic Islands. ABB in India also received the CII Leadership and Excellence Award in Environment Health & Safety (EHS) for the southern region. Support to natural calamities ABB in India and its employees assisted the relief and rehabilitation operations for the victims of the floods in North Karnataka and Bihar with monetary contributions. This money provided essential commodities such as milk, medicines, eatables and clothes to the flood victims.
Notice to Members
NOTICE is hereby given that the SIXTIETH ANNUAL GENERAL MEETING of the Members of ABB Limited will be held at The Atria Hotel, Chancery, No.1, Palace Road, Bengaluru 560 001, on Tuesday, May 11, 2010 at 11.00 A.M. (IST) to transact the following business: Ordinary Business:
Notes: 1. The Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, setting out the material facts in respect of special business under item No. 6 is annexed hereto. 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 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. Members should bring the duly filled 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 5, 2010 to May 11, 2010 (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 May 13, 2010, to those Members whose names stand registered on the Companys Register of Members:a) as Beneficial Owners as at the end of business hours on May 4, 2010 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 4, 2010.
2. 1. To receive, consider and adopt the Audited Balance Sheet as at December 31, 2009 and the Audited Profit & 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. N. S. Raghavan, 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 having registration number 301003E, as Statutory Auditors of the Company to hold office 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 fix their remuneration. 3. 4.
2. 3.
4.
5.
5.
Special Business: 6. To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. Francis Duggan, who was appointed as an Additional Director by the Board of Directors of the Company on February 26, 2010, pursuant to Article 152 of the Articles of Association of the Company and who holds office upto the date of this 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 office of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation. By Order of the Board For ABB Limited B. Gururaj Company Secretary
b)
6.
Place : Bengaluru Date : February 26, 2010 Registered Office: 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bengaluru 560 001.
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 financial year ended December 31, 2002, 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 rest 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, 2001, have been transferred to the Investor Education and Protection Fund.
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7.
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 Agents, viz., Karvy Computershare Private Limited, Unit: ABB Limited, (a) No. 51/2, T.K.N.Complex, Vanivilas Road, Opp. National College, Basavanagudi, Bengaluru - 560 004. (b) Plot No. 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 filing Form 2B (in duplicate) with the Company or its Registrar & Share Transfer Agents 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 re-appointment/ appointment as Directors are furnished in the Corporate Governance Section of this Annual Report.
Annexure to Notice Explanatory Statement under Section 173(2) of the Companies Act, 1956 Item No. 6 The Board of Directors of the Company at its meeting held on February 26, 2010, appointed Mr. Francis Duggan as an Additional Director effective that date. In terms of Section 260 of the Companies Act, 1956 and Article 152 of the Articles of Association of the Company, Mr. Francis Duggan holds office as Director upto the date of the ensuing Annual General Meeting of the Company and is eligible for re-appointment as Director. 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. Francis Duggan, for the office of Director. The Board considers that his association as Director will be beneficial and in the interest of the Company. The Directors recommend the passing of resolution set out at Item No.6, of the accompanying Notice. Except Mr. Francis Duggan, none of the other Directors is, in any way, concerned or interested in the said resolution. By Order of the Board For ABB Limited B. Gururaj Company Secretary Place: Bengaluru Date: February 26, 2010
8.
9.
10. Securities and Exchange Board of India vide its circular dated April 27, 2007 and June 25, 2007, has made it mandatory effective July 2, 2007 for every participant in the securities / capital market to furnish Income Tax Permanent Account Number (PAN No.). Accordingly all shareholders are required to submit their PAN No. along with a photocopy of both sides of the PAN card, duly attested. Shareholders holding shares in physical form are requested to submit the copy of the PAN card of all holders including joint holders duly attested by the Notary Public / Gazetted Officer / Bank Manager under their Official Seal and stating their full name and address, registration number to the Companys registered office address or its Registrars & Share Transfer Agents, Karvy Computershare Private Limited, at the address mentioned above. Shareholders holding shares in electronic form are required to furnish their PAN No to their Depository Participant with whom they maintain their account along with the documents as required by them. 11. The Company has designated an exclusive e-mail id viz., investor.helpdesk@in.abb.com to enable investors to register their complaints / queries, if any.
Registered Office: 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bengaluru 560 001.
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Directors Report
Your Directors have pleasure in presenting their Sixtieth Annual Report and Audited Accounts for the year ended December 31, 2009. Financial Results (Rs in Thousands) For the year ended December 31, 2009 Profit Before Taxation Less: Provision for Tax - Current Tax - Deferred Tax - Fringe Benefit Tax Profit After Tax Balance Brought Forward from last year Amount available for Appropriation Appropriations General Reserve Proposed Dividend Corporate Dividend Tax Balance Carried Forward 3,000,000 423,817 72,028 607,178 4,103,023 5,000,000 466,198 79,230 556,632 6,102,060 1,805,255 (39,000) (38,652) 3,546,391 556,632 4,103,023 2,858,210 (90,000) 90,100 5,474,130 627,930 6,102,060 5,273,994 For the year ended December 31, 2008 8,332,440
Dividend Your Directors recommend payment of a dividend at the rate of Rs 2/(Rupees Two only) per share for the year ended December 31, 2009 on 211,908,375 equity shares of Rs 2/- each. Performance Review Orders received during the year at Rs 86,847 million were 8% higher compared to Rs 80,541 million in the previous year. Order backlog at the end of 2009 was healthy at Rs 84,787 million compared to Rs 61,618 million at the end of the previous year. Sales and other income for the year were lower by 9% at Rs 63,098 million compared to Rs 69,675 million in the previous year. Revenues of all the segments were lower than the previous year except Automation Products which saw a moderate growth of 4%. Profit before tax was lower at Rs 5,274 million compared to Rs 8,332 million in the previous year. Reduction in profit was mainly attributable to lower sales, adverse impact from fair valuations of forward foreign exchange and embedded derivative contracts and additional cost incurred for exit/ foreclosure of rural electrification business. Profit after tax at Rs 3,546 million for the year has reduced by 35% compared to Rs 5,474 million in the previous year. Earning per equity share of face value of Rs 2/- correspondingly decreased to Rs 16.74 compared to Rs 25.83 in the 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 899,063/- lying with the Company for a period of seven years pertaining to year ended on December 31, 2001, was transferred during the year 2009, to the Investor Education and Protection Fund established by the Central Government. Conservation of Energy, Earnings and Outgo Technology Absorption, Foreign Exchange
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 certificates for ISO 14001 (EMS). Environment, health and safety are given high priority. All the units of the Company have been awarded OHSAS18001 certification 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.
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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 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 confirm that: i. ii. 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, 2009 and of the profit of the Company for the year ended on that date; proper and sufficient 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. Bernhard Jucker was appointed as an Alternate Director for Mr. Peter Leupp during the period from April 30, 2009 to July 31, 2009. Mr. K Rajagopal, Whole-time Director of the Company resigned effective July 31, 2009. Your Directors place on record their appreciation of the valuable services rendered by the above Directors during their tenure as Directors / Alternate Director of the Company. Mr. Francis Duggan was appointed as an Additional Director of the Company with effect from February 26, 2010. Mr. D. E. Udwadia and Mr. N. S. Raghavan, Directors of the Company are due for retirement by rotation and are eligible for re-appointment. As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, brief profile of the Directors proposed to be re-appointed / appointed, nature of their expertise in specific functional areas, names of companies in which they hold directorships and memberships / chairmanships of Board Committees, shareholding are provided in the Report on Corporate Governance forming part of the Annual Report. Auditors The Companys Auditors, M/s. S.R. BATLIBOI & CO., Chartered Accountants, hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certificate from them pursuant to Section 224(1B) of the Companies Act, 1956, confirming their eligibility for reappointment as Auditors of the Company. For and on behalf of the Board Place: Bengaluru Date: February 26, 2010 Gary Steel Chairman
iii.
iv.
Corporate Governance As required under Clause 49 of the Listing Agreement of Stock Exchanges, a report on Corporate Governance and a Certificate from M/s D. R. Shressha & Associates, Practicing Company Secretaries, confirming 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. Bernhard Jucker and Mr. Veli-Matti Reinikkala, Directors of the Company resigned effective March 20, 2009 and March 31, 2009 respectively.
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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 Energy conservation continued to be priority area for the Company. Energy conservation measures taken during the year included Optimum utilisation of maximum demand load HV (11kV) capacitor banks installed for HV machine testing to improve the system power factor to 0.99 Maximised use of sun light during day time reducing illumination requirement. This aspect was considered while designing of new factory at Nelamangala Induction of a hot dip impregnation machine for two baking ovens and use of 40 kW oven for 135 kW oven at Faridabad plant Replacement of all incandescent lamps with CFL Control over compressed air leakages Use of solar powered street lights at Bangalore plant Awareness and training programmes for employees Energy audits and corrective actions Switching off lights and air conditioners during breaks and when not essential
Product Improvements: 400 kV circuit breaker 4000A suitable for Indian conditions Polymer insulators for current and capacitor voltage transformers Surge capacitor for GCB application Development of IP 65 protection for frame size 160 and 180 Online machine monitoring system for electrical rotating machines New insulation scheme for motors in classified hazardous area in line with Global Standards Product certification for IP 55 for foot and flange motors in frame size 280 - 355 ACS 510 drives for general purpose industry Global cabinet design for LV drives Manufacturing of cabinet for ACS 5000 MV drives Optimisation of dimensions of unigear switchgear
Technology adaptation and innovation: Unigear panel localisation and range expansion Localisation of contactors, air circuit breakers, MCCBs, switches and fuses of different ratings, components for 145 kV circuit breaker, assemblies for hybrid switchgear type PASS and double bus bar switchgear Local manufacturing of 615 series relays Development of indigenous components for switching mechanism Technology absorption for traction motors, TEFC range machines Indicating meter with digital display for analog power line carrier terminal type ETL4X and ETL8X Bidding tool for Electrics for balance of plant Design for HMI603, LCD based human machine interface for REJ603 Benefits derived as a result of the R&D efforts Multifold benefits were accrued as a result of R&D activities. Apart from strengthening of technical base, benefits have also been reflected in terms of improvement of product reliability and quality, standardisation of design of assemblies, sub-assemblies and components of various products, improved measurement range and accuracy level, better aesthetics, cost reduction and increased acceptability of products in local and global markets. R&D also helped in adopting some of the new products with the existing legacy system installed at the customer plants, helping customer in avoiding costlier investments. 2.3 Expenditure on Research & Development Considering nature of research and development, complexity, competency required, time frame, amount and also to optimise overall cost, all major R&D efforts are pooled centrally at the Group level. Company as a beneficiary of these developments in terms of new products, technologies and application pays to the Group companies royalties/ license fees. Total amount incurred for these fees during the year was Rs 790 million. Localisation of products manufacturing, adoption to local environment and other improvements/ cost saving actions are carried out locally. Total expenditure on such development efforts during the year is estimated to be Rs 10 million.
With proper planning and awareness consumption of electricity and diesel was reduced as compared to previous year. Proposed areas of work include use of LPG and natural gas for thermic fluid heating for ovens, replacement of inefficient central air conditioned plant with efficient AC plants, installation of VFD on compressors, servo control voltage stabilisers for lighting, water saving activities, compressed air systems, selection of energy efficient plant and machineries as per BEE guidelines. Total energy saving as a result of measures taken is estimated at 2 million kWh units of energy per annum. This saving, however, has no appreciable impact on cost of goods, as the Companys production processes are not energy intensive. 2. Technology absorption, adaptation and innovation 2.1 Technical Development
2.2
New Products Developed: 145 kV new design LTBD circuit breaker 33 kV 400A centre break disconnector 145 kV 2500A double break disconnector 180 kVA auxiliary railway converter Dry type transformer New design for small frame motors for domestic and export market 36 kV vacuum circuit breaker 36 kV indoor switchgear type unigear ZS2 12 kV 630A, 20 kA frame mounted compact substation 12 kV 800A, 13.1 kA outdoor breaker
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3.
Imported Technologies 3.1 Technologies imported during last five years 'A range contactors up to 40A 2005 Residual current circuit breakers 2005 PR521 and PR512 relays 2005 SPAD 346C relays 2005 Operating mechanism- BLK 222 245 kV CB 2005 ACS 550 Drives 2005 Residual Current Device (RCD) 2007 Localisation of TMAX/EMAX MCCBs 2007 TA 25 Relays 2007 HT Motors M3BM 2007 Three phase LV induction Motors up to 7.5 kW 2007 Shunt reactors 2008 MCD-80 band pass and ETL-600 2008 145 kV, SF6 circuit breaker LTB145D1/B 2008 REF601 relays 2008 Fuseless capacitors 2008 Unigear double bus bar switchgear 2009 TEFC range of machines (HXR range) 100 1400 kW 2009 Contactors size 3, 4 & 5 2009 ACS 510 drives for general purpose industry 2009 Global cabinet design LV drives and ACS 5000 MV drives 2009 145 kV new design LTBD circuit breaker 2009 Dry type transformer 2009 Shunt reactor 50 MVAr, 400 kV 2009
the year orders were received for the first time from new markets/ countries. It continued as a global feeder factory within the group for 72.5 kV circuit breakers. Segments export orders received included 128 circuit breakers from a utility of Brazil, maiden order for 300 kV disconnector from Indonesia for POSO energy, a large order from Nigeria for 800, 36 kV outdoor breakers and 964 MVA of 132/33 kV of power transformers from Saudi Arabia, Malaysia, Ethiopia and other countries. Automation product segment continued to pursue export sales promotional activities. Orders received grew by 15%. Significant orders received included supply for wind power generator motors to Denmark, high current rectifier order from Indonesia, supply of coils and rewinding of generator stators from United Kingdom and from ABB, Spain for electric motors. Machine life expectancy analysis studies earned significant revenues. Internal sourcing within group of products, components, tools and engineering services is on increase. Construction of wind power generator motor factory for export at Vadodara is in advance stage of completion. Metals and minerals business units of process automation division are group internal centre of excellence for metals and cement businesses and have secured several orders particularly from Middle East and South Asia regions. A major order from Arcelor-Mittal for Tube Mill at Saudi Arabia was received during the year. Power system segment also received a major substation order from Bangladesh. With management focus, strategies and increasing sourcing of components, products and services from India by the ABB Group companies, prospects for growth of exports in coming years remains high. (b) Total foreign exchange used and earned (Rs in Millions) i) ii) Foreign exchange earned (including deemed exports) Foreign exchange used 8,770 22,904 For and on behalf of the Board
Above technologies have been fully absorbed, except for contactors size 4 & 5 and dry type transformer. 3.2 Foreign exchange earnings and outgo (a) Activities related to Exports; initiatives taken to increase exports; development of new export markets for products and services; export plans During the year export orders received was Rs 7,431 million, reflecting a growth of 31% over previous year. Several strategies adopted in past few years resulted in continuous growth in the export orders. Due to significant higher revenues from certain large value projects in last year, overall revenues during the year at Rs 5,021 million were lower by 4%. Power products segment further consolidated its position in the export market and had growth in export orders of 28%. During
Place: Bengaluru Date: February 26, 2010
Gary Steel 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 financial 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, 2009 Directorships / Mandatory Committee Memberships in Other Companies Directorship in Private Companies Directorship in Public Companies
Attendance
No. of Board Meetings attended
No. of Board Meetings held during 2009
Name
Category of Director
Mr. Gary Steel (Chairman) Mr. Biplab Majumder (Vice Chairman & Managing Director) Mr. K. Rajagopal * 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# * ** #
Non-executive Executive Executive Non-executive & Independent Non-executive & Independent Non-executive & Independent Non-executive Non-executive & Independent Non-executive Non-executive
4 4 4 4 4 4 4 4 4 4
3 4 3 3 3 4 1 3 3 -
Yes Yes Yes Yes Yes Yes NA Yes No NA
1 1 2 14 12 6 1 -
8 1 7 -
1 1 4 7 1 -
Mr K Rajagopal resigned as Whole-time Director of the Company with effect from July 31, 2009. Mr Bernhard Jucker resigned as Director of the Company with effect from March 20, 2009, but however he was appointed as an Alternate Director for Mr Peter Leupp during the period from April 30, 2009 to July 31, 2009 and he attended the Board Meeting held on April 30, 2009. Mr Veli-Matti Reinikkala resigned as Director of the Company with effect from March 31, 2009
None of the Non-executive Directors has any pecuniary relationship or transaction with the Company. (ii) No. of Board Meetings held in the Financial Year 2009 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 financial results. The Board has held four meetings during the financial year 2009 i.e., on February 20, April 30, July 31 and October 30, 2009. 3. Audit Committee (i) Terms of Reference The Audit Committee is responsible for overseeing the Companys financial reporting process, reviewing the quarterly/half-yearly/annual financial statements, reviewing with the management on the financial statements and adequacy of internal audit function, recommending the appointment/ re-appointment of statutory auditors and fixation of audit fees, reviewing the significant internal audit findings/related party transactions, reviewing the Management Discussion and Analysis of financial condition and result of operations. The Committee acts as a link between the management, external and internal auditors and the Board of Directors of the Company.
Mandatory Committee Chairmanships 1 1 3 1 17
Mandatory Committee Memberships
Last AGM attendance
The Committee discussed with the external auditors their audit methodology, audit planning and significant 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 Exchanges 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 Exchanges 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 five meetings during the financial year 2009 i.e., on February 19, April 30, June 20, July 31 and October 30, 2009. The composition of the Audit Committee as on December 31, 2009 and the attendance of members at the meetings of the Audit Committee held during the financial year 2009 were as follows: Members of Audit Committee Mr. Nasser Munjee (Chairman) Mr. N. S. Raghavan Mr. D. E. Udwadia Mr. A. K. Dasgupta 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 (s). (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 financial year 2009. The composition of the Remuneration Committee as on December 31, 2009 is as under: Members of Remuneration Committee Mr. N. S. Raghavan (Chairman) Mr. Gary Steel 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 Board of Directors and the Members. 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 not paid sitting fees. (iv) Details of remuneration to all the Directors paid / payable for the financial year 2009 (Rs in Thousands) Name Mr. Biplab Majumder Mr. K. Rajagopal** Mr. N.S. Raghavan Mr. Nasser Munjee Mr. D. E. Udwadia Mr. A. K. Dasgupta (*) ** subject to the approval of the Board. Mr K Rajagopal resigned as Whole-time Director of the Company effective July 31, 2009. Sitting Fees Nil Nil 85 70 110 60 Salary & Perquisites 13,513 4,820 NA NA NA NA Commission Payable(*) 3,662 1,200 400 400 400 400 Stock Option Nil Nil Nil Nil Nil Nil Pension Nil Nil Nil Nil Nil Nil No. of meetings attended 4 4 5 3
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Fixed Component / Performance Linked Incentive / Criteria The Executive Directors of the Company are entitled to an annual performance related commission based on the results achieved against the targets fixed and determined by the Board. Service Contract / Notice Period / Severance Fees a) b) 5. The Contract of Service entered into by the Company with Mr. Biplab Majumder, Vice Chairman & Managing Director, provides that the Company and the Vice Chairman & Managing Director shall be entitled to terminate the agreement by giving 90 days notice in writing on either side. No severance fee is payable by the Company on termination of the agreement.
Shareholders Committee The Board of Directors of the Company has 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 severally to the Vice Chairman & Managing Director (VC & MD) and the Company Secretary to approve the share transfers and accordingly, the VC & MD or the Company Secretary approves the transfer / transmission of shares generally at a frequency of about twice a month. Four meetings of Investors Grievance Committee were held during the financial year 2009 i.e., on February 20, April 30, July 31 and October 30, 2009. Mr. B. Gururaj, Senior Vice President - Legal & Compliance and Company Secretary is the Compliance Officer of the Company. The composition of Investors Grievance Committee as at December 31, 2009 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 The details of investors complaints received and resolved during the financial year 2009 is as under: No. of investors complaints received during 2009 294 No. of investors complaints resolved during 2009 294 Investors complaints pending at the end of 2009 NIL No. of meetings attended 4 3 4
6.
General Body Meetings (i) Location and time where last three Annual General Meetings (AGMs) held For the Year 2008 2007 2006 (ii) Venue The Lalit Ashok, Kalinga, Kumara Krupa High Grounds, Bengaluru 560 001 The Atria Hotel, Chancery, No.1, Palace Road, Bengaluru 560 001 The Atria Hotel, Chancery, No.1, Palace Road, Bengaluru 560 001 Day & Date Tuesday, May 19, 2009 Tuesday June 3, 2008 Friday, May 25, 2007 Time 11.00 a.m. (IST) 11.00 a.m. (IST) 3.00 p.m. (IST)
Special Resolution passed in the previous three Annual General Meetings No Special Resolution was passed in the last two Annual General Meetings i.e., AGM held on June 3, 2008 and May 19, 2009. Two Special Resolutions had been passed in the 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.
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(iii)
Postal Ballot No postal ballot was conducted in the year 2009. 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 significant related party transactions. There was no materially significant related party transaction during the year having potential conflict with the interests of the Company. (ii) Details of non-compliance by the Company, penalties and strictures imposed on the Company by the Stock Exchanges 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 affirmation 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. ABB Group has a business ethics hotline maintained at Groups headquarter at Zurich for making any compliant by anyone on compliance issues. (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 Exchanges. Further, the Company has adopted one non-mandatory requirement 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 Director(s).
8.
Means of Communication (i) Quarterly Financial Results / Official News Releases The quarterly / half-yearly / annual financial results are published in The Economic Times / Business Standard / Financial Express (English Daily) and Samyukta Karnataka (Kannada Daily). The financial results and the official news releases are also placed on the Companys website www.abb.co.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. 9. (i) General Shareholder Information Annual General Meeting Day, Date, Time and Venue: The Company will be holding its 60th Annual General Meeting on Tuesday, May 11, 2010 at 11.00 a.m. (IST) at The Atria Hotel, Chancery, No.1, Palace Road, Bengaluru 560 001. Agenda: (a) (b) (c) (d) (e) 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 Director
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(ii)
Profile of Directors seeking re-appointment/appointment The profile of Directors who are seeking re-appointment / appointment at the Annual General Meeting is furnished below: Brief profile of Directors and nature of their expertise in functional areas Directorships/Committee Memberships in other companies Directorships 1. ADF Foods Ltd. 2. AstraZeneca Pharma India Ltd. 3. The Bombay Burmah Trading Corp. Ltd. 4. Development Credit Bank Ltd. 5. Eureka Forbes Ltd. 6. ITD Cementation India Ltd. 7. JM Financial Ltd. 8. MPS Ltd. 9. Mechanalysis (India) Ltd. 10. WABCO-TVS (India) Ltd. 11. Wyeth Ltd. 12. Nitesh Estates Ltd. 13. Conservation Corporation of India Pvt. Ltd. 14. Habasit lakoka Pvt. Ltd. 15. JM Financial & Investment Consultancy Services Pvt. Ltd. 16. JM Financial Trustee Co. Pvt. Ltd. 17. JM Financial Consultants Pvt. Ltd. 18. Quantum Advisors Pvt. Ltd 19. Rossi Gearmotors (India) Pvt. Ltd. Committee Memberships Audit Committee 1. 2. 3. 4. 5. 6. 7. AstraZeneca Pharma India Ltd. The Bombay Burmah Trading Corp. Ltd. Development Credit Bank Ltd. ITD Cementation India Ltd. MPS Ltd. WABCO-TVS (India) Ltd. Wyeth Ltd. NIL Flame-Tao Knoware Pvt. Ltd. IDFC Private Equity Nadathur Holdings and Investments Pvt. Ltd. Ojas Ventures Fund Pte. Ltd., Singapore Syndicated Research Worldwide Pvt. Ltd. Ananta Holdings Pvt. Ltd. Nadathur Arts Pvt. Ltd. Nadathur Fareast Pte. Ltd. Shareholding in ABB Limited 2600 Shares
Mr. D. E. Udwadia Mr. Udwadia, aged 70, has obtained a Post Graduate Degree from the University of Mumbai. He has nearly five decades 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 firm Udwadia & Udeshi, which is one of the leading law-firms in Mumbai. He is also the Chairman of AstraZeneca Pharma India Limited and Vice Chairman of MPS Limited. He is also on the boards of several reputed public as well as private companies.
Mr. N. S. Raghavan Mr. Raghavan, aged 66, is a graduate in Electrical Engineering. He served in the Ministry of Defence, Government of India for 9 years handling various responsibilities in the Corps of Electrical and Mechanical Engineers. He worked as an Engineer in Andhra Pradesh State Electricity Board and as Head - Electrical Department in Kothari Sugars and Chemicals Limited, Trichy. He was the Joint Managing Director of Infosys Technologies Limited for 19 years.
Directorships 1. 2. 3. 4. 5. 6. 7. 8.
Committee Memberships Audit Committee 1. IDFC Private Equity Mr. Francis Duggan Mr. Duggan aged 50, is a graduate Engineer. He has been working with ABB for the past 25 years. Mr. Duggan has held various high-profile positions across the company, including Transmission & Distribution Manager in Poland, Country Manager of the Czech Republic, Global Business Area Manager for Oil, Gas and Petrochemicals, as well as Head of Group Account Management. Currently he is the Region Manager for India, Middle East and Africa (IMA). NIL NIL
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(iii)
Financial Year Indicative calendar of events for the year 2010 (January - December) excluding Extra Ordinary General Meeting(s), if any, are as under: Fourth Quarter Financial Results (Year 2009) First Quarter Financial Results Annual General Meeting Second Quarter Financial Results Third Quarter Financial Results February, 2010 April, 2010 May, 2010 July, 2010 October, 2010
(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 5, 2010 to May 11, 2010 (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 May 13, 2010, to those shareholders whose names appear on the Companys Register of Members as on May 4, 2010. (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. (vii) Stock Code National Stock Exchange ABB (viii) Market Price Data The market price data of the Companys shares traded in the Bombay Stock Exchange and the National Stock Exchange, during the year 2009 was as follows: BSE (Rs.) High 517.00 480.00 433.00 560.00 697.00 834.00 808.00 763.90 820.35 827.90 786.45 777.00 Low 420.00 360.00 344.00 414.05 392.10 649.10 641.15 648.15 723.00 731.15 707.50 730.15 BSE Sensex High 10469.72 9724.87 10127.09 11492.10 14930.54 15600.30 15732.81 16002.46 17142.52 17493.17 17290.48 17530.94 Low 8631.60 8619.22 8047.17 9546.29 11621.30 14016.95 13219.99 14684.45 15356.72 15805.20 15330.56 16577.78 High 519.65 478.00 432.80 560.00 700.00 834.00 806.00 765.00 820.00 827.25 786.80 788.00 NSE (Rs.) Low 422.50 359.45 343.35 414.00 452.80 648.10 642.00 649.00 723.00 700.55 703.00 728.05 High 3147.20 2969.75 3123.35 3517.25 4509.40 4693.20 4669.75 4743.75 5087.60 5181.95 5138.00 5221.85 NSE Nifty Low 2661.65 2677.55 2539.45 2965.70 3478.70 4143.25 3918.75 4353.45 4576.60 4687.50 4538.50 4943.95 Bombay Stock Exchange 500002 ISIN INE117A01022
Period 2009 January February March April May June July August September October November December
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(ix)
Performance in comparison to broad-based indices viz., BSE Sensex and NSE Nifty
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(x)
Registrar and Share Transfer Agents Karvy Computershare Private Limited, (Unit: ABB Limited) (1) No. 51/2, T.K.N.Complex, Vanivilas Road, Opp. National College, Basavanagudi, Bengaluru - 560 004. Tel. No.: 080-26621192 Fax No.: 080-41312645 E-mail: sksharma@karvy.com (2) Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081. Tel. No.: 040-23420815-28 Fax No.: 040-23420814 E-mail: mailmanager@karvy.com
(xi)
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 & Share Transfer Agents and approved by the Investors Grievance Committee. In order to expedite the process, the Board of Directors has also delegated the authority severally to the Vice Chairman & Managing Director (VC & MD) and the Company Secretary to approve the share transfers and accordingly, the VC & MD or the Company Secretary approve the transfer/transmission of shares generally at a frequency of about twice a month. The share transfer process is reviewed by the said Committee.
(xii) Shareholding Pattern As on 31.12.2009 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 110420285 446193 3500 43318448 979900 6030284 21308653 5934434 23466678 211908375 % 52.11 0.21 0.00 20.44 0.46 2.85 10.06 2.80 11.07 100.00 As on 31.12.2008 No. of shares 110420285 459231 5225 37088502 584473 7848964 26215035 5047432 24239228 211908375 % 52.11 0.22 0.00 17.50 0.28 3.70 12.37 2.38 11.44 100.00
(xiii) Distribution of Shareholding as on December 31, 2009 Category 1 5000 5001 10000 10001 50000 50001 100000 100001 and above Total No. of Shareholders 111741 382 230 31 75 112459 No. of Shares held 18676873 2625092 4644175 2287980 183674255 211908375 %age of equity capital 8.81 1.24 2.19 1.08 86.68 100.00
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(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, 2009, 101,703,577 equity shares of the Company have been dematerialised representing 47.99% of the total shares. (101,432,487 equity shares were in dematerialised form representing 47.87% of the total shares as on December 31, 2008). (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 the same has been hosted on the Companys website. All the Board Members and the Senior Management Personnel have affirmed compliance with the Code of Conduct, as on December 31, 2009. (xvii) Plant Locations The Companys plants are located at Bengaluru, Faridabad, Haridwar, Mumbai, Nashik and Vadodara. (xviii)Address for Correspondence ABB Limited 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bengaluru - 560 001 Phone: 080-22949150 to 22949153 Fax: 080-22949148 Corporate Secretarial E-mail ID: investor.helpdesk@in.abb.com Corporate Website: www.abb.co.in (xix) Non-Mandatory Requirements Remuneration Committee of the Board to determine the remuneration package for the Executive Director(s). For and on behalf of the Board
Place : Bengaluru Date : February 26, 2010
Gary Steel Chairman
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Annexure - D to Directors Report

Corporate Governance Compliance Certificate
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 financial year ended December 31, 2009. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of certification. The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedure and implementation thereof. This certificate is neither an assurance as to the future viability of the Company nor the efficacy 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 Proprietor C. P. No. 6119
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Managements Discussion and Analysis
Operating Results of the Company During the year 2009, the Company secured orders worth Rs 86,847 million, a modest 8% higher than the previous years orders of Rs 80,541 million. Due to slowing down of global and Indian economy and liquidity crunch particularly in early part of the year, investment decisions by our customers, particularly industrial sector customers, were either deferred or dropped. As a result, orders for Process Automation segment were significantly lower. This had affected rate of overall growth in order receipt during the year. Central Governments stimulus package had positive impact on investments and liquidity in the economy. Consequently, order receipt for Power Products segment had remained at the same level as achieved in last year. The Company had good inflow of orders from Power Systems and Automation Products segments. During the year, relative share of project orders were higher compared to product orders which delayed conversion of these orders into revenues. Companys order backlog at the end of the year increased by 38% to Rs 84,787 million as compared to Rs 61,618 million at the beginning of the year. Revenues during the year were at Rs 63,098 million, registering a decline of 9% over the previous years revenues of Rs 69,675 million. Slowing down of orders for products, particularly in the first two quarters of the year, increased credit risk, decision to exit from rural electrification business in Power Systems segment and requests from certain customers to defer the supplies affected overall revenue growth. Profit before tax was lower at Rs 5,274 million as compared to Rs 8,332 million in the previous year. Profit before tax for the year was lower on account of lower revenues, cost of early exit/foreclosure of certain contracts in rural electrification business, adverse impact from fair valuation of forward foreign exchange and embedded derivative contracts, building of organisation and manufacturing capacities for higher expected scale of operation and significant provision against receivables due to higher credit and other risks. During the year, management continued to pursue several cost optimisation measures, which partially helped in improving the profitability. Net profit after tax at Rs 3,546 million for the year was lower by 35% compared to the previous year. Earnings per equity share (face value Rs 2) was also lower at Rs 16.74 compared to Rs 25.83 in the previous year. Cash flow, however, from operations was significantly higher than the previous year. In line with attractive long term returns, the Company has completed majority of manufacturing capacities expansion projects and continued to expand its range of offering and introduced several new products. Investment in fixed assets during the year was Rs 1,632 million. Outlook for the Company With improvement in economic scenario, better liquidity environment, recent pickup in growth rate in the manufacturing sector, continued investments in power and other infrastructure projects, the business is expected to grow. And all time high order backlog, potential for increase in exports, adequate manufacturing and engineering capacities coupled with various management strategies and access to global technologies, management is optimistic about volume growth of the Company in coming years. Profitable growth in the short term may be influenced by market competition, credit risk, successful closure of rural electrification and certain other large projects. 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. Power Systems (PS) Power Products (PP) Process Automation (PA) Automation Products (AP) 2009 26 % 29 % 18 % 27 % 2008 31 % 28 % 18 % 23 %
Relative share of revenues from Power Systems segment reduced significantly during the year with corresponding increase in revenue share from Power and Automation Products segments. Power Systems Segment (PS) The summarised performance of the segment is as under. (Rs in Millions) Orders Received Order Backlog Revenues Result 2009 33,478 42,653 17,192 65 2008 25,608 26,131 23,054 2,028
With energy shortage increasing in the country and Central Governments focus on power sector reforms and introduction of national electricity policy in past few years have reflected in increasing investment in capacity addition, development of transmission network and power distribution improvements. Against power generation capacity addition target of 78,700 MW during the eleventh five year plan (2007-12), actual capacity addition till year end has been rather low. However additional capacity of over 60,000 MW is under construction and for most of these projects fuel linkage has been established. National grid is being planned and it is envisaged to have 37,000 MW of inter-regional capacity comprising of high capacity HVDC and HVAC lines to be completed by the year 2011-12. Power Grid Corporation of India Limited (PGCIL) is expected to invest over Rs 500 billion on enhancing power transmission capacity in next two years. Central Government has finalised Restructured Accelerated Power Development and Reforms (R-APDRP) for augmenting and strengthening power distribution network in India. There have been significant investment plans both by public and private sectors for other infrastructure projects also in the areas of airports, metros, railways, roads, ports, water irrigation etc. Central Governments stimulus packages have helped in improving liquidity and investments in power and infrastructure sector.
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Most utilities prefer to order substation packages on turnkey basis and power plant developers prefer to go in for procurement by splitting the packages for boilers, turbines and generator (BTG) and balance of plant (BOP). These trends are favourable to this segment. There is also increasing focus on non conventional source of energy like solar and wind due to environment considerations and global warming concerns. Several new players have entered in extra high voltage space increasing competition resulting in lower price levels for substation packages. With favourable environment, Power Systems segment booked several large orders during the year. The major orders received during the year included 765/400 kV transmission substations at Bilaspur, Wardha and Agra from PGCIL, 220/132/33 kV transmission substations at Srinagar from Power Transmission Corporation of Uttaranchal Limited, electrical balance of plant package for 2X250 MW Chhabra II from Indure Private Limited, electrical balance of plant for 2X800 MW thermal power plant at Krishnapatnam from TATA Projects Limited, electrical balance of plant packages for 1X500 MW Korba thermal power plant from INDU Projects Limited and supply, erection, testing and commissioning of power supply receiving/distribution system, 750V DC third rail traction electrification and SCADA system from Bangalore Metro Rail Corporation Limited. During the year several 400/220/132 kV substations were commissioned for PGCIL and other customers. Orders received in Power Systems segment grew by 31% during the year. Revenues during the year were lower by 25% due to Companys decision to exit from rural electrification business due to cash flow and safety concerns, deferment of deliveries by the private sector customers for electrical balance of plant, and lower order receipt/backlog for certain business units. Profit of the segment was significantly lower compared to previous year due to lower revenues, impact of exit/foreclosure of certain rural electrification projects, margin slippages in certain contracts, execution of lower margin orders and adverse impact from fair valuation of foreign exchange forward and embedded derivative contracts. Cash flow from operations was better during the year due to collection of old receivables and higher advances from customers for the large order receipt during the year. Power Systems segment continued its focus in the area of safety, project risk reviews, increasing competency in the area of project management, project controlling and supply chain management. In complex projects we shall introduce world class systems and plan to deploy world class experts from the parent company. Internal organisation has been recently reorganised to optimise resources and bringing management focus. Considering improving economic environment and good order backlog position, outlook for the segment is positive. However due to competitive market, exit costs of rural electrification business and successful closure of certain large projects pose a challenge towards realisation of normal profit levels in the short term. Power Products Segment (PP) The summarised performance of the segment is as under. (Rs in Millions) Orders Received Order Backlog Revenues Result 2009 23,742 20,629 19,936 2,170 2008 24,062 16,980 20,492 2,601
The business environment for the power transmission and distribution sector continued to be positive as detailed under Power Systems segment. Due to slow down in the Indian economy and liquidity crunch, investment by industries was lower. Central Governments stimulus package had positive impact on the business environment. Increasing number of utilities are preferring to buy on turnkey basis from EPC contractors. This segment also witnessed increase in number of competitors from both domestic as well as overseas, particularly from China and Korea, and excess capacity for certain products, have affected the price levels. It is also to be noted that there is increasing demand for new technologies like gas insulated switchgears due to space constraint in urban areas. Major orders received during the year included 18 number power transformers of various ratings from NTPC Limited for Mauda project, 13 number power transformers of various ratings from TATA Projects Limited for Krishnapatnam project, 15 number power transformers from NTPC Limited for Vishnugad project, 19 number power transformers of various ratings from Neyveli Lignite Corporation Limited for Tuticorin project, 6 bay of 220 kV hybrid switchgears from GMR Energy Limited for barge mounted power plant at Kakinada and an export order for supply of 36 kV OHB breakers for Rs 323 million. This segment also booked large value internal orders for transformers and HV/MV breakers from Power Systems segment. To maintain competitive edge in the market, during the year, several new products were introduced/supplied by the segment. This included shunt reactor 50 MVAr, 400 kV, dry type transformers, 33 kV indoor switchgear type ZS2 equipped with Vacuum circuit breaker type VD4, 33 kV packaged substation, 145 kV LTB D light circuit breaker, 33 kV, 4000A centre break disconnector, 145 kV, 2500A double break disconnector and current transformers and capacitor voltage transformers with polymer insulators. During the year new manufacturing facilities for small power transformers, bushings, shunt reactors and capacity augmentation for high voltage circuit breakers and instrument transformers were commissioned. Manufacturing capacity enhancement for power transformers and traction transformers at Vadodara, indoor unigear switchgear at Nashik and HV capacitor at Bangalore are under implementation and will be completed during 2010. Series of short circuit tests of transformers of various ratings were completed during the year. During the year orders and revenues remained broadly at the same level as of the previous year. Profit was lower compared to last year due to lower price realisation for high and medium voltage switchgears and higher provision against receivables. Cash flows from the operation was better during the year. Outlook for the segment continues to be positive with comfortable order backlog, higher manufacturing capacities, continuous introduction of new products and expected increase in demand for power products from utilities as well as industrial sector.
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Process Automation Segment (PA) The summarised performance of the segment is as under. (Rs in Millions) Orders Received Order Backlog Revenues Result 2009 12,335 13,401 12,100 1,488 2008 15,659 13,265 13,334 1,848
The Industrial climate in the country remained buoyant for several years till middle of 2008. The global market meltdown, lower consumer spending, liquidity crunch and capacity built-up in anticipation of demand growth have adversely affected the demand for new equipment and systems provided by the segment from later part of the year 2008. Some of the proposed investments were either deferred or dropped. For improving efficiencies, industries are investing for retrofit and up gradation projects. For certain customer orders there was delay in conversion of order backlog into revenues due to delay in the projects. In the later part of the year 2009, with improvements in consumer sentiments, availability of finance and industrial growth, there were early signs of new investments in brown and green field projects. The industry has significant latent opportunities for investments from trend of increasing per capita consumptions for all metals, cement and paper. With pickup of automobile sector and investments in power generation and other infrastructure segment, demand for cement, steel and coal handling equipment is expected to increase. The global steel majors like POSCO, Arcelor-Mittal and Tata Group, Steel Authority of India Limited, Jindal group and Bhushan group have announced their plans for investment in steel sector in India. With limited global opportunities, competition in India is increasing. Customers are splitting the packages for smaller group of products limiting the opportunities for the segment in terms of volume and margin. Due to adverse external environment, orders received, revenues and profits during the year were lower than the previous year. Profitability of the segment was further affected due to adverse impact from fair valuation of foreign exchange derivatives. Operating cash flows were lower due to delay in payments from the customers. To minimise adverse impact of business slow down, control over expenses and new recruitments were exercised throughout the year. With slow down in investment for new capacity enhancement projects, segment focused on service opportunities and had significant growth in orders and revenues from the service business. The segment has received several large orders for electrical and automation solutions during the year. The major orders received include Arcelor-Mittal for Tube Mill at Saudi Arabia, Tata Projects Limited for blast furnace BF5-Rourkela Steel Plant, Vedanta Aluminium Limited LT package for pot lines, Punj Lloyd Limited for LPG terminal, Prism Cements Limited and Jaiprakash Associates Limited for cement plants, Megha Engineering and Infrastructure Limited for ONGC Assam renewable project, ThyssenKrupp Industries Limited for internal coal handling plant for Mundra power plant, Bhushan Power and Steel Limited for cold rolling mill and Diesel Locomotive Works for TPR61 Turbochargers. Major plants/systems for electrical and automation solutions commissioned during the year includes cold rolling mill for Dharampal Industries Limited, hot rolling mill plate mill at Vasind for JSW Steels Limited, cold rolling mill at Korba for BALCO, Grasim Cements Limited cement plant at Kotputil, clinkerisation plant for Star Cement Limited, Dubai, Ariyalur cement line II for Chettinad Cements Limited, bucket wheel excavator for Neyveli Lignite Corporation Limited, SCADA systems at nine locations for ONGC and systems for paper machine, variflex winder and Janus calendar for Ballarpur Industries Limited. Focus in the material handling sector has been increased to secure orders for coal handling plants. Newer opportunities are expected from Middle East and South East Asian markets where internal market allocation has been given to the segment for metals and minerals businesses. Safety at project sites continued as major focus area and training programmes were conducted during the year for risk reviews. With good order backlog, increase in growth rate of industrial production and expectation of firming up of the new and deferred investment plan by the customers, outlook for the segment remains positive. The outlook for Process Automation segment shall improve gradually with additional emphasis on service business particularly with ABB Full Service Concept which is being introduced as a major revenue stream. Automation Products Segment (AP) The summarised performance of the segment is as under. (Rs in Millions) Orders Received Order Backlog Revenues Result 2009 23,297 12,632 18,022 2,048 2008 20,679 7,830 17,376 2,268
Slow down in Indian economy and lower investments in industrial sector effected orders and revenues for standard products. Demand for building electrical products was lower due to slow down in the real estate segment. This was more than compensated by very good order receipt and revenues from power electronics and medium voltage drives business units. Overall growth in orders and revenues of the segment during the year was 13% and 4% respectively. Due to lower demand for standard products and lower price realisation from increased competition, adverse impact of foreign exchange rates and capacity build up cost affected the profitability of the segment. Cash flow from the operating activities was better during the year. Active sectors during the year were capital goods, cement, non-ferrous metals, infrastructure, iron, steel, pulp, paper, automotive, chemicals, food, beverages, water, waste water and telecom. Segment was able to sustain its market position in all the product ranges. There was marketing focus on original equipment manufacturer (OEM) segment including HVAC, pumps, compressor, boiler machinery, food, beverages and wind energy. Orders were received from major
29
OEMs like Sulzer Limited, Ingersoll Rand (India) Limited, Kirloskar Brothers Limited, Thermax Limited, Atlas Copco Limited, Cethar Vessel Limited, Other European customers including Win Wind. Excess industry capacity, increase in competition and volatility of foreign exchange rates continue to be the risks for the segment. Segment received several large orders during the year from various sectors of the industry. Major orders received includes Vedanta Aluminium Limited for supply and commissioning of high current rectifier system and associated equipments for expansion of aluminum smelter at Jharsuguda, Orissa, Bharat Aluminium Company Limited for supply and commissioning of high current rectifiers for aluminium smelter at Korba, RNS Infrastructure Limited for equipments for KNNL lift irrigation project, Megha Engineering and Infrastructure Limited for equipment for lift irrigation project at Dumagudem, Win Wind for LV drives for wind converters, other European customers for wind generators and Bombardier Transportation India Limited for traction motors as well as other low voltage products and Relays. Execution and commissioning of large systems during the year included high current rectifiers at Vedanta Aluminium Limited and 180 kVA traction converters for Indian Railways. Segments new modern factory for manufacturing of breakers, drives, LV system and power electronics at Nelamangala, Bangalore and new Machine service unit at Taloja, Maharashtra were inaugurated in early part of the year. New wind generator motor factory at Vadodara is in advance stage of completion. The channel partner network remained over 850 during the year which contributed to revenues of Rs 12 billion. E-initiatives continued to yield good results with the B2B transactions running over Rs 5 billion. Segment has plans to increase thrust on marketing activities in potential growth areas like railways, wind, water, ports and harbors, maintain efficient distribution network and continuous range expansion to secure fair share of the market. With improvement in industrial production in the later part of the year, comfortable order backlog and capacities available for faster deliveries, overall outlook for the segment remains positive. Finance There was improvement in liquidity position in economy from second half of the year compared to short of crisis situation witnessed during later part of the previous year. Availability of funds from banking sector improved and rate of interest reduced during the year. Collections from industrial customers and channel partners improved in the later part of the year. Cash flow from operation during the year improved significantly. However higher investment in receivable continues to remain area of concern. Interest expenses during the year reduced to Rs 256 million compared to Rs 347 million in the previous year. Company had borrowing position in most part of the year and interest income from placement of temporary surplus funds as fixed deposits with the banks reduced to Rs 11 million compared to Rs 85 million in the previous year. Net cash position (cash and bank balances less loan fund) at the end of the year was higher at Rs 5,241 million compared to Rs 3,482 million at the end of the previous year. The Company continued to hedge all its foreign currency exposures for imports and exports to protect contract stage margins. As in the past, Company has maintained excellent relationship with major banks operating in India and was able to avail and negotiate favourable terms for various banking facilities. Human Resources Employee engagement remained the key focus of human resource (HR) function. New HR initiatives were aligned to support business needs. This has been achieved by continuously investing in learning and development programmes creating a positive work environment, empowering employees at all levels and launching structured reward and recognition mechanisms. During the year goal setting exercise, followed by a mid-term performance review, of all the employees was carried out. This initiative was taken up from a feedback from an employee engagement survey in 2008. Special emphasis was laid on talent management by rolling out a new and comprehensive employee performance and development appraisal programme in the later part of the year. Action learning workshops were launched and technical skill enhancement trainings were provided to the employees across all the levels in organisation. To recognise exemplary performances, to create an employee centric reward system and to create a culture of appreciation within the Company, employee driven reward programme called EMPower was launched. To attract and recruit bright professionals, employer branding and robust functional assessments processes were carried out. As in the past, the industrial relations continued to remain cordial at all the locations of the Company. During the year two employee unions were merged at a location and process for management of third party service providers was streamlined. This is expected to optimise management efforts in the coming years. The company had 6,222 (previous year 6,496) employees at the end of 2009. There were selective recruitments during the year and employee strength was rationalised in line with the business environment. Internal Control System The Company has in place effective systems of internal control ensuring accurate, reliable and speedy compilation of financial 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-defined 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. Audit plans are prepared in advance based on risk assessment. Internal audit also conducts follow up reviews to ensure implementation of its recommendations and suggestions. 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 significant 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 financial reporting. During the year, detailed customer evaluation and credit limit fixation process were established and physical verification of all the fixed assets of the Company was carried out and these assets were bar coded to support future efficient verification process.
30
CEO / CFO Certification
To The Board of Directors ABB Limited We certify that; 1. We have reviewed the financial statements and cash flow statement of ABB Limited for the year ended December 31, 2009 and to the best of our knowledge and belief; (i) (ii) 2. 3. 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 company's affairs and are in compliance with existing accounting standards, applicable laws and regulations.
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 financial reporting and we have evaluated the effectiveness of internal control systems of the company over financial reporting and we have disclosed to the auditors and the audit committee, deficiencies in the design or operation of internal controls over financial reporting, if any, of which we are aware and the steps we have taken, propose to take, to rectify these deficiencies. In our opinion, there are adequate internal controls over financial reporting. We have indicated to the auditors and the audit committee that there are (i) (ii) (iii) significant improvement in internal controls over financial reporting during the year; no significant changes in accounting policies during the year. no instance of fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company's internal control system on financial reporting.
4.
Biplab Majumder Chief Executive Officer Vice Chairman & Managing Director
Amlan Datta Majumdar Chief Financial Officer Sr. Vice President-Finance
31
Auditors Report To The Members of ABB Limited
1.
We have audited the attached balance sheet of ABB Limited (the Company) as at December 31, 2009 and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial 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 subsection (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified 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, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account ;
iv.
In our opinion, the balance sheet, profit and loss account and cash flow 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, 2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on December 31, 2009 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) b) c) in the case of the balance sheet, of the state of affairs of the Company as at December 31, 2009; in the case of the profit and loss account, of the profit for the year ended on that date; and in the case of cash flow statement, of the cash flows for the year ended on that date. For S.R. BATLIBOI & CO. Chartered Accountants per Sunil Bhumralkar Partner Membership No. 35141
v.
2.
vi.
3.
4.
ii.
iii.
Bengaluru, India February 26, 2010
32
Annexure referred to in paragraph 3 of our report of even date

Re: ABB Limited (the Company)
(i)
(a)
The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. The Company has a regular programme of physical verification of fixed 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, all the fixed assets were physically verified by the management during the year and we are informed that no material discrepancies were noticed on such verification. There was no substantial disposal of fixed assets during the year. The management has conducted physical verification of inventory at reasonable intervals during the year. The procedures of physical verification 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 verification. As informed to us, the Company has not granted any loans, secured or unsecured to companies, firms 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, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.
(v)
(b)
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 five lakh in respect of any one such party in the financial 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.
(vi) (vii)
(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, wealth-tax, service-tax, customs duty, excise duty, cess and other material statutory dues 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, sales-tax, wealth-tax, service-tax, customs duty, excise duty, cess and other material 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, cess and other material statutory dues 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 fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.
(c)
33
Name of the statute Customs Act
Nature of dues Tariff classification
Amount * (Rs in Thousands) 534,183 15,150 194
Period to which the amount relates 2002-07 2008-09 2008-09 1997-06 2003-06 2003-07 2003-06 2004-05 2005-06 1995-96 2006-07 1999-01 2003-08 2006-07 2003-07 1994-07 1998-03 2003-04 2003-07 2005-06 1994-95 1986-94
Forum where dispute is pending Customs Excise and Service Tax Appellate Tribunal (CESTAT) Additional Commissioner of Customs Joint Commissioner of Customs CESTAT Commissioner, Central Excise and Service Tax Commissioner, Central Excise and Service Tax Commissioner (Appeals) CESTAT High Court Deputy Commissioner (Appeals) Joint Commissioner of Commercial Taxes (Appeals) Sales Tax Appellate Tribunal Deputy Commissioner (Appeals) Joint Commissioner of Commercial Taxes (Appeals) High Court Sales Tax Appellate Tribunal Deputy Commissioner (Appeals) Joint Commissioner (Appeals) Joint Commissioner of Commercial Taxes (Appeals) Sales Tax Appellate Tribunal High Court High Court
Finance Act,1994 (Service Tax Provisions)
Tax on freight charges and erection services
13,426 17,011
Tax on foreign payments
17,547 2,516 3,998
Tax on freight charges and erection services Sales Tax Act Works contract tax charged
3,422 2,450 35,325 14,692
Differential tax charged
13,571 947 50,235 284,213
Submission of statutory forms
18,153 11,316 6,876 7,014 900
Faridabad Development Act [Octroi]
Product classification
30,400
* Net of Rs 633,310 paid under protest. (x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial 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 financial 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. (xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit 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 financial institutions.
(xi)
(xii)
34
(xvi) The Company did not have any term loans outstanding during the year. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet 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.
Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial 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 Bengaluru, India February 26, 2010
(xxi) The management has represented that during an internal investigation conducted by the Company, an instance of inappropriate conduct by certain employees of the Company was observed and that there are no financial implications on the Company arising out of such inappropriate conduct.
35
Balance Sheet
As at December 31, 2009 Sources of Funds Shareholders Funds Share Capital Reserves and Surplus Loan Funds Finance Lease Obligations Deferred Tax Liability (net)
Schedule
2009
(Rs in Thousands) 2008
1 2
423,817 23,813,515 24,237,332
423,817 20,765,715 21,189,532 202 38,034 21,227,768
16(9) 16(10)
24,237,332
Application of Funds Fixed Assets Gross Block Less: Depreciation and Amortisation Net Block Capital Work in Progress including Capital Advances Investments Deferred Tax Assets (net) 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 the 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
3 8,792,636 2,061,340 6,731,296 1,163,391 4 16(10) 5 6 7 8 9 7,294,061 28,577,298 5,241,405 3,203,027 3,176,861 47,492,652 29,869,326 1,450,439 31,319,765 16,172,887 24,237,332 16 0 7,894,687 168,792 966 7,664,819 2,206,494 5,458,325 1,375,145 6,833,470 611,244 6,426,534 29,758,869 3,482,313 3,812,881 3,517,663 46,998,260 31,618,924 1,596,282 33,215,206 13,783,054 21,227,768
10 11
per Sunil Bhumralkar Partner Membership No. 35141
For and on behalf of the Board Gary Steel Biplab Majumder Peter Leupp Francis Duggan Nasser Munjee D E Udwadia A K Dasgupta Amlan Datta Majumdar B Gururaj Bengaluru, February 26, 2010
Chairman Vice Chairman & Managing Director Director Director Director Director Director Chief Financial Officer Company Secretary
Bengaluru, February 26, 2010
36
Profit and Loss Account
For the year ended December 31, 2009 Income Sales and Services Less : Excise Duty on Sales 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 Less : Expenses Capitalised
Schedule
2009
(Rs in Thousands) 2008
64,945,710 2,573,696 12 13 62,372,014 725,696 63,097,710 45,178,728 3,892,346 8,026,815 487,804 2,746 485,058 256,242 57,839,189 15,473 57,823,716 5,273,994 1,805,255 (39,000) (38,652)
73,402,391 5,032,076 68,370,315 1,304,192 69,674,507 49,504,181 4,029,637 7,138,790 369,418 2,613 366,805 346,600 61,386,013 43,946 61,342,067 8,332,440 2,858,210 (90,000) 90,100
14 15
Profit Before Tax Provision for Tax: Current Tax Deferred Tax Fringe Benefits Tax* * includes writeback of excess provision in respect of previous years Rs 57,605 thousand (Previous year - Rs Nil) Profit After Tax Add: Balance brought forward Profit available for appropriation Appropriations General Reserve Proposed Dividend Corporate Dividend Tax Balance carried forward
3,546,391 556,632 4,103,023 3,000,000 423,817 72,028 607,178 4,103,023 16.74
5,474,130 627,930 6,102,060 5,000,000 466,198 79,230 556,632 6,102,060 25.83
Basic and Diluted Earnings per Equity Share (in Rs) (Face value Rs 2 per share) Notes to the Accounts
16(3)
16
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 For and on behalf of the Board Gary Steel Biplab Majumder Peter Leupp Francis Duggan Nasser Munjee D E Udwadia A K Dasgupta Amlan Datta Majumdar B Gururaj Bengaluru, February 26, 2010 37
Bengaluru, February 26, 2010 ABB Limited, India, Annual Report 2009
(Rs in Thousands) As at December 31, 2009 2009 2008
Schedule 1 - Share Capital
Authorised
212,500,000
Equity Shares of Rs 2 each
425,000
425,000
750,000
11% Redeemable 10 year, Cumulative Preference Shares of Rs 100 each
75,000
75,000
500,000
500,000
Issued, Subscribed and Paid Up
211,908,375
Equity Shares of Rs 2 each
423,817
423,817
Notes : Share Capital includes: a) b) c) d) 46,185,525 equity shares of Rs 2 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 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 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 are held by ABB Asea Brown Boveri Limited, Zurich, Switzerland, the ultimate holding company and 12,540,330 equity shares of Rs 2 each are held by ABB Norden Holdings AB, Sweden, a subsidiary of the ultimate holding company.
38
(Rs in Thousands) As at December 31, 2009 Schedule 2 - Reserves and Surplus Capital Reserve Account Capital Redemption Reserve Account Revaluation Reserve Account As per last Balance Sheet Transferred to Profit 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 Transferred from Profit and Loss Account Profit and Loss Account Balance carried forward 607,178 23,813,515 556,632 20,765,715 19,382,348 4,000 3,000,000 22,386,348 14,379,848 2,500 5,000,000 19,382,348 4,000 (4,000) 6,500 (2,500) 4,000 142,774 (2,746) 140,028 593,990 145,387 (2,613) 142,774 593,990 10,971 75,000 10,971 75,000 2009 2008
39
As at December 31, 2009 Schedule 3 - Fixed Assets Gross Block Description As at January 1, 2009 Additions Deductions As at December 31, 2009 As at January 1, 2009 Depreciation/ Amortisation For the Year Deductions As at December 31, 2009
(Rs in Thousands)
Net Block As at December 31, 2009 As at December 31,2008
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 366,885 140,368 169,705 1,257,441 412,695 14,200 4,563,058 365,897 26,664 7,316,913 2. Leased Assets Plant and Machinery Vehicles Total Tangible Assets B. Intangible Assets Technical Know-how Fees Capitalised Software Total Intangible Assets Previous Year 155,828 97,869 253,697 7,664,819 5,769,125 41,211 5,478 46,689 1,844,304 2,344,391 15,178 12,531 27,709 716,487 448,697 181,861 90,816 272,677 8,792,636 7,664,819 96,170 49,010 145,180 2,206,494 2,249,827 28,279 19,346 47,625 487,804 369,418 15,178 12,330 27,508 632,958 412,751 109,271 56,026 165,297 2,061,340 2,206,494 1,163,391 7,894,687 1,375,145 6,833,470 72,590 34,790 107,380 6,731,296 59,658 48,859 108,517 5,458,325 83,141 11,068 94,209 7,411,122 1,797,615 688,778 83,141 11,068 94,209 8,519,959 72,191 4,218 76,409 2,061,314 4,450 101 4,551 440,179 605,450 76,461 4,319 80,960 1,896,043 6,500 6,749 13,249 6,623,916 10,950 6,850 17,800 5,349,808 2,105 70,723 570,998 63,821 1,001,632 81,924 6,412 1,797,615 26,757 655 1,333 601,781 46,739 11,513 688,778 368,990 140,368 213,671 1,827,784 475,183 14,200 4,962,909 401,082 21,563 8,425,750 1,607 47,304 203,568 33,790 5,187 1,573,157 106,274 14,018 1,984,905 2,341 21,995 54,502 7,490 232 320,748 24,135 4,185 435,628 18,302 71 85 540,407 38,531 8,054 605,450 3,948 50,997 257,999 41,195 5,419 1,353,498 91,878 10,149 1,815,083 368,990 136,420 162,674 1,569,785 433,988 8,781 3,609,411 309,204 11,414 6,610,667 366,885 138,761 122,401 1,053,873 378,905 9,013 2,989,901 259,623 12,646 5,332,008
Capital Work in Progress including Capital Advances Grand Total
Notes :
1. Certain freehold and leasehold land, factory and other buildings and residential quarters were revalued during 1985, 1986 and 1996. Net block of such revalued assets as at December 31, 2009 is Rs 140,028 thousand (Previous Year Rs 142,774 thousand). Residential Quarters include cost of shares in Lotus Court Private Limited Rs 56 thousand (Previous Year - Rs 56 thousand).
2.
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(Rs in Thousands) As at December 31, 2009 Schedule 4 - Investments Long Term (At Cost): Non Trade: Government Securities Quoted: 1,500,000 (Previous Year - 1,500,000) 6.25% Government of India Bonds of Rs 100 each Others: Quoted: Nil (Previous Year - 2,386,496) 6.60% Tax Free Bonds 2009 of Rs 100 each fully paid up in Unit Trust of India Nil (Previous Year - 200) 5.25% 10 Year Tax Free Nuclear Power Corporation Limited Infrastructure Bonds of Rs 1,000,000 each fully paid up Unquoted: 10 (Previous Year - 10) 5.95% 15 Year Non-Cumulative Bonds of Karnataka Water & Sanitation Pooled Fund Trust of Rs 916,667 each (Previous Year Rs 1,000,000 each) 1,000 (Previous Year - 1000) Shares of Rs 25 each fully paid up in Co-operative Bank of Baroda Nil (Previous Year - 2) 6.5% Non-Redeemable Debentures of Bengal Chamber of Commerce and Industry. 241,617 200,000 441,617 159,600 159,600 2009 2008
9,167 25 9,192 168,792
10,000 25 2 10,027 611,244 601,217
Notes: Quoted Investments aggregate (Market value - Rs 137,520 thousand; Previous Year - Rs 591,163 thousand) Unquoted Investments aggregate
9,192 159,600
10,027
41
(Rs in Thousands) As at December 31, 2009 Schedule 5 - Inventories Stores and Spares Raw Materials and Components Goods in Transit - Raw Materials and Components Finished Goods Work-in-Progress 3,122 3,816,913 556,539 698,454 2,219,033 7,294,061 3,007 3,377,984 562,886 583,648 1,899,009 6,426,534 2009 2008
Schedule 6 - Sundry Debtors (also refer to schedule 16(5)) Unsecured : Debts outstanding for a period exceeding six months - Considered Good - Considered Doubtful Other Debts - Considered Good Less: Provision for Doubtful Debts 12,587,075 1,638,026 14,225,101 15,990,223 30,215,324 1,638,026 28,577,298 11,205,113 1,180,775 12,385,888 18,553,756 30,939,644 1,180,775 29,758,869
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 1,037,666 3,009,016 4,046,682 22,594 5,241,405 Current Accounts with Non Scheduled Banks include As at December 31, 2009 As at December 31, 2008 Maximum amount outstanding at any time during the year 8,043 39,202 Maximum amount outstanding at any time during the previous year 5,597 19,043 1,923,985 8,554 915 1,933,454 17,226 3,482,313 1,172,129 1,531,633
a) Hongkong & Shanghai Banking Corporation Ltd., Sri Lanka. b) Hongkong & Shanghai Banking Corporation Ltd., Bangladesh.
5,917 16,677
4,131 13,095
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(Rs in Thousands) As at December 31, 2009 Schedule 8 - Other Current Assets Contract Revenue in Excess of Billing and Unbilled Revenue Interest Accrued on Investments and Fixed Deposits 3,196,673 6,354 3,203,027 Schedule 9 - Loans and Advances (also refer to schedule 16(5)) 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 Income Tax (net of provision) Fringe Benefits Tax (net of provision) Balances with Customs, Port Trusts and Excise Authorities 1,738,655 29,356 1,768,011 29,356 1,738,655 724,661 2,742 709,404 3,176,861 Schedule 10 - Current Liabilities Acceptances Sundry Creditors - Dues to Micro and Small Enterprises (also refer to schedule 16(27)) - 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 228,136 14,556,068 14,784,204 6,534,048 2,707,965 11,021 29,869,326 Schedule 11 - Provisions Proposed Dividend Corporate Dividend Tax Income Tax (net of advance tax) Fringe Benefits Tax (net of advance tax) Provident Fund Long term employee benefits Others - (also refer to schedule 16(24)) 423,817 72,028 38,169 115,491 800,934 1,450,439 466,198 79,230 149,078 46,696 53,529 91,685 709,866 1,596,282 174,395 16,326,161 16,500,556 5,777,651 2,062,789 9,864 31,618,924 5,832,088 7,268,064 2,769,102 34,309 2,803,411 34,309 2,769,102 747,050 3,517,663 1,399 1,511 3,795,616 17,265 3,812,881 2009 2008
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For the year ended December 31, 2009 Schedule 12 - Capacities, Production, Stock and Turnover (also refer to schedule 16(11)) (Figures in brackets are in respect of previous year) Annual Capacities 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 Power Capacitors of all types Robotics Gas Analysers and Systems Process Control Instruments Others Project Items Erection, Commissioning and Engineering Services HP Nos. Nos. Nos. Nos. Nos. MVA Nos. Installed 3,934,000 (3,839,170) 17,098,367 3,500 (2,850) 100 (100) 150 (150) 650 (480) 18,375 (16,875) 100,000 (100,000) Value Rs in Thousands MVAR Nos. Nos. Nos. 4,251,297 (3,930,000) 6,780 (3,700) 74 (74) 400 (300) 45,000 (45,000) Opening Stock of Finished Goods Quantity 151,035 (96,403) 121,216 33 (-) (-) (-) (9) (-) 129 (9) (-) 12 (-) (-) (-) 13 (-) (-) (-) (-) Rupees in Thousands 168,572 (144,836) 178,698 (304,184) 3,571 (-) (-) (-) (8,539) (-) 12,110 (18,277) 332 (-) 747 (-) (-) (-) 393 (-) 5,071 (6,894) 214,154 (-) (-) 583,648 (482,730) Production of Finished Goods Quantity 3,177,887 (3,427,893) 7,850,767 (7,287,452) 3,183 (1,948) 31 (78) 2 (10) 634 (327) 16,231 (15,151) 30,211 (28,470) 1,589,502 (1,664,690) 5,912 (3,192) 47 (74) 228 (250) 26,700 (34,803) (-) (-) (-) Closing Stock of Finished Goods Quantity 106,410 (151,035) 61,864 (121,216) (33) (-) (-) 6 (-) 316 (-) 58 (129) (-) 123 (12) (-) (-) 65 (13) (-) (-) (-) Rupees in Thousands 131,887 298,610 (3,571) (-) (-) 13,290 (-) 83,303 (-) 29,734 (12,110) 35,969 (332) 19,321 (747) (-) 96 (-) 3,156 (393) (5,071) 83,088 (214,154) (-) 698,454 (583,648) Turnover of Finished Goods Quantity 3,222,512 7,904,591 3,216 (1,915) 31 (78) 2 (10) 628 (336) 15,915 (15,151) 30,282 (28,350) (-) 5,801 (3,180) 47 (74) 228 (250) 26,648 (34,790) (-) (-) Rupees in Thousands 4,062,734 (4,482,155) 13,197,663 477,084 (394,059) 20,460 (87,265) 2,503 (5,397) 916,838 (713,356) 7,155,027 (6,802,599) 6,166,447 (5,250,808) 1,589,502 (1,664,691) 557,809 (516,430) 322,639 (507,810) 432,326 (524,917) 733,986 (869,512) 960,393 (792,037) 21,503,078 4,273,525 (3,587,842) 62,372,014 (68,370,315)
(168,572) (3,373,261)
(16,060,650) (234,740)
(178,698) (7,394,073) (16,149,505)
(-) (26,021,932)
Note: The Company's products are exempt from licensing requirement under the industrial policy by virtue of notification No. 477 (E) of 25.07.91.
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(Rs in Thousands) For the year ended December 31, 2009 Schedule 13 - Other Income Interest Long Term Investment Deposit with Banks (Tax deducted at source Rs 1,389 thousand; Previous Year Rs 18,476 thousand) Others Profit on Sale of Fixed Assets (net) Profit on Sale of Investment (net) Scrap Sales Commission Income Exchange Rate Difference - Gain (net) (includes gain / (loss) on fair valuation of derivative contracts) Miscellaneous Income 336,170 725,696 311,404 1,304,192 156,254 183,293 172,111 34,122 17,752 141,143 46,006 23,677 137,913 169,450 474,599 16,236 10,803 38,539 84,852 2009 2008
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 3,370,124 46,094 80,992 160,332 158,024 76,780 3,892,346 3,378,123 88,146 99,018 159,231 200,712 104,407 4,029,637
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(Rs in Thousands) For the year ended December 31, 2009 Schedule 15 - Other Expenses Tools and Stores Royalty and Technology Fees Freight and Forwarding (net of recovery) Postage and Telephone Commission (to other than sole selling agent) 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) Loss on Sale of Investment (net) Printing and Stationery Bank Charges Legal and Professional Trade Mark Fees Information Technology Expenses Exchange Rate Difference - Loss (net) (includes gain/(loss) on fair valuation of derivative contracts) Miscellaneous 1,336,402 8,026,815 1,007,899 7,138,790 321,283 790,339 578,124 94,954 40,684 30,592 271,616 731,352 101,993 148,681 230,552 21,093 113,623 20,998 452,298 265,559 70,449 2,970 54,312 187,210 173,007 464,261 1,047,949 476,514 338,595 916,402 526,752 131,257 92,266 36,054 274,312 909,931 143,272 81,871 207,197 25,504 106,036 38,725 586,784 61,112 70,698 147,195 155,056 341,852 940,020 2009 2008
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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 60 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. Significant Accounting Policies 2.1. Basis of Preparation of Financial Statements The financial statements have been prepared to comply in all material respects with the notified accounting standards by Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except for revaluation of certain fixed assets, in accordance with the accounting principles generally accepted in India. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. 2.2. Use of Estimates The preparation of financial 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 financial 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. 2.3. Fixed Assets (Tangible and Intangible) 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 fixed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the asset to its working condition for the intended use. Own manufactured assets are capitalised at cost including an appropriate share of overheads. Borrowing costs related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or construction are capitalised. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed 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 significant future economic benefits. ERP Project costs comprise license fees and cost of system integration services. All costs relating to upgradations/ enhancements are generally charged off as revenue expenditure unless they bring significant additional benefits of lasting nature. Assets acquired under finance 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. 2.4. 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. 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 remaining period of the lease. Technical know-how fees over a period of six years. Capitalised software costs over a period of five years.
Assets individually costing Rs 5,000 or less are depreciated fully in the year of purchase.
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Assets under finance 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. 2.5. Investments Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified 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. 2.6. 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 finished goods - at full absorption cost method based on annual average cost of production which includes direct materials, direct labour and manufacturing overheads. Excise duty is included in the value of finished goods inventory.
Provision for obsolescence is made wherever necessary. 2.7. Employee Benefits Contribution to Superannuation Fund, a defined contribution scheme, is made at pre-determined rates to the Superannuation Fund Trust and is charged to the profit 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 benefits - leave, defined benefit schemes, are made on the basis of actuarial valuations made at the end of each financial year and are charged to the profit and loss account during the year. Actuarial gains and losses are recognised immediately in the profit and loss account. 2.8. Revenue Recognition Sales of products and services are recognised when significant 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. Revenue recognised in excess of billing has been reflected under "Other Current Assets" as Unbilled Revenue. Net 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 reflected under Other Current Assets and billing in excess of contract revenue has been reflected under Current Liabilities in the balance sheet. Full provision is made for any loss in the year in which it is first 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.
2.9. Provisions A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow 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 reflect the current management estimates.
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2.10. Research and Development All revenue expenses pertaining to research and development are charged to the profit and loss account in the year in which they are incurred and development expenditure of capital nature is capitalised as fixed assets, and depreciated as per the Companys policy. 2.11. Foreign Currency Transactions Foreign currency transactions are recorded by applying the daily exchange rates. Exchange differences arising on foreign currency transactions settled during the year are recognised in the profit 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 profit and loss account for the year. The Company uses derivative financial instruments such as forward exchange contracts to hedge its risks associated with foreign currency fluctuations. Gain or loss on restatement of forward exchange contracts for hedging underlying outstandings at the balance sheet date are recognised in the profit and loss account for the year in which it occurs. The premium or discount on such contracts is recognised in the profit and loss account over the period of the contract. Gain or loss on fair valuation of forward exchange contracts for hedging highly forecasted transactions and embedded derivative contracts are recognised in the profit and loss account for the year in which it occurs. 2.12. Taxation Tax expense comprises current tax, deferred tax and fringe benefits tax. The current charge for income tax and fringe benefits 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, 2010. The deferred tax for timing differences between the book and tax profits 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. Deferred tax assets are reviewed at each balance sheet date for its realisability. The Company provides for and discloses the fringe benefits tax (FBT) in accordance with the provisions of section 115WC of the Income Tax Act, 1961. The Finance Act, 2009 has withdrawn FBT with effect from April 1, 2009. 2.13. Operating Leases Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term. For the year ended December 31, 3. Earnings Per Share a) b) c) Weighted average number of Equity Shares of Rs 2 each outstanding during the year Net profit after tax attributable to equity shareholders (Rs in thousand) Basic and Diluted Earnings Per Share (in Rs) 211,908,375 3,546,391 16.74 211,908,375 5,474,130 25.83 2009 2008
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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. 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 efficiency through flexible alternating current transmission systems, high voltage direct current systems, network management systems and utility communications. Power Products Segment (PP) manufactures, engineers, supplies key components to transmit and distribute electricity, improving power supply and energy efficiency. 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 specific 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 efficiency 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 financial 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 financial statements. 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) Figures in brackets are in respect of the previous year.
iv)
50
vi)
Segment Revenues, Results and Other Information (Rs in Thousands) Power Systems External Sales (net of Excise Duty) Inter Segment Sales 16,885,483 (22,370,725) 138,277 (193,402) Other operating Income 168,248 (490,022) Segment Revenues 17,192,008 (23,054,149) Segment Results 65,141 (2,028,431) Segment Assets 14,785,731 (18,865,414) Segment Liabilities 9,898,859 (11,379,478) Capital Expenditure 30,389 (32,675) Depreciation / Amortisation 13,349 (10,298) Power Products 16,478,555 (17,146,920) 3,290,606 (3,134,786) 167,110 (210,446) 19,936,271 (20,492,152) 2,170,419 (2,601,172) 12,802,708 (12,073,810) 6,642,665 (7,111,041) 537,882 (900,721) 191,045 (151,688) Process Automation 11,900,165 (13,163,635) 167,066 (229,051) 32,695 (58,976) 12,099,926 (13,333,710) 1,488,260 (1,847,575) 7,127,085 (7,129,380) 5,101,738 (5,621,631) 52,418 (98,608) 23,747 (22,036) Automation Products 16,169,921 (14,720,275) 1,725,807 (2,294,880) 126,446, (360,455) 18,022,174 (17,375,610) 2,047,893 (2,267,641) 11,440,957 (9,504,265) 8,064,533 (6,759,245) 207,477 (611,995) 135,326 (98,941) Others Segment 561,597 (787,474) 2,590 (14,224) 4,389 (7,814) 568,576 (809,512) 30,773 (59,413) 314,082 (477,567) 162,570 (408,331) 40 (6,879) 2,345 (1,700) Total 61,995,721 (68,189,029) 5,324,346 (5,866,343) 498,888 (1,009,761) 67,818,955 (75,065,133) 5,802,486 (8,804,232) 46,470,563 (48,050,436) 29,870,365 (31,279,726) 828,206 (1,650,878) 365,812 (284,663)
vii)
Reconciliation of Reportable Segments with the Financial Statements Results / Net Profit 5,802,486 (8,804,232) 272,250 (125,192) (-) 256,242 (346,600) 1,727,603 (2,858,310) 3,546,391 (5,474,130) Capital Expenditure 828,206 (1,650,878) 804,344 (1,009,240) (-) (-) (-) 1,632,550 (2,660,118)
Revenues Total Segments Corporate - Unallocated (net) Inter Segment Sales Interest Expense Provision for tax 67,818,955 (75,065,133) 603,101 (475,717) 5,324,346 (5,866,343) (-) (-) 63,097,710 (69,674,507)
Assets 46,470,563 (48,050,436) 9,086,534 (6,392,538) (-) (-) (-) 55,557,097 (54,442,974)
Liabilities 29,870,365 (31,279,726) 1,449,400 (1,973,716) (-) (-) (-) 31,319,765 (33,253,442)
As per Financial Statements
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B)
Secondary Segment Reporting (by Geographical Segments) Secondary segment disclosures are reported on the basis of geographical location of customers. (Rs in Thousands) India Revenues 57,340,281 (64,074,823) Total Assets 54,300,815 (52,431,965) Capital Expenditure 1,628,122 (2,634,498) Rest of World 5,154,328 (5,123,967) 1,256,282 (2,011,009) 4,428 (25,620) Total 62,494,609 (69,198,790) 55,557,097 (54,442,974) 1,632,550 (2,660,118) (Rs in Thousands)
As at December 31, 5. Amounts due from companies under the same management as defined in sub-section (1-B) of Section 370 of the Companies Act, 1956, are as under: a) Sundry Debtors - ABB Global Industries and Services Limited b) Loans and Advances - ABB Global Industries and Services Limited (Maximum amount due during the year Rs74,901 thousand,Previous Year Rs 134,893 thousand) - Raman Boards Limited (Maximum amount due during the year Rs Nil, Previous Year Rs 24,984 thousand) 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 1,473 thousand (Previous Year Rs 17,774 thousand) Income tax matters in dispute
2009
2008
160,208
68,790
2,070 -
72,384 -
1,685,368 -
1,307,042 -
iii)
130,379
83,637
7.
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)
450,055
1,090,215
8.
The Company has taken several premises under cancelable and non-cancelable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. The Company has non-cancelable operating lease obligations of Rs 46,533 thousand (Previous year Rs 63,296 thousand) payable within one year and Rs 131,949 thousand (Previous Year Rs 130,213 thousand) payable later than one year but not later than five years and Rs 77,941 thousand (Previous Year Rs Nil) payable later than five years as on December 31,2009. Rental expenses towards cancelable and non-cancelable oprating lease charged to the profit and loss account amounts to Rs 230,552 thousand (Previous Year Rs 207,197 thousand).
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9.
Finance Lease Obligations The Company normally acquires computers and vehicles under finance lease with the respective underlying assets as security. Minimum lease payments outstanding as of December 31, 2009 in respect of these assets are as follows:- (Figures in brackets are in respect of the previous year): (Rs in Thousands) Due Within one year Later than one year and not later than five years TotalMinimum Lease Payments outstanding as on December 31, 2009 (211) (-) Total (211) Interest Not Due (9) (-) (9) Present Value of Minimum Lease Payments (202) (-) (202)
10.
Deferred Tax The break up of net deferred tax assets / (liability) as at December 31, 2009 is as follows: (Figures in brackets are in respect of the previous year): (Rs in Thousands) 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 Others 14,415 (9,976) (69) 566,630 (413,007) 37,114 (35,476) 618,159 (458,528) Net Deferred Tax Assets / Liability 966 617,193 (496,562) (38,034) 617,193 (496,562) Deferred Tax Liability
11.
Capacities, Production, Stock and Turnover (Refer Schedule 12) 11.1 Capacities a) Installed capacities are as certified by the Managing Director, but not verified by the auditors, being a technical matter.
11.2 Production a) b) Production of finished 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.
53
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 23,165,639 thousand (Previous Year Rs 26,181,596 thousand).
b)
11.4 Work-in-Progress a) The Work-in-Progress at the beginning of the year amounted to Rs 1,899,009 thousand (Previous Year Rs 1,262,058 thousand). (Rs in Thousands) For the year ended December 31, 12. Earnings in Foreign Exchange (on accrual basis) i) Export of goods - Direct on FOB basis - Deemed Exports (including local currency) Goods supplied/services rendered locally against foreign exchange remittances Erection & Other Services Other Income : a) Commission b) Others 2009 2008
4,594,609 3,606,596 8,597 427,058
4,796,844 2,146,124 1,181 295,948
ii) iii) iv)
34,122 98,539 8,769,521
169,450 17,751 7,427,298 (Rs in Thousands)
13.
Consumption of Raw Materials and Components For the year ended December 31, Quantity Ferrous Metals Non-Ferrous Metals Components Others MT MT 1,034 1,284 * 2009 Amount 62,493 434,940 16,236,477 1,928,568 18,662,478 Quantity 717 2,308 * 2008
Amount 51,842 704,410 17,704,093 2,374,665 20,835,010
Imported Indigenously acquired
% 39.45 60.55 100.00
7,362,727 11,299,751 18,662,478
% 33.73 66.27 100.00
7,026,873 13,808,137 20,835,010
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 finally 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.
54
(Rs in Thousands) For the year ended December 31, 14. Value of imports on CIF basis (on accrual basis) Raw Materials and Components including Spares Finished Goods Capital Goods including Technical Know-how Project items 11,030,965 2,301,267 232,211 6,455,914 20,020,357 15. Expenditure in foreign currency (on accrual basis) Royalty and Technology Fees Trade Mark Fees Commission and Discount Professional / Project Consultancy Others 776,183 464,261 233 50,109 1,349,590 2,640,376 16. Amount remitted during the year in foreign currency, on account of dividend i) ii) iii) iv) 17. Number of non resident shareholders Number of equity shares held by them on which dividend was paid Year ended to which the dividend related December 31, Amount remitted 3 110,420,990 2008 242,926 3 110,420,990 2007 242,926 915,436 341,852 141 42,882 843,123 2,143,434 10,569,284 2,603,531 319,573 5,695,281 19,187,669 2009 2008
Managerial Remuneration a) i) ii) Directors fee Other remuneration Salary Commission to Managing Director Commission to Whole-time Director Commission to Independent Directors Contribution to Provident and other funds Other perquisites 8,973 3,662 1,200 1,600 2,423 6,937 24,795 25,120 9,115 3,401 1,708 1,275 2,461 7,563 25,523 25,813 325 290
55
(Rs in Thousands) For the year ended December 31, b) Computation of Net Profit as per Section 349 of the Companies Act, 1956 Profit Before Tax as per profit and loss account Add: Managerial remuneration Loss on sale of fixed assets Loss on sale of Investment Provision for doubtful debts and advances 25,120 72,191 2,970 452,298 552,579 5,826,573 Less: Profit on sale of fixed assets Net Profit as per Section 349 of the Companies Act, 1956 Maximum permissible remuneration to Whole-time Directors under Section 198 of the Companies Act, 1956 @ 10% of the profits computed above Maximum permissible remuneration to Independent Directors under Section 198 of the Companies Act, 1956 @ 1% of the profits computed above Commission to Managing Director Commission to Whole-time Director Commission to Independent Directors 1,742 1,742 5,824,831 582,483 58,248 3,662 1,200 1,600 6,462 5,273,994 8,332,440 25,813 18,508 586,784 631,105 8,963,545 64,514 64,514 8,899,031 889,903 88,990 3,401 1,708 1,275 6,384 2009 2008
Remuneration to Directors 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. Commission to Managing Director and Whole-time Director is subject to further recommendation and approval of Remuneration Committee and the Board of Directors. For the year ended December 31,2008, Rs 2,336 thousand was paid as commission to Managing Director, Rs 1,167 thousand was paid as commission to Whole-time Director and Rs 1,200 thousand was paid as commission to Independent Directors based on recommendation and approval of Remuneration Committee and Board of Directors. 18. Auditors' Remuneration (for audit services excluding service tax) i) ii) iii) Audit fee Tax Audit Fee Other Services - SOX Fee - Quarterly Limited Review Fee - Group Reporting Fee - Others iv) Reimbursement of out of pocket expenses 4,000 3,900 3,000 400 650 20,425 7,800 2,625 1,600 200 263 19,263 6,000 2,475 4,300 2,475
19. Interest charge for the year includes Rs 9 thousand (Previous Year Rs 4,387 thousand) being interest on fixed period loans. During the year the Company has capitalised interest on borrowing cost Rs 2,395 thousand (Previous Year Rs 21,293 thousand). 20. Research and development expenditure of Rs Nil (Previous Year Rs 21,715 thousand) on revenue account has been incurred during the year.
56
(Rs in Thousands) 2009 21. Construction Contracts Contract revenue recognised as revenue for the year ended December 31, 2009 Aggregate amount of contract costs incurred and recognised profits (less recognised losses) up to December 31, 2009 for all the contracts in progress The amount of customer advances outstanding for contracts in progress as at December 31, 2009 The amount of retentions due from customers for contracts in progress as at December 31, 2009 26,411,392 68,871,093 3,623,598 6,234,864 28,528,823 71,932,427 3,819,331 7,044,982 2008
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, Hong Kong ABB (P.J.S.C.), Teheran, Iran ABB (Pvt) Ltd., Lahore, Pakistan ABB A/S, Skovlunde, Denmark ABB AB, Vsters, Sweden ABB AG, Mannheim, Germany ABB AG, Vienna, Austria ABB AS, Billingstad, Norway ABB AS, Tallinn, Estonia ABB Australia Pty Limited, Sydney, Australia ABB Automation Co. Ltd., Riyadh, Saudi Arabia ABB Automation GmbH, Mannheim, Germany ABB Automation L.L.C., Abu Dhabi, United Arab Emirates ABB Automation LLC, Moscow, Russian Federation ABB Automation Products GmbH, Ladenburg, Germany ABB Bailey Beijing Controls Co. Ltd., Beijing, China ABB Beijing Drive Systems Co. Ltd., Beijing, China ABB Bomem Inc., Quebec, Canada ABB BV, Rotterdam, Netherlands ABB Capital, B.V., Amsterdam, Netherlands ABB Chongqing Transformer Company Ltd., Chongqing City, China ABB CL Logistic S.A., Montevideo, Uruguay ABB Contracting Company. Ltd., Riyadh, Saudi Arabia ABB d.o.o., Belgrade, Serbia ABB Ecuador S.A., Quito, Ecuador ABB Electrica SGPS, Lda., Luanda, Angola ABB Electrical Industries Ltd., Riyadh, Saudi Arabia ABB Electrical Machines Ltd., Shanghai, China ABB Electroengineering Ltd., Moscow, Russian Federation ABB Elektrik Sanayi A.S., Istanbul, Turkey ABB Malaysia Sdn Bhd, Subang Jaya, Malaysia ABB Management Services Ltd., Zurich, Switzerland ABB Mexico S.A. de C.V., Tlalnepantla, Mexico ABB N.V., Zaventem, Belgium ABB Near East Trading Ltd., Amman, Jordan ABB Oy, Helsinki, Finland ABB Power Systems and Automation Techology S.A.E, Cairo, Egypt ABB Qatar LLC., Doha, Qatar ABB S.A., Buenos Aires, Argentina ABB S.A. Casablanca, Morocco ABB S.A. Lima, Peru ABB S.A. Panama, Panama ABB S.A., Rueil-Malmaison, France ABB S.A., Santiago, Chile ABB S.p.A., Milan, Italy ABB s.r.o., Praque, Czech Republic ABB Schweiz AG, Baden, Switzerland ABB Secheron S.A., Satigny, Switzerland ABB Service Co. Ltd., Al Khobar, Saudi Arabia ABB Shanghai Motors Co. Ltd., Sanghai, China ABB South Africa (Pty) Ltd, Sunninghill, South Africa ABB Sp. zo.o., Warsaw, Poland ABB Stotz-Kontaki GmbH, Heidelberg, Germany ABB Technologies Ltd., Tirat Carmel, Israel ABB Technologies W.L.L., Bahrain, Bahrain ABB Technology AB, Vsteras, Sweden ABB Technology Ltd., Zurich, Switzerland ABB Technology SA, Abidjan, Cote D'Ivoire ABB Ltd., Taipei, Taiwan, Province Of China ABB Ltd., Zagreb, Croatia ABB Ltda., Osasco, Brazil
57
ABB Engg. Technologies Co. (KSCC), Safat, Kuwait ABB Engineering (Shanghai) Ltd., Shanghai, China ABB Engineering Trading and Service Ltd., Budapest, Hungary ABB ESAP Limited, St. Peter's Port, Guernsey ABB France SAS, Rueil Malmaison cedex, France ABB Global Industries and Services Limited, Bengaluru, India ABB High Voltage Switchgear Co. Ltd., Beijing, China ABB Holdings (Pty) Ltd., Sunninghill, South Africa ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia ABB Inc., Norwalk, CT, United States ABB Inc., St. Laurent, Quebec, Canada ABB Industries (L.L.C.), Dubai, United Arab Emirates ABB Industries FZ, Dubai, United Arab Emirates ABB Industriunderhall AB, Degerfors, Sweden ABB Industry Pte. Ltd., Singapore ABB Information Systems Ltd., Zurich, Switzerland ABB International Marketing Ltd., Zurich, Switzerland ABB Jiangjin Turbo Systems Company Limited, Chongqing, China ABB K.K. Tokyo, Japan ABB Limited, Auckland, New Zealand ABB Limited, Bangkok, Thailand ABB Limited, Dar Es Salaam, Tanzania ABB Limited, Warrington, United Kingdom ABB Logistics Center Europe GmbH, Menden, Germany ABB Ltd., Dublin, Ireland ABB Ltd., Jordan, Amman, Jordan ABB Ltd., Hanoi, Vietnam ABB Ltd., Kiev, Ukraine ABB Ltd., Lusaka, Zambia
ABB Ltd., Seoul, South Korea ABB LV Installation Materials Co. Lid., Beijing, China ABB Transmission & Distribuition Automation Equipment (Xiamen) Co. Ltd., Fujian, China ABB Transmissione & Distribution Ltd., Abu Dhabi, United Arab Emirates ABB Turbo Systems (Hong Kong) Limited, Hong Kong, Hong Kong ABB Turbo-Systems AG, Baden, Switzerland ABB UAB, Vilnius, Lithuania 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, Xi'an Power Capacitor Company Limited, Xi'an, China ABB, Xinhui Low Voltage Switchgear Co, Ltd., Xinhui (Guangdong), China ABB, Inc., Paranaque, Metro Manila, Philippines ABB, s.r.o, Bratislava, Slovakia ABBNG Limited, Abuja, Nigeria Asea Brown Boveri Ltd., Port Louis, Mauritius Asea Brown Boveri Ltda., Bogot, Columbia Asea Brown Boveri Ltda., La Paz, Bolivia Asea Brown Boveri S.A., Caracas, Venezuela Asea Brown Boveri S.A., Madrid, Spain Asea Brown Boveri S.A., Metamorphossis Attica, Greece Asea Brown Boveri S.A.E., Cairo, Egypt Busch-Jaeger Elektro GmbH, Mannheim/Ldenscheid, Germany Electrical Materials Center, Riyadh, Saudi Arabia PT ABB Installation Materials, Jakarta, Indonesia PT ABB Jasa Indonesia, Jakarta, Indonesia PT ABB Sakti Industri, Jakarta, Indonesia PT ABB Transmission and Distribution, Jakarta, Indonesia Pucaro Elektro-Isolierstoffe GmbH, Roigheim, Germany
Associate : (erstwhile)
Integra Hindustan Control Limited (ceased to be associate from 25th April, 2008 on divestment of shares by the Company)
Key Management Personnel: Managing Director: Whole-time Director: Chief Financial Officer: Mr. Biplab Majumder Mr. K Rajagopal (ceased to be director w.e.f. August 1, 2009) Mr. Amlan Datta Majumdar (w.e.f. September 1, 2009) Mr. K Rajagopal (From August 1, 2009 to August 31, 2009)
58
(Rs in Thousands) 2009 b) Transactions with related parties Transaction value in excess of 10% with a fellow subsidiary has been individually disclosed below. All other cases have been grouped and disclosed as 'other fellow subsidiaries'. i) Sales, Services and Other income Fellow Subsidiaries - ABB Global Industries and Services Limited, Bengaluru, India - Other fellow subsidiaries Integra Hindustan Control Limited (an erstwhile associate) ii) Purchases of Raw Materials, Components and Project items Fellow Subsidiaries - ABB Oy, Helsinki, Finland - ABB Schweiz AG, Baden, Switzerland - ABB AB, Vsters, Sweden - ABB S.p.A., Milan, Italy - Other fellow subsidiaries Integra Hindustan Control Limited (an associate) iii) Expenditure on ESAP Charges Fellow Subsidiaries - ABB ESAP Limited, St. Peters' Port, Guernsey iv) Expenditure on Royalty, Trade-mark, Technical and Consultancy Services Holding Company Fellow Subsidiaries - ABB Technology Ltd., Zurich, Switzerland - Other fellow subsidiaries 687,983 63,663 751,646 v) Expenditure on Information technology, Engineering and Other Services Holding Company Fellow Subsidiaries - ABB Information Systems Ltd., Zurich, Switzerland - ABB Global Industries and Services Limited, Bengaluru, India - ABB Management Services Limited, Zurich, Switzerland - ABB AB, Vsters, Sweden - Other fellow subsidiaries 472,763 375,952 168,347 164,268 396,551 1,577,881 323,534 310,799 5,245 155,623 215,199 1,010,400 41,641 18,080 795,012 101,214 896,226 464,261 341,852 15,462 36,567 4,110,039 2,394,235 2,211,948 1,157,994 4,585,632 14,459,848 2,984,713 1,602,689 2,454,152 1,361,517 5,225,593 13,628,664 25,363 490,844 3,149,591 3,640,435 287,269 2,850,969 3,138,238 1,875 2008
59
(Rs in Thousands) 2009 vi) Interest Expenses Fellow Subsidiaries - ABB Global Industries and Services Limited, Bengaluru, India - ABB Oy, Helsinki, Finland vii) Capital expenditure for Technical Know-how Fellow Subsidiaries - ABB Oy, Helsinki, Finland - ABB France SAS, Rueil Malmaison cedex, France - ABB AB, Vsters, Sweden - Other fellow subsidiaries 33,297 8,174 41,471 viii) Capital expenditure Fellow Subsidiaries - ABB Turbo-System AG, Baden, Switzerland - ABB Oy, Helsinki, Finland - ABB S.p.A., Milan, Italy - ABB AB Vsters, Sweden - ABB AG Mannheim, Germany - ABB Global Industries and Services Limited, Bengaluru, India - Other fellow subsidiaries 15,096 10,293 9,743 7,212 3,488 45,832 ix) Fixed assets (sold) Fellow Subsidiaries - ABB Global Industries and Services Limited, Bengaluru, India - ABB International Marketing Limited, Zurich, Switzerland x) Outstanding balances Debtors and Advances Holding Company Fellow Subsidiaries: - ABB Global Industries and Services Limited, Bengaluru, India - ABB AB, Vsters, Sweden - Other fellow subsidiaries Creditors Holding Company Fellow Subsidiaries: - ABB, Oy, Helsinki, Finland - ABB Schweiz AG, Baden, Switzerland - ABB Vsters, Sweden - Other fellow subsidiaries 1,573,603 1,063,335 912,633 2,486,379 6,035,950 908,453 945,970 1,148,604 2,471,101 5,474,128 115,292 171,007 162,278 159,808 845,450 1,167,536 141,174 119,024 1,093,448 1,353,646 4,121 534 1,099 1,099 59,950 59,950 7,084 6,691 25,852 19,737 23,531 18,805 101,700 12,050 7,528 4,062 23,640 13,098 793 13,891 825 825 2008
60
(Rs in Thousands) 2009 xi) Unsecured loan taken (repaid during the year) Fellow Subsidiaries: - ABB Global Industries and Services Limited, Bengaluru, India xii) Dividend Paid during the year Holding Company Fellow Subsidiaries xiii) Remuneration to Managing Director xiv) Remuneration to Whole-time Director xv) Remuneration to Chief Financial Officer 215,336 27,589 17,175 6,020 2,734 215,336 27,589 15,604 8,643 798 2,235,000 430,000 2008
Remuneration to directors and chief financial officer 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. The remuneration to Whole-time Director Mr. K Rajagopal for the year ended December 31, 2009 is for the period from January 1 to July 31, 2009. The remuneration to Chief Financial Officer includes payment made to Mr. K Rajagopal for the period August 1 to August 31, 2009 and to Mr. Amlan Datta Majumdar for the period September 1 to December 31, 2009. The remuneration to Whole-time Director for 2008 to Mr. K Rajagopal is for the period February 19, 2008 to December 31, 2008. The remuneration to Chief Financial Officer Mr. K Rajagopal for 2008 is for the period upto February 18, 2008. 23. The pro rata difference between the forward contract rate and the exchange rate on the date of transaction to be charged to profit and loss account is Rs 58,223 thousand (Previous Year Rs 5,024 thousand).
24. Provisions a) Movement in provisions: (Figures in brackets are in respect of the previous year) (Rs in Thousands) As at January 1, 2009 630,042 (778,561) Sales Tax Litigations Restructuring 21,458 (58,079) 57,160 (57,160) 1,206 (66,373) b) Nature of provisions: a. Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31, 2009 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. Provision for Sales Tax represents mainly the differential sales tax liability on account of non collection 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. 61 Unused Amounts reversed 65,607 (216,018) 1,330 (25,000) (-) (26,000) As at December 31, 2009 686,456 (630,042) 53,462 (21,458) 59,810 (57,160) 1,206 (1,206)
Class of provisions Warranties
Additions 244,482 (173,930) 33,334 (3,892) 2,650 (-) (-)
Amounts used 122,461 (106,431) (15,513) (-) (39,167)
b. c. d.
25. The employees of the Company are entitled to purchase shares of ABB Asea Brown Boveri Ltd., Zurich (the ultimate holding company) on the settlement date, at a price fixed based on the fair market price on the grant date under ABB Employee Share Acquisition Plan. During the year, the Company has been cross charged Rs 15,462 thousand (Previous Year Rs 35,567 thousand) towards the above including administrative charges and this has been charged in the profit and loss account under the head Salaries, Wages and Bonus. The Institute of Chartered Accounants of India has issued a Guidance Note on Accounting for Employee Share-based Payments, which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged above. Accordingly, the company is of the opinion that there is no further accounting treatment/ disclosure required under the said Guidance Note. 26. Derivative Instruments i) ii) iii) iv) v) Forward cover for foreign currency debtors outstanding as of balance sheet date is Rs 1,292,530 thousand (Previous Year Rs 2,352,388 thousand). Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs 2,979,301 thousand (Previous Year Rs 2,922,990 thousand). Forward cover for foreign currency creditors outstanding as of balance sheet date is Rs 6,748,480 thousand (Previous Year Rs 6,896,877 thousand). Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 1,929,404 thousand (Previous Year Rs 6,998,974 thousand). Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is Rs 668,879 thousand (Previous Year Rs 136,072 thousand).
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, 2009. (Rs in Thousands) 2009 i) The principal amount and the interest due thereon remaining unpaid to any supplier as at December 31, 2009 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, 2009 Principal amount Interest 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, 2009. The amount of further interest remaining due and payable for the earlier years. 2008
228,136 88
174,395 828
ii)
271,997 2,500 25 113 -
357,067 5,459 828 828 -
iii) iv) v)
Note: The information has been given in respect of only those suppliers who have intimated the Company that they are registered as micro and small enterprises. 28. Excise duty on sales amounting to Rs 2,573,696 thousand (Previous Year Rs 5,032,076 thousand) has been reduced from sales in profit and loss account and excise duty on increase in inventory of finished goods amounting to Rs 9,575 thousand (Previous Year Rs 453 thousand) has been accounted in the profit and loss account under the head Cost of Materials and Erection Services. 29. The Company has defined benefit gratuity plan and provident fund plan managed by trusts. The following table summarises the component of net benefit expenses recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet.
62
2009 Gratuity i) Change in benefit obligations Projected benefit obligations at beginning of the period Current service cost Contribution by plan participants (employees) Interest cost Benefits paid Actuarial loss / (gain) Projected benefit obligations (PBO) at the end of the period Change in plan assets Plan assets at the beginning of the period, at fair value Contributions Expected return on plan assets Actuarial (loss) / gain Benefits paid Plan assets at the end of the period, at fair value Actual return on plan assets Expected return on plan assets Actuarial (loss) / gain on plan assets Actual return on plan assets Present value of the defined benefit obligation Plan assets at the end of the period, at fair value Liability recognised in the balance sheet Cost for the period Current service cost Interest cost Expected return on plan assets Actuarial loss/(gain) Expense recognised in the statement of profit & loss Investment details (% invested) GOI Securities State Government Securities PSU Securities Special Deposit Scheme Others (including bank balances) Experience adjustment Defined benefit obligation Plan assets Surplus / (Deficit) Experience adjustments on plan liabilities Experience adjustments on plan assets 520,302 48,922 39,022 (30,737) (1,939) 575,570
Provident Fund 1,822,049 129,983 239,210 136,654 (203,807) (37,796) 2,086,293
(Rs in Thousands) 2008 Gratuity Provident Fund 430,650 46,885 25,839 (34,169) 51,097 520,302 1,527,153 93,732 247,485 91,629 (177,572) 39,622 1,822,049
ii)
491,881 39,935 40,959 (1,048) (30,737) 540,990
1,768,520 335,562 146,752 1,097 (203,807) 2,048,124
412,252 78,123 38,426 (2,751) (34,169) 419,881
1,482,996 337,131 132,836 (6,871) (177,572) 1,768,520
iii)
40,959 (1,048) 39,911 575,570 540,990 34,580
146,752 1,097 147,849 2,086,293 2,048,124 38,169
38,426 (2,751) 35,675 520,302 491,881 28,421
132,836 (6,871) 125,965 1,822,049 1,768,520 53,529
iv)
v)
48,922 39,022 (40,959) (891) 46,094
129,983 136,654 (146,752) (38,893) 80,992
46,885 25,839 (38,426) 53,848 88,146
93,732 91,629 (132,836) 46,493 99,018
vi)
33.9 15.6 23.9 17.3 9.3 100.0 575,570 540,990 (34,580) 8,240 (1,048)
28.6 13.1 32.5 14.5 11.3 100.0 2,086,293 2,048,124 (38,169) 35,401 1,097
39.8 9.1 22.7 19.0 9.4 100.0 520,302 491,881 (28,421) 51,270 (2,751)
30.4 9.9 30.4 17.0 12.3 100.0 1,822,049 1,768,250 (53,529) 1,727 (6,871)
vii)
viii) Assumptions Interest rate for discount Estimated rate of return on plan assets
7.50% p.a. 8.25% p.a.
7.50% p.a. 8.00% p.a.
6.00% p.a. 8.50% p.a.
6.00% p.a. 8.50% p.a.
63
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 inflation, market growth and other factors applicable to the period over which the obligation is expected to be settled. The Company expects to contribute Rs 50,700 thousand (Previous Year Rs 96,960 thousand) to Gratuity Fund and Rs 89,091 thousand (Previous Year Rs 108,919 thousand) to Provident Fund in 2009. The attrition rate for gratuity varies from 1% to 8% for various age groups.
ii)
iii)
30. The figures of the previous year have been regrouped / reclassified, where necessary, to conform with the current years classifications.
As per our report of even date For S.R. BATLIBOI & CO. Chartered Accountants
64
Cash Flow Statement
(Rs in Thousands) For the year ended December 31, 2009 2009 2008
A.
Cash Flow from Operating Activities Net Profit Before Tax 5,273,994 8,332,440
Adjustments for Depreciation/ Amortisation Unrealised Losses/ (Gains) on Restatement of Monetary Assets (net) Unrealised Losses/ (Gains) on Restatement of Monetary Liabilities (net) Loss / (Profit) on Sale of Fixed Assets, (net) Loss / (Profit) on Sale of Investments, (net) Interest Income Interest Expense Operating Profit before Working Capital Changes 485,058 9,668 (86,301) 70,449 2,970 (183,293) 256,242 5,828,787 366,805 (104,573) 329,235 (46,006) (23,677) (141,143) 346,600 9,059,681
Movement in Working Capital (Increase)/ Decrease in Sundry Debtors (Increase)/ Decrease in Inventories (Increase)/ Decrease in Other Current Assets (Increase)/ Decrease 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 1,172,237 (867,527) 598,943 1,065,129 (1,565,655) 6,231,914 (2,687,038) 3,544,876 (5,453,252) (1,539,432) (1,193,549) (1,075,383) 2,777,157 2,575,222 (2,378,489) 196,733
B.
Cash Flow from Investing Activities Purchase of Fixed Assets Proceeds from sale of Fixed Assets Sale/Maturity of Investments Interest Received Net Cash used in Investing Activities (1,632,550) 13,080 439,482 194,204 (985,784) (2,720,926) 81,952 116,979 275,414 (2,246,581)
65
(Rs in Thousands) For the year ended December 31, 2009 2009 2008
C.
Cash Flow from Financing Activities Proceeds from new Borrowings Repayment of Borrowings Interest Paid Dividend (Including corporate Dividend Tax) paid Net Cash used in Financing Activities 28,435,000 (28,435,202) (255,527) (544,271) (800,000) 11,960,000 (11,965,458) (346,600) (544,417) (896,475)
Net Increase/ (Decrease) in Cash and Cash Equivalents (A+B+C) Cash and Cash Equivalents (Opening Balance) Cash and Cash Equivalents (Closing Balance)
1,759,092 3,482,313 5,241,405
(2,946,323) 6,428,636 3,482,313
Components of Cash and Cash Equivalents as at December 31,
2009
2008
Cash and cheques on hand Balances With Banks - On Current Account - On Deposit Account - On Margin Account
1,172,129 1,060,260 3,009,016 5,241,405
1,531,633 1,941,211 8,554 915 3,482,313
Notes: 1) 2) 3) Cash and Cash Equivalents at the end of the year represent cash and cheques on hand and cash and deposits with banks. Cash and Cash Equivalents includes unclaimed dividend and margin deposit of Rs 11,021 thousand (Previous Year Rs 10,779 thousand) being restricted cash. The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the classification of the current year. Cash Flow Statement is made using the indirect method.
As per our report of even date For S.R. BATLIBOI & CO. Chartered Accountants
66
Balance Sheet Abstract and Companys General Business Profile
Registration Details Registration No. Balance Sheet Date L32202KA1949PLC032923 31 Date 12 Month 09 Year Rights Issue NIL Bonus Issue NIL Private Placement NIL Total Assets 24237332 Sources of Funds Paid Up Capital 423817 Secured Loans NIL Deferred Tax Liability NIL Application of Funds Net Fixed Assets 7894687 Net Current Assets 16172887 Accumulated Losses NIL Deferred Tax Assets 966 Total Expenditure 63097710 +/- Profit/Loss Before Tax +5273994 Earnings per share in Rs 16.74 Dividend Rate % 100 +/- Profit/Loss After Tax +3546391 57823716 Misc. Expenditure NIL Investments 168792 Unsecured Loans NIL Reserve and Surplus 23813515 24237332 NIL State Code 0 8
II
Capital Raised During the year (Rs In Thousands) Public Issue
III
Position of Mobilisation and Deployment of Funds (Rs in Thousands) Total Liabilities
IV
Performance of the Company (Rs in Thousand) Turnover
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 85.04 Electronic Control and Supply Units for Variable Speed Drives and other applications
67
Notes
68

ATTENDANCE SLIP
ABB Limited
Registered Office : 2nd Floor, East Wing, Khanija Bhavan 49, Race Course Road, Bengaluru - 560 001.
DP. Id
NAME & ADDRESS OF THE REGISTERED SHAREHOLDER
Client Id/ Folio No.
No. of Shares
I hereby record my presence at the SIXTIETH ANNUAL GENERAL MEETING of the Company at The Atria Hotel, Chancery, No. 1, Palace Road, Bengaluru - 560 001 on Tuesday, May 11, 2010 at 11.00 a.m.
SIGNATURE OF THE ATTENDING MEMBER / PROXY ..............................................................................................................
Note: 1. A Member/Proxy holder attending the meeting must bring the Attendance Slip to the meeting and hand it over at the entrance duly signed. 2. A Member/Proxy holder attending the meeting should bring copy of the Annual Report for reference at the meeting.
PROXY FORM
ABB Limited
Registered Office : 2nd Floor, East Wing, Khanija Bhavan 49, Race Course Road, Bengaluru - 560 001.
I/We ..................................................................................................................................................................................................................................................... of.................................................................................................................. in the district of .............................................................................. being a Member/ Members of ABB Limited, hereby appoint ........................................................................................................................................................................................ of ....................................................................................... in the district of ...................................................................................................................................... or failing him/her ................................................................................................... of ........................................................................................................................ in the district of .......................................................................................................... as my/our Proxy to attend and vote for me/us and on my/our behalf at the
SIXTIETH ANNUAL GENERAL MEETING of the Company at The Atria Hotel, Chancery, No. 1, Palace Road, on Tuesday, May 11, 2010 at 11.00 a.m. and at any adjournment thereof.
Signed this .................................................... day of ......................................................... 2010.
Bengaluru - 560 001
DP. Id Affix a Re 1/Revenue Stamp
Client Id/ Folio No.

SIGNATURE OF MEMBER/S ....................................................
No. of Shares
Notes: 1. The proxy must be returned so as to reach the Registered office of the Company 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bengaluru 560 001, not less than FORTY-EIGHT HOURS before the time for holding the aforesaid meeting. 2. A Proxy need not be a member of the Company.
Copyright 2010 ABB. All rights reserved.
ABB Limited Corporate Communications
2nd Floor, East Wing Khanija Bhavan 49, Race Course Road Bangalore 560 001 India Tel: +91 80 2294 9150 Fax: +91 80 2294 9148
www.abb.co.in

ABB India Annual Report 2009

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Driving sustainable growth ABB India Annual Report 2009

Auditors S.R. BATLIBOI & CO. Chartered Accountants

ABB Limited, India, Annual Report 2009

(Rs in Millions) Description 2009 2008 2007 2006 2005

Excludes revaluation of xed assets and revaluation reserve.

ABB Limited, India, Annual Report 2009

Profit after tax (Rs in Millions) 8,000 7,000 6,000

3,000 2,000 1,000 0 05 06 07 08 09

Return on capital employed (%)

Employees and Productivity 12,500

10,000 8,000 6,000 4,000 2,000 0

7,500 5,000 2,500 0 05 06 07 08 09

7,439 5,187 4,052

Excludes revaluation of fixed assets and revaluation reserve.

ABB India corporate management team

Biplab Majumder Vice Chairman & Managing Director

Amlan Datta Majumdar Chief Financial Officer

Ramesh Shankar Head Human Resources

N Venu Head Sales and Marketing

B Gururaj Head - Legal & Compliance and Company Secretary

Prakash Nayak Head Power Systems

Madhav Digraskar Head Power Products

R Narayanan Head Discrete Automation and Motion

Venkatesh Prasad Head Low Voltage Products

G N V Subbarao Head Process Automation

Madhav Vemuri Head Corporate Research

Ranjan K De Head Institutional Sales

S Karun Head Service and EHS

Our business Ensuring grid reliability

Improving industrial productivity

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

Annexure - A to Directors Report

ABB Limited, India, Annual Report 2009

Place: Bengaluru Date: February 26, 2010

Gary Steel Chairman

ABB Limited, India, Annual Report 2009

Annexure C to Directors Report

No. of Board Meetings attended

No. of Board Meetings held during 2009

Yes Yes Yes Yes Yes Yes NA Yes No NA

ABB Limited, India, Annual Report 2009

Mandatory Committee Chairmanships 1 1 3 1 17

Mandatory Committee Memberships

Last AGM attendance

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009

Place : Bengaluru Date : February 26, 2010

Gary Steel Chairman

ABB Limited, India, Annual Report 2009

Annexure - D to Directors Report

Place: Bengaluru Date: February 26, 2010

D.R.Shressha Proprietor C. P. No. 6119

ABB Limited, India, Annual Report 2009

Managements Discussion and Analysis

ABB Limited, India, Annual Report 2009

ABB Limited, India, Annual Report 2009