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കമ്പനിയുടെ പേരിലെ ആദ്യത്തെ കുറച്ച് അക്ഷരങ്ങള്‍ എന്റര്‍ ചെയ്യൂ, അതിന് ശേഷം 'ഗോ' എന്നതില്‍ ക്ലിക്ക് ചെയ്യൂ

Directors Report of ABB India Ltd.

Dec 31, 2022

Your Directors have pleasure in presenting their Seventy Third Annual Report and Audited Accounts for the year ended December 31, 2022.

1. Financial Summary and Highlights:

(? in Crores)

Particulars

For the year ended December 31, 2022

December 31, 2021

Profit before tax and exceptional items

1,011.00

585.85

Profit before tax and after exceptional items Tax expense:

1,350.26

707.19

- Current tax

328.29

176.85

- Deferred tax

5.74

10.63

Profit after tax

1,016.23

519.71

Other comprehensive income / (loss) (net of tax)

(11.82)

25.05

Balance brought forward from previous year

1,359.98

921.17

Amount available for appropriation Appropriations:

2,364.39

1,465.93

Equity dividend paid

110.19

105.95

Balance carried forward

2,254.20

1,359.98

2. Dividend:

Your Directors recommend payment of a dividend at the rate of ? 5.50 (Rupees Five and Fifty paisa only) per equity share of the face value of ? 2/- each (275%) for the year ended December 31, 2022. Dividend pay-out is in accordance with the Company''s dividend distribution policy and will be payable subject to approval of members at the ensuing Annual General Meeting and deduction of tax at source to those Shareholders whose names appear in the Register of Members as on the Record Date.

3. Dividend Distribution Policy:

The Dividend Distribution Policy containing the requirements mentioned in Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") can be accessed at the following Web-link: https://new.abb.com/docs/ librariesprovider19/default-document-library/dividend-distribution-policyca47b9f2c1f463c09537ff0000433538.pdf

4. Transfer to Reserves:

The Directors have decided not to transfer any amount to the General Reserve for the year under review.

5. Share capital:

During the year under review, there was no change in share capital of the Company.

6. Performance and State of the company''s affairs:

During the year, orders from continuing operations touched an all time historic high of ? 10,028 crore as

against ? 7,666 crore in 2021. In 2022, the Company was able to optimize the stable macro environment offered in the country as compared to global headwinds of uncertainty. Proactive engagement with identified sectors of high and moderate growth and the government''s focus on sectors like infrastructure and transportation provided significant traction to the journey of profitable growth. The order backlog at the end of the year held steady at ? 6,468 crore which continued to provide visibility to the future revenue streams. The revenue for the Company for the year 2022 stood at ? 8,568 crore as against ? 6,934 crore in the previous year. For the full year, the Company''s profit before tax before exception stood at ? 1,024 crore as compared to ? 603 crore in 2021. Profit after tax for the year was ? 1,026 crore. This includes an exceptional item of ? 339 Crore from the profit on the sale of the turbocharger business. On an overall basis, the catalysts for improved profitability include efficient opex management, better mix, improved service and product revenues, supported by a sharp focus on cost savings. The earnings per share for 2022 stood at ? 47.96 per share as compared to ? 24.53 per share in 2021.

Discussion on the performance and state of Company''s affairs, has been covered as part of the Management Discussion and Analysis which forms part of this Report.

7. Management Discussion & Analysis

The Management Discussion & Analysis as required under the Listing Regulations is enclosed as in Annexure A, forming part of this Report.

8. Material changes and commitment, if any, affecting financial position of the Company from the end of Financial Year and till the date of this Report:

There has been no material change and commitment, affecting the financial performance of the Company that occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

9. Names of companies which have become or ceased to be Subsidiaries, joint ventures or associate companies during the year:

Turbocharging Industries and Services India Private Limited (TISPL) was incorporated as a wholly owned subsidiary of the Company on January 31, 2022 to carry on turbocharger business. The Company during the year under review sold the investment in TISPL to Turbo Systems Switzerland and by virtue of that TISPL has ceased to be a wholly owned subsidiary of the Company. Apart from this, no other company has become or ceased to be subsidiaries, joint ventures or associate companies.

10. Board Meetings and Annual General Meeting:

Four (4) meetings of the Board were held during the Financial Year 2022. Also, a separate meeting of Independent Directors as prescribed under Schedule IV of the Act, was held during the year under review. For details of the meetings of the Board and its Committees, please refer to the Corporate Governance Report forming part of this Report. The intervening gap between the Board meetings was within the period prescribed under Act.

The 72nd Annual General Meeting (AGM) of the Company was held on May 05, 2022 through Video Conferencing/ Other Audio Visual Means.

11. Directors and Key Managerial Personnel:

The Board of Directors of the Company at their meeting held on February 10, 2022 on the recommendation of the Nomination & Remuneration Committee appointed Ms. Carolina Granat (DIN: 09477744) as Non-Executive & Non-Independent Director of the Company with effect from April 1, 2022. Further, the Shareholders of the Company approved her appointment at the 72nd AGM held on May 5, 2022. Ms. Maria Rosaria Varsellona (DIN: 08892891), resigned from the office of

Non-Executive & Non-independent Director of the Company effective from March 31, 2022.

Ms. Renu Sud Karnad (DIN: 00008064), resigned from the office of Non-Executive & Independent Director with effect from March 18, 2022 before the expiry of her term due to other commitments and limitation of time. Consequently, the Board of Directors of the Company at its meeting held on May 4, 2022 appointed Ms. Monica Widhani (DIN: 07674403) as Non-Executive & Independent Director of

the Company for term of three consecutive years effective from May 6, 2022 and the same was approved by the Shareholders by way of postal ballot, the results of which were declared on June 23, 2022.

Mr. Morten Wierod (DIN: 08753868) vide letter dated May 5, 2022 resigned from the office of Chairman & Non-Executive Non-Independent Director with effect from May 5, 2022.

On the recommendation of the Nomination &

Remuneration Committee, the Board at its meeting held on May 4, 2022 appointed Mr. Adrian Guggisberg (DIN: 09590850) as Chairman & Non-Executive

Non-Independent Director with effect from May 6, 2022. Requisite approval for his appointment was obtained from the Shareholders by way of postal ballot, the results of which were declared on June 23, 2022.

On the recommendation of the Nomination &

Remuneration Committee, the Board at its meeting held on August 9, 2022 approved the re-appointment of Mr. V K Viswanathan (DIN: 01782934) as Non-Executive Independent Director for a further term of 2 consecutive years effective from November 13, 2022 and the same was approved by the shareholders by way of postal ballot, the results of which were declared on September 28, 2022.

In accordance with the provisions of the Act read with Article 157 of the Articles of Association of the Company, Ms. Carolina Yvonne Granat, Non Executive Non Independent Director, will retire by rotation at the ensuing Annual General Meeting of the Company, and being eligible, offers herself for re-appointment.

Brief profile and details of Ms. Carolina Yvonne Granat, Director proposed to be re-appointed as required under the Listing Regulations are contained in the Notice convening the ensuing 73rd Annual General Meeting of the Company.

Apart from aforesaid changes there are no changes in Directors and Key Managerial Personnel of the Company. Details of Directors and composition of various Committees of the Board are provided in the Corporate Governance Report forming part of this report. Details of the familiarization Programme for Directors have been provided under Corporate Governance section of the report.

Mr. Sanjeev Sharma (DIN: 07362344), Managing Director, Mr. T.K. Sridhar, Chief Financial Officer, and Mr. Trivikram Guda, Company Secretary continues to remain Key Managerial Personnel of the Company.

During the Financial Year, none of the Directors and Key Managerial Personnel of the Company had any material pecuniary relationship or transactions with the Company.

12. Independent Directors:

All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that, they meet the criteria of independence as prescribed both under the Companies Act, 2013 ("the Act") and Listing Regulations and that their names have been included in the data bank of Independent Directors maintained by The Indian Institute of Corporate Affairs. The Board is of the opinion that the Independent Directors of the Company hold highest standards of integrity and possess requisite expertise and experience required to fulfill their duties as Independent Directors.

13. Annual evaluation of Board Performance and Performance of its Committees and Directors:

Pursuant to applicable provisions of the Act, and the Listing Regulations, the Board has carried out annual evaluation of its own performance, performance of the Directors including Chairman assessment as well as the evaluation of the working of its Committees.

The NRC has defined the evaluation criteria and procedure for the Performance Evaluation process for the Board, its Committees and Directors.

During the year, feedback was sought by way of structured questionnaires and evaluation was carried out based on various criteria and the responses received from the Directors.

The criteria for performance evaluation of the Board included aspects such as Board composition and quality, setting strategy, overall direction, effectiveness of Board processes, Board and management relations, contribution, board development, timeliness of information etc., The criteria for performance evaluation of the Committees included aspects such as structure and composition of Committees, effective participation of member of the Committees, deliberations and suggestions made by the Committee, effectiveness of the Committee''s recommendation for the decisions of the Board, etc., A separate peer review exercise was carried out to evaluate the performance of Individual Directors. The performance evaluation of the Chairman of the Board was also carried out, considering the views of all the remaining Directors.

Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non- executive Directors and other items as stipulated under the Listing Regulations.

14. Nomination and Remuneration Policy:

The details of Nomination and Remuneration Policy of the Company for Directors, Key Managerial Personnel (KMP), Senior Management personnel (SMP) and other

employees along with other related matters have been provided in the Corporate Governance Report.

Your Company has revised its Nomination and Remuneration Policy to inter alia cover the role of Nomination and Remuneration Committee, appointment criteria and qualifications for appointment of Board of Directors, KMP and SMP, fixing of remuneration of Independent Directors, Executive Directors, KMPs, SMP and other employees, their removal and business continuity. The copy of the Nomination and Remuneration policy can be accessed by clicking on weblink https://new.abb.com/docs/ librariesprovider19/default-document-library/nomination-and-remuneration-policy_new.pdf?sfvrsn=4548880a_2

15. Particulars of Employees and Remuneration:

The information required under Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure B which forms part of this Report. The information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of Annexure C. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon specific request made in writing to the Company by the Members. Any Member interested in obtaining the same may write to the Company Secretary at [email protected]. None of the employees listed in the said Annexure is related to any Director / KMP of the Company. The said information is available for inspection by the Members on any working day of the Company up to the date of the 73rd Annual General Meeting.

16. Particulars of loans, guarantees or investments under Section 186 of the Act:

Particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security if any are provided in notes to the Financial Statements.

17. Deposits:

Your Company has not accepted any public deposits during the year under review.

18. Internal Control Systems and their adequacy:

The Company''s internal control systems are commensurate with the nature of its business, the size and complexity of its operations and such internal financial controls with reference to the Financial Statements are adequate. The Company has implemented robust processes to ensure

that all internal financial controls are working effectively. The details on Internal Control Systems and their adequacy are provided in the Management''s Discussion and Analysis which forms part of this Report.

19. Directors'' Responsibility Statement:

In accordance with Section 134(5) of the Act, your Directors confirm that, to the best of their knowledge and belief:

(a) that in the preparation of the annual accounts for the Financial year ended December 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) Appropriate accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts have been prepared on a going concern basis;

(e) Appropriate internal financial controls have been laid down and that such internal financial controls are adequate and are operating effectively; and

(f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

20. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is attached as Annexure D which forms part of this Report.

21. Related Party Transactions:

The Company has adopted a policy on materiality of and Related Party Transactions for the purpose of review and approval of such transactions. The objective is to ensure proper approval, disclosure and reporting of transactions as applicable, between the Company and any of its related parties. All Related Party Transactions entered during the year were in the ordinary course of business and on arm''s length basis. The details of Related Party Transaction under the provisions of Section 188 of the Act, requiring

disclosures to be made in Form No.AOC-2 pursuant to Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 which is attached as Annexure E. During the year under review, your Company had not entered into any Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of Audit Committee is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm''s length.

All related party transactions are subjected to independent review by Ernst & Young LLP (EY) to verify and ensure and confirm that the transactions carried out were in the ordinary course of business and at arm''s length basis. EY submits its Report to the Audit Committee at its quarterly meetings.

Transactions with related parties, as per the requirements of Indian Accounting Standard 24 are disclosed in the notes to accounts annexed to the financial statements. Your Company''s Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Company''s website and can be accessed at the Web-link https://new.abb.com/docs/librariesprovider19/default-document-library/rpt-policy-approved_feb-10-2022. pdf?sfvrsn=185cdf09_2

22. Statutory Auditors:

Pursuant to provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, Messrs. B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W / W-100022), were appointed as Statutory Auditors of the Company for a term of 5 years, to hold office from the conclusion of 72nd Annual General Meeting held on May 5, 2022 until the conclusion of 77th Annual General Meeting to be held in 2027.

The Auditors have issued an unmodified opinion on the Financial Statements, for the financial year ended December 31, 2022. The said Auditors'' Report(s) for the financial year ended December 31, 2022 on the financial statements of the Company forms part of this Annual Report.

23. Cost Auditor:

The Company is required to make and maintain cost records for certain products as specified by the Central Government under sub-section (1) of Section 148 of the Act. Accordingly, the Company has been making and maintaining the records as required. The Board had appointed Ashwin Solanki & Associates, Cost Accountants (Registration No: 100392), as Cost Auditor for conducting the audit of cost records of the Company for the Financial Year ended December 31, 2022.

The Board of Directors on the recommendation of the Audit Committee, has reappointed Ashwin Solanki & Associates, Cost Accountants (Registration No: 100392), as the Cost Auditors of the Company for the Financial Year ended December 31, 2023 under section 148 of the Act.

Ashwin Solanki & Associates, Cost Accountants have confirmed that their appointment is within the limits of section 141(3)(g) of the Act, and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Act. The Audit Committee has also received a Certificate from the Cost Auditors certifying their independence and arm''s length relationship with the Company.

As per the provisions of the Act, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their approval. Accordingly, a Resolution seeking Members'' approval for the remuneration payable to Ashwin Solanki & Associates, Cost Auditors is included in the Notice convening the 73rd Annual General Meeting of the Company and same is recommended for your consideration.

Cost Audit and Compliance reports for the year 2021 were filed with the Ministry of Corporate Affairs, within the prescribed time limit.

24. Reporting of frauds:

During the year under review, the Statutory Auditor, Cost Auditor and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee and / or Board under section 143(12) of the Act.

25. Secretarial Audit:

Pursuant to the provisions of section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed BMP & Co. LLP, Company Secretaries, Bengaluru (Firm Registration No. AAI-4194) to undertake the Secretarial Audit of the Company. The Company has annexed to this Board''s Report as Annexure F, a Secretarial Audit Report for the Financial Year ended December 31, 2022 given by the Secretarial Auditor. The Auditor has issued an unmodified Report for the Financial Year ended December 31, 2022.

26. Annual Secretarial Compliance Report:

The Company has undertaken an audit for the Financial Year ended December 31, 2022 for all applicable compliances as per Listing Regulations and Circulars / Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Biswajit Ghosh, Partner, BMP & Co. LLP, Company Secretaries, Bengaluru has been submitted to the Stock Exchanges and is annexed at Annexure G to this Board''s Report.

27. Corporate Governance Report and Certificate:

As required under Regulation 34 (3) read with

Schedule V (C) of the Listing Regulations, a report on Corporate Governance and the certificate as required under Schedule V (E) of the Listing Regulations from Messrs. V. Sreedharan & Associates, Practicing Company Secretaries, regarding compliance of conditions of Corporate Governance are given in Annexure H and Annexure I respectively, forming part of this report.

28. Risk Management:

The Company has a Risk Management Policy and constituted a Risk Management Committee as required under Listing Regulations. The Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans, risk reporting and carries out other related activities as per the Listing Regulations. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to enterprise risk management.

The details and the process of Risk Management as implemented in the Company are provided as part of Management''s Discussion and Analysis which forms part of this Report.

29. Vigil Mechanism and Whistle Blower Policy:

The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct. The mechanism provides for adequate safeguards to employees and business associates reporting unethical practices and encourages employees to report genuine concerns or grievances such as unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct.

The Whistle Blower Policy is available on the Company''s website at www.abb.co.in

30. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company:

During the Financial Year under review, no regulator or court has passed any significant and / or material orders impacting the going concern status of the Company and its future operations.

31. Corporate Social Responsibility (CSR):

The Corporate Social Responsibility Committee had formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) which was subsequently adopted by it and is being implemented by the Company for carrying out various CSR activities

Composition of the Committee and other details are provided in Corporate Governance Report. The Company''s focus on CSR activities are predominantly in the areas of Education, Diversity and inclusion in the fabric of society, Environment and Social Issues of the Communities.

The Company has implemented various CSR projects directly and / or through implementing partners and the projects undertaken by the Company are in accordance with Schedule VII of the Act.

During the year under review, your company was required to spend ? 9,87,67,666.59 out of which your Company spent ? 5,88,58,539/- and an amount of ? 3,99,11,461/-remained unutilised due to implementation delays, such as delay in getting requisite approvals from local authorities, overlap of the projects between two calendar years etc., The Company has transferred the unutilised amount(s) to a specified account in accordance with the Act and the same will be utilized within the prescribed time limits.

A brief outline of the Corporate Social Responsibility Policy of the Company and the initiatives undertaken on CSR activities during the Financial Year ended December 31, 2022 is given in Annexure J, forming part of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

In compliance with requirements of Section 135 of the Act, the Company has laid down a CSR Policy which is published on its website and can be accessed by clicking on https://new.abb.com/docs/librariesprovider19/default-document-library/csr-policy.pdf?sfvrsn=c5444009_2

32. Business Responsibility and Sustainability Report:

The ''Business Responsibility and Sustainability Report'' (BRSR) of your Company for the Financial Year ended December 31, 2022 forms part of this Annual Report as required under Regulation 34(2)(f) of the Listing Regulations. Your Company continues to execute strong ESG proposition by working with all relevant stakeholders as well as in its own operations.

33. Transfer to Investor Education and Protection Fund:

As required under Section 124 of the Act, the unclaimed dividend amount aggregating to ? 40.39 lakhs lying with the Company for a period of seven years pertaining to the financial year ended on December 31, 2014, was transferred during the Financial Year 2022, to the Investor Education and Protection Fund established by the Central Government.

34. Secretarial Standards:

During the Financial Year, your Company has complied with the mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

35. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

Your Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions

of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. As required under law, the Company has constituted an Internal Committee for conducting inquiry into the sexual harassment complaints at the work place and for taking such actions as stipulated under the said act. During the year 2022, three complaints of sexual harassment were received, and all three were addressed and closed during the Financial Year ended December 31, 2022. No complaints were pending as at the date of this report.

36. Annual Return:

Pursuant to section 134(3)(a) and section

92(3) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, a copy of the annual return is placed on the website of the Company and can be accessed at https://new.abb. com/news/detail/87676/annual-returns-with-challans

37. Proceedings under the Insolvency and Bankruptcy Code, 2016 (31 of 2016):

During the financial year, neither any application nor any proceeding is initiated against the Company under the Insolvency and Bankruptcy Code, 2016.

38. Other Disclosures:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions / events on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (including Sweat Equity Shares) to employees of the Company under any Scheme.

3. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Act).

4. There has been no change in the nature of business of your Company.

5. The Company has not made any one-time settlement for loans taken from the Banks or Financial Institutions.

6. There was no revision of financial statements and Board''s Report.

39. Acknowledgements:

Your Directors appreciate and value the co-operation and support of the Company''s parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels and look forward to continuance of the supportive relations and assistance in the future.

For and on behalf of the Board

Adrian Guggisberg

Chairman

DIN: 09590850

Place : New Delhi Date : February 10, 2023


Dec 31, 2018

The Directors have pleasure in presenting their Sixty Ninth Annual Report and Audited Accounts for the year ended December 31, 2018.

1. Financial Results:

(Rs. in Crores)

Particulars

For the year ended

December 31, 2018

December 31, 2017

Profit before tax

794.24

621.76

Tax expense:

- Current tax

282.05

189.90

- Deferred tax

1.30

11.91

Profit after tax

510.89

419.95

Other comprehensive income/ (loss) (net of tax)

1.95

2.22

Balance brought forward from previous year

397.68

127.53

Amount available for appropriation

910.52

549.70

Appropriations:

Equity dividend paid

93.24

84.76

Tax on equity dividend paid

19.17

17.26

Debenture redemption reserve

-

50.00

General reserve

-

-

Balance carried forward

798.11

397.68

2. Dividend:

Your Directors recommend payment of a dividend at the rate of Rs.4.80 (Rupees Four and Paisa Eighty only) per share for the year ended December 31, 2018 on 211,908,375 equity shares of Rs.2/- each.

3. Performance Review:

During the year, orders touched Rs.10,115 crore as against Rs.9,490 crore in the Previous Year. In the year 2018, the orders witnessed a healthy growth of 7%, reflecting the technology push and continued traction in transportation and renewable energy. Services and export-led orders resulted in more comprehensive customer engagements. The order backlog at the end of the year stood at Rs.10,111 crore which continued to provide visibility to the future revenue streams. The revenue from operations for the Company for the year 2018 stood at Rs.10,862 crore as against Rs.9,087 crore in the previous year, reflecting stability of operations in an uncertain market situation. Profit before tax was up by 28% at Rs.794.24 crore in 2018 on higher sales as compared to Rs.621.76 crore in the previous year mainly due to operational excellence initiatives, supply chain efficiencies, focus on project management. Net profit after tax was up by 22% at Rs.511 crore for the current year as compared to Rs.420 crore in the previous year. Consequently the earnings per share for the year 2018 stood at Rs.24.11 per share as compared to Rs.19.82 per share in the year 2017.

For detailed analysis of the performance, please refer to the Management’s Discussion and Analysis given in Annexure - A, forming part of this Report.

4. Extract of Annual Return:

As per provisions of Section 92 (3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended from time to time, the extract of the Annual Return in the Form MGT-9 is given in Annexure - B, forming part of this report.

5. Board Meetings held during the year:

During the year, 5 meetings of the Board of Directors were held and one meeting of Independent Directors was also held. The details of the meetings are furnished in the Corporate Governance Report.

6. Compliance on criteria of Independence by the Independent Directors:

All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that, they meet the criteria of independence as provided in Sub-Section 6 of Section 149 of the Act and also under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

7. Remuneration Policy of the Company:

The Remuneration Policy of the Company for appointment and remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company along with other related matters have been provided in the Corporate Governance Report.

As and when need arises to appoint Director, the Nomination and Remuneration Committee (NRC) of the Company will determine the criteria based on the specific requirements. NRC while recommending candidature to the Board, will take into consideration the qualification, attributes, experience and Independence of the Candidate. Director(s) appointment and remuneration will be as per NRC Policy of the Company.

A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in Annexure - C, forming part of this report.

8. Dividend Distribution Policy:

As required under the Regulation 43A of the Listing Regulations, the Company has a Policy on Dividend Distribution. This Policy can be accessed on the Company’s website at www.abb.co.in.

9. Particulars of loans, guarantees or investments under Section 186 of the Act:

During the year under review, your Company has not granted any Loan, Guarantees or made Investments within the meaning of Section 186 of the Act.

10. Amount, if any, proposed to be transferred to Reserves:

During the year under review, the Company redeemed entire Non-Convertible Debentures, consequent to which, balance amount in the Debenture Redemption Reserve was transferred to General Reserves. Except this, the Company has not transferred any amount to General Reserves.

11. Material changes and commitment, if any, affecting financial position of the Company from the end of Financial Year and till the date of this Report:

There has been no material change and commitment, affecting the financial performance of the Company occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

12. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The particulars as prescribed under Section 134 of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are given in Annexure - D, forming part of this report.

13. Risk Management Policy:

The Company has a Risk Management Policy and constituted a Risk Management Committee as required under Listing Regulations. The Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to enterprise risk management.

The details and the process of Risk Management as implemented in the Company are provided as part of Management’s Discussion and Analysis which forms part of this Report.

14. Corporate Social Responsibility (CSR) initiatives:

The Company has a Policy on Corporate Social Responsibility and has constituted a CSR Committee as required under the Act for implementing various CSR activities. Composition of the Committee and other details are provided in Corporate Governance Report. Education, Access to Electricity, Health Care, Environment, skills enhancement for creating employable opportunities for the differently abled personnel, etc., are the focal area under the CSR Policy.

The Company has implemented various CSR projects directly and / or through implementing partners and the projects undertaken by the Company are in accordance with Schedule VII of the Act. During the year under review, the Company has achieved more than 100% of the amount to be spent by the Company on CSR activities.

Detailed report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure - E, forming part of this report.

15. Annual evaluation of Board, its Committees and Individual Directors:

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Directors pursuant to the requirements of the Act and the Listing Regulations.

Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and NonExecutive Directors and other items as stipulated under the Listing Regulations.

16. Audit Committee:

The details pertaining to composition of the Audit Committee and terms of reference are included in the Corporate Governance Report, which forms part of this Report.

17. Related Party Transactions:

The Board of Directors has adopted a policy on Related Party Transactions. The objective is to ensure proper approval, disclosure and reporting of transactions as applicable, between the Company and any of its related parties. All contracts or arrangements with related parties, entered into or modified during the financial year were at arm’s length basis and in the ordinary course of the Company’s business except the one which is reported herein below:

The Company took decision to discontinue its EPC Substation Business hitherto carried out as a strategy to focus more on technology-based value-added business offerings thereby improving margin and lowering high risk businesses. Accordingly, the discontinued EPC Substation Business comprising 32 customer contracts with their corresponding assets and liabilities were transferred to ABB Substations Contracting India Private Limited (Buyer Company), a wholly owned Indian Subsidiary of ABB Group incorporated for this purpose, for a total consideration of Rs 30 Crore. The Company and the Buyer Company executed an "Asset Purchase Agreement” to that effect. Out of the 32 customer contracts transferred, execution status of about 27 contracts have already reached at a significant level and it is expected the final closure of all these contracts might be achieved in 2 to 3 years’ time. These 27 contracts will stay with the Buyer Company (ABB Group Company) for completion of execution and handing over the Projects to respective customers.

As the aforesaid transfer of Customer Contracts with their related assets and liabilities fall within the ambit of Related Party Transaction within the provisions of Section 188 of the Companies Act, 2013, required disclosure is made in Form No.AOC-2 pursuant to Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 which is attached as Annexure-F.

The balance 5 Customers Contracts which are new and execution activities are yet to commence and/or at a starting level, will further be transferred by the Buyer Company to a new Company formed in India for doing the EPC Substation business by the overseas JV Company in which SNC Levlin and ABB Group would be having equity of 51% and 49% respectively.

All contracts or arrangements were entered into only with prior approval of the Audit Committee, except transactions which qualified under Omnibus approval as permitted under law.

Transactions with related parties, as per requirements of Indian Accounting Standard 24 are disclosed in the notes to accounts annexed to the financial statements. Your Company’s Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Company’s website. Link for the same is http://new.abb.com/ docs/ librariesprovider19/default- document- library/ related-party-transaction-policy.pdf?sfvrsn=2

18. Reporting of frauds:

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act and Rules framed thereunder.

19. Transfer to Investor Education and Protection Fund:

As required under Section 124 of the Act, the unclaimed dividend amount aggregating to Rs.21.46 lakh lying with the Company for a period of seven years pertaining to the financial year ended on December 31, 2010, was transferred during the financial year 2018, to the Investor Education and Protection Fund established by the Central Government.

20. Particulars of Employees:

The information on employee particulars as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, are given in Annexure-G, forming part of this report. In terms of Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding this Annexure. This Annexure shall be provided to Members on a specific request made in writing to the Company. The said information is available for inspection by the Members at the Registered Office of the Company on any working day of the Company up to the date of the 69th Annual General Meeting.

21. Demerger of Power Grids business:

The Board of Directors of the Company at their meeting held on February 13, 2019 has granted in principle approval for the segregation of the Company’s Power Grids business from the Company’s other businesses. The Board has also determined that a court-approved demerger is the preferred option. In this regard, your Company has incorporated a wholly owned subsidiary Company i.e., ABB Power Products and Systems India Limited. Necessary approvals as may be required under the law including approval from Members will be initiated at appropriate time.

22. Directors’ Responsibility Statement:

To the best of knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) and 134(5) of the Act, that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at December 31, 2018 and of the profit and loss of the Company for the year ended on that date;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

23. Disclosure on confirmation with the Secretarial Standards:

Your Directors confirm that the Secretarial Standards issued by the Institute of Company Secretaries of India have been duly complied with.

24. Corporate Governance Report and Certificate:

As required under Regulation 34 (3) read with Schedule V (C) of the Listing Regulations, a report on Corporate Governance and the certificate as required under Schedule V (E) of the Listing Regulations from Messrs V. Sreedharan & Associates, Practicing Company Secretaries, regarding compliance of conditions of Corporate Governance are given in Annexure - H and Annexure - I respectively, forming part of this report.

25. Secretarial Audit:

Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments thereto, your Company engaged the services of Messrs BMP & Co. LLP, Company Secretaries, Bengaluru, to conduct the Secretarial Audit of the Company for the financial year ended December 31, 2018. The Secretarial Audit Report in Form MR-3 is given in Annexure - J, forming part of this report.

26. Business Responsibility Report:

As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report forms part of the Annual Report.

27. Whistle Blower Policy:

The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of conduct. The mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail of the mechanism.

The Whistle Blower Policy is available on Company’s website at www.abb.co.in.

28. Directors and Key Managerial Personnel:

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on October 30, 2018, has approved

(a) the re-appointment of Mr. Sanjeev Sharma as Managing Director of the Company for a period of three years commencing from January 01, 2019 to December 31, 2021;

(b) for continuation of Directorship beyond March 31, 2019, by Mr. Darius E. Udwadia, Non-executive Director, who has attained the age of 75 years and in compliance with SEBI (Listing Obligations Disclosure Requirements), Regulations 2015, as amended, subject to approval of Shareholders by way of Special Resolution.

Shareholders of the Company have approved both aforesaid proposals with requisite majority through Postal Ballot held during January/ February 2019.

Apart from aforesaid changes there are no changes in Directors and Key Managerial Personnel of the Company during the rest of the year. Details of Directors, Key Managerial Personnel and Composition of various Committees of the Board are provided in the Corporate Governance Report forming part of this report.

In accordance with the provisions of the Companies Act, 2013 read with Article 157 of the Articles of Association of the Company, Mr. Tarak Mehta (DIN: 06995639), Director, retire by rotation at the ensuing Annual General Meeting of the Company, and being eligible, offers himself for re-appointment.

Necessary resolution relating to Mr. Tarak Mehta, Director, who is seeking re-appointment as a Director is included in the Notice of Annual General Meeting. The relevant details of Mr. Mehta are given in the annexure to the Notice of the Annual General Meeting.

As on date, Mr. Sanjeev Sharma, Managing Director, Mr. B. Gururaj, Company Secretary and Mr. T.K. Sridhar, Chief Financial Officer, are the Key Managerial Personnel of the Company.

29. Deposits:

During the year under review, your Company did not accept any deposit within the meaning of the provisions of Chapter V - Acceptance of Deposits by Companies read with the Companies (Acceptance of Deposits) Rules, 2014.

30. Debentures:

During the year under review, the Company has redeemed the entire 600 Unsecured Redeemable Non Convertible Debentures of face value of Rs.1,00,00,000/- each, i.e., on September 4, 2018.

31. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company:

There has been no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations.

32. Internal Control Systems and their adequacy:

The details on Internal Control Systems and their adequacy are provided in the Management’s Discussion and Analysis which forms part of this Report.

33. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. As required under law, an Internal Complaints Committee has been constituted for reporting and conducting inquiry into the complaints made by the victim on the harassments at the work place. During the year 2018, two complaints of sexual harassment were received. These complaints were investigated by the Internal Complaints Committee and Report is awaited.

34. Statutory Auditors:

Pursuant to provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, Messrs B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022), were appointed as Statutory Auditors of the Company for a term of 5 years, to hold office from the conclusion of 67th Annual General Meeting held on May 9, 2017 until the conclusion of 72nd Annual General Meeting.

35. Cost Auditor:

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Board of Directors, on the recommendation of the Audit Committee, has appointed Messrs Ashwin Solanki & Associates, Cost Accountants (Registration No: 100392) as Cost Auditor of the Company, for the financial year ending December 31, 2019, on a remuneration as mentioned in the Notice convening the 69th Annual General Meeting for conducting the audit of the cost records maintained by the Company.

A Certificate from Messrs Ashwin Solanki & Associates, Cost Accountants has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder.

A resolution seeking Members’ approval for remuneration payable to Cost Auditor forms part of the Notice of the 69th Annual General Meeting of the Company and same is recommended for your consideration.

Cost Audit and Compliance reports for the year 2018 were filed with the Registrar of Companies, within the prescribed time limit.

36. Acknowledgements:

The Board of Directors take this opportunity to thank the Company’s parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels for their support and co-operation extended to the Company during the year.

For and on behalf of the Board

J C Deslarzes

Chairman

DIN: 08064621

Place: Bengaluru

Date: March 1, 2019


Dec 31, 2016

The Directors have pleasure in presenting their Sixty Seventh Annual Report and Audited Accounts for the year ended December 31, 2016.

1. Financial Results:

(Rs, in Crore)

Particulars

For the year ended

December 31, 2016

December 31, 2015

Profit Before Taxation

576.05

474.59

Less: Provision for Tax

- Current Tax

229.20

203.71

- Deferred Tax

(29.40)

(29.00)

Profit after Tax

376.25

299.88

Balance Brought Forward from last year

109.41

103.90

Amount available for Appropriation

485.66

403.78

Appropriations:

General Reserve

210.00

150.00

Debenture Redemption Reserve

50.00

50.00

Proposed Dividend

84.76

78.41

Corporate Dividend Tax

17.26

15.96

Balance Carried Forward

123.64

109.41

485.66

403.78

2. Dividend:

Your Directors recommend payment of a dividend at the rate of '' 4 (Rupees Four only) per share for the year ended December 31, 2016 on 211,908,375 equity shares of '' 2/- each.

3. Performance Review:

The Company secured orders valued Rs, 12,466 crore in 2016 as against Rs, 8,100 crore in the previous year, reflecting the technology push in the transmission business and the continued traction in transportation and renewable energy. Services and export-led orders resulted in more comprehensive customer engagements. The order backlog at the end of the year stood at Rs, 11,821 crore which continued to provide visibility to the future revenue streams. The revenue from operations for the Company for the year 2016 stood at Rs, 8,648 crore as against Rs, 8,140 crore in the previous year, reflecting stability of operations in an uncertain market situation. Profit before tax was up by 21% at Rs, 576 crore in 2016 on higher sales as compared to Rs, 475 crore in the previous year mainly due to operational excellence initiatives, supply chain efficiencies, focus on project management. Net profit after tax was up by 25% at Rs, 376 crore for the current year as compared to Rs, 300 crore in the previous year. Consequently the earnings per share for the year 2016 stood at Rs, 17.76 per share as compared to Rs, 14.15 per share in the year 2015.

For detailed analysis of the performance, please refer to the Management’s Discussion and Analysis given in Annexure - A, forming part of this Report.

4. Extract of Annual Return:

As per provisions of Section 92 (3) of the Companies Act, 2013 (the Act) read with Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended from time to time, the extract of the Annual Return in the Form MGT-9 is given in Annexure - B, forming part of this report.

5. Board Meetings held during the year:

As required under the Act and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), during the year, 4 meetings of the Board of Directors were held and one meeting of Independent Directors was also held. The details of the meetings are furnished in the Corporate Governance Report.

6. Compliance on criteria of Independence by the Independent Directors:

All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that, they meet the criteria of independence as provided in Sub-Section 6 of Section 149 of the Act and also under the Listing Regulations.

7. Remuneration Policy of the Company:

The Remuneration Policy of the Company for appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company along with other related matters have been provided in the Corporate Governance Report.

As and when need arises to appoint Director, the Nomination and Remuneration Committee (NRC) of the Company will determine the criteria based on the specific requirements. NRC while recommending candidature to the Board, will take into consideration the qualification, attributes, experience and Independence of the Candidate. Director(s) appointment and remuneration will be as per NRC Policy of the Company.

A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in Annexure - C, forming part of this report.

8. Dividend Distribution Policy:

As required under the Regulation 43A of the Listing Regulations, the Company has formulated a Policy on Dividend Distribution. This Policy can be accessed on the Company''s website at www.abb.co.in.

9. Particulars of loans, guarantees or investments under Section 186 of the Act:

During the year under review, your Company has not granted any Loan, Guarantees or made Investments within the meaning of Section 186 of the Act.

10. Amount, if any, proposed to be transferred to Reserves:

The Company transferred a sum of Rs, 210 Crore towards General Reserve and Rs, 50 Crore towards Debenture Redemption Reserve during the Financial Year 2016.

11. Material changes and commitment, if any, affecting financial position of the Company from the end of Financial Year and till the date of this Report:

There has been no material change and commitment, affecting the financial performance of the Company occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

12. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The particulars as prescribed under Section 134 of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are given in Annexure - D, forming part of this report.

13. Risk Management Policy:

The Company is having a Risk Management Policy and constituted a Risk Management Committee as required under Listing Regulations. The Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to enterprise risk management.

The details and the process of Risk Management as implemented in the Company are provided as part of Management''s Discussion and Analysis which forms part of this Report.

14. Corporate Social Responsibility (CSR) initiatives:

The Company is having a Policy on Corporate Social Responsibility and constituted a CSR Committee as required under the Act for implementing various CSR activities. Composition of the Committee and other details are provided in Corporate Governance Report. Education, Access to Electricity, Health Care, Environment, skills enhancement for creating employable opportunities for the differently abled personnel, etc., are the focal area under the CSR Policy.

The Company has implemented various CSR projects directly and / or through implementing partners and the projects undertaken by the Company are in accordance with Schedule VII of the Act. During the year under review, the Company has achieved 99% of the amount to be spent by the Company on CSR activities.

Detailed report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure - E, forming part of this report.

15. Annual evaluation of Board, its Committees and Individual Directors:

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors pursuant to the requirements of the Act and the Listing Regulations.

Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non Executive Directors and other items as stipulated under the Listing Regulations.

16. Audit Committee:

The details pertaining to composition of the Audit Committee and terms of reference are included in the Corporate Governance Report, which forms part of this Report.

17. Related Party Transactions:

The Board of Directors has adopted a policy on Related Party Transactions. The objective is to ensure proper approval, disclosure and reporting of transactions as applicable, between the Company and any of its related parties. All contracts or arrangements with related parties, entered into or modified during the financial year were at arm''s length basis and in the ordinary course of the Company''s business. All such contracts or arrangements were entered into only with prior approval of the Audit Committee, except transactions which qualified under Omnibus approval as permitted under law. During the year under review, there were no contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Act as amended from time to time. Therefore, there is no requirement to report any transaction in Form No. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 as amended from time to time. Transactions with related parties, as per requirements of Accounting Standard 18 are disclosed in the notes to accounts annexed to the financial statements. Your Company''s Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Company''s website. Link for the same is http://new.abb.com/docs/ librariesprovider19/default-document-library/ related-party-transaction-policy.pdf?sfvrsn=2

18. Reporting of frauds:

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and /or Board under Section 143(12) of the Act and Rules framed there under.

19. Transfer to Investor Education and Protection Fund:

As required under Section 124 of the Act, the unclaimed dividend amount aggregating to '' 21.01 lakh lying with the Company for a period of seven years pertaining to the financial year ended on December 31, 2008, was transferred during the year 2016, to the Investor Education and Protection Fund established by the Central Government.

20. Particulars of Employees:

The information on employees particulars as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, are given in Annexure - F, forming part of this report. In terms of Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding this Annexure. This Annexure shall be provided to Members on a specific request made in writing to the Company. The said information is available for inspection by the Members at the Registered Office of the Company on any working day of the Company up to the date of the 67th Annual General Meeting.

21. Directors'' Responsibility Statement:

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3) (c) and 134 (5) of the Act, that:

a) in the preparation of the annual financial statements for the year ended December 31, 2016, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if applicable;

b) for the financial year ended December 31, 2016, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit and Loss of the Company for the year ended December 31, 2016;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) proper internal financial controls are in place and such internal financial controls are adequate and were operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and are adequate and operating effectively.

22. Corporate Governance Report and Certificate:

As required under Regulation 34 (3) read with Schedule V (C) of the Listing Regulations, a report on Corporate Governance and the certificate as required under Schedule V (E) of the Listing Regulations from Messrs V. Sreedharan & Associates, Practicing Company Secretaries, regarding compliance of conditions of Corporate Governance are given in Annexure - G and Annexure - H respectively, forming part of this report.

23. Secretarial Audit:

Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments thereto, your Company engaged the services of Messrs HBP & Co., Company Secretaries, Bengaluru, to conduct the Secretarial Audit of the Company for the financial year ended December 31, 2016. The Secretari al Au dit Report in Form MR-3 is given in Annexure - I, forming part of this report.

24. Business Responsibility Report:

As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report forms part of the Annual Report.

25. Whistle Blower Policy:

The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of conduct. The mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail of the mechanism.

The Whistle Blower Policy is available on Company''s website at www.abb.co.in.

26. Directors and Key Managerial Personnel:

During the year under review there are no changes in Directors and Key Managerial Personnel of the Company. Details of Directors, Key Managerial Personnel and Composition of various Committees of the Board are provided in the Corporate Governance Report forming part of this report.

In accordance with the provisions of the Companies Act, 2013 read with Article 164 of the Articles of Association of the Company, Mr. Tarak Mehta (DIN: 06995639), Director, retire by rotation at the ensuing Annual General Meeting of the Company, and being eligible, offers himself for re-appointment.

Necessary resolution relating to Director who is seeking re-appointment is included in the Notice of Annual General Meeting. The relevant details of the said Director is given in the annexure to the Notice of the Annual General Meeting.

As on date, Mr. Sanjeev Sharma, Managing Director, Mr. B. Gururaj, Company Secretary and Mr. T.K. Sridhar, Chief Financial Officer, are the Key Managerial Personnel of the Company.

27. Deposits:

During the year under review, your Company did not accept any deposit within the meaning of the provisions of Chapter V - Acceptance of Deposits by Companies read with the Companies (Acceptance of Deposits) Rules, 2014.

28. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company:

There has been no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operations. All orders received by the Company during the year are of routine in nature which have no significant / material impact.

29. Internal Control Systems and their adequacy:

The details on Internal Control Systems and their adequacy are provided in the Management''s Discussion and Analysis which forms part of this Report.

30. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. As required under law, an Internal Compliance Committee has been constituted for reporting and conducting inquiry in to the complaints made by the victim on the harassments at the work place. During the year 2016, no complaint of sexual harassment has been received.

31. Statutory Auditors:

Messrs S R BATLIBOI & ASSOCIATES LLP, Chartered Accountants (Firm Registration No. 101049W/ E300004), Statutory Auditors of the Company would retire on the conclusion of this Annual General Meeting on completion of their term of appointment.

Since Messrs S R BATLIBOI & ASSOCIATES LLP, Chartered Accountants are not eligible for reappointment as Statutory Auditors of the Company as per Companies Act, 2013, the Board of Directors on recommendation of the Audit Committee, recommended the appointment of Messrs B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022) as Statutory Auditors of the Company for a term of 5 years, in place of Messrs S R BATLIBOI & ASSOCIATES LLP to hold office from the conclusion of 67th Annual General Meeting until the conclusion of 72nd Annual General Meeting, subject to ratification of their appointment at every Annual General Meeting. Consent and certificate from the said firm has been received to the effect that their appointment as Statutory Auditors of the Company, if appointed at ensuing Annual General Meeting, would be according to the terms and conditions prescribed under Section 139 of the Act and Rules framed there under.

A resolution seeking their appointment forms part of the Notice convening the 67th Annual General Meeting and the same is recommended for your consideration and approval.

32. Cost Auditor:

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Board of Directors, on the recommendation of the Audit Committee, have appointed Ashwin Solanki & Associates, Cost Accountant (Registration No: 100392) as Cost Auditor of the Company, for the financial year ending December 31, 2017, on a remuneration as mentioned in the Notice convening the 67th Annual General Meeting for conducting the audit of the cost records maintained by the Company.

A Certificate from Ashwin Solanki & Associates, Cost Accountant has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed there under.

A resolution seeking Member''s ratification for remuneration payable to Cost Auditor forms part of the Notice of the 67th Annual General Meeting of the Company and same is recommended for your consideration and ratification.

Cost Audit and Compliance reports for the year 2015 were not mandatory.

33. Acknowledgements:

The Board of Directors take this opportunity to thank the Company''s parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels for their support and co-operation extended to the Company during the year.

For and on behalf of the Board

Frank Duggan

Chairman

DIN:02937233

Place: Mumbai

Date: March 23, 2017


Dec 31, 2015

The Directors have pleasure in presenting their Sixty Sixth Annual Report and Audited Accounts for the year ended December 31, 2015.

1. Financial Results

(Rs, in Crores)

Particulars For the year ended

December 31, 2015 December 31, 2014

Profit Before Taxation 474.59 355.21

Less: Provision for Tax

– Current Tax 203.71 114.00

– Deferred Tax (29.00) 12.70

Profit after Tax 299.88 228.51

Balance Brought Forward from last year 103.90 89.48

Amount available for Appropriation 403.78 317.99

Appropriations:

General Reserve 150.00 120.00

Debenture Redemption Reserve 50.00 -

Proposed Dividend 78.41 78.41

Corporate Dividend Tax 15.96 15.68

Balance Carried Forward 109.41 103.90

403.78 317.99

2. Dividend:

Your Directors recommend payment of a dividend at the rate of Rs, 3.70 (Rupees three and paise seventy only) per share for the year ended December 31, 2015 on 211,908,375 equity shares of Rs, 2/- each.

3. Performance Review:

The Company secured orders valued Rs, 8,100 crore in 2015 as against Rs, 7,908 crore in the previous year. Base orders from wider spectrum of customers formed a large portion with few large projects. Service led sales resulted in more comprehensive customer engagement. The order backlog at the end of the year stood at Rs, 7,946 crore providing visibility to the future revenue streams. The revenue from operations for the Company for the year 2015 stood at Rs, 8,140 crore as against Rs, 7,733 crore in the previous year, reflecting stability of operations in an uncertain market. Profit before tax was up by 34% at Rs, 475 crore in 2015 as compared to Rs, 355 crore in the previous year mainly due to efforts towards internal operational excellence, entering new market, lower material cost and extensively participating in the shift to renewable energy. Net profit after tax was up by 31% at Rs, 300 crore for the current year as compared to Rs, 229 crore in the previous year. Consequently the earnings per share for the year 2015 stood at Rs, 14.15 per share as compared to Rs, 10.78 per share in the year 2014.

For detailed analysis of the performance, please refer to the Management''s Discussion and Analysis given in Annexure – A, forming part of this Report.

4. Extract of Annual Return:

As per provisions of Section 92 (3) of the Companies Act, 2013 (the Act) read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in the Form MGT-9 is given in Annexure – B, forming part of this report.

5. Board Meetings held during the year:

During the year, 8 meetings of the Board of Directors were held, which includes a meeting of Independent Directors as required under the Act and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations). The details of the meetings are furnished in the Corporate Governance Report.

6. Issue of Debentures:

As approved by the Members through Postal Ballot during August 2015, the Company has issued 600 unsecured, rated, listed, redeemable, non-convertible debentures having face value of Rs, 1,00,00,000/- (Rupees One Crore only) aggregating to Rs, 600 Crore on private placement basis under Foreign Portfolio Investment route to an identified investor, which are listed with BSE Limited. The proceeds of these debentures were used for refinancing the Company''s debt.

7. Compliance on criteria of Independence by the Independent Directors:

All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that, they meet the criteria of independence as provided in Sub-Section 6 of Section 149 of the Act and also under the Listing Regulations.

8. Remuneration Policy of the Company:

The Remuneration Policy of the Company for appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company along with other related matters have been provided in the Corporate Governance Report.

As and when need arises to appoint Director, the Nomination and Remuneration Committee (NRC) of the Company will determine the criteria based on the specific requirements. NRC while recommending candidature to the Board, will take into consideration the qualification, attributes, experience and Independence of the Candidate. Director(s) appointment and remuneration will be as per NRC Policy of the Company.

A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in Annexure – C, forming part of this report.

9. Particulars of loans, guarantees or investments under Section 186 of the Act:

During the year under review, your Company has not granted any Loan, Guarantees or made Investments within the meaning of Section 186 of the Act.

10. Amount, if any, proposed to be transferred to Reserves:

The Company transferred a sum of Rs, 150 Crore towards General Reserve and Rs, 50 Crore towards Debenture Redemption Reserve during the Financial Year 2015.

11. Material changes and commitment, if any, affecting financial position of the Company from the end of Financial Year and till the date of this Report

There has been no material change and commitment, affecting the financial performance of the Company occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

12. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The particulars as prescribed under Section 134 of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are given in Annexure – D, forming part of this report.

13. Listing Agreements:

Your Company has entered into new Listing Agreements with BSE Limited and National Stock Exchange of India Limited, in compliance with Regulation 109 of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended by SEBI.

14. Risk Management Policy:

The Board of Directors has adopted a Risk Management Policy and constituted a Risk Management Committee. The Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to enterprise risk management.

The details and the process of Risk Management as implemented in the Company are provided as part of Management''s Discussion and Analysis which forms part of this Report.

15. Corporate Social Responsibility (CSR) initiatives:

In accordance with the provisions of Section 135 of the Act and Rules framed there under your Company has adopted a policy for CSR and the Board has constituted a Committee for implementing the CSR activities. Composition of the Committee and other details are provided in Corporate Governance Report. Education, Access to Electricity, Health Care, Environment, skills enhancement for creating employable opportunities for the differently baled personnel, etc., are the focal area under the CSR Policy.

The Company has implemented various CSR projects directly and / or through implementing partners and the projects undertaken by the Company are in accordance with Schedule VII of the Act. The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure – E, forming part of this report.

16. Annual evaluation of Board, its Committees and Individual Directors:

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors pursuant to the requirements of the Act and the Listing Regulations.

Further, the Independent Directors, at their exclusive meeting held during the year reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations.

17. Audit Committee:

The details pertaining to composition of the Audit Committee and terms of reference are included in the Corporate Governance Report, which forms part of this Report.

18. Related Party Transactions:

The Board of Directors has adopted a policy on Related Party Transactions. The objective is to ensure proper approval, disclosure and reporting of transactions as applicable, between the Company and any of its related parties. All contracts or arrangements with related parties, entered into or modified during the financial year were at arm''s length basis and in the ordinary course of the Company''s business. All such contracts or arrangements were entered into only with prior approval of the Audit Committee, except transactions which qualified under Omnibus approval as permitted under law. No material contract or arrangement with related parties were entered into during the year under review. Therefore, there is no requirement to report any transaction in Form No. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. Transactions with related parties, as per requirements of Accounting Standard 18 are disclosed in the notes to accounts annexed to the financial statements. Your Company''s Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Company''s website at www.abb.co.in.

19. Reporting of frauds:

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and /or Board under Section 143(12) of the Act and Rules framed there under.

20. Transfer to Investor Education and Protection Fund:

As required under Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs, 18.09 lakh lying with the Company for a period of seven years pertaining to year ended on December 31, 2007, was transferred during the year 2015, to the Investor Education and Protection Fund established by the Central Government.

21. Particulars of Employees:

The statement under Rule 5 (2) and Rule 5 (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and particulars required under Section 197 (12) of the Act are given in Annexure – F, forming part of this report.

The said Annexure shall be provided to Members on a specific request made in writing to the Company. The said information is available for inspection by the Members at the Registered Office of the Company on any working day of the Company up to the date of the 66th Annual General Meeting.

22. Directors'' Responsibility Statement:

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3) (c) and 134 (5) of the Act, that:

a) in the preparation of the annual financial statements for the year ended December 31, 2015, the applicable Accounting Standards have been followed along with proper explanation relating to material departures if applicable;

b) for the financial year ended December 31, 2015, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit and Loss of the Company for the year ended December 31, 2015;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) proper internal financial controls are in place and such internal financial controls are adequate and were operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and are adequate and operating effectively.

23. Corporate Governance Report and Certificate:

As required under Regulation 34 (3) read with Schedule V (C) of the Listing Regulations a report on Corporate Governance and the certificate as required under Schedule V (E) of the Listing Regulations from Messrs V. Sreedharan & Associates, Practicing Company Secretaries, regarding compliance of conditions of Corporate Governance are given in Annexure – G and Annexure – H respectively, forming part of this report.

24. Secretarial Audit:

Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments thereto, your Company engaged the services of Messrs HBP & Co., Company Secretaries, Bengaluru, to conduct the Secretarial Audit of the Company for the financial year ended December 31, 2015. The Secretarial Audit Report in Form MR-3 is given in Annexure – I, forming part of this report.

25. Business Responsibility Report:

As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report forms part of the Annual Report.

26. Whistle Blower Policy:

The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of conduct. The mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail of the mechanism.

The Whistle Blower Policy is available on Company''s website.

27. Directors and Key Managerial Personnel:

Mr. Bazmi R. Husain (DIN: 00965992) resigned as Director and the Managing Director of the Company on September 2, 2015 and as per the Company''s policy, he has been relieved from the services of the Company effective close of office hours on December 31, 2015. Your Directors place on record their appreciation of the valuable service rendered by Mr. Husain during his tenure as the Managing Director of the Company.

Further your Directors at their meeting held on December 11, 2015, appointed, Mr. Sanjeev Sharma (DIN: 07362344) as Director and Managing Director of the Company effective January 1, 2016.

The Board at its meeting held on October 28, 2014 appointed Mr. Frank Duggan (DIN: 02937233) as a Director in the casual vacancy caused due to the resignation of Mr. Gary Steel (DIN: 02500073). Since Mr. Gary Steel was to retire by rotation at the ensuing Annual General Meeting, Mr. Frank Duggan would also cease to hold the office of Director at ensuing Annual General Meeting, pursuant to Section 161(4) of the Act, and is eligible for reappointment as Director.

Pursuant to the Act, and Regulation 25 of the Listing Regulations, all the three Independent Directors, viz., Mr. Nasser Munjee, Mr. Darius E Udwadia and Mrs. Renu Sud Karnad were appointed at the 65th Annual General Meeting held on May 6, 2015 for a period of 5 years effective conclusion of the said meeting. Hence none of the Independent Directors is liable to retire by rotation.

Necessary resolutions relating to Directors who are seeking appointment / reappointment are included in the Notice of Annual General Meeting. The relevant details of the said Directors are given in the annexure to the Notice of the Annual General Meeting.

During the year, Mr. Amlan Datta Majumdar resigned as Chief Financial Officer of the Company and was relieved from the services effective close of office hours on March 10, 2015. Mr. T. K. Sridhar, was appointed as Chief Financial Officer of the Company effective July 23, 2015.

As on date, Mr. Sanjeev Sharma, Managing Director, Mr. B. Gururaj, Company Secretary and Mr. T.K. Sridhar, Chief Financial Officer, are the Key Managerial Personnel of the Company.

28. Deposits:

During the year under review, your Company did not accept any deposit within the meaning of the provisions of Chapter V – Acceptance of Deposits by Companies read with the Companies (Acceptance of Deposits) Rules, 2014.

29. Financial Year:

The Act requires every company to have the period April to March as its Financial Year mandatorily. Exception is however permitted to have a different period as financial year provided the Company obtains permission from the Ministry of Corporate Affairs.

Your Company is one of the key subsidiaries of ABB Group, which follows calendar year as its financial year. To support consolidation of group financial statements and audit thereof as per overall group process and timeline, it was necessary for the Company to follow the financial year as January – December. Therefore your Company intended to continue the calendar year i.e., January – December as its financial year and made an application to the Hon''ble Company Law Board, Southern Region Bench, Chennai, to retain its current financial year period instead of changing it to April – March period. The Hon''ble Company Law Board allowed the Company''s application and permitted the Company to continue to have calendar year, i.e., January – December as its financial year.

30. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the Going Concern status of the Company:

There has been no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations. All orders received by the Company during the year are of routine in nature which have no significant / material impact.

31. Internal Control Systems and their adequacy:

The details on Internal Control Systems and their adequacy are provided in the Management''s Discussion and Analysis which forms part of this Report.

32. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. As required under law, an Internal Compliance Committee has been constituted for reporting and conducting inquiry in to the complaints made by the victim on the harassments at the work place. During the year 2015, the Company has received one complaint of sexual harassment, and the same has been duly inquired and concluded by taking appropriate action.

33. Statutory Auditors:

Pursuant to provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, Messrs S R BATLIBOI & ASSOCIATES LLP, Chartered Accountants (Firm Registration No. 101049W), were appointed as Statutory Auditors of the Company for a term of 2 years, to hold office from the conclusion of 65th Annual General Meeting held on May 6, 2015 until the conclusion of 67th Annual General Meeting, subject to ratification of their appointment at every subsequent Annual General Meeting.

Consent and certificate from them has been received to the effect that their appointment as Statutory Auditors of the Company, if ratified at ensuing Annual General Meeting, would be according to the terms and conditions prescribed under Section 139 of the Act and Rules framed there under.

A resolution seeking ratification of their appointment forms part of the notice convening the 66th Annual General Meeting and the same is recommended for your consideration and approval.

34. Cost Auditor:

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors, on the recommendation of the Audit Committee, have appointed Messrs Ashwin Solanki & Associates, Cost Accountant (Registration No: 100392) as Cost Auditor of the Company, for the financial year ending December 31, 2016, on a remuneration as mentioned in the Notice convening the 66th Annual General Meeting for conducting the audit of the cost records maintained by the Company.

A Certificate from Messrs Ashwin Solanki & Associates, Cost Accountant has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed there under.

A resolution seeking Member''s ratification for the remuneration payable to Cost Auditor forms part of the Notice of the 66th Annual General Meeting of the Company and same is recommended for your consideration and approval.

Cost Audit and Compliance report for the year 2014 were filed on May 27, 2015, which is within the time limit as prescribed in Companies (Cost Audit Report) Rules, 2011.

35. Acknowledgements:

The Board of Directors take this opportunity to thank the Company''s parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels for their support and co-operation extended to the Company during the year.

For and on behalf of the Board

Frank Duggan

Chairman

DIN: 02937233

Place : Bengaluru

Date : February 4, 2016


Dec 31, 2014

Dear Members,

The Directors have pleasure in presenting their Sixty Fifth Annual Report and Audited Accounts for the year ended December 31, 2014.

Company''s financial year under reference has commenced from January 1, 2014. The financial statements, auditors'' report and Board''s report for the year is prepared as per relevant provisions, schedules and rules of the Companies Act, 1956 as per clarification provided by the Ministry of Corporate Affairs vide their circular No 8/2014 dated April 4, 2014.

Financial Results

(Rs. in Crores)

For the year ended For the year ended December 31, 2014 December 31, 2013

Profit Before Taxation 355.21 272.47

Less: Provision for Tax

- Current Tax 114.00 108.48

- Deferred Tax 12.70 (12.90)

Profit After Tax 228.51 176.89

Profit of Baldor Electric India Private Limited for the period April 1, 2012 to December 31, 2012 - 2.42 of the previous year on amalgamation

Profit for the year after giving impact of amalgamation 228.51 179.31

Balance Brought Forward from last year 89.48 85.04

Amount available for Appropriation 317.99 264.35

Appropriations

General Reserve 120.00 100.00

Proposed Dividend 78.41 63.57

Corporate Dividend Tax 15.68 10.81

Corporate Dividend Tax (previous years) - 0.49

Balance Carried Forward 103.90 89.48

317.99 264.35

Dividend

Your Directors recommend payment of a dividend at the rate of Rs. 3.70/- (Rupees three and paise seventy only) per share for the year ended December 31,2014 on 21,19,08,375 equity shares of Rs. 2/- each.

Performance Review

The Company secured orders valued Rs. 7,908 crores in 2014 as against Rs. 6,717 crores in the previous year. Base orders from wider spectrum of customers was also complimented by quite a few large projects. Exports witnessed a healthy growth through enhanced focus on sub-continent markets. The order backlog at the end of the year stood at Rs. 7,926 crores which continued to give more visibility to the future revenue streams. The revenue from operations for the Company for the year 2014 stood at Rs. 7,733 crores as against Rs. 7,722 crores in the previous year, reflecting stability of operations in an uncertain market situation. Profit before tax was up by 30% at Rs. 355 crores in 2014 on flat sales as compared to Rs. 272 crores in the previous year mainly due to operational excellence initiatives, supply chain efficiencies, focus on project management and localization of the products inspite of higher interest costs. Net profit after tax was up by 27% at Rs. 229 crores for the current year as compared to Rs. 179 crores in the previous year. Consequently the earnings per share for 2014 stood at Rs. 10.78 per share as compared to Rs. 8.46 in 2013.

For detailed analysis of the performance, please refer to the Management''s 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 (which is still applicable as the relevant Section under the Companies Act, 2013 is yet to be notified), the unclaimed dividend amount aggregating to Rs. 18.89 lakh pertaining to the year ended on December 31 , 2006, was transferred during the year 2014, to the Investor Education and Protection Fund established by the Central Government.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this Report.

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 in writing to the Company Secretary.

Directors'' Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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 31,2014 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

Corporate Governance

The Company is committed to adhere the highest standards of corporate governance in all areas of its functioning. As required under Clause 49 of the Listing Agreement with Stock Exchanges, a report on Corporate Governance and a Certificate from M/s. V. Sreedharan & Associates, Practicing Company Secretaries, confirming compliance with the requirements of Corporate Governance are given in Annexure - C and Annexure - D respectively, which form part of this Report.

Business Responsibility Report

As required under Clause 55 of the Listing Agreement with the Stock Exchanges, the Business Responsibility Report forms part of the Annual Report.

Whistle Blower Policy

The Company has a vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the company''s code of conduct. The mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail of the mechanism. In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee.

The Whistle Blower Policy is available on Company''s website.

Directors

Mr. Gary Steel, Chairman and Mr. Peter Leupp, Director resigned from Board of Directors of the Company effective October 28, 2014. Your Directors place on record their appreciation of the valuable services rendered by the aforesaid Directors during their tenure as Directors of the Company.

Mr. Frank Duggan and Mr. Tarak Mehta have been appointed as Directors in the casual vacancies caused due to the resignations of Mr. Gary Steel and Mr. Peter Leupp respectively, with effect from October 28, 2014. Since Mr. Peter Leupp was to retire by rotation in this Annual General Meeting, Mr. Tarak Mehta would also cease to hold the office of Director at ensuing Annual General Meeting, pursuant to Section 161 (4) of the Companies Act, 2013 and is eligible for re- appointment as Director.

Mr. Frank Duggan has been appointed as Chairman of the Company effective October 28, 2014.

Pursuant to Companies Act, 2013 and Clause 49 of the Listing Agreement, Mr. Nasser Munjee, Mr. Darius E Udwadia and Mrs Renu Sud Karnad are proposed to be appointed as Independent Directors for a period of 5 years from the date of the Annual General Meeting and shall not be liable to retire by rotation.

As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, the relevant details of Directors retiring by rotation and seeking re-appointment at the ensuing Annual General Meeting are given in the annexure to the Notice of the Annual General Meeting.

Necessary resolutions relating to Directors who are seeking appointment / re-appointment are included in the Notice of Annual General Meeting.

Fixed deposits

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

Shifting of Registered Office

Your Company has shifted its Registered Office to the new premises at 21st Floor, World Trade Center, Brigade Gateway, No.26/1, Dr. Rajkumar Road, Malleshwaram West, Bengaluru - 560 055 effective May 19, 2014.

Auditors

The Company''s Auditors, M/s. S R BATLIBOI & ASSOCIATES LLP, Chartered Accountants (Firm Registration No. 101049W) hold office upto the conclusion of the ensuing Annual General Meeting. M/s. S R BATLIBOI & ASSOCIATES LLP, Chartered Accountants, will be the Statutory Auditors of the Company from the conclusion of 65th Annual General Meeting until the conclusion of 67th Annual General Meeting of the Company (subject to ratification for such appointment by Members at the subsequent Annual General Meeting). The Company has received the requisite certificate from them pursuant to Section 139 and 141 of the Companies Act, 2013 and rules framed there under, confirming their eligibility for re-appointment as Auditors of the Company.

Cost Auditors

The Board of Directors of the Company has appointed M/s. Ashwin Solanki & Associates, Cost Accountants, for conducting the Cost Audit for the year 2014. Cost Audit reports for the year 2013 was filed on June 24, 2014, which is within the time limit as prescribed in the Companies (Cost Audit Report) Rules, 2011.

Acknowledgements

The Board of Directors take this opportunity to thank the Company''s parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels for their support and co-operation extended to the Company during the year.

For and on behalf of the Board

Frank Duggan Chairman

Mumbai, February 10, 2015


Dec 31, 2013

The Directors have pleasure in presenting their Sixty Fourth Annual Report and Audited Accounts for the year ended December 31, 2013.

Financial Results

(Rs in Crores)

For the year ended For the year ended December 31, 2013 December 31, 2012

Profit Before Taxation 272.47 206.21

Less: Provision for Tax

- Current Tax 108.48 61.20

- Deferred Tax (12.90) 7.60

Profit After Tax 176.89 137.41

Profit of Baldor Electric India Private Limited for the period April 1, 2012 to December 31, 2012 2.42 - of the previous year on amalgamation

Profit for the year after giving impact of amalgamation 179.31 137.41

Balance Brought Forward from last year 85.04 85.51

Amount available for Appropriation 264.35 222.92

Appropriations

General Reserve 100.00 64.00

Proposed Dividend 63.57 63.57

Corporate Dividend Tax 10.81 10.31

Corporate Dividend Tax (previous years) 0.49 -

Balance Carried Forward 89.48 85.04

264.35 222.92

Dividend

Your Directors recommend payment of a dividend at the rate of Rs 3/- (Rupees Three only) per share for the year ended December 31, 2013 on 21,19,08,375 equity shares of Rs 2/- each.

Performance Review

The Company secured orders valued Rs 6,717 crores in 2013 as against Rs 6,966 crores in the previous year. Base orders from wider spectrum of customers helped offset the paucity of large projects in the market. Exports grew annulling the effect of a contraction in domestic market opportunities. The company continued to tap sectors like Renewable energy, Data center, Railways, Grid stability, Mining that look increasingly promising now and for the future. The order backlog at the end of the year stood at Rs 7,709 crores which continued to give more visibility to the future revenue streams. The revenues for the Company for the year 2013 stood at Rs 7,632 crores as against Rs 7,565 crores in the previous year, reflecting stability of operations in an uncertain market situation. Profit before tax was at Rs 272 crores in 2013 improved as compared to Rs 206 crores in the previous year mainly due to operational excellence initiatives, supply chain efficiencies, focus on project management and localization of the products inspite of higher interest costs. Net profit after tax stood at Rs 179 crores for the current year as compared to Rs 137 crores in the previous year. Consequently the earnings per share for 2013 stood at Rs 8.46 per share as compared to Rs 6.48 in 2012.

For detailed analysis of the performance, please refer to the Management''s Discussion and Analysis Section of the Annual Report.

Amalgamation of Subsidiary Company

The Hon''ble High Court of Bombay vide its Order dated September 27, 2013 has sanctioned the Scheme of Amalgamation of Baldor Electric India Private Limited (Baldor) with your Company. The Scheme has become effective on November 1, 2013 with appointed date being April 1, 2012. Baldor was a wholly owned subsidiary of the Company.

Members'' attention is drawn to Point No.27 (b) in Notes to Accounts, on Scheme of Amalgamation and treatment of accounts.

In this regard, it is to be noted that the adoption of the Audited Balance Sheet as at December 31, 2013 and the Audited Statement of Profit and Loss as mentioned in item No.1 of the Notice will also cover the approval of this accounting treatment.

Transfer to Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs 14.16 lakhs lying with the Company for a period of seven years pertaining to year ended on December 31, 2005, was transferred during the year 2013, to the Investor Education and Protection Fund established by the Central Government.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this Report.

Health, Safety and Environment

Firmly rooted in the ABB Group''s sustainability strategy that underscores the knowledge that health, safety and environment is good for your Company''s business and its customers. Your Company has integrated health, safety and environment into all its business activities which drive a strong and sound commitment within the Company and contribute to its stakeholders. Health, safety and environment, continues to be one of the Company''s focus areas. Your Company''s commitment to ensure the health, safety and security of employees, contractors and others affected by business operations has been implemented through certifications of its facilities along with strict adherence to its Supplier Code of Conduct. The Company continues its commitment to avoid and/or minimize the impact of its business activities on the environment.

All the major facilities of the Company are certified under the ISO 14001 and OHSAS 18001 standards.

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 in writing to the Company Secretary.

Directors'' Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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, 2013 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

Corporate Governance

As required under Clause 49 of the Listing Agreement with 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 form part of this Report.

Business Responsibility Report

As required under Clause 55 of the Listing Agreement with the Stock Exchanges, Business Responsibility Report is provided in the Annual Report.

Directors

Mr. Francis Duggan resigned as a Director of the Company effective May 7, 2013. Mr. Arun Kanti Dasgupta resigned as a Director of the Company effective May 8, 2013 and Mr. N S Raghavan, resigned as Director of the Company effective August 20, 2013. Your Directors place on record their appreciation of the valuable services rendered by the aforesaid Directors during their tenure as Directors of the Company.

Mrs. Renu Sud Karnad has been appointed as an Additional Director on the Board of the Company on August 9, 2013 and holds office upto the date of the forthcoming Annual General Meeting and is eligible for appointment.

Mr. Gary Steel, Director of the Company is due to retire by rotation at this Annual General Meeting and is eligible for re-appointment.

As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, the relevant details of Directors retiring by rotation and seeking re-appointment at the ensuing Annual General Meeting are given in the annexure to the notice of the Annual General Meeting.

Necessary resolution relating to Directors who are seeking appointment / re-appointment is included in the Notice of Annual General Meeting.

Change of Name

Consequent to the approval of members in the last annual general meeting and subsequent approval from the Central Government, the name of your Company has been changed from "ABB Limited" to "ABB India Limited" effective June 14, 2013.

Fixed Deposits

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

Auditors

M/s. S.R. BATLIBOI & CO. LLP, Chartered Accountants (ICAI Firm Registration No 301003E), the retiring Auditors of the Company, have conveyed their inability to seek re-appointment as the statutory auditors of the Company at the ensuing Annual General Meeting.

Based on the recommendation of the Audit Committee, the Board of Directors at its meeting held on February 18, 2014 appointed, subject to the approval of the members at the forthcoming Annual General Meeting, M/s. S.R. BATLIBOI & ASSOCIATES LLP, Chartered Accountants, having ICAI Firm registration number 101049W, an affiliate of the retiring auditors, as the statutory auditors of the Company from the conclusion of the ensuing Annual General Meeting. M/s. S.R. BATLIBOI & ASSOCIATES LLP, Chartered Accountants, have conveyed their willingness to be appointed as the statutory auditors of the Company and confirm that their appointment, if made, would be within the limits prescribed in Section 224(1B) of the Companies Act, 1956.

The subject of appointment of M/s. S.R. BATLIBOI & ASSOCIATES LLP, Chartered Accountants, in place of existing statutory auditors M/s. S.R. BATLIBOI & CO. LLP, Chartered Accountants, is being placed before the members for approval at the ensuing Annual General Meeting.

Cost Auditors

The Board of Directors of the Company has appointed M/s. Ashwin Solanki & Associates, Cost Accountants, for conducting the Cost Audit for the year 2013. Cost Audit reports for the year 2012 filed on June 28, 2013, which is within the time limit as prescribed in the Companies (Cost Audit Report) Rules, 2011.

Acknowledgements

The Board of Directors take this opportunity to thank its parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels for their support and co-operation extended to the Company during the year.

For and on behalf of the Board

Gary Steel

Chairman

Vadadora, February 18, 2014


Dec 31, 2012

The Directors have pleasure in presenting their Sixty Third Annual Report and Audited Accounts for the year ended December 31, 2012.

Financial Results

(Rs in Crores)

For the year ended For the year ended December 31, 2012 December 31, 2011

Profit before taxation 206.21 267.74

Less: Provision for tax

- Current tax 61.20 104.80

- Deferred tax 7.60 (17.80)

- Fringe benefit tax - (3.80)

Profit after tax 137.41 184.54

Balance brought forward from last year 85.51 54.69

Amount available for appropriation 222.92 239.23

Appropriations

General reserve 64.00 80.00

Proposed dividend 63.57 63.57

Corporate dividend tax 10.31 10.31

Corporate dividend tax (previous years) - (0.16)

Balance carried forward 85.04 85.51

222.92 239.23

Dividend

Your Directors recommend payment of a dividend at the rate of Rs 3/- (Rupees Three only) per share for the year ended December 31, 2012 on 211,908,375 equity shares of Rs 2/- each.

Performance Review

The Company secured orders valued Rs 6,966 crore in 2012 as against Rs 8,189 crore in the previous year. The decline in orders in the current year was mainly attributable to delayed decisions on a few large projects unlike in the last year wherein the Company had secured couple of landmark large orders like HVDC project from Power Grid Corporation of India Limited for nearly Rs 600 crore and 765 kV substation order from Isolux for nearly Rs 800 crore. The base orders continued to be stable in a challenging market environment. The order backlog at the end of the year stood at Rs 8,672 crore which continued to give more visibility to the future revenue streams. The revenues for the Company for the year 2012 stood at Rs 7,565 crore as against Rs 7,449 crore in the previous year, refecting stability of operations in an uncertain market situation. Proft before tax was at Rs 206 crore in 2012 as compared to Rs 268 crore in the previous year. Additional costs required executing the orders due to inordinate time delays in the infrastructure projects, unfavorable foreign exchange impact due to rupee volatility and higher interest costs resulted in lower proftability for the Company. Net proft after tax stood at Rs 137 crore for the current year as compared to Rs 185 crore in the previous year. Consequently the earnings per share for 2012 stood at Rs 6.48 per share as compared to Rs 8.71 in 2011.

For detailed analysis of the performance, please refer to the Management-s Discussion and Analysis Section of the Annual Report.

Subsidiary Company

During the year under review, your Company acquired 18,45,763 Non- Participating Redeemable Preference Shares of Rs 10/- each of Baldor Electric India Private Limited, for a consideration of Rs 1.85 crore.

The Consolidated Accounts have been prepared in accordance with the prescribed Accounting Standards and in line with the general exemption granted by Ministry of Corporate Affairs.

As prescribed in the Circular issued by Ministry of Corporate Affairs, the Board of Directors has, at its meeting held on February 21, 2013, passed a resolution giving consent for not attaching the Balance Sheet of the Subsidiary Company. The Audited consolidated Accounts, Auditors- Report thereon and Cash Flow Statement, comprising your Company and its Subsidiary Company, form part of this Annual Report. Shareholders who wish to have a copy of the annual report and accounts of the Subsidiary will be provided on receipt of a written request from them. The above documents will also be available for inspection by any share holder at the registered offce of the Company as well as registered offce of the Subsidiary Company, on any working day during the business hours.

Amalgamation of Subsidiary Company

The Board at its meeting held on September 26, 2012, approved the proposal of amalgamation of Baldor Electric India Private Limited with your Company. Accordingly, Scheme of Amalgamation has been fled before the Hon-ble High Court of Bombay which is pending for approval of the Court.

Transfer to Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs 11,29,485/- lying with the Company for a period of seven years pertaining to year ended on December 31, 2004, was transferred during the year 2012, to the Investor Education and Protection Fund established by the Central Government.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1) (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure – A, forming part of this Report.

Environment, Health and Safety

The Company stays committed to the principles of Environmental stewardship & Safety in every aspect of its business. This is achieved by embedding the practices for environmental sustainability and safety in the way of doing its daily businesses. Efforts are made to create consistent awareness and training on relevant issues in that regard. In this direction, the Company has identifed projects ranging from energy effciency, waste management and disposal, looking for alternative chemicals to reduce negative impacts on the environment. Most of the locations of the Company are ISO 14001 & OHSAS 18001 certifed and few locations are in the process of getting certifed.

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 in writing to the Company Secretary.

Directors- Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confrm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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, 2012 and of the proft of the Company for the year ended on that date;

iii. proper and suffcient 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

iv. the annual accounts have been prepared on a going concern basis.

Corporate Governance

As required under Clause 49 of the Listing Agreement of Stock Exchanges, a report on Corporate Governance and a Certifcate from M/s. D. R. Shressha & Associates , Practicing Company Secretaries, confrming compliance with the requirements of Corporate Governance are given in Annexure – C and Annexure – D respectively, which form part of this Report.

Business Responsibility Report

As required under Clause 55 of the Listing Agreement of Stock Exchanges Business Responsibility Report is provided in the Annual Report.

Board of Directors

Mr. Darius E. Udwadia and Mr. N. S. Raghavan, Directors of the Company are due to retire by rotation at this Annual General Meeting and are eligible for re-appointment.

As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, brief profle of the Directors proposed to be re-appointed, nature of their expertise in specifc functional areas, names of companies in which they hold directorships and memberships / chairmanships of Board Committees and shareholding are provided in the Report on Corporate Governance forming part of the Annual Report.

Change of Name

The Board at its meeting held on February 21, 2013, accorded its approval to change the name of the Company from the existing -ABB Limited- to -ABB India Limited-. However the said change is subject to the approval of shareholders, Registrar of Companies, Karnataka, and any other concerned authorities.

Auditors

The Company-s Auditors, M/s. S.R. BATLIBOI & CO., Chartered Accountants (Firm Registration No 301003E), hold offce upto the conclusion of the ensuing Annual General Meeting. The Company has received the requisite certifcate from them pursuant to Section 224(1B) of the Companies Act, 1956, confrming their eligibility for re-appointment as Auditors of the Company.

Cost Auditors

The Board of Directors of the Company has appointed M/s. Ashwin Solanki & Associates, Cost Accountants, for conducting the Cost Audit in respect of Electric Motors and Mr. T. L. Sangameswaran, Cost Accountant for Cost Audit of Electrical Grade Insulation Paper and Paper Boards for the year 2012. Cost Audit reports for Electric Motors and Electrical Grade Insulation Paper and Paper Boards for the year 2011 were fled on March 16, 2012 and March 28, 2012 respectively, within the time limit as prescribed in the Cost Audit Report Rules, 2001.

Acknowledgements

The Board of Directors take this opportunity to thank its parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees for their support and co-operation extended to the Company during the year.

For and on behalf of the Board

Gary Steel

Chairman

Place : Bengaluru

Date : February 21, 2013


Dec 31, 2011

The Directors have pleasure in presenting their Sixty Second Annual Report and Audited Accounts for the year ended December 31, 2011.

Financial Results (Rs in Thousands) For the year ended For the year ended December 31, 2011 December 31, 2010

Profit Before Taxation 2,677,391 1,002,303 Less: Provision for Tax

- Current Tax 1,048,000 415,000

- Deferred Tax (178,000) (45,000)

- Fringe Benefit Tax (37,960) -

Profit After Tax 1,845,351 632,303

Balance Brought Forward from last year 546,910 607,178

Amount available for Appropriation 2,392,261 1,239,481

Appropriations

General Reserve 800,000 200,000

Proposed Dividend 635,725 423,817

Corporate Dividend Tax 103,131 70,391

Corporate Dividend Tax (previous years) (1,637) (1,637)

Balance Carried Forward 855,042 546,910

2,392,261 1,239,481

Dividend

Your Directors recommend payment of a dividend at the rate of Rs 3/- (Rupees Three only) per share for the year ended December 31, 2011 on 211,908,375 equity shares of Rs 2/- each.

Performance Review

Orders received during the year at Rs 81,888 million were 29% higher as against Rs 63,496 million in the previous year. The year 2011 witnessed strong growth in both large and base orders. Order backlog at the end of 2011 was at Rs 91,288 million as compared to Rs 84,362 million providing significant revenue visibility for the coming year.

Sales and other income for the year was higher by 17% at Rs 74,651 million compared to Rs 63,726 million in the previous year. Revenues of all the segments were higher than the previous year.

Profit before tax for the year was higher at Rs 2,677 million compared to Rs 1,002 million in the previous year, mainly on account of business growth, improved operational efficiencies and favourable foreign exchange impact.

Profit after tax was significantly higher at Rs 1,845 million for the year as compared to Rs 632 million in the previous year. Earnings per equity share of face value of Rs 2/- correspondingly increased to Rs 8.71 compared to Rs 2.98 in the previous year.

For detailed analysis of the performance, please refer to the Management''s Discussion and Analysis Section of the Annual Report.

Acquisitions a) Acquisition of Operating Businesses

With effect from April 1, 2011, the Company has acquired three businesses (a) Transformer Insulation - Boards and Components,

(b) Low Voltage Breakers and Switches and (c) Vacuum Interrupters from ABB Global Industries and Services Limited for an aggregate consideration of Rs 4,000 million on slump sale basis with the object of bringing business synergies.

b) Acquisition of company

The Company acquired 100% of equity shares in Baldur Electric India Private Limited (Baldur), for a total consideration of Rs 339 million. Baldur is a private limited company based in Pane which provides sales and service assistance to its customers including support for the products viz., electric motors, power transmission products, drives, generators and other accessory products. Baldur became a wholly owned subsidiary of your company effective December 1, 2011. The Company is in the process of acquiring the preference shares in Baldur at a consideration of Rs 18.5 million.

The consolidated Accounts have been prepared in accordance with the prescribed Accounting Standards and in line with the general exemption granted by Ministry of Corporate Affairs.

As prescribed in the circular issued by Ministry of Corporate Affairs, the Board of Directors has, at its meeting held on February 23, 2012, passed a resolution giving consent for not attaching the Balance Sheet of the subsidiary company. The Audited Consolidated Accounts, Auditors'' Report thereon and Cash Flow Statement, comprising of your Company and its subsidiary company, form a part of this Annual Report. Shareholders who wish to have a copy of the full report and accounts of the subsidiary will be provided on receipt of a written request from them. The above documents will also be available for inspection by any shareholder at the registered office of the Company as well as registered office of the subsidiary company, on any working day during the business hours.

Transfer to Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs 1,047,695/- lying with the Company for a period of seven years pertaining to year ended on December 31, 2003, was transferred during the year 2011, to the Investor Education and Protection Fund established by the Central Government.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this Report.

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all its 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.

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 in writing to the Company Secretary.

Directors Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. appropriate accounting policies have been selected and applied consistently and such judgments 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, 2011 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

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. Suresh & Associates, Practicing Company Secretaries, confirming compliance with the requirements of Corporate Governance are given in Annexure - C and Annexure - D respectively, which form part of this Report.

Board of Directors

Mr. Peter Leupp and Mr. Maser Munsee, Directors of the Company are due to retire by rotation at this Annual General Meeting and are eligible for re-appointment.

Mr. Biplab Maunder did not seek re-appointment at the Annual General Meeting held on May 10, 2011 and hence ceased to be Director of the Company with effect from May 10, 2011.

As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, brief profile of the Directors proposed to be re-appointed, nature of their expertise in specific functional areas, names of companies in which they hold directorships and memberships / chairmanships of Board Committees and shareholding are provided in the Report on Corporate Governance forming part of the Annual Report.

Auditors

The Company''s Auditors, M/s S.R. BATLIBOI & CO., Chartered Accountants (Firm Registration No. 301003E), hold office up to the conclusion of the ensuing Annual General Meeting. The Company has received the requisite certificate from them pursuant to Section 224(1B) of the Companies Act, 1956, confirming their eligibility for re-appointment as Auditors of the Company.

Cost Auditors

The Board of Directors of the Company have appointed M/s Ashwini Slinky & Associates, Cost Accountants, for conducting the Cost Audit for the product Electric Motors for the year 2011. Cost Audit report for the year 2010 was filed on June 1, 2011, within the time limit prescribed by the Cost Audit Report Rules, 2001. Further, Mr. T. L. Sangameswaran, Cost Accountant, is appointed to conduct Cost Audit for the Electrical Grade Insulation Paper and Paper Boards. These products are part of the businesses which the Company acquired during the year 2011 from ABB Global Industries and Services Limited.

Acknowledgements

The Board of Directors take this opportunity to thank the parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees for their support and co-operation extended to the Company during the year.

For and on behalf of the Board

Gary Steel Chairman

Place : Bengaluru

Date : February 23, 2012


Dec 31, 2010

The Directors have pleasure in presenting their Sixty First Annual Report and Audited Accounts for the year ended December 31,2010.

Financial Results

(Rs in Thousands)

For the year ended For the year ended December 31,2010 December 31,2009

Profit Before Taxation 1,002,303 5,273,994

Less: Provision for Tax

-Current Tax 415,000 1,805,255

-Deferred Tax (45,000) (39,000)

-Fringe Benefit Tax - (38,652)

Profit After Tax 632,303 3,546,391

Balance Brought Forward from last year 607,178 556,632

Amount available for Appropriation 1,239,481 4,103,023

Appropriations

General Reserve 200,000 3,000,000

Proposed Dividend 423,817 423,817

Corporate Dividend Tax 70,391 72,028

Corporate Dividend Tax (2009) (1,637)

Balance Carried Forward 546,910 607,178

1,239,481 4,103,023

Dividend

Your Directors recommend payment of a dividend at the rate of Rs 21- (Rupees Two only) per share for the year ended December 31, 2010 on 211,908,375 equity shares of Rs 21- each.

Performance Review

Orders received during the year at Rs 63,496 million were 27% lower as compared to Rs 86,847 million in the previous year. Order backlog at the end of 2010 was at the same level of Rs 84,362 million compared to Rs 84,787 million at the end of the previous year.

Sales and other income for the year were marginally higher by 1 % at Rs 63,726 million compared to Rs 63,098 million in the previous year. Revenues of all the segments were higher than the previous year except Power Products and Process Automation which saw a negative growth of 9% and 8% respectively.

Profit before tax for the year was lower at Rs 1,002 million as compared to Rs 5,274 million in the previous year, mainly on account of exit costs of rural electrification business, strategic orders with lower margin, higher input costs witnessed by the industry and adverse impact from fair valuation of forward foreign exchange and embedded derivative contracts.

Profit after tax at Rs 632 million for the year has reduced by 82% compared to Rs 3,546 million in the previous year. Earning per equity share of face value of Rs 21- correspondingly decreased to Rs 2.98 compared to Rs 16.74 in the previous year.

For detailed analysis of the performance, please refer to the Managements Discussion and Analysis Section of the Annual Report.

Acquisition

The Company acquired the business of Metsys Engineering and Consultancy Private Limited (Metsys), based in Bangalore, a private limited company engaged in providing engineering services/consultancy and optimized solutions to OEMs/End customers mainly in Metal industry, for a total consideration of Rs 84.6 million.

Open Offer

The promoter company ABB Asea Brown Boveri Limited, Zurich along with ABB Norden Holding AB, Sweden was holding 52.11% of the total share capital of the Company. ABB Asea Brown Boveri Limited, Zurich, has increased its stake in the Company from 46.19% to 69.08% by way of an Open Offer during 2010. Subsequent to the Open Offer the total shareholding of ABB Asea Brown Boveri Limited, Zurich, in the company along with ABB Norden Holding AB, Sweden is 75%.

Transferto Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs 1,018,692/- lying with the Company for a period of seven years pertaining to year ended on December 31, 2002, was transferred during the year 2010, to the Investor Education and Protection Fund established by the Central Government.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this Report.

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all its 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.

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 in writing to the Company Secretary.

DirectorsResponsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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, 2010 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

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 form part of this Report.

Board of Directors

Mr. Bernhard Jucker was appointed as an Alternate Director for Mr. Peter Leupp during the period from April 30, 2010 to July 29, 2010 when Mr. Leupp was a Director.

Mr. Biplab Majumder, Vice Chairman & Managing Director of the Company resigned and his resignation was accepted by the Board from the close of office hours on December 31,2010.

Your Directors place on record their appreciation of the valuable services rendered by the above Directors during their tenure as Alternate Director and Managing Director of the Company respectively.

Mr. Majumder was appointed as an Additional Director effective January 1, 2011. He holds office upto the date of this Annual General Meeting. He does not wish to seek reappointment.

Mr. Bazmi R. Husain was appointed as an Additional Director. He was also appointed as the Managing Director of the Company with effect from January 1,2011, subject to approval of the share holders in general meeting.

Mr. Arun Kanti Dasgupta, Director of the Company is due to retire by rotation at this Annual General Meeting and is eligible for re-appointment.

Mr. Gary Steel was appointed as a Director of the Company with effect from February 20,2009, in the casual vacancy caused by the resignation of Mr. Ravi Uppal. Since Mr. Ravi Uppal would have retired by rotation at this Annual General Meeting had he not resigned, Mr. Gary Steel would also cease to hold the office of Director at this Annual General Meeting, pursuant to Section 262 of the Companies Act, 1956 and is eligible for reappointment as a Director.

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 ofthe Annual Report.

Auditors

The Companys Auditors, M/s S.R. BATLIBOI & CO., Chartered Accountants, (Registration Number 301003E), hold office upto the conclusion ofthe ensuing Annual General Meeting. The Company has received the requisite certificate from them pursuant to Section 224(1 B) of the Companies Act, 1956, confirming their eligibility for re-appointment as Auditors ofthe Company.

For and on behalf of the Board

Place: Bengaluru Gary Steel

Date : February 23,2011 Chairman


Dec 31, 2009

The 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 For the year ended December 31, 2009 December 31, 2008

Profit Before Taxation 5,273,994 8,332,440

Less: Provision for Tax

-Current Tax 1,805,255 2,858,210

- Deferred Tax (39,000) (90,000)

- Fringe Benefit Tax (38,652) 90,100

Profit After Tax 3,546,391 5,474,130

Balance Brought Forward from last year 556,632 627,930

Amount available for Appropriation 4,103,023 6,102,060

Appropriations

General Reserve 3,000,000 5,000,000

Proposed Dividend 423,817 466,198

Corporate Dividend Tax 72,028 79,230

Balance Carried Forward 607,178 556,632

4,103,023 6,102,060

Dividend

Your Directors recommend payment of a dividend at the rate of Rs 21- (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 21- 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, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report. *

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all factories complying with environmental standards and legislation. All the manufacturing units of the Company have received 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.

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. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

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.

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(1 B) of the Companies Act, 1956, confirming their eligibility for re- appointment as Auditors of the Company.

For and on behalf of the Board

Place: Bengaluru Gary Steel

Date: February 26, 2010 Chairman


Dec 31, 2008

The Directors have pleasure in presenting their Fifty-Nineth Annual Report and Audited Accounts for the year ended December 31, 2008.

Financial Results (Rs in Thousands) For the year ended For the year ended December 31, 2008 December 31, 2007

Profit Before Taxation 8,332,400 7,564,569

Less: Provision for Tax

- Current Tax 2,858,210 2,563,879

- Deferred Tax (90,000) (11,000)

- Fringe Benefit Tax 90,100 95,000

Profit After Tax 54,474,130 4,916,690

Balance Brought Forward from last year 627,930 519,255

Amount avaliable for Appropriation 6,102,060 5,435,945

Appropriations

General Reserve 5,000,000 4,250,000

Proposed Dividend 466,198 466,198

Corporate Dividend Tax 79,230 79,230

Corporate Dividend Tax - 2006 - 12,587

Balance Carried Forward 556,632 627,930

6,102,060 5,435,946

Dividend

Your Directors recommend payment of a dividend at the rate of Rs 2.20 (Rupees Two and Paise Twenty only) per share for the year ended December 31, 2008 on 211,908,375 equity shares of Rs 2/- each.

Performance Review

Orders recived during the year at Rs 80,541 million were 5% higher compared to Rs 76,682 million in the previous year. Order backlog at the end of 2008 was healthy at Rs 61,618 million compared to Rs 50,260 million at the end of the previous year.

Sales and other income for the year were higher by 16% at Rs 69,675 million compared to Rs 60,014 million in the previous year. Profit before tax was higher at Rs 8,332 million compared to Rs 7,565 million in the previous year. Growth in profit was mainly attributable to volume growth and operational efficiencies.

Profit after tax at Rs 5,474 million for thr year has improved by 11% compared to Rs 4,917 million in the previous year. Earning per equity share of face value of Rs 2/- correspondingly improved to Rs 25.83 compared to Rs 23.20 in the previous year.

Operating performance of all the segments was better than previous year except of Power Systems segment where revenues were at the same level of last year with lower operating margin due to higher provision for doubtful debts. 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 887,620/- lying with the Company for a period of seven years pertaining to year ended on December 31, 2000, was transferred during the year 2008, to the Investor Education and Protection Fund established by the Central Government.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment, Health and Safety

The Company has in place a system for controling 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 location. Some of these include energy conservation, waste management, rain water harvesting and greening initiatives.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended and forming part of this report is given in Annexure - B. The said Annexure - B shall, however, be provided to the Members on request to be made to the Company Secretary.

Directors Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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, 2008 and of the profit of the Company for the year ended on that date;

iii. proper and suffcient 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

iv. the annual accounts have been prepared on a going concem basis.

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. Ravi Uppal resigned as Director and the Chairman of the Company effective January 1, 2009.

Your Directors place on record their appreciation of the valuable services rendered by Mr. Ravi Uppal during his tenure as Chairman of the Company.

The Board of Directors at its meeting held on February 20, 2009 appointed Mr. Gary Steel, as Director of the Company in the casual vacancy caused by the resignation of Mr. Ravi Uppal. At the same meeting, the Board appointed Mr. Gary Steel as Chairman of the Company.

Mr. Biplab Majumder has been appointed as Vice Chairman of the Company and accordingly re-designated him as Vice Chairman and Managing Director in the Board Meeting held on February 20, 2009.

Mr. Peter Leupp and Mr. Nasser Munjee, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The particulars of Directors who are seeking re-appointment at the ensuing Annual General Meeting are furnished in the Corporate Governance section annexed to this report.

Auditors

The Companys Auditors, M/s. S.R. Batliboi & Co., Chartered Accountants, 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 re-appointment as Auditors of the Company.

For and on behalf of the Board

Place : Bangalore Gary Steel Date : February 20, 2009 Chairman


Dec 31, 2007

The Directors have pleasure in presenting their Fifty-eighth Annual Report and Audited Accounts for the year ended December 31, 2007.

Financial Results

(Rs in Thousands) For the year ended For the year ended December 31, 2007 December 31, 2006

Profit Before Taxation 7,564,569 5,232,062 Less: Provision for Tax Current Tax 2,563,879 1,671,000 Deferred Tax (11,000) 81,000 Fringe Benefit Tax 95,000 77,000 Profit After Tax 4,916,690 3,403,062 Balance Brought Forward from last year 519,255 349,450 Amount available for Appropriation 5,435,945 3,752,512 Appropriations 4,250,000 2,750,000 Proposed Dividend 466,198 423,817 Corporate Dividend Tax 79,230 5,440 Corporate Dividend Tax 20.06 12,587 Balance Carried Forward 627,930 519,255 5,435,945 3,752,512



Dividend

Your Directors recommend payment of a dividend at the rate of Rs.2.20 (Rupees two and paise twenty only) per share (previous year Rs 10/- per share on 42,381,675 equity shares of Rs.10/- each) for the year ended December 31, 2007 on 211,908,375 equity shares of Rs 2/- each.

Sub-division of the Face Value of Equity Shares

In accordance with the approval of the shareholders at the 57th Annual General Meeting of the Company held on May 25, 2007, each equity share of the face value of Rs.10/- each was sub-divided into 5 equity shares of the face value of Rs.2/- each, effective July 6, 2007. Consequently, the sub-divided equity shares of the face value of Rs.2/- each have been issued to such shareholders who held the equity shares of the face value of Rs.10/- each of the Company, as on July 6, 2007.

Performance Review

Orders received during the year at Rs 76,682 million were 36% higher compared to Rs 56,236 million in the previous year. Order backlog at the end of 2007 was healthy at Rs 50,260 million compared to Rs 33,723 million at the end of the previous year.

Sales and other income for the year were higher by 38% at Rs 60,014 million compared to Rs 43,477 million in the previous year. Profit before tax was significantly higher at Rs 7,565 million compared to Rs 5,232 million in the previous year. Growth in profit was mainly attributable to volume growth and operational efficiencies. Profit after tax at Rs 4,917 million for the year has improved by 44% compared to Rs 3,403 million in the previous year. Earning per equity share of face value of Rs 2 correspondingly improved to Rs 23.20 compared to Rs 16.06 in the previous year.

Operating performance of all the segments, power system, power products, process automation and automation products was significantly better than previous year. For detailed analysis of the performance, please refer to the managements discussion and analysis section of the annual report.

Transfer to Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs.825,720/- lying with the Company for a period of seven years pertaining to year ended on December 31, 1999, was transferred during the year 2007, to the Investor Education and Protection Fund established by the Central Government. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo The particulars as prescribed under sub-section (1 )(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all factories complying with environmental standards and legislation. All the manufacturing units of the Company have received 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.

Delisting of Equity Shares

In accordance with the approval of the shareholders at the 56th Annual General Meeting of the Company held on May 26,2006, the equity shares of the Company have been voluntarily delisted from Calcutta Stock Exchange Association Limited with effect from August 10, 2007. The voluntary delisting of equity shares from Ahmedabad Stock Exchange Limited and Delhi Stock Exchange Association Limited had been completed by the Company during the year 2006.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended and forming part of this report is given in Annexure - B. The said Annexure - B shall, however, be provided to the Members on request to be made to the Company Secretary.

Directors Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. appropriate accounting policies have been selected and applied consistently and such judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2007 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

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. Arun Kanti Dasgupta was appointed as a Director of the Company with effect from April 26, 2007 in the casual vacancy caused due to the resignation of Mr. K. Sridhar.

Mr. Dinesh Paliwal resigned as the Chairman and Director of the Company effective May 25, 2007. Consequent to taking over as the Head of Global Marketing and the base being shifted to Zurich, Switzerland, Mr. Ravi Uppal resigned as the Vice Chairman & Managing Director with effect from July 26, 2007. The Board of Directors, however, at its meeting held on July 26, 2007, appointed Mr. Ravi Uppal as an Additional Director and also as Chairman of the Company with effect therefrom. Mr. Biplab Majumder, Executive Director, has been appointed as the Managing Director of the Company for a period of 3 years, with effect from July 26, 2007.

Mr. Tom Eric Sjoekvist resigned as a Director of the Company effective July 5, 2007 and the Board of Directors at its meeting held on July 26, 2007, appointed Mr. Peter Leupp as a Director of the Company, in the casual vacancy caused due to the resignation of Mr. Tom Eric Sjoekvist. The Board of Directors also appointed Mr. Veli-Matti Reinikkala as an Additional Director of the Company, effective July 26, 2007.

The Board of Directors at its meeting held on February 19, 2008, appointed Mr. K. Rajagopal as an Additional Director and also as Whole-time Director of the Company for a period of three years with effect therefrom. Your Directors place on record their appreciation of the valuable services rendered by Mr. K. Sridhar, Mr. Dinesh Paliwal and Mr. Tom Eric Sjoekvist, during their tenure as Directors of the Company. Mr. D. E. Udwadia and Mr. Bernhard Jucker, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The particulars of Directors who are seeking appointment at the ensuing Annual General Meeting are furnished in the Corporate Governance section annexed to this report.

Auditors

The Companys Auditors-M/s. S.R. BatliboiS Co..Chartered Accountants, holds office upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certificate from them pursuant to Section 224(1 B) of the Companies Act, 1956, confirming their eligibility for re-appointment as Auditors of the Company.

For and on behalf of the Board

New Delhi Ravi Uppal February 19,2008 Chairman


Dec 31, 2006

The Directors have pleasure in presenting their Fifty-seventh Annual Report and Audited Accounts for the year ended December 31, 2006.

Financial Results

(Rs in Thousands)

For the year ended For the year ended December 31, 2006 December 31, 2005

Profit Before Taxation 5,232,062 3,394,770 Less: Provision for Tax - Current Tax 1,671,000 1,204,000 - Deferred Tax 81,000 (48,000) - Fringe Benefit Tax 77,000 52,000 Profit After Tax 3,403,062 2,186,770 Balance Brought Forward from last year 349,450 302,122 Amount available for Appropriation 3,752,512 2,488,892 Appropriations General Reserve 2,750,000 1,750,000 Proposed Dividend 423,817 339,053 Corporate Dividend Tax 59,440 47,552 Corporate Dividend Tax - 2004 - 2,837 Balance Carried Forward 519,255 349,450 3,752,512 2,488,892

Dividend

The Directors recommend payment of a dividend at the rate of Rs.10.00 previous year Rs.8.00) per equity share for the year ended December 31, 2006 on 42,381,675 equity shares of Rs. 10 each.

Sub-division of Equity Shares

In order to enhance the liquidity for the Company's shares in the stock market had to make it affordable to the small investors, the Board of Directors of your Company at their meeting held on February 16, 2007, have recommended sub-division of the face value of the equity shares from Rs.10/- each per are to Rs.2/- each per share, subject to the approval of the shareholders in the ensuing Annual General Meeting.

Performance Review

Orders received during the year at Rs 56,236 million were 50% higher compared to Rs 37,645 million in the previous year. Orders backlog at the year ended of 2006 was healthy at Rs 33,723 million compared to Rs.21,032 million of the end of the previous year.

Rates and other income for the year were higher by 44% at Rs 43,477 million compared to Rs 30,141 million in the previous year. Profit before tax was significantly higher at Rs 5,232 million compared to Rs 3,395 million in the previous year. Growth in profit was mainly attributable to volume growth, operational efficiencies and higher other income.

Profit after tax at Rs 3,403 million for the year has improved by 56% compared to Rs 2,187 million in the previous year. Earning per equity share of face value of Rs 10 correspondingly improved to Rs 80.30 compared to Rs 51.60 in the previous year.

Operating performance of all the segments, power products, power systems, automation products and process automation was significantly better than previous year. For detailed analysis of the performance, please refer to the management's discussion and analysis section of the annual report.

Transfer to the Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs.535,4307- lying with the Company for a period of seven years pertaining to year ended on December 31 ,• 1998, was transferred during the year to the Investor Education and Protection Fund.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all factories complying with environmental standards and legislation. All the manufacturing units of the Company have received 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.

Delisting of Equity Shares

In accordance with the approval of the shareholders at the 56th Annual General Meeting of the Company held on May 26, 2006, the Company applied for voluntary delisting of its equity shares with Ahmedabad Stock Exchange Limited, Delhi Stock Exchange Association Limited and Calcutta Stock Exchange Association Limited.

While Ahmedabad Stock Exchange Limited and Delhi Stock Exchange Association Limited have confirmed the delisting effective July 31, 2006 and September 21, 2006, respectively, confirmation from Calcutta Stock Exchange Association is awaited.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended and forming part of this report is given in Annexure-B. The said Annexure - B shall, however, be provided to the Members on request to be made to the Company Secretary.

Directors' Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. appropriate accounting policies have been selected and applied consistently and such judgments 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, 2006 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

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. K Sridhar resigned as a Director of the Company effective dune 23, 2006. Your Directors place on record their appreciation of the valuable services rendered by Mr. Sridhar, during his tenure as a Director of the Company.

The Board of Directors of the Company at its meeting held on July 24, 2006, has re-appointed Mr. Ravi Uppal as the Vice Chairman & Managing Director of the Company for a period of five years with effect from October 1, 2006, subject to the approval of the shareholders in General Meeting.

Mr. Dinesh Paliwal and Mr. N S Raghavan, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The particulars of the retiring Directors are furnished in the Corporate Governance section annexed to this report.

Auditors

The Company's Auditors - M/s. S.R. Batliboi & Co., Chartered Accountants, holds office upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certificate from them pursuant to Section 224(1 B) of the Companies Act, 1956, confirming their eligibility for re-appointment as Auditors of the Company.

For and on behalf of the Board

Bangalore Dinesh Paliwal February 16, 2007 Chairman

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo - Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of energy

(a) Energy conservation measures taken during the year

Energy audit at Vadodara factory was carried out. Efforts were made to moderate peak load demand, optimisation of oven power ratings and deployment of regenerative method for load testing of HT motors. Training programmes were conducted to increase awareness on energy saving at different locations of the Company.

(b) Proposals being implemented for reduction of consumption

Areas of work included power factor improvement up to 0.999 at various plants of the Company by installation of STATCON, capacitor banks for power factor improvement, usage of thermic fluid heating for oven, optimization of thermic fluid system, air conditioning system, oven ratings and regenerative methods for load testing.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 200,000 kWh of energy per annum. This savings, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort were carried out in almost all the products and processes. The major area includes numeric relays for over current - earth fault protection NI40/41, cougar family of ultra low end relays- REF601 and REJ601, micro-controller based time-lag relay, self power relay REJ603, upgrades for 150 kVAR & 50 kVAR STATCON, universal speech interface card for PLCC application, development of M2BAI motor series frame 71-132, flame proof motors and flame proof flange mounted motors, motors suitable for ambient temperature of 500°C (HX+), 3600 A current rating, 400 kV current transformer, fuse-less capacitor units, high voltage switched capacitor bank using vacuum contactors, bushing terminal arrangement for the HV capacitors, low energy drive for 145 kV breakers, traction converters and instrument transformer design and processes.

(2) Benefits derived as a result of the above R&D

Apart from strengthening of technical base and increased participation in Global projects, other benefits derived includes:

* improvement of product reliability

* introduction of new product ranges and adaptation of designs to suit domestic markets

* reduction in material cost

* increased acceptability of products in global markets and increase in exports

* confirmation to new stringent standards

* better productivity and first pass yields

(3) Future plan of action

Continuous efforts are made to integrate R&D activities with reference to customers' requirement. Future plan includes:

Numeric relay designs, usage of 3D modeling techniques for design optimization of components, development of higher rating Statcon (300/500) kVAR, Statcon for 3-phase application along with lower order harmonic cancellation technique and load balancing, new M2BA motors for frames 160 - 250, new M3BPI motors for frames 280 - 400, brake motors frame 71-132, development of oil immersed internal breaker for transformer, 3600 Amps, 220 kV and 132 kV current transformers, composite insulators for 132, 220, 420 kV current transformers, installation of HV capacitor configurator and low energy drive for 400 kV breakers.

(4) Expenditure on R&D

(Rs in Thousands)

i) Capital 6,872 ii) Revenue 38,299 iii) Total 45,171 iv) Total R&D expenditure as a percentage of turnover 0.10

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Involvement of local designers in product development efforts at the parent units, changeover to automation friendly processes and flexibility for different levels of production on manufacturing lines and extensive training and skill building exercises were conducted in-house and at the collaborators' end to improve design, development, production, commissioning and servicing. Some of the products and applications covered were:

Drive for 245kV breakers with single pole and three pole operation, fuse-less capacitor technology, 3600 A, 400 kV current transformer, IEC 61850 based protection and substation automation systems and EMU traction transformers.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts, product quality, performance and reliability have improved. Product offerings with IEC 61850 compliance are now possible.

(ii) Cost reduction

Usage of specialized software and tools has helped in reduction of the production cycle time. Significant cost reductions have been achieved through design changes, standardization of components, indigenisation of components and developments in HT and LT motors, HV and MV breakers, disconnectors, PLCC components and EPAX, transformers, relay and switchgear cubicles.

(iii) Product development

Important products developed were NI40/41 numeric relays, prototype for 180 kVA and 25 kVA traction converters, 400 kV current transformer, M2BA motors, motors for high speed compressor and wind mill applications.

(iv) Import substitution

Import substitution was mainly carried out for the test facilities for the high end products and insulating materials.

(3) Imported Technology (imported during last five years)

(i) Technology imported

400kV Power Transformer 2002 High voltage circuit breakers (36kV to 420kV) 2003 Instrument transformers (36kV to 420kV all types) 2003 Miniature circuit breakers 2003 Power capacitor units and Banks 2003 HT Motors 2003 LV Capacitors 2003 Transformer Bushings 2004 3100 HP Supercharger 2004 INDACTIC 1425 telemetering equipment 2004 Air circuit breakers 2004 `A' range contactors up to 40A 2005 Residual current circuit breakers 2005 PR521 and PR512 relays 2005 SPAD 346C relays 2005 Operating mechanism - BLK222 245kV CB 2005 ACS 550 Drives 2005

(ii) Has technology been fully absorbed?

Yes, except HT motors for hazardous area and TEFC (M3BM) types.

iii) Foreign exchange earnings and outgo

(a) Activities related to Exports; initiative taken to increase exports; development of new export markets for products and services; export plans

Revenues from exports at Rs 4,331 million were 85% higher than Rs 2,337 million in the previous year. Power products segment consolidated its position in the export markets with .coverage of more than 85 countries so far. It also strengthen its position as global focus feedter factory for 72 kV circuit breakers for the group. This group had significant success in South Africa for this breaker. A major order for Disconnectors was received from Nigeria and from Angelique International Limited, New Delhi, for supply of various HV switchgear products. Process automation segment got certain important orders for export for cement and steel industries and for spares and service of turbochargers. Automation products segment has strategies in place to increase export of various products and services to Europe and in South Asian region. There was significant increase in exports from global engineering and sourcing centre, established last year and is further expected to grow in coming years. Power system segment had substantial increase in revenues on execution of project orders at Syria and Bangladesh. Company management's efforts continue towards increasing export revenues. Moreover, the ABB Group remains committed to increased sourcing from India. Overall growth prospects for export continues to be promising.

(b) Total foreign exchange used and earned

(Rs in Millions)

a) Foreign Exchange earned (including deemed exports) 4,929 b) Foreign Exchange used 12,489

For and on behalf of the Board

Bangalore Dinesh Paliwal February 16, 2007 Chairman


Dec 31, 2005

The Directors have pleasure in presenting their Fifty-sixth Annual Report and Audited Accounts for the year ended December 31, 2005.

Financial Results

(Rs in Thousands)

For the year ended For the year ended December 31, 2005 December 31, 2004

Profit Before Tax and Exceptional Item 3,394,770 2,365,200

Exceptional Item - Profit on Sale of Undertaking - 37,991

Profit Before Taxation 3,394,770 2,403,191 Less: Provision for Tax - Current Tax 1,204,000 874,000 - Deferred Tax (48,000) (14,000) - Fringe Benefit Tax 52,000 - Profit After Tax 2,186,770 1,543,191 Less : Transfer to Foreign Projects Reserve Account - 4,000 Balance Brought Forward from last year 302,122 278,374 Amount available for Appropriation 2,488,892 1,817,565 Appropriations General Reserve 1,750,000 1,180,000 Proposed Dividend 339,053 296,672 Corporate Dividend Tax 47,552 38,771 Corporate Dividend Tax - 2004 2,837 - Balance Carried Forward 349,450 302,122 2,488,892 1,817,565

Dividend

The Directors recommend payment of a dividend at the rate of Rs.8 (previous year Rs 7.00) per equity share for the year ended December 31, 2005 on 42,381,675 equity shares of Rs.10 each.

Performance Review

Orders received during the year at Rs 37,645 million were 45% higher compared to Rs 25,878 million in the previous year. Orders backlog at the end of 2005 was healthy at Rs 21,032 million compared to Rs 13,356 at the end of previous year.

Sales and other income for the year were higher by 31% at Rs30,141 million compared to Rs 23,056 million in the previous year. Profit before tax and exceptional item was significantly higher at Rs 3,395 million compared to Rs 2,365 million in the previous year. Growth in profit was mainly attributable to volume growth, operational efficiencies and higher interest income from short and long term investments.

Profit after tax at Rs 2,187 million for the year has improved by 42% compared to Rs 1,543 million in the previous year. Earning per equity share of face value of Rs 10 correspondingly improved to Rs 51.60 compared to Rs 36.41 in the previous year.

Operating performance of both the core segments, power technologies and automation technologies was significantly better than previous year. For detailed analysis of the performance, please refer to management's discussion and analysis section of the annual report.

Transfer to the Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs.549,315/- lying with the Company for a period of seven years pertaining to year ended on 31 December, 1997, was transferred during the year to the Investor Education and Protection Fund.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all factories complying with environmental standards and legislation. All the manufacturing units of the Company have received certificates for ISO 14001 (EMS). Environment, health and safety are given high priority. All the units of the Company have been awarded OHSAS 18001 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.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended and forming part of this report is given in Annexure-B. The said Annexure - B shall, however, be provided to the Members on request to be made to the Company Secretary.

Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. appropriate accounting policies have been selected and applied consistently and such judgments 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, 2005 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

Corporate Governance

As required by recently amended 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 requirement of corporate governance are given in Annexure - C and Annexure - D respectively, which forms part of this report.

Board of Directors

Mr. Umesh Prasad Singh resigned as a Director of the Company effective February 14, 2005. Mr. Peter Smits and Mr. Peter Leupp resigned as Directors of the Company effective December 22, 2005. Your Directors place on record their appreciation of the valuable services rendered by the aforesaid Directors during their tenure as Directors of the Company.

Mr. D E Udwadia was appointed as an Additional Director on the Board of the Company on July 21, 2005. Further, the Board appointed Mr. K Shridhar as a Director of the Company effective July 21, 2005, in the casual vacancy caused by the resignation of Mr. R N Bharadwaj.

The Board of Directors of the Company in its meeting held on January 24, 2006, has appointed Mr. Biplab Majumder as an Additional Director and also as Executive Director of the Company for a period of three years with effect from January 24, 2006, subject to the approval of the shareholders in General Meeting. Further, the Board appointed Mr. Bernhard Jucker as a Director of the Company, effective January 24, 2006, in the casual vacancy caused by the resignation of Mr. Peter Smits.

Mr. Tom Eric Sjoekvist and Mr. Nasser Munjee, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The particulars of the retiring Directors are furnished in the Corporate Governance section annexed to this report.

Necessary resolution relating to Directors who are seeking appointment/re-appointment is included in the Notice of Annual General Meeting.

Auditors

The. Company's Auditors - M/s. S.R. Batliboi & Company, 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 re-appointment as Auditors of the Company.

For and on behalf of the Board

Mumbai Dinesh Paliwal January 24, 2006 Chairman

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.

(A) Conservation of energy

(a) Energy conservation measures taken during the year

Detailed studies were conducted to achieve unity power factor at Company's Vadodara unit. Continuous efforts were made to moderate peak load demand. Optimisation of oven power ratings and deployment of regenerative method for load testing of HT motors was carried out. Training programmes were conducted for increased awareness on energy conservation.

(b) Proposals being implemented for reduction of consumption

Actions taken to control consumption of energy included installations of dynamic reactive power compensator with switched capacitor banks at Vadodara unit, thrust on energy efficiency in selection of new plants, installation of solar lamps, use of thermic fluid heating for oven in place of electrical heating and energy efficient air-cooling and air conditioning plant. Water harvesting was also taken up at the various manufacturing units.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 200,000 kWh of energy per annum. This savings, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

Major R&D effort areas included numeric relay for over current-earth fault protection, micro-controller based time-lag and voltage relays, self power relay designs, 245 kV transformer bushing, design upgrades for CT and CVT, standalone protection coupler type NSD-50, motor with 2P ratings of frame M2BA400L, die cast rotor design of motor frames M2BA355/2P, 4P, 6P, cooling arrangement for motors, 420 kV, 2000A,HCB disconnector, fuse less capacitors, compact design for CLMD 33C capacitors, 150 kVAR STATCON for railways, 12kV indoor cost effective design compact VCB, and switchgear cubicle, 12kV pole mounted auto recloser & pole mounted capacitor switch, 12kV air switch and outdoor RMU, magnetic actuators for vacuum contactor and for 50kA application, drives for HV breakers, 180kVA traction converters, novel algorithms for common platform relay designs.

(2) Benefits derived as a result of the above R&D

Multifold benefits were accrued as a result of R&D activities. Apart from strengthening of technical base and increased participation in Global projects, other benefits have been reflected in terms of

* improvement of product reliability * introduction of new product ranges and adaptation of designs to suit domestic markets * reduction in material cost * increase in exports * increased acceptability of products in global markets * better productivity and first pass yields

(3) Future plan of action

Continuous efforts are made to integrate R&D activities with reference to customers' requirement. Future plan includes:

Launch of NI-40 and NI-41 type over current and earth fault relays, universal time-lag relay, over voltage and under voltage relays, 12kV, 40kA indoor VCB, 12kV sectionaliser, localisation of PR521, PR512, SPAD346C and SPAE relays, compact design of UVT relay, 3600Amps, 400 kV current transformer, composite insulators for 135 kV CT, development of oil immersed internal breaker for transformer, increased usage of 3-D modeling techniques for design optimization of components, motors for frames 71 -160, flame proof motors in frame JHX 80 and JHX90, development of SPO version of 145kV circuit breaker, development of motor drive, one MVAR capacitor unit, HV bushings with higher creepage, 3 phase STATCONs with ratings equal to and greater than 100 kVAR, new 12kV, 40 kA switchgear cubicle, improved Version of 12kV compact sub station with concrete foundation.

(4) Expenditure on R&D

(Rs in Thousands)

i) Capital 9,700 ii) Revenue 28.520 iii) Total 38.220 iv) Total R&D expenditure as a percentage of turnover 0.13

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted in-house and at the collaborators' end to improve design, development, production, commissioning and servicing. Some of the products and applications covered were:

Failure analysis and design review of PQ8 mechanism, type testing of relays as per IEC, development of indigenous components for relays, development of non-standard variants of UVT, VHXm and substitution of obsolete components for FCX, UFX and PPX relays, 245 kV transformer bushing, up gradation of I-650/1-425 - software to Windows 2000 and XP operating platform, adoption of form-fit tank design for 315 MVA auto-transformers, development of 145 kV breaker of capacitive duty class C2, development of mechanical gang breaker with spring drive with rating of 245kV, localisation of 12kV Ring main unit, IEC 61850 based protection and substation automation systems.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts, product quality, performance and reliability have improved. Also very low vibration levels could be achieved for testing of HT motors. Usage of CAD/CAM tools has also helped in reduction of the time required for the electrical and mechanical designs.

(ii) Cost reduction

Substantial cost reduction has been achieved through design changes, standardisation of components, indigenisation of components and developments of relays, transformers, LV switchgears, RMU, HV and MV Switchgears and dis-connectors. Automation of process has also helped in reducing the cycle time.

(iii) Product development

Important products developed were 250KW/4P wind generator, ACB E1 frame size up to 1600A, 150 kVAR STATCON for railways, 12kV Indoor cost effective compact VCB and switchgear cubicle, 12kV pole mounted auto recloser and capacitor switch, 12kV air Switch and outdoor RMU, magnetic actuators for vacuum contactor and for 50kA application, HT machines for high speed compressor application, 245 kV transformer bushing, NI40 and NI41 relays.

(iv) Import substitution

Import substitution was carried out for ICM relay components, epoxy housing of 12kV indoor VCB, tank components of 12 kV ring main unit, breaker drive components, control CTs and PTs.

(3) Imported Technology (imported during last five years)

(i) Technology imported

* 400kV Power Transformer 2002 * High voltage circuit breakers (36kV to 420kV) 2003 * Instrument transformers (36kV to 420kV all types) 2003 * Miniature circuit breakers 2003 * Power capacitor units and Banks 2003 * HT Motors 2003 * LV Capacitors 2003 * Transformer Bushings 2004 * 3100 HP Supercharger 2004 * INDACTIC 1425 telemetering equipment 2004 * Air circuit breakers 2004 * `A' range contactors up to 40A 2005 * Residual current circuit breakers 2005 * PR521 and PR512 relays 2005 * SPAD 346C relays 2005 * Operating mechanism - BLK222 245kV CB 2005 * ACS 550 Drives 2005

(ii) Has technology been fully absorbed?

Yes, except HT motors, RCCB, PR521, PR512 and SPAD 346C relays.

(C) Foreign exchange earnings and outgo

(a) Activities related to Exports; initiative taken to increase exports; development of new export markets for products and services; export plans

Exports orders booked during the year at Rs 2,836 million were significantly higher compared to Rs 1,940 million in previous year (excluding an exceptionally high value turnkey substation project order valuing Rs 1,350 million from Middle East). Revenues from exports at Rs. 2,337 million were at similar level as in the previous year.

Power technology product export consolidated its position by reaching 82 countries. During the year new countries added included Saudi Arabia, Cameroon, Sudan and Croatia. Orders for compact secondary sub-stations, ring main units and 245kV SF6 circuit breakers were received for the first time. In Group's front-end sales conference in April, 2005, Company's manufacturing capabilities were demonstrated, which will help in securing more orders. Major export orders were received from ESKOM, South Africa, Australian utility Western Power and Mohan Exports, New Delhi. Power technology system booked a large turnkey order to construct 230 kV switchyard from a power grid company of Bangladesh. Revenue from a large Middle East order booked in last year is expected to commence from early part of the year 2006. Export orders and revenues of Automation technology segment also registered a growth during year. During the year Group's global engineering and sourcing centre was established and commenced the operation. This will significantly contribute to export revenues in future. Turbocharger service centre was established at Colombo, Sri Lanka. Export of systems and products increased to Middle East, South and South East Asian countries with large orders from Bangladesh, Malaysia and Thailand. Overall a growth prospect for exports continues to be promising.

(b) Total foreign exchange used and earned

(Rs. in Millions)

a) Foreign Exchange earned (including deemed exports) 2,631

b) Foreign Exchange used 7,761

For and on behalf of the Board Dinesh Paliwal Chairman

Mumbai January 24, 2006


Dec 31, 2004

The Directors have pleasure in presenting their Fifty-fifth Annual Report and Audited Accounts for the year ended 31 December, 2004.

Financial Results

(Rs in Thousands)

For the year For the year ended 31 ended 31 December, 2004 December, 2003

Profit Before Tax and Exceptional Item 2,365,200 1,528,927

Exceptional Item-Profit on Sale of Undertaking 37,991 233,008

Profit Before Taxation 2,403,191 1,761,935 Less: Provision for Tax - Current Tax 874,000 524,000 - Deferred Tax (14,000) (4,000) Profit After Tax 1,543,191 1,241,935

Less: Transfer to Foreign Projects Reserve Account 4,000 2,500

Balance Brought Forward from last year 278,374 258,391

Amount available for Appropriation 1,817,565 1,497,826 Appropriations General Reserve 1,180,000 900,000 Proposed Dividend 296,672 254,290 Corporate Dividend Tax 38,771 32,581 Corporate Dividend Tax - 2002 - 32,581 Balance Carried Forward 302,122 278,374 1,817,565 1,497,826

Dividend

The Directors recommend payment of a dividend at the rate of Rs 7.00 (Previous year Rs 6.00) per equity share for the year ended 31 December, 2004 on 42,381,675 equity shares of Rs 10 each.

Performance Review

Total orders received during the year at Rs 25,878 million were 52% higher compared to Rs 17,054 in the previous year.

Order backlog at the end of 2004 increased to Rs 13,356 million compared to Rs 10,710 million at the end of the previous year.

Sales and other income for the year was 53% higher at Rs 23,056 million compared to Rs 15,031 million in the previous year.

Profit before tax and exceptional item was significantly higher at Rs 2,365 million compared to Rs 1,529 million in the previous year. Growth in profit was mainly attributable to volume growth and focused control over overheads.

Gain on sale of Control Valve business was Rs 38 million. In last year gain on sale of Metering business was significantly higher at Rs. 233 million. Profit after tax was higher at Rs 1,543 million compared to Rs 1,242 million in the previous year.

Operating performance of both the segments, power technology and the automation technology, was significantly better than previous year. For detailed analysis of the performance, please refer to management's discussion and analysis section of the annual report.

Divestment of Business

As approved by the shareholders earlier, the Company has divested its Control Valves business to Kent Introl Private Limited on 12 July, 2004. The gain on divestment was Rs 38 million reported as profit on sale of undertaking in profit and loss account as an exceptional item. The Company has invested the gain in specified assets as per the provisions of Section 54EC of the Income Tax Act, 1961. Accordingly no tax liability arises on this gain.

Change in Registrar and Transfer agents

The Board of Directors has appointed Karvy Computershare Private Limited as Registrar and Share Transfer Agents of the Company in place of Tata Consultancy Services Limited who have opted out of Registry Services business.

Transfer to the Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the following amounts lying with the Company as unclaimed for a period of seven years from the date they became due for payment were transferred during the year to the Investor Education and Protection Fund.

1. Unclaimed Fixed Deposits Rs. 6,000 2. Unclaimed Dividends Rs. 402,492

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all factories complying with environmental standards and legislation. All the manufacturing units of the Company had received certificates for ISO 14001 (EMS). Health and safety are also Company's focus areas. Most of the units of the Company had been awarded OHSAS 18001 certification for the health and safety system.

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.

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. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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 31 December, 2004 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

Corporate Governance

Pursuant to clause 49 of the listing agreement, a report on corporate governance and a certificate from the Auditors of the Company are given in Annexure - C and Annexure - D respectively, which forms part of this report.

Board of Directors

Mr. BoonKiat Sim and Mr. R N Bhardwaj resigned as Directors of the Company effective 5 March, 2004 and 13 December, 2004 respectively. Your Directors place on record their appreciation of the valuable services rendered by Mr. BoonKiat Sim and Mr. R N Bhardwaj as Directors of the Company.

The Board at its meeting held on 19 October, 2004 appointed Mr.Tom Eric Sjoekvist as a Director of the Company in the casual vacancy caused by the resignation of Mr. BoonKiat Sim.

Mr. Dinesh Paliwal and Mr. N.S. Raghavan, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The particulars of the retiring Directors are given in the Corporate Governance section annexed to this report.

Auditors

The Company's Auditors M/s S.R. Batliboi & Company, Chartered Accountants, hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certificate pursuant to Section 224(1B) of the Companies Act, 1956, regarding their eligibility for re-appointment as Auditors of the Company.

For and on behalf of the Board of Directors

Dinesh Paliwal Chairman Bangalore

1 February, 2005

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.

(A) Conservation of energy

(a) Energy conservation measures taken during the year

Main areas of work during the year included installation of VFD on compressor, energy savers for lighting, felt belt for blowers and continuous monitoring of electrical energy consumption. Energy audit was conducted at one factory of the Company. Training programmes were conducted to have increased awareness on energy conservation.

(b) Proposals being implemented for reduction of consumption

Proposed areas of work include power factor improvement up to 0.999, installation of capacitor banks for power factor improvement. Selection of energy efficient plant and machinery, compressed air system along with manufacturing processes. Installation of solar heating system, energy efficient plants for air-cooling and air conditioning is also under consideration.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 360,000 kWh of energy per annum. This savings, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort is carried out in almost all the products and processes, specifically, the major area includes standalone version of protection coupler type NSD 50, party line system, series capacitors, HVDC banks, special terminal connectors, tubular conductors, corona rings, special clamps and insulators for HV capacitors, STATCON with 1ph, 430V, 150kVAR rating, trip circuit supervision relays, restricted earth fault relays, flag indicator for ring main units, low cost Numerical measuring relay, RMUs for outdoor application, 12kV air switch, 27.5 kV single phase VCB for traction application of Indian Railways, 12kV, 1250A, 25kA Indoor VCB, motors with vibration monitoring system, enhancement of motors with different frames, 375kW/3000 RPM high speed induction generator, disconnectors, 400kV auto transformers, single phase generator transformer, 245kV circuit breaker, operating rods for 420kV circuit breakers, switch cubicle body for ELF 245kV and 420kV breakers and pole mounted capacitor switch.

(2) Benefits derived as a result of the above R&D

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 * Introduction of new product ranges * Reduction in material cost * Adaptation of designs to suit local markets * Increased acceptability of products in global markets

(3) Future plan of action

Continuous efforts are being made for integration of R&D activities with business needs so as to offer better value added products and services to our customers. The areas of efforts include:

Universal speech interface and multiplexer for carrier communication equipment, development of new foil and film for power capacitors, design improvements for SSX and VHXm relays, time lag relays for diesel locomotives, 12kV auto reclosure, 36kV air switch, forced cooling arrangement for VSD motors, oil immersed type fuse and internal breaker for transformers, higher ratings of STATCONs, LTB 245 E1 breaker certification for introduction in local markets, flame proof motors in frames JHX90, JHX80 & JHX180, 2 pole ratings of frame M2BA400L, enhanced ratings of M3BP280 frame of M3000 series motors, improved 12kV switchgear cubicle, numeric relay platforms, 66kV and 132kV CTs with casted terminal blocks and 145kV and 72.5 kV GOB type transformer bushing with 500 BCT.

(4) Expenditure on R&D

(Rs in Thousands)

i) Capital 860 ii) Revenue 17,909 iii) Total 18,769 iv) Total R&D expenditure as a percentage of turnover 0.08

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted in-house and at collaborators' end to improve design, development, production, commissioning and servicing. Some of the products covered were:

Fiber optic equipments type FOX515X, FOX515T, digital protection coupler, type testing of relays, substitution of obsolete components for PCX, UFX and PPX relays, MV switchgear solutions, HVDC transformers, 315MVA autotransformers with optimised material content, type testing of 245KV & 420kV breakers, BLK 222 mechanisms, components of 245KV circuit breaker type LIB 245 E1, development of the components for medium voltage circuit breakers and type testing of 145kV and 72.5kV transformer type GOB bushings.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts, product quality, performance and reliability have improved.

(ii) Cost reduction

Substantial cost reduction has been achieved through design changes, standardization of components, indigenisation of components and developments in HV and MV breakers, disconnectors, motors, PLCC components and EPAX, transformers, relay and switchgear cubicles.

(iii) Product development

Important products developed were 145kV & 72.5kV transformer type GOB bushings, 245kV circuit breaker type LIB 245 E1, 375KW/3000RPM high speed induction generator, 10P motors in frames M2BA315 and M2BA355, retrofit product solution for 12kV & 36kV circuit breakers, 12kV air switch, 27.5 kV single phase VCB for traction application of Indian Railways, 12kV, 1250A, 25kA Indoor VCB, non standard variants of UVT, VHXm relays, SPAM 150 with non volatile memory, Single phase 430V, 150 kVAR STATCON and standalone version of NSD50 protection coupler.

(iv) Import substitution

Import substitution was carried out for ring main unit components, which included coils, CTs, voltage indicators, mimic stickers, aluminum profiles and structure assembly. Operating rods used in 420kV circuit breakers were also locally developed.

(3) Imported Technology (imported during last five years)

(i) Technology imported

* Magnetic actuator Type A2 for circuit breakers up to 36kV 2000 * Medium voltage air insulated switchboard type UNISAFE 2000 * 400kV Power Transformer 2002 * High voltage circuit breakers (36kV to 420kV) 2003 * Instrument transformers (36kV to 420kV all types) 2003 * Miniature circuit breakers 2003 * Power capacitor units and Banks 2003 * HT Motors 2003 * LV Capacitors 2003 * Transformer Bushings 2004 * 3100 HP Supercharger 2004 * INDACTIC 1425 telemetering equipment 2004 * Air circuit breakers 2004

(ii) Has technology been fully absorbed?

Yes except in the case of HT Motors

(C) Foreign exchange earnings and outgo

(a) Activities related to exports; initiative taken to increase exports; development of new export markets for products and services; export plans

Export orders booked during the year at Rs 3,290 million were 13% higher compared to previous year. This included a major turnkey substation project order valuing Rs 1,350 million from Middle East. Revenues from exports were Rs 2,382 million. High and medium voltage product continued to be exported across the globe. New countries added by this product included Bolivia, Ecuador and Laos. During 2005 the Company is planning to participate in large value tenders from France, Ireland, Chile and Australia. Several orders from Malaysia, USA, China, Japan and Dubai were secured by Company's automation technologies segment for drives and process automation and engineering solutions for various industries. Overall growth prospects for exports continues to be promising.

(b) Total foreign exchange used and earned

(Rs in Thousands)

a) Foreign Exchange earned (including deemed exports) 3,184,556

b) Foreign Exchange used 6,939,157

For and on behalf of the Board of Directors

Dinesh Paliwal Chairman

Bangalore 1 February, 2005


Dec 31, 2003

The Directors have pleasure in presenting their Fifty-fourth Annual Report and Audited Accounts for the year ended 31 December, 2003.

Financial Results

(Rs in Thousands)

For the year For the year ended 31 ended 31 December, 2003 December, 2002

Profit Before Tax and Extraordinary Item 1,528,927 1,229,682 Extraordinary Item-Profit on sale of Undertaking 233,008 158,259 Profit Before Taxation 1,761,935 1,387,941 Less: Provision for Tax -Current Tax 524,000 405,000 -Deferred Tax (4,000) 11,200 Profit After Tax 1,241,935 971,741 Less: Transfer to Foreign Projects Reserve Account 2,500 1,000 Add: Reversal of Corporate Dividend Tax provided - 21,123 Balance Brought Forward from last year 258,391 245,630 Amount available for Appropriation 1,497,826 1,237,494

Appropriations

General Reserve 900,000 720,000 Dividend Paid-Preference Shares - 4,813 Proposed Dividend-Equity Shares 254,290 254,290 Corporate Dividend Tax 32,581 - Corporate Dividend Tax-2002 32,581 - Balance Carried Forward 278,374 258,391

1,497,826 1,237,494

Dividend

The Directors recommend payment of a dividend at the rate of Rs 6.00 (Previous year Rs 6.00) per equity share for the year ended 31 December, 2003 on 42,381,675 equity shares of Rs 10 each.

Performance Review

Total orders received during the year at Rs 17,054 million were 31% higher compared to Rs 13,050 million in the previous year.

Order backlog at the end of 2003 increased to Rs 10,710 million compared to Rs 8,794 million at the end of the previous year.

Sales and other income for the year was 25% higher at Rs 15,031 million compared to Rs 12,006 million in the previous year.

Profit before tax and extraordinary item was significantly higher at Rs 1,529 million compared to Rs 1,230 million in the previous year. Growth in profit was mainly attributable to volume growth, higher interest income and focused control over overheads.

Capital gain on sale of Metering business was Rs 233 million. Profit after tax was 28% higher at Rs 1,242 million compared to Rs 972 million in the previous year.

For detailed analysis of the performance, please refer to management's discussion and analysis section of the annual report.

Divestment of Business

As approved by the shareholders earlier, the Company has divested its Metering business to Elster Metering Private Limited on 1 April, 2003. Capital gain of 233 million has been booked by the Company on gross proceed of Rs 407 million from the divestment. The Company has invested Rs 310 million in specified assets as per the provisions of Section 54EC of the Income-tax Act, 1961 and accordingly no tax is payable on this capital gain.

Change of Name and Registered Office of the Company

On receipt of the consent of the shareholders and on completion of other formalities, the name of the Company has changed from Asea Brown Boveri Limited to ABB Limited with effect from 16 April, 2003 and the Registered Office of the Company has shifted from Mumbai to Bangalore with effect from 27 November, 2003.

Transfer to the Investor Education and Protection Fund

In terms of Section 205A and 205C of the Companies Act, 1956, following amounts lying with the Company as unclaimed for a period of seven years from the date they became due for payment were transferred during the year to the Investor Education and Protection Fund.

1. Unclaimed Fixed Deposits Rs 50,000

2. Interest on Cumulative Fixed Deposits Rs 4,442

3. Unclaimed Dividends Rs 416,234 Fixed Deposits

A fixed deposit of Rs 6,000 due for repayment before 31 December, 2003 is not yet claimed by the depositor till the date of this report. The Company has stopped accepting fixed deposits in 1998.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment Compliance 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 IS014001 (EMS). The Company's Electric Motor factory at Faridabad has been awarded OHSAS 18001 certification for the. health and safety system. The Company has targeted to have all its manufacturing units certified under OHSAS 18001 during the year 2004.

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 the Annexure-B.

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. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. appropriate accounting policies have been selected and applied consistently and such judgments 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 31 December, 2003 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

Corporate Governance

Pursuant to clause 49 of the listing agreement, a report on corporate governance and a certificate from the auditors of the Company is given in the Annexure - C and Annexure - D respectively, which forms part of this report.

Board of Directors

Consequent to reorganisation of responsibilities at the ABB Group level, Mr. Peter Smits relinquished the Chairmanship of the Company effective 27 January, 2004. He has however agreed to continue as a Director of the Company The Board of Directors at its meeting held on 27 January, 2004 appointed Mr. Dinesh Paliwal, Director, as the Chairman of the Company in place of Mr. Peter Smits.

The Board at its meeting held on 27 January, 2004 appointed Mr. R N Bhardwaj, as a Director of the Company in the vacancy caused due to the demise of Mr. A Ramamurthy

Mr. Bhardwaj shall hold office up to the ensuing Annual General Meeting and his directorship thereafter is subject to the approval of the shareholders at the said Annual General Meeting.

Mr. Peter Smits and Mr. Nasser Munjee, retire as director by rotation at the ensuing Annual General Meeting and being eligible, offers themselves for re-appointment. The particulars of Directors retiring by rotation are given in the Corporate Governance section of this report.

Reconstitution of Committees of the Board

On demise of Mr. A Ramamurthy, Mr. N S Raghavan was appointed as a member of Audit Committee with effect from 6 March, 2003. Mr. Umesh Prasad Singh was appointed as a Chairman of the Share Transfer and Investors' Grievance Committee with effect from 10 April, 2003. Details about the various Committees of the Board of Directors is provided in the Corporate Governance section of this report.

Auditors

The Company's Auditors M/s. Bharat S Raut & Co., who hold office upto the conclusion of the ensuing Annual General Meeting, have requested the Company not to consider their re-appointment as Auditors at the ensuing Annual General Meeting.

M/s. Ernst & Young are the Auditors of the ABB group worldwide and M/s. S.R. Batliboi & Co., Chartered Accountants, are Member firm of Ernst & Young Global in India. Your Directors consider it to be in the interest of the Company and recommend the appointment of M/s. S R Batliboi & Co., as Auditors of the Company at the ensuing Annual General Meeting. The Company has received requisite certificate pursuant to Section 224(1B) of the Companies Act, 1956 from M/s. S.R. Batliboi & Co. regarding their eligibility for appointment as Auditors of the Company

For and on behalf of the Board of Directors

Dinesh Paliwal Chairman

Mumbai 27 January, 2004

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.

(A) Conservation of energy

(a) Energy conservation measures taken during the year Area of work during the year included upgrade of old ovens with the new low power alternatives, installation of ambiator based air cooling plants and solar heating systems. Energy audit at Vadodara and Andheri factories was carried out. Training programmes were conducted to increase awareness on energy saving.

(b) Proposals being implemented for reduction of consumption Proposed areas of work include power factor improvement up to 0.99, selection of energy efficient tube lights and plants and machinery, stoppage of air leakages, solar heating systems, •reflow ovens, wave soldering machines, compressed air system etc.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 184,000 kWH of energy per annum. This saving, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort is carried out in almost all the products and processes, specifically, in the major areas of restricted earth fault relays, time lag relays for railways, trip circuit supervision relays, wind turbine generators, variable speed motors with tacho mounting for cranes, variable speed separately cooled motors for centrifuge, 12kV pole mounted capacitor switch, 12kV ring main unit, switchgear cubicles, controller for PMCS, dynamic reactive power compensator-STATCON improvements and upgrades, 420 current transformer, transformer bushings, standalone version of NSK 5 VFT modem, fixed contact and earth switch for 72.5 kV indoor circuit breaker, series capacitors in higher kVAR ratings, substation earthing design using finite element techniques, substation location optimisation in distribution systems, 420 kV isolators and seismic design for isolator/circuit breaker using FEM techniques.

(2) Benefits derived as a result of the above R&D

The benefits to the Company resulting from R&D activities is manifold, The Company absorbed new and upcoming global technologies, which resulted in increased technical base.

Benefits have been reflected also in terms of

* Improvement of product reliability * Reduction in material cost * Adaptation of imported design to suit local markets * Lower cycle time for manufacturing

(3) Future plan of action

Efforts will be made by integrating R&D with business needs for offering better value added products and services for our customers. The areas of efforts include:

Motor protection relay SPAM150 variant with non-volatile memory, range extension of time lag relays for railways, super efficient series of motors for textile industries, flame proof motors in new frames, high output series motors for compressor applications, 500 kW/4P M2BA400XL wind turbine generator, single phase VCB for railways, new 12 kV/25 kA Indoor VCB, 12 kV/50 kA SF6 circuit breaker, 12 kV air break load switch, 66 and 132 kV transformer bushings, dry type EMU for CVT, all ranges in grading capacitor, 300-400 VA PT for EMU of CVT, filter for PLCC in HVDC application, speech multiplexer in PLCC, economic designs for HVDC capacitors, Thyristor Switched .Capacitor (TSC), dynamic reactive power compensator STATCON for railways, higher rating STATCONs, improvements in LV distribution quality and efficiency, optimised network planning for overhead and underground distribution systems, and dynamic stability studies of large power systems.

(4) Expenditure on R&D

Rs in Thousands

i) Capital 165 ii) Revenue 43,420 iii) Total 43,585 iv) Total R&D expenditure as a percentage of turnover 0.29

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted in-house and at collaborators' end to improve design, development, production, commissioning and servicing. Some of them are:

1MB 420 CT, failure analysis and design review of PSU rocker mechanism, type testing of relays as per IEC, indigenous component for relays, development of the components for high and medium voltage circuit breakers, PLCC version of EPAX, sequential event logger, introduction ofBLK222 mechanism for 145kV CB, 420kV CB for HVDC application, components for traction transformers, 400kV series and HVDC capacitors, low voltage (CLMD) capacitors, and improvements in instrument transformer first pass yields.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts, product quality, performance and reliability have improved.

(ii) Cost reduction

Substantial cost reduction has been achieved through design changes, standardization of components, indigenisation of components and developments in motors, PLCC associated equipments, transformers, relay and switchgear cubicle as well as high value components.

(iii) Product development

Important products developed were 1MB 420 CT, wind turbine generator 250/60 kW, increased safety motors fed through VSD in frame IM2BA355, time lag relays of type SSX-QTD 105/106, SRX-Q48, trip circuit supervision relay TCS/RXTCS, 12 kV pole mounted capacitor switch, 12 kV ring main unit, indoor VCB with local switchgear cubicle and local vacuum interrupters, sequential event recorder type 1425, PLCC version of EPAX.

(iv) Import substitution

Import substitution was carried out for transformer components, sequential event recorder system, motors for ESH mechanism, 12 kV/25A vacuum interrupters, 12 kV/40 kA bushings, 12 kV/40 kA tulip contacts.

(3) Imported Technology (imported during last five years)

(i) Technology imported

EDFSK1 36to72.5kV 1999

Switch fuses 200 Amps to 800 Amps 1999

Magnetic actuator Type A2 for circuit breakers up to 36kV 2000

Medium voltage air insulated switchboard type UNISAFE 2000

400kV Power Transformer 2002

High voltage circuit breakers (36kV to 420kV) 2003

Instrument transformers (36kV to 420kV all types) 2003

Miniature circuit breakers 2003 Power capacitor units and Banks 2003 HT Motors 2003 LV Capacitors 2003

(ii) Has technology been fully absorbed?

Yes, except in the case of MCB, HT Motors and LV Capacitors.

(C) Foreign exchange earnings and outgo

(a) Activities related to Exports; initiative taken to increase exports; development of new export markets for products and services; export plans

There had been significant growth in exports during the year. Orders received and revenues grew by 75% and 230% respectively. Composition of exports at 20% of the total revenues of the Company has also increased significantly During the year Company receiver a single largest export order till date, valued at Rs 1,680 million from Public Establishment of Electricity for Generation & Transmission, Syria for design and supply for six substations. Several orders were received for process automation solutions for steel and cement industries from China, Morocco, Turkey and Bangladesh. For high voltage products orders were received from new countries like Morocco, Montenegro, Chile, Uganda, Portugal, Russia, Colombia and Guatemala. Good responses have been received for medium voltage outdoor breakers exported to South Asia, South East Asia, China and Latin America. To increase exports in neighboring countries, export liaison offices have been opened at Colombo and Dhaka during the year. With continued thrust to export, it is expected that exports volumes will further grow in coming years.

(b) Total foreign exchange used and earned

(Rs in Thousands)

a) Foreign Exchange earned (including deemed exports) 3,657,133

b) Foreign Exchange used 4,005,922

For and on behalf of the Board of Directors

Dinesh Paliwal Chairman

Mumbai 27 January, 2004


Dec 31, 2002

The Directors have pleasure in presenting their Fifty-third Annual Report and Audited Accounts for the year ended 31 December, 2002.

Financial Results

(Rs. in Thousands) For the year For the year ended 31 ended 31 December, 2002 December, 2001

Profit Before Tax and Extraordinary Item 1,229,682 850,789

Extraordinary Item - Profit on sale of Air handling business 158,259 -

Profit Before Taxation 1,387,941 850,789

Less: Provision for Tax

- Current Tax 405,000 200,000

- Deferred Tax 11,200 (2,470)

Profit After Tax 971,741 653,259

Less: Transfer to Foreign Projects Reserve Account 1,000 5,000

Add: Reversal of Corporate Dividend Tax provided 21,123 25,680

Balance Brought Forward from last year 245,630 249,906

Amount available for Appropriation 1,237,494 923,845

Appropriations

General Reserve 720,000 450,000

Dividend Paid - Preference Shares 4,813 -

Proposed Dividend - Equity Shares 254,290 207,092

Corporate Dividend Tax - 21,123

Balance Carried Forward 258,391 245,630

1,237,494 923,845

Dividend

The Directors recommend payment of a dividend at the rate of Rs 6.00 per equity share for the year ended 31 December, 2002 on 42,381,675 equity shares of Rs 10 each (Previous year at the rate of Rs 5.00 per share on 41,418,356 equity shares). This dividend is subject to deduction of tax, if any.

The Company has paid Rs 4,813 thousand during the year as dividend on 750,000 11 % preference shares of Rs 100 each redeemed on 31 July, 2002.

Performance Review

Total orders received during the year at Rs 13,050 million were 20% higher compared to Rs 10,920 million in the previous year. Order backlog at the end of 2002 increased to Rs 8,794 million compared to Rs 7,750 million at the end of the previous year.

Sales and other income for the year was 14% higher at Rs 12,006 million compared to Rs 10,558 million in the previous year.

Profit before tax and extraordinary item was significantly higher at Rs 1,230 million compared to Rs 851 million in the previous year. Growth in profit was mainly attributable to volume growth, improvement in interest income and focused control over overheads.

Capital gain on sale of Air handling business was Rs 158 million. Profit after tax was also higher at Rs 971 million compared to Rs 653 million in the previous year.

For detailed analysis of the performance, please refer to managements discussion and analysis section of the annual report.

Divestment of Businesses

Consequent to the approval of the shareholders for the sale of Air handling equipment business by way of postal ballot and on completion of necessary formalities, the said business was divested during the year under review. An amount of Rs 259 million was realised from the divestment. The Company has invested Rs 215 million in Bonds of Rural Electrification Corporation Limited and accordingly no capital gain tax is payable as per Section 54EC of the Income-tax Act, 1961.

Pursuant to the ABB Groups decision to sell its Metering business worldwide to Ruhrgas Industries GmbH of Essen, Germany, the Board of Directors of the Company in its meeting held on 7 January, 2003 has decided to divest Companys Metering business. The requisite consent of the shareholder has since been obtained through postal ballot, the details of the results are provided in the Corporate Governance section of this report.

Change of Name and Registered Office of the Company

The Board of Directors in their meeting held on 7 January, 2003 had approved the change of name of the Company from Asea Brown Boveri Limited to ABB Limited and shifting of the Registered Office of the Company from state of Maharashtra to the state of Karnataka. The requisite consent of the shareholder has since been obtained through postal ballot, the details of the results are provided in the Corporate

Governance section of this report.

Redemption of Preference Shares

The Board of Directors of the Company in its meeting held on 20 February, 2002 had decided to redeem the 11 % 750,000 preference shares of Rs 100 each held by ABB Holdings (South Asia) Limited aggregating to Rs 75,000,000. These shares have been redeemed at par as on 31 July, 2002 by crediting Rs 75,000,000 to Capital Redemption Reserve Account.

Transfer to the Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, an amount of Rs 2,051 thousand, being unclaimed fixed deposits and unclaimed debentures along with interest accrued thereon, was transferred during the year to the Investor Education and Protection Fund established by the Central Government.

Fixed Deposits

Fixed deposits totalling Rs 59 thousand due for repayment on or before 31 December, 2002 were not claimed by the depositors as on that date. As on the date of this report, no claims have been received for the payment of these deposits. The Company has stopped accepting fixed deposits in 1998.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment Compliance

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 had received certificates for ISO 14001 (EMS).

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 the Annexure - B.

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. in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

ii. 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 31 December, 2002 and of the profit of the Company for the year ended on that date;

iii. 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

iv. the annual accounts have been prepared on a going concern basis.

Corporate Governance

Pursuant to clause 49 of the listing agreement, a report on corporate governance and a certificate from the auditors of the Company is given in the Annexure - C and Annexure - D respectively, which forms part of this report.

Board of Directors

Mr. K. N. Shenoy resigned as Chairman and Director of the Company with effect from 25 October, 2002.

Your Directors place on record their appreciation of the valuable contributions made by Mr. Shenoy during his long and illustrious tenure firstly as Managing Director of the Company and subsequently as Chairman of the Company.

Consequent to the resignation of Mr. Shenoy, the Board of Directors has appointed at its meeting held on 25 October, 2002, Mr. Peter Smits as the Chairman of the Company. At the same meeting, the Board has also appointed Mr. Ravi Uppal as the Vice Chairman and redesignated him as Vice Chairman and Managing Director of the Company.

Mr. Vijay Karan resigned as Director effective 22 June, 2002 and Mr. Umesh Prasad Singh has been appointed in the casual vacancy caused due to the resignation at the Board Meeting held on 24 July, 2002.

Mr. Eric Drewery resigned as Director effective 9 October, 2002 and in his place, Mr. Peter Leupp has been appointed in the casual vacancy caused due to resignation at the Board Meeting held on 25 October, 2002.

Mr. BoonKiat Sim was co-opted as Additional Director by the Board at its meeting held on 25 October, 2002 and he holds office upto the conclusion of the ensuing Annual General Meeting. Necessary resolution is being placed before the shareholders for the approval of his appointment.

The Directors also place on record their appreciation of the valuable services rendered by Mr. Vijay Karan and Mr. Eric Drewery as Directors of the Company.

Your Directors regret to inform about the sad demise of Mr. A. Ramamurthy on 23 February, 2003. He was a Director on the Board of your Company since April, 2001. The Directors place on record the valuable guidance and support extended by him during his tenure as a Director.

Mr. N. S. Raghavan, Director, retire by rotation at ensuing Annual General Meeting and is eligible for re-appointment.

The particulars of Directors retiring by rotation and/or eligible for reappointment are given in the Corporate Governance section of this report.

Reconstitution of Committees of the Board

Consequent to the resignation of Mr. K. N. Shenoy as Chairman and also as Director, he ceased to be a member of Audit Committee, Transfer and Investors Grievance Committee and Remuneration Committee of the Board.

Consequently, your Directors at their meeting held on 25 October, 2002, have reconstituted these committees of the Board, the details of which are provided in the Corporate Governance section of this report.

Auditors

The Companys Auditors M/s. Bharat S Raut & Co. hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certificate pursuant to Section 224(1 B) of the Companies Act, 1956, regarding their eligibility for re-appointment as Auditors of the Company.

Annexure 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.

(A) Conservation of energy

(a) Energy conservation measures taken during the year

Area of work during the year were installation of compressed air system and improvements in air cooling plant and office air conditioning units. Conversion of electric ovens to gas fired ovens was taken up. The manufacturing process of Instrument Transformer was taken up for cycle time reduction leading to energy savings. Unnecessary heating in certain areas was eliminated. Energy audit at Vadodara factory was carried out. Training programs were also conducted to increase awareness on energy saving.

(b) Proposals being implemented for reduction of consumption

Proposed areas of work include power factor improvement up to 0.99, air conditioning system, air cooling plants, electrical motors, solar heating system, water saving activity, selection of energy efficient plant and machinery, manufacturing processes, compressed air system.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 167,000 kWH of energy per annum. This saving, however, has no appreciable impact on cost of goods, as the Companys production processes are not energy intensive.

(B) Technology absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort is carried out in almost all the products and processes, specifically, in the major areas given below:

Time lag relays for railways, improvements in Motor protection and Numerical relays, Trip circuit supervision relays, introduction of higher frame size and cost reduction and standardisation of Motors frames, embedded controllers using DSPs, Dynamic reactive power compensator - STATCON improvements and upgrades, Energy meters (three phase), software for energy meters, Shunt capacitors (higher ratings) and HV capacitor components like bushings, Series capacitors, substation earthing design using finite element techniques, substation location optimisation in distribution systems, 420kV isolators, pole mounted capacitor switch, Seismic design for isolator/circuit breaker using FEM techniques, Development of turbocharger components for export, design and development of 36kV outdoor SF6 circuit breaker, design and development of 12kV pole mounted capacitor switch, prototype development and type testing of 420kV, 2000A, HCB Disconnector Type SDF420p 128, Retrofitting solution and redesign of SERIES installation BAY with 145kV Disconnector Type SGF145 and 12kV, 40kA indoor vacuum circuit breaker with switchgear cubicle.

(2) Benefits derived as a result of the above R&D

The benefits to the Company resulting from R&D activities is manifold. The Company absorbed new and upcoming global technologies, which resulted in increased technical base.

Benefits have been reflected also in terms of

* Improvement of product reliability

* Reduction in material cost

* Adaptation of imported design to suit local markets

* Lower cycle time for manufacturing

(3) Future plan of action

Efforts will be made by integrating R&D with business needs for offering better value added products and services for our customers.

Introduction of new features and range for STATCON, indigenisation of PP film used in capacitors, and reduction in capacitance tolerance in HT capacitors, increased safety motors fed through VSD, development of roller table motor in frame 225, popular ratings with EFF1 higher efficiency motors, restricted earth fault relays, development of higher rating STATCONs and LV distribution quality and efficiency improvement solutions, wider range of metering solutions and range extensions, optimised network planning for overhead and underground distribution systems, dynamic stability study of large power systems, improvements in transformers tank design, development of economical design for 245kV and 400kV circuit breakers, special designs of higher MVA transformers and design and development of 12kV pole mounted capacitor switch.

(4) Expenditure on R&D

(Rs. in Thousands)

i) Capital 2,692

ii) Revenue 23,139

iii) Total 25,831

iv) Total R&D expenditure as a percentage of turnover 0.22

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted in-house and at collaborators end to improve design, development, production, commissioning and servicing. Some of them are:

Development of the components for high and medium voltage circuit breakers, development of indigenous components for electromechanical relays, localisation of components and monitoring field operation of turbochargers, type testing of relays, HT capacitors technology from the collaborator utilised and the range extended from present 132kV to 400kV voltage, technology adoption for making LT power capacitors and higher frequency applications, FAT (higher kVAR capacitor) designs and standardisation, extension of series capacitors technology for 400kV installations and improvements in Instrument transformer first pass yields.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts, product quality, performance and reliability have improved.

(ii) Cost reduction

Substantial cost reduction was achieved through design changes, standardization of components, indigenisation of components, and development of energy meters, relay and switchgear components.

(iii) Product development

Important products developed were 400kV shunt and series capacitors, 200Hz capacitors, frame size M2BA400L motor and motors with EFF1 efficiency level, time lag relay SRX-Q44, 420kV isolator, 12kV VD4E CB with VG5 interrupter, Outdoor 33kV SF6 CB type OHB, Single phase 240,50 Hz, +/-210A Dynamic reactive power compensator, 30MVA 220kV railway traction supply transformer, 30 MVA Single phase 220 kV traction supply transformer with OLTC on HV side etc.

(iv) Import substitution

Import substitution was carried out for electromechanical relays, various components of VTC304 turbocharger.

(3) Imported Technology (imported during last five years)

(i) Technology imported

Power and traction transformers 1998

SF6 CB Types ELF-SP, SP 4-1, ELF SP 6-21 and ELF SP 6-22 1998

Relays 1998

EDFSK1 36 to 72.5kV 1999

Switch fuses 200 Amps to 800 Amps 1999

Magnetic actuator Type A2 for circuit breakers up to 36kV 2000

Medium voltage air insulated switchboard type UNISAFE 2000

400kV Power Transformer 2002

(ii) Has technology been fully absorbed ?

Yes, except in the case 400 kV Power Transformer.

(C) Foreign exchange earnings and outgo

(a) Activities related to Exports; initiative taken to increase exports; development of new export markets for products and services; export plans

Orders received and revenues for the physical exports were higher by 24% and 30% respectively during the year.

Apart from traditional areas of exports, significant exports orders were received for engineering and projects execution in the areas of metals, cement, pulp and paper and petrochemicals from China and other South East Asian countries.

Export of high and medium voltage apparatus were also made to new countries like Algeria, Belgium, Lebanon, Malawi, New Zealand and Ukraine. MV vacuum and SF6 breakers were well received in the export markets.

In the beginning of the year 2003, Company has received its single largest export order to date valued at Rs. 1,680 million for six new substations at Syria.

With continued thrust to export, it is expected that exports will form significant proportion of Companys revenues in coming years.

(b) Total foreign exchange used and earned

(Rs. in Thousands)

a) Foreign Exchange earned (including deemed exports) 1,278,850

b) Foreign Exchange used 2,601,590

For and on behalf of the Board of Directors

Peter Smits Chairman

Zurich 27 February, 2003


Dec 31, 2001

The Directors have pleasure in presenting their Fifty-second Annual Report and Accounts for the year ended 31 December, 2001.

Financial Results

(Rs. in Thousands) 31.12.2001 31.12.2000

Profit Before Tax 850,789 705,115

Less: Provision for Tax

- Current Tax 200,000 165,000

- Deferred Tax (2,470) -

Profit After Tax 653,259 540,115

Less: Transfer to Foreign Projects Reserve Account 5,000 22,000

Add : Reversal of excess Corporate Dividend Tax provided (2000 Dividend) 25,680 -

Balance Brought Forward from last year 249,906 245,686

Amount available for Appropriation 923,845 763,801

Appropriations

General Reserve 450,000 260,000

Proposed Dividend 207,092 207,092

Corporate Dividend Tax thereon 21,123 46,803

Balance Carried Forward 245,630 249,906

923,845 763,801 Dividend

The Directors recommend payment of a dividend at the rate of Rs. 5.00 per share for the year ended 31 December, 2001 on 41,418,356 equity shares of Rs. 10 each (Previous year at the rate of Rs. 5.00 per share). 207,092 207,092

Corporate Dividend Tax thereon 21,123 46,803

Amalgamation

The Scheme of Amalgamation ("the Scheme") of the erstwhile Introl (India) Limited, ABB Instrumentation Limited, ABB Lenzohm Service Limited and ABB Analytical Limited, the transferor companies, with the Company was sanctioned by Honbl'e High Courts of Judicature of Bombay and Chandigarh on 9 November, 2001 and 22 November, 2001 respectively. On complying with the requisite formalities, the Scheme became effective on 24 December, 2001 operative retrospectively from the appointed date of 1 April, 2001 as per the Scheme. In the accompanying financial statements, results of operation for the period 1 April, 2001 to 31 December, 2001 and assets and liabilities as of 31 December, 2001 of the transferor companies have been incorporated.

In consideration of the transfer of and vesting of the undertakings of the transferor companies, 963,319 equity shares of Rs. 10 each and 750,000 11% redeemable 10 year cumulative preference shares of Rs. 100 each fully paid up of the Company were issued and allotted to the shareholders of the transferor companies on 31 December, 2001. The new equity shares allotted rank pari passu with the existing equity shares except they are not entitled to dividend declared for the year 2001. The redemption period for the preference shares is remaining period at the date of allottment till completion of 10 years from the date that the shares were originally issued by ABB Instrumentation Limited. The shareholder of these preference shares has waived its right to receive dividend upto the period 31 December, 2001.

The paid up share capital of the Company has consequently increased to Rs. 498.8 million from Rs. 414.2 million at the end of previous year.

Performance Review

Total orders received during the year were Rs. 10,920 million compared to Rs. 11,277 million in the previous year. Considering current economic environment and certain large value project orders booked in the previous year, order booking performance is considered satisfactory.

Order backlog at the end of 2001 increased to Rs. 7,750 million compared to Rs. 7,034 million at the end of previous year.

Sales and other income for the year was 31% higher at Rs. 10,558 million compared to Rs. 8,068 million in the previous year.

Profit before tax for the year was Rs. 851 million compared to Rs. 705 million in the previous year. Growth in the profit was mainly attributable to volume growth, despite pressure on the margins. Profit after tax was Rs. 653 million compared to Rs. 540 million in the previous year.

The Company's future prospects are closely linked to investments in the power and industrial sector. Though current level of investments in these sectors is low, the Company believes that in the medium and long term, significant investments will take place in these sectors. The Company is confident to secure an important share of this business.

Divestment of Air Handling Equipment Business

Pursuant to the ABB Group's decision to sell worldwide air handling equipment business to Global Air Movement (Luxembourg) SARL, the Board of Directors of the Company in its meeting held on 20 February, 2002 has decided to divest the Company's air handling equipment business. This is subject to approval of the shareholders by postal ballot for which a Notice is being sent to the shareholders.

Redemption of Preference Shares

The Board of Directors of the Company in its meeting held on 20 February, 2002 has decided to redeem the 750,000 11% redeemable preference shares of Rs. 100 each, aggregating to Rs. 75,000,000 during the year 2002.

Fixed Deposits

Fixed deposits totalling Rs. 857,000 due for repayment on or before 31.12.2001 were not claimed by the depositors as on that date. As on the date of this report, no claims have been received for the payment of these deposits. The Company has stopped accepting fixed deposits in 1998.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment Compliance

The Company has in place, a system for controlling and monitoring pollutants at all factories, which has resulted in all of our units complying with environmental standards and legislation. All the manufacturing units of the Company had received certificate for ISO 14001 (EMS). Of the four manufacturing units amalgamated during the year, Control Valve and Instrumentation units are already ISO 14001 (EMS) certified and balance two units are planned for certification during the year 2002.

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 the Annexure - B.

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) in the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

(ii) 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 31 December, 2001 and of the profit of the Company for the year ended on that date;

(iii) 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

(iv) the annual accounts have been prepared on a going concern basis.

Board of Directors

Mr. Ravi Uppal was appointed as Managing Director of the Company for a period of five years with effect from 1 October, 2001 in place of Mr. K.K.Kaura who had expressed his desire to relinquish the office of Managing Director on completion of his term. Mr. Ravi Uppal's appointment is placed before the shareholders for their approval at the ensuing Annual General Meeting.

Mr. Sune Karlsson resigned as a Director with effect from 18 January, 2002. The Board places on record its appreciation of the services rendered by Mr. Karlsson during his tenure on the Board. Mr. Peter Smits was appointed at the Board Meeting held on 20 February, 2002 in the casual vacancy caused by resignation of Mr. Karlsson.

Mr. N.S. Raghavan, Mr. Dinesh Paliwal and Mr. Nasser Munjee were appointed as Additional Directors at the Board Meeting held on 20 February, 2002. They hold office upto the date of ensuing Annual General Meeting but eligible for re-appointment.

Mr. K.K. Kaura was reappointed as an Additional Director at the Board Meeting held on 23 October, 2001 and will hold office upto the date of ensuing Annual General Meeting. He has however requested not to be reappointed as a Director, in view of his other commitments. The Board express their appreciation for the services rendered by him during his tenure on the Board.

Auditors

The Company's Auditors M/s. Bharat S Raut & Co. hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certificate pursuant to Section 224(1B) of the Companies Act, 1956, regarding their eligibility for re-appointment as Auditors of the Company.

For and on behalf of the Board of Directors

K.N. Shenoy Chairman

Mumbai 20 February, 2002

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.

(A) Conservation of energy

(a) Energy conservation measures taken during the year

Area of work during the year were installation of timers for water coolers and split air conditioning systems and improvement in compressed air system to reduce energy consumption. Training programmes were conducted to increase awareness on energy saving.

(b) Proposals being implemented for reduction of energy consumption

Proposed areas of work included energy audits, air conditioning system, air cooling plants, electrical motors, solar heating system, manufacturing processes, illumination systems and compressed air system.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 150,000 kWH per annum. This saving, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology Absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort is carried out in almost all the products and processes, specifically, in the major areas given below:

Development of SF6 breaker type EDI, development of low cost VCBS, turbochargers and turbocharging, protocol converters for relay communication, high-speed trip relay, embedded controllers using DSPs, single phase STATCON for welding applications, timer for railway application, studies for LV distribution quality and efficiency improvements. AF protection coupler, energy meters (three phase), software for energy meters, HV capacitors (higher ratings) and HV capacitor components, surface cooled motors with encoder for VSD application, brake motors, roller table motors, flame proof motors frame 132, auxiliary motors for Indian Railways, motors with SPM nipple and encoders.

(2) Benefits derived as a result of above R&D

The benefits to the Company resulting from R&D activities is manifold. The Company absorbed new and upcoming global technologies, which resulted in increased technical base.

Benefits have also been reflected in terms of

- Improved product reliability

- Reduction in foreign exchange outgo

- Adaptation of the design to suit local markets helping in business growth and opening of new markets

- Lower cycle time for manufacturing

(3) Future plan of action

Efforts will be made by integrating R&D with business needs for offering better value added products and services for our customers.

Upgradation of systems and equipment in the areas of transmission line, trip circuit supervision relays, communication solution for single mode fiber optic cable, NDT techniques, introduction of new turbocharger model for Railways, development of tool for earthing in high resistivity area, system study, development of higher rating STATCONs and LV distribution quality and efficiency improvement solutions, wider range of metering solutions, portable disturbance recorder, sequential event recorders, standalone modem, development of high efficiency motors and development of different ratings of indoor/outdoor CBs.

(4) Expenditure on R&D

(Rs. in Thousands)

i. Capital 2,308

ii. Revenue 20,274

iii. Total 22,582

iv. Total R&D expenditure as a percentage of turnover 0.21

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation Extensive training and skill building exercises were conducted in-house and at collaborators' end to improve design, development, production, commissioning and servicing. Some of them are:

Development of the components for circuit breakers, testing and proving of local manufacturing of spring operated mechanism for CBs, development of 420kV, 50kA breakers and testing as per IEC standards. Technology absorption, adaptation and innovation on developed designs for auto-regulating transformers with special connections for aluminum smelters and design of high efficiency generator transformers with directed oil flow and water cooling, development of indigenous components for electromechanical relays, localisation of components and monitoring field operation of turbochargers.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts, product quality, performance and reliability have improved.

(ii) Cost reduction

Substantial cost reduction was achieved through design changes, standardisation and indigenisation of components and development of Alpha meters.

(iii) Product development

Important products developed were indoor version of 72.5kV CB, spring type BLK222 drive and FSA, high speed trip relay, protocol converters, VTC304 turbocharger, new version of Alpha energy meter, new insulation system in capacitors, bird caps on capacitor terminals and surface cooled motors with encoders and brake motors.

(iv) Import substitution

Import substitution was carried out for electromechanical relays and components of VTC304 turbocharger.

(3) Imported technology (imported during last five years)

(i) Technology imported

- Power and traction transformers 1998

- SF6 CB Types ELF-SP, SP 4-1, ELF SP 6-21 and ELF SP 6-22 1998

- Relays 1998

- EDF SKI 36 to 72.5kV 1999

- Switch fuses 200 Amps. To 800 Amps 1999

- Magnetic actuator Type A2 for circuit breakers up to 36kV 2000

- Medium voltage air insulated switchboard type UNISAFE 2000

(ii) Has technology been fully absorbed ?

Yes.

(C) Foreign exchange earning and outgo

(a) Activities related to exports; initiatives taken to increase exports, development of new export markets for products and services, export plans

As a result of various initiatives taken by the Company, orders received for physical exports were higher by 150% and revenues were up by 85%. Major orders booked during the year included 3 sub-station order for 230/66/20 kV from Syria valuing Rs. 781 million. There has been significant growth in export of high voltage apparatus. A dedicated cell has been recently formed to monitor and realise export opportunities from South Asian countries.

(b) Total foreign exchange earned and used

(Rs. in Thousands)

a. Foreign exchange earned 2,300,926 (including deemed exports)

b. Foreign exchange used 2,192,039

c. Net foreign exchange earned 108,887


Dec 31, 2000

DIR

The Directors have pleasure in presenting their Fifty-first Annual Report and Accounts for the year ended 31 December, 2000.

Financial Results

(Rs. in Thousands) For the year For the year ended 31 ended 31 December, 2000 December, 1999

Profit Before Taxation 705,115 531,956 Less: Provision for Taxation-Income tax 165,000 160,000 Profit After Taxation 540,115 371,956 Less: Transfer to Foreign Projects Reserve Account 22,000 34,900 Balance brought forward from last year 245,686 200,573 Amount available for Appropriation 763,801 537,629

Appropriations

General Reserve 260,000 60,000 Proposed Dividend 207,092 207,092 Corporate Dividend Tax thereon 46,803 22,780 Surcharge on Corporate Dividend Tax (1998 Dividend) - 2,071 Balance carried forward 249,906 245,686

763,801 537,629

Dividend

In line with Company's recent years policy of consistent dividend, the Directors recommend payment of following dividend :

A dividend at the rate of Rs. 5.00 per share for the year ended 31 December, 2000 on 41,418,356 equity shares of Rs. 10 each (Previous year at the rate of Rs.5.00 per share). 207,092 207,092

Corporate Dividend Tax thereon 46,803 22,780

Performance Review

Total orders received during the year at Rs. 11,277 million were 52% higher compared to Rs.7,410 million (excluding the power generation business demerged with effect from 1 April, 1999) in the previous year. The orders booked were higher in each of the segments.

Order backlog at the end of 2000 increased to Rs.7,034 million compared to Rs.4,154 million at the end of previous year.

Sales and other income for the year was Rs.8,068 million compared to Rs.7,704 million (excluding power generation business) in the previous year, reflecting an increase of 5%.

Profit before taxation for the year was higher at Rs.705 million compared to Rs.598 million (excluding power generation business) in the previous year. Volume growth, better cost management and lower restructuring costs accounted for improved results. The profit after taxation was significantly higher at Rs.540 million compared to Rs.418 million (excluding power generation business) in the previous year after providing for Rs.l65 million for taxation. The provision for taxation was lower due to reversal of excess tax provision of Rs.23 million made in 1999 for the fixed assets of demerged power business on retrospective amendment to the Income-tax Act, 1961.

The Company's future prospects arc closely linked to investments in the power and industrial sectors. While there are still unresolved issues relating to these sectors' investments, the Company believes that in the medium and long term, significant investment will be made in these sectors. The Company is confident to secure an important share of the business. Considering the comfortable order backlog position at the beginning of the year, higher growth in Revenues is expected in the year 2001.

Debentures.

During the year the Company has redeemed the third and last instalment of Rs.17 million of 18% Non-Convertible Debentures, of the total aggregating to Rs.50 million which were issued on private placement basis to the financial institutions in 1992 for the purpose of augmenting working capital requirements of the Company.

Fixed Deposits

Fixed deposits totalling Rs. 1,308 thousand due for repayment on or before 31.12.2000 were not claimed by the depositors as on that date. As on the date of this report, deposits amounting to Rs. 250 thousand have been claimed and paid.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A, forming part of this report.

Environment Compliance

The Company has in place, a system for controlling and monitoring pollutants at all factories, which has resulted in all of our units complying with environmental standards and legislation. We have submitted environmental statement reports for all our factories to the local authorities.

During the year, the Company has obtained ISO 14001 (EMS) certificates for its manufacturing units at Peenya and Andheri. With this, all the 7 manufacturing units of the Company have received certificates for ISO 14001 (EMS). Nashik unit on completion of three years has been re-certified for the ISO 14001 (EMS).

Due to the various environmental management programmes initiated the consumption of natural resources such as energy, water and paper has been reduced and ozone depleting substances at some of the sites have been either eliminated or reduced. During the year many improvement projects were completed including effluent treatment plant and incinerator plant for disposal of hazardous waste and exhaust systems with scrubber and safe storage facilities for hazardous wastes at various sites. Regular training programmes were organised on environment compliance and protection, ISO 14001 (EMS) and environment laws and regulations.

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 reporl is given in the Annexure - B.

Directors' Responsibility Statement

Directors' responsibility statement under Section 217 (2AA) of the Companies Act, 1956, forming part of this report is given in the Annexure - C.

Corporate Governance

Pursuant to clause 49 of the listing agreement, a report on corporate governance and a certificate from the auditors of the Company is given in the Annexure - D and Annexure - E respectively, which forms part of this report.

Directors

Mr. Jacob Disch, Mr. Tommie Bergman, Mr. Bo Martin Waern and Mr. J.S. Zaia resigned from the Board of Directors of the Company. The Board places on record its appreciation for their contributions during their tenure as Directors.

Mr. Aloke Mookherjea, retired on 31 December, 2000 on completion of his term as Whole-time Director of the Company. The Board acknowledges and places on record the valuable services and guidance given by him during his tenure.

Mr. Sune Karlsson, Mr. Eric Drewery and Mr. Ramamurthy were appointed as Additional Directors of the Company and hold office upto the date of ensuing Annual General Meeting.

In accordance with the provisions of the Companies Act, 1956, and Company's Articles of Association, Mr. K.N. Shenoy retires by rotation as Director at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

A notice has been received from member/s pursuant to Section 257 of the Companies Act, 1956, proposing the name of Mr. Karlsson, Mr. Drewery and Mr. Ramamurthy as Directors at the ensuing Annual General Meeting.

Auditors

The Company's auditors M/s. Bharat S Raut & Co. hold office upto the conclusion of the ensuing Annual General Meeting. The Company has received a requisite certificate pursuant to Section 224(1B) of the Companies Act, 1956, regarding their eligibility for re-appointment as Auditors of the Company.

For and on behalf of the Board of Directors

K. N.Shenoy Chairman

Bangalore 24 April, 2001

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo - Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of energy

(a) Energy conservation measures taken during the year

Areas of work during the year were power factor improvement by installing LT capacitor banks, illumination systems, change in air conditioning systems and improvements in compressed air systems to reduce energy consumption. Training programmes were conducted to increase awareness on energy saving.

(b) Proposals being implemented for reduction of energy consumption

Proposed areas of work include air conditioning systems, air cooling plants, electrical motors, solar heating system, manufacturing processes, illumination systems and compressed air system.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 240,000 units of energy per annum. This saving, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology Absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort is carried out in almost all the products and processes, specifically, in the major areas given below :

Distribution system improvement, energy management in hotels and cement industries, development of IT solutions for the metals, minerals, pulp and paper industries, automatic meter reading software, upgradation of various products like CBs, MV systems, numerical terminals etc., launching of new products like STATCON for windmills and retrofitting and revamping of outdoor substation including specific equipment like CBs and Disconnectors.

(2) Benefits derived as a result of above R&D

The benefits to the Company resulting from R&D activities is manifold. The Company absorbed new and upcoming global technologies, which resulted in an increased technical base.

Benefits have also been reflected in terms of

* Improved service support

* Innovative system solutions

* Improvement in market share, exports and new businesses

* Development of eco-friendly and energy saving products and systems

* Reduction in production costs

* Improvement in reliability of equipment and processes

(3) Future plan of action

Efforts will be made by integrating R&D with business needs for offering better value added products and services for our customers.

Upgradation of various systems and equipment will continue in specific areas like 400kV and HVDC back-to-back transformers, 400kV, 50kA SF6 circuit breakers, introduction of new Turbocharger models, frequency relay test kit, timer relay for railways, electrical system studies, distribution automation, diagnostic testing and condition monitoring, digital PLCC, portable disturbance recorder, introduction of new range numerical transformer and series compensated line protection, evelopment of higher rating STATCON, solution development using Industrial IT framework and development of traction and high efficiency motors.

(4) Expenditure on R&D

(Rs. in Thousands)

i. Capital 27,783 ii. Revenue 23,083 iii. Total 50,866 iv. Total R&D expenditure as a percentage of turnover 0.63

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted in-house and at collaborators' end to improve design, development, production, commissioning and servicing. Some of them are :

Design techniques of Trafostar' transformers, PMDC motor in place of imported DC Compound motor, HV circuit breaker contact fingers, monitoring field operation of turbochargers, upgradation of 400kV CT, development of 400kV CVT with higher capacitance and l45kV CVT follow primary currents, Alpha simulator software, 3 phase loco blowers, simulation tests on line protection, introduced negative sequence and out of step relays and offering of total integrated clean room facility to industry.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts, product quality, performance and reliability have improved.

(ii) Cost reduction

Substantial cost reduction was achieved through supply management, design changes in VTC 304 turbocharger, communication module, Alpha meters, VD4 circuit breakers and 36kV outdoor circuit breakers.

(iii) Product development

Important products developed were 11kV outdoor VCB, BLK222 drive and EDI, Disconnector type SGF36 and SFG72.5, VTC304 turbocharger, communication module and protocol converter of Spacom relays, higher current CTs, new version of Alpha energy meter, clean room facilities for industries, new series of centrifugal fans, STATCON, IT solutions in the areas of manufacturing execution systems, process optimisation and modelling, 12kV outdoor CB and roller table motors.

(iv) Import substitution

Import substitution was carried out for DC compound motor and various equipment like 400kV CB and EDI SKI-1, mechanical hardware for numerical line protection terminals, G5 bushings and 12/36kV CBs.

(3) Imported technology (imported during last 5 years)

(i) Technology imported

- Medium voltage CB Type VD4E & VD4 1996

- Spacom relays 1996

- Power and traction transformers 1998

- SF6 CB Types ELF-SP, SP 4-1, ELF SP 6-21 and ELF SP 6-22 1998

- Relays 1998

- EDF SKI 36 to 72.5kV 1999

- Switch fuses 200 Amps. to 800 Amps. 1999

- Magnetic actuator Type A2 for CBs upto 36kV 2000

- Medium voltage air insulated switchboard type unisafe 2000

(ii) Has technology been fully absorbed ?

Yes, except for certain types of Spacom relays and unisafe MV air insulated switchboard.

(C) Foreign exchange earning and outgo

(a) Activities related to exports; initiatives taken to increase exports, development of new export markets for products and services, export plans

As a result of various initiatives taken by the Company, orders received for exports were 48% higher during the year. Orders received included certain new products like vacuum circuit breakers and power transformers and a turnkey 132kV switchyard project from Bangladesh apart from traditional areas of high and low voltage apparatus.

To increase export business, the export group has been further strengthened. Company is currently also focussing on turnkey project prospects in South Asian countries.

(b) Total foreign exchange used and earned

(Rs. in Thousands) Foreign exchange used 1,589,412

Foreign exchange earned 679,698 (including deemed exports)

For and on behalf of the Board of Directors

K.N.Shenoy Chairman

Bangalore 24 April, 2001


Dec 31, 1999

The Directors have pleasure in presenting their Fiftieth Annual Report and Accounts for the year ended 31 December, 1999.

Financial Results

(Rs in Thousands)

For the year For the year ended 31 ended 31 December, 1999 December, 1998

Profit Before Taxation 531,956 492,343

Less : Provision for Taxation-Income Tax 160,000 115,000

Profit After Taxation 371,956 377,343

Less : Transfer to Foreign Projects Reserve Account 34,900 10,000

Balance Brought Forward from Last Year 200,573 250,031

Amount available for Appropriation 537,629 617,374

Appropriations

General Reserve 60,000 189,000

Proposed Dividend 207,092 207,092

Corporate Dividend Tax thereon 22,780 20,709

Surcharge on Corporate Dividend Tax (1998 Dividend) 2,071 --

Balance Carried Forward 245,686 200,573

537,629 617,374

Dividend

The Directors recommend payment of following dividend :

A dividend at the rate of Rs. 5 per cent for the year ended

31 December, 1999 on 41,418,356 equity shares of Rs 10 each

(Previous year at the rate of Rs 5 per share). 207,092 207,092

Corporate Dividend Tax thereon 22,780 20,709

Demerger of Power Generation Business

The Honorable High Court of Judicature at Bombay vide its Order dated 1 October, 1999 sanctioned the Arrangement as emboided in the Scheme of Arrangement (`the Scheme') between the Company and Asea Brown Boveri Management Limited (POWERCO) as approved by the shareholders and creditors of the Company in the Court convened meeting held on 20 august, 1999 for demerger and transfer of the Power Generation business of the Company to POWERCO. The name of Asea Brown Boveri Management Limited has since been changed to ABB ALSTOM POWER India Limited. On complying the requisite conditions by the Company and POWERCO as per the Scheme, the Scheme has become effective from 1 December, 1999 retrospectively from the Appointed Date i.e. 1 April, 1999. Further details of the effect of the Scheme are provided in Note 2 of Schedule 17 - Notes to the Accounts.

Pursuant to the Scheme of Arrangement becoming effective and in consideration of the demerger and transfer of the Undertaking in favour of ABB ALSTOM POWER India Limited, ABB ALSTOM POWER India Limited has on 30 December, 1999, without any further act or deed and without any further payment, issued and allotted to each member of the Company holding equity shares as on the Record date (i.e. 9 December, 1999) one equity share of face value Rs. 10/- each credited as fully paid-up in cash for every one fully paid-up equity share of face value of Rs. 10/- each held by such member in the Company.

Performance Review

Operations

The performance of the Company in the year 1999 continued to be affected by lower demand, high competition, delays in decisions by customers and delays in financing, Sales and other income for the year was Rs.7,934 million (Rs. 8,934 million for the previous year). In the year 1999 the revenues of Rs. 222 million of power generation business have been accounted for only first 3 months of 1999 i.e. till Appointed Date of Demerger (Previous year's figures included sales of Rs. 1,033 million pertaining to Power Generation business for the fully year).

Results and Profitability

Profit before taxation was higher at Rs 532 million compared to Rs. 492 million. The profits for the year 1999 included restructuring costs and initial under absorption of the new Transformer manufacturing facility in its first year of operation. To minimise the adverse impact of lower revenues and profits, management initiated certain actions which included restructuring, supply management, customer value enhancement etc.

The profit after taxation was Rs. 372 million (Rs. 377 million in 1998) after providing Rs. 160 million for taxation (Rs. 115 million in 1998). The cash flow from operating activities during the year continued to be adversely affected by delays in payment by the customer.

Order Book

Declining trend of earlier 2 years in order receipt was reversed during 1999. Total orders received at Rs. 7,410 million excluding Power Generation Segment, were 17% higher compared to previous year. Order backlog at the end of 1999 was Rs. 4,154 million.

Segment Analysis

Business segments of the Company were realigned in 1999 in the with ABB Group providing more customer oriented structure. Business analysis of each of the segment is as under :

Power Transmission and Distribution Segment

This Segment achieved significant growth in orders compared to previous year inspite of the difficult market conditions and delays in decision making. A new thrust was given for increasing business potential in Renovation and Modernisation (R&M) opportunities as well as distribution substation business. The Segment received orders for R&M of substation of Hydel Projects in Karnataka and West Bengal. Further spares & service business also registered high growth compared to previous year. Bechtel International awarded repeat order for 400 kV Switchyard for Dabhol Power Project Phase 2.

First Traction Transformer to CLW for three phase locomotive and first 100 MVA, 220 kV class Power Transformer to GEM were delivered from the new Power Transformer factory. MV Switchgear factory delivered 140 Nos. 36 kV Vacuum breakers designed and developed locally. During the year, orders received and revenues of the Segment were Rs. 3,039 million and Rs. 2,825 million respectively. Revenues of the Segment were significantly lower compared to last year due to low orders on hand at the beginning of the year.

This Segment is expected to have positive growth in coming years.

Automation Segment

The automation Segment did well despite an unfavourable business environment during 1999 - a year in which no appreciable investments were made in the core sectors of the economy viz. steel, cement, etc.

Major orders booked during the year 1999 were 4 X 50 Power Plant Control for MPEB, LPG revamp for ONGC, Electrics for sinter plant for Neelachal Ispat Nigam Ltd., Terminal automation systems for GAIL, Crane control systems for TISCO and DCS for SPB to name a few. Segment also received significant orders for supply of Turbochargers to DLW and supply of Control and Relay panels to BHEL and PGCIL.

Focus for the Segment included patterning with key customers, increased automation solutions now available for various applications, easier and flexible automation solutions bridging the gap between the plant floor and decision support systems through seamless integration, innovation sales channels, including e-commerce.

The first phase of the project SCADA for Hyderabad City was commissioned in December 1999.

During the year, orders received and revenues of the Segment were Rs. 3,802 million and Rs. 4,037 million respectively.

This Segment is expected to have positive growth in coming years.

Building Technologies Segment

The market demand for products of this Segment continued to remain low. Air Handling unit, predominantly handling process fans for cement and other process industries focussed on retrofit and other solutions. Focus on customers for axial flow fans resulted in higher orders. For the fans manufacturing, cellular set up was established during the year to reduce cycle time. Low Voltage Apparatus unit introduced Mini Contractors, Load Break Switches and Relays during the year. Installation contracting unit of the Segment was adjusted as the best contractor at Reliance Refinery site which also ensured receipt of repeat orders. Ventilation group established itself in the niche market in Pharmaceuticals, Food Products, Off shore and Marine.

During the year, orders received and revenues of the Segment were Rs. 911 million and Rs. 1,042 million respectively.

The Segment is expected to have positive growth in coming years.

Future Prospects

The Company's future prospects are closely linked to investment in power generation. transmission, distribution and industries. With the signs revival of economy, the Company believes that significant investment will be taking place in near future. The Company is confident to have important share of the business inspite of increasingly competitive environment. The strategies adopted include thrust to exports, service and knowledge based business, improvement in marketing processes, customer value enhancement programmes, optimal cost base, implementation of ERP system etc.

Debentures

The Directors confirm that the funds raised through 18% non-convertible debentures during 1992 by way of private placement were utilized for the working capital requirements of the Company.

Fixed Deposits

Fixed deposits totalling Rs. 1,087,500 due for repayments on or before 31.12.1999 were not claimed by the deposits as on that date. As on the date of this report, deposits amounting to Rs. 59,000 have been claimed and paid.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A which forms part of the Directors' Report.

Environment Compliance

The Company has in place, a system for controlling and monitoring pollutants at all factories, which has resulted in all of our units complying with environmental standards and legislation. We have submitted environmental statement reports for all our factories to the local authorities.

The Company has obtained EMS - ISO - 14001 certificates for its all manufacturing units except for Peenya and Andheri units. For these units, certificate is planned to be obtained in the year 2000.

The Company also conducts environmental audit of all the units. New initiatives in this area include construction of sewage treatment plant, modification and expansion of effluent treatment plant, safe storage facilities for hazardous wastes, incinerator plant for safer disposal of waste etc. In addition a number of long term projects are undertaken in the area of natural resource conservation to reduce consumption of paper, water and energy at all the manufacturing units.

Year 2000 Compliance

The Company had recognised in the early stage the importance and critically of Year 2000 problem. A task force was employees, suppliers and customers. The task force inventoried the systems/applications, assessed criticalities and initiated remedial actions to ensure Y2K compliance. The probale risk areas identified were internal IT systems, manufacturing and infrastructure facilities, supply chain and the products and systems supplied by the Company to its customers. The Company had contingency plan to face any unexpected Y2K problem. The Company had also established a call centre, located at its Peenya factory to help smooth rollover to Year 200. Total cost incurred on Y2K project was about Rs. 40 million.

Directors are pleased to inform you that the Company managed flawless rollover to year 2000 without any significant problem being reported.

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, as amended, and forming part of this Directors' Report is given in the Annexure - B.

Board of Directors

Mr. D.S. Narain resigned as a Director of the Company with effect from 25 May, 1999. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Director of the Company.

The Board of Directors appointed Mr. J.S. Zala as a Director of the Company with effect from 5 July, 1999 in the casual vacancy caused by the resignation of Mr. D.S. Narain. He would hold office upto the date Mr. D.S. Narain would have held office if it had not been vacated.

Mr. Alexis Fries resigned as a Director of the Company with effect from 26 October, 1999. The Director place on record their appreciation of the valuable advice and guidance given by him while he was a Director of the Company.

Mr. Tommy Lekberg resigned as a Director of the Company with effect from 26 October, 1999. The Directors place on record their appreciation of the valuable advice and guidance given by him while the was a Director of the Company.

Under the Articles of Association of the Company, Mr. K.N. Shenoy and Mr. Vijay Karan retire by rotation and are eligible for re-appointment.

Auditors

You are requested to appoint Auditors and fix their remuneration.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo - Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of energy

(a) Energy conservation measures taken during 1999

Areas of work during the year were that exchanges, solar heating systems, illumination systems, transformers, electric drivers, furances and compressors to reduce energy consumption.

Energy audits and training programs to increase awareness on energy saving were conducted.

(b) Proposals being implemented for reduction of energy consumption

Proposed areas of work include revision of maximum demand, electric motors, manufacturing processes, illumination systems, dynamic power factor correction systems and compressed air system.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 366,000 units of electricity per annum. This saving, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology Absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort is carried out in almost all the products and processors, specifically, in the major areas given below :

Protection and control for generator/ transformer/transmission/busbar, substation automation, network control, calibration kit for frequency relays, circuit breaker control and monitoring, static VAR compensation, micro-controller/ microprocessors/DSP based controller developments, data acquisition and control, active filters for industrial systems, timer/ relays for railways, voltage profile improvement, Windows based SMS software for station monitoring, development of 75.5kV center break disconnectors, bypass arrangement of SGF 145 disconnectors, complex tandom arrangement of SGF 123 and SGF 245 disconnectors, turbochargers & turbochargings, medium voltage switchgear upto 36kV-40kA-3150A, engineering software for sag tension calculation, auxiliary motors for new AC loco, high efficiency M2000 series motors, high efficiency motors for VSD application, special double cage rotor design, CAD and modeling, economical design of 245, 400kV SF6 circuit breakers, drive for 145kV SF6 breaker, procedure development of welding processes, improving first pass yield of castings/forgings, development of import substitutes for breakers, improvement in heat treatment and plating processes, residual life assessment of turbines and boilers and failure analysis.

(2) Benefits derived as a result of above R&d

The benefits to the Company resulted from above R&D are manifold. The Company could absorb new and upcoming technologies, which resulted in increased technical base. State of the art products meeting domestic as well as global requirements were introduced as a result of extensive R&D. These activities also helped the Company in developing technical expertise, which in turn resulted in offering total integrated electrical engineering solutions to our customers.

Benefits have been reflected also in terms of

* Product quality enhancement

* Improvement in market share

* New business scope

* Indigenisation & local expertise development

* Reduction of material cost

* Reduction of Foreign Exchange outgo

* Export potential development

* Reduction in manufacturing cycle time

* Improved supply management

* Development of new eco-friendly and energy saving products and systems

(3) Future plan of action

Efforts will be made to make R&D more result oriented with upgradation of design and quality of products and systems. Introduction of cost effective solutions to our customers, integration of newer products with existing ones for enhanced features and increased efficient systems are planned so as to maintain our position as a full range electrical supplier in India. Specific areas include :

Introduction of turbocharger Model TPL61, 12kV outdoor circuit breaker based on magnetic actuator technology, flame-proof motors, M2000 series with die cast rotor, high efficiency series motor, innovative substation automation and design, switchgear condition monitoring and diagnostic techniques, integrated engineering and costing software earthing system design, electrodynamic force calculation as per IEC-865, lightning/ shielding protection using EGM, introduction and improved ratings for Dynamic Static Var compensation and active filters for distribution systems and industrial applications, fast acting digital controllers, specific controllers for railways, power electronics applications in power systems, creep and fatigue life prediction of metals and simulation techniques for failure analysis.

(4) Expenditure on R&D

(Rs. in Thousand)

i. Capital 47,354

ii. Revenue 55,280

iii. Total 102,634

iv. Total R&D expenditure as a percentage of turnover 1.30

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted at in-house and at collaborators and to enhance quality of services in design, development, production, commissioning and servicing. Collaboration with the parent companies has been taken up for technological upgradation. In-house infrastructural facilities and technical knowledge were enhanced. Infrastructure facilities and technical knowledge of various reputed academic institutions, laboratories and development centers were utilized by sponsoring industrial projects.

(2) Benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts products quality and reliability have improved. Product improvement was done on P-type relays, turbochargers, timer module, breaker failure protection relay, distance protection relay, fault locator, transformer protection relay, DC/DC converters, power swing protection relay, fly ash conveying system, industrial and ventilation fans, scrubbers, ESPs and its auxiliaries, capacitor cans, 11kV-3 phase capacitors, GSM weldable bushings, instrument transformers and medium voltage switchgear.

(ii) Cost reduction

Substantial cost reduction was achieved in Spacom relays, interface modules for relays, VTC 304 turbocharger, 12kV compact cubicle, outdoor vacuum circuit breaker, capacitor cans, 11kV3-phase capacitors and G3M weldable bushings.

Cost reduction was possible because off improvement in supply management, standardisation, import substitution, reduction in manufacturing cycle time, upgradation in design and quality, improved first pass yield, effective utilisation of computers and engineering softwares.

(iii) Product development

Important products developed were 36kV Outdoor vacuum circuit breaker, Center break disconnectors type SGF72.5 VTC 304 turbocharger, 12kV outdoor vacuum circuit breaker, switchgear bushings, 240/400kV SF6 circuit breaker for 50KA breaking capacity, static VAR compensator for windmills, 11kV-3 phase capacitors, centimaster type fans, oil-cooled impellers, electronic controllers for ESP, auxiliary motors for new AC loco, high efficiency motors low kVAR Static VAR compensator, relay test and calibration kit, circuit breaker control and monitoring unit, sparkgap and arc detection relay and a number of computer softwares.

(iv) Import substitution

Import substitution was carried out for all stationery parts of VTC 304 turbocharger, VD4 vacuum circuit breaker components, contact finger, various components of medium voltage switchgear and various components pertaining to bag filters and electronic controllers.

(3) Imported technology (imported during last 5 years)

(i) Technology imported

- VD4 VCB 1995

- Advant controller 1995

- Advant stations 1995

- Digital thyristor controller for DC motor drive 1995

- Relay modules REXA, RXSB4, RXKL 1995

- Indoor vacuum circuit breaker 1995

- Power capacitors 1995

- Medium voltage circuit breaker type VD4E & VD4 1996

- Spacom relays 1996

- 245 & 400kV SF6 CB 1997

- Weldable bushings 1997

- Power and traction transformers 1998

- Relay Modules

REL511, RET316, REL521, REG316,

READK, RAPDK, RALK 1997

REB500, RAIDK 1999

REB500, RAIDK 1999

Switch Fuses (200 Amps. To 800 Amps.) 1999

SF6 CB types EDF SK1-1 (36 - 72.5 kV) 1999

(ii) Has technology been fully absorbed?

Yes, except in Spacom relays and relay modules.

(C) 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

The Company's thrust to increase export of products and services in cooperation of other ABB group Companies continued during the year. In order to increase export of HV SF6 circuit breakers, an international seminar was organised at Vadodara in December, 1999, which was attended by representatives of world wide ABB group Companies. During the year Company achieved major success in MV Switchgear business with export of panels to Nigeria. Company is currently also focussing on turnkey projects in South Asian countries.

(b) Total Foreign exchange used and earned

(Rs. in Thousands)

a. Foreign exchange used 1,440,079

b. Foreign exchange earned 1,092,079 (including deemed exports)


Dec 31, 1998

The Directors have great pleasure in presenting their Forty-ninth Annual Report and Accounts for the year ended 31 December, 1998.

Financial Results

(Rs. in Thousands) For the year For the year ended 31 ended 31 December, 1998 December, 1997

Profit before taxation 492,343 863,460

Less : Provision for taxation - Income tax 115,000 215,000

Profit after taxation 377,343 648,460

Less : Transfer to foreign projects reserve account 10,000 3,600

Debenture redemption reserve account - 4,477

Balance brought forward from last year 250,031 227,449

Amount available for appropriation 617,374 867,832

Appropriations

General Reserve 189,000 390,000

Proposed dividend 207,092 207,092

Corporate dividend tax thereon 20,709 20,709

Balance carried forward 200,573 250,031

617,374 867,832

Dividend

The Directors recommend payment of following dividend :

A dividend at the rate of Rs. 5 per share for the year ended 31 December 1998 on 41,418,356 equity shares of Rs. 10 each (Previous year at the rate of Rs. 5 per share on 41,418,356 equity shares of Rs. 10 each). 207,092 207,092

Corporate dividend tax thereon 20,709 20,709

Performance Review

Operations

The performance of the Company in the year 1998 has to be viewed in the context of a decelerating economy, declining business confidence and delays in financial closing of large power projects. Sales and other income for the year was Rs. 8,934 million (Rs. 10,842 million for the previous year). The lower revenues were particularly marked in the Power Segment and the Industrial and Building System Segment, which reflected the sluggish economic conditions.

Power Generation Segment

This Segment which is positioned as a total solution provider for power plants, products and services could not take up any major project for execution during the year due to delays in financial closure of orders on hand. The revenues in this Segment accrued primarily from the pollution control equipment and industrial turbine businesses. During the year, a major order for power plant controls for Indian Oil Corporation was commissioned. The industrial turbine business area introduced turbines with a new back pressure technology and achieved complete indigenisation. The year also witnessed synchronisation of 2 x 25 MW units for a large Cement Company. The pollution control equipment business area also commissioned major projects during the year for various industries including copper, steel, power and aluminium.

Orders booked during the year include electrostatic precipitators for Jindal Vijayanagar Steel Limited, ash handling systems for National Thermal Power Corporation Limited and National Aluminium Company Limited and a retrofit job in association with ABB ABL Limited.

While the performance in this segment has been affected in the short term due to delays in the power sector, the segment is well positioned to achieve significant growth when, as expected, a number of projects under negotiation are concluded.

Transmission and Distribution Segment

This Segment achieved revenues in level with the previous year in spite of the difficult market conditions and delays in decision making. The performance in the high and medium voltage switchgear and network protection systems was maintained. Major substations commissioned during the year include 400 KV switchyards for Bechtel International and Power Grid Corporation of India Limited. The segment registered 87% growth in the export of HV apparatus and PLCC equipment.

The new power transformer manufacturing facility was completed in 1998 and some orders have been received for execution in 1999.

Despite continued market pressure on price levels, this segment is expected to continue to show positive growth.

Industrial and Building Systems Segment

The depressed markets in the steel, cement, paper and other industrial sectors affected this segment which provides total solutions to these industries. Major orders booked during the year include an automation system for Hindustan Petroleum Corporation Limited, an electrics and automation system for Tata Iron and Steel Company Limited, a quality control system for Mysore Paper Mills Limited and an open control system for Reliance Industries Limited. In addition, orders for a ventilation system for Maruti Udyog Limited and fans for Fuller India Limited have been received.

During the year, this segment commissioned an automation system for Indian Oil Corporation Limited and a major part of the electrics for Bokaro Steel Plant. This segment is expected to get back to the growth path it has achieved in the past, once the industrial sector economy improves.

Results and Profitability

Revenues recorded during the year were some 20% below the previous year and resulted in profit before taxation falling to Rs. 492 million. The lower profits are also a reflection of the continued investments, in particular in the Power Generation segment, which encountered substantial delays in finalising certain large projects.

The profit after taxation was Rs. 377 million in 1998 (Rs. 648 million in 1997) after providing Rs. 115 million for taxation (Rs. 215 million in 1997). The cash flow from operating activities during the year was in line with the profits, but was adversely affected by deteriorating payment performance by the Company's customers, particularly industrial customers. The Company's earnings in foreign currency were Rs. 1,563 million, a 10% increase over 1997.

Order Book

Orders received in 1998 were Rs. 7,295 million, about 60% below the previous year. Though the Company completed negotiations for a number of major power projects in the private sector, they have not been booked as orders mainly due to delays in the financial closure. Delays in project decisions by some important customers in the substation and automation businesses also affected the order levels. Order backlog at the end of 1998 was Rs. 18,992 million.

Future Prospects

The Company's future prospects are closely linked to the Power Sector in the country. The Company believes that in spite of poor performance of the Power Sector in terms of investment and capacity addition, this sector, so crucial for the economy will ultimately witness major investments, both in new and rehabilitation projects. The Company is confident of leveraging its strengths to achieve an important share of this potentially huge business. Any order for a power plant also provides the Company with significant "Value-addition-opportunities" for transmission and distribution and industry segments.

During the year 1999, at least two major power projects in the private sector, which the Company has already negotiated, are likely to be financially closed and work is also expected on these, which will provide revenues and profit growth for the Company.

Debentures

The Directors confirm that the funds raised through 18% Non-convertible debentures by way of private placement were utilised for the working capital requirements of the Company.

Fixed Deposits

Fixed deposits totalling Rs. 1,401,500 due for repayment on or before 31.12.1998 were not claimed by the depositors as on that date. As on the date of this report, deposits amounting to Rs. 280,000 have been claimed, paid or renewed.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo

The particulars as prescribed under sub-section(1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A which forms part of the Directors' Report.

Environment Compliance

The Company has in place, a system for controlling and monitoring pollutants in all factories which has resulted in all our units complying with environmental standards and legislation. We have submitted environmental statement reports on all our factories to the local authorities.

In addition to the Nasik unit which is already certified for EMS-ISO- 14001, the Maneja unit has been recommended for certification. The Company's Chennai and Calcutta units have already complied with EMS systems.

The Company, by way of an internal program also conducts environmental audit of all the units. New initiatives in this area include, proper storage facilities for hazardous wastes, reduction in coolant consumption and elimination of tricholoroethylene, an ozone depleting substance.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with Companies (Particulars of Employees) (Amendment) Rules, 1994 and forming part of this Director's Report is given in Annexure - B.

Board of Directors

Mr. A. K. Thiagarajan relinquished his office of Managing Director with effect from 1 September, 1998 on the expiry of his term on 31 August, 1998. The Directors place on record their appreciation for the ceaseless efforts, devoted and sincere services provided by Mr. A. K. Thiagarajan During his tenure as Managing Director.

The Board of Directors appointed Mr. K. K. Kaura a Whole-time Director of the Company as Managing Director with effect from 1 September, 1998. His appointment to the office of Managing Director is for the remaining period upto 16 October, 2001 of his tenure as Whole-time Director of the Company. The terms and conditions of such appointment and remuneration are to be approved by the Members of the Company at the forthcoming Annual General Meeting to be held on 21 April, 1999.

Mr. A. R. Bennborn resigned as a Director of the Company with effect from 29 September, 1998. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Director of the Company.

The term of appointment of Mr. S. K. Nagpal as Whole-time Director of the Company expired on 31st December, 1998 and effective 1 January, 1999 he ceased to be a Director and Whole-time Director of the Company. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Whole-time Director of the Company. Under the Articles of Association of the Company, Mr. D. S. Narain and Mr. Tommy Lekberg retire from the Board of Directors by rotation and are eligible for re-appointment.

Auditors

You are requested to appoint Auditors and fix their remuneration.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo - Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of energy

(a) Energy conservation measures taken during 1998

Areas of work during the year included autoclaves and furnaces, steam curing systems, electroplating systems and transformers, to reduce energy consumption.

Regular training programs were conducted throughout the Company to increase awareness on energy saving.

(b) Proposals being implemented for reduction of energy consumption.

Proposed areas of work include compressed air systems, illumination systems, transformers, electric drives, re-designing processes to ensure optimum efficiency and re-sizing of motors depending upon actual loading conditions to ensure maximum efficiency.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods.

Total energy saving is estimated at around 285,000 units of electricity per annum. This saving, however, has no appreciable impact on cost of goods, as the Company's production processes are not energy intensive.

(B) Technology absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

R&D effort is carried out in almost all the products and processes, specifically, in the major areas given below :

Medium voltage switchgear, weldable bushings, series capacitors, robotic welding, spark-gap, high efficiency motors, increased safety motors for hazardous environment, Power Line Carrier Communication (PLCC), AF protection coupler, three phase and single phase energy meters, audio frequency track circuits, turbocharging and turbochargers, energy saving in air pollution control equipment, industrial fans, dust conveying systems, refrigeration systems, Computer Aided Design (CAD) and modeling, substation automation, network control, calibration kit for frequency relays, heat treatment processes, vacuum circuit breakers, engineering software, static condenser, circuit breaker control and monitoring, microcontroller/microprocessor based system development, data acquisition and control system, Residual Life Assessment (RLA) of turbines and boilers, casting simulation and failure analysis.

(2) Benefits derived as a result of above R&D

The benefits to the company resulting from the above R&D are manifold. The Company could absorb new and upcoming technologies which resulted in increased technical base. State-of-the-art products meeting domestic as well as global requirements were introduced as a result of extensive R&D. These activities also helped the Company in developing technical expertise which in turn resulted in offering total integrated electrical engineering solutions to our customers.

Benefits have been reflected also in terms of

* Product quality and cost reduction

* Improvement in market share

* Indigenisation and local expertise development

* Reduction of foreign exchange outgo

* Export potential development

* Reduction in manufacturing cycle time

* Improved supply management

* Development of new eco-friendly products.

(3) Future plan of action

Efforts will be made to make R&D more result oriented, in improving the design and quality of products. Introduction of cost effective, state- of-the-art products with enhanced features is planned so as to maintain our position as a full range electrical supplier in India. Specific areas include :

Indoor and outdoor vacuum circuit breakers, weldable bushings, STATCON for distribution systems, Thyristor Controlled Reactors (TCR), flame proof motors, auxiliary motors for AC locomotives, energy efficient motors, single phase energy meters, software for meter reading automation, digital PLCC, portable disturbance recorder for power line, updating of turbocharger specifications, energy and distribution management systems, integration of new products with existing ones for enhanced features, indoor switchgear diagnostics and monitoring techniques, power plant integrated engineering and costing, creep and fatigue prediction of metals and simulation techniques for failure analysis.

(4) Expenditure on R&D

(Rs. in Thousands)

i. Capital 7,660

ii. Revenue 143,913

iii. Total 151,573

iv. Total R&D expenditure as a percentage of turnover 1.70

(b) Technology absorption, adaptation and Innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted in-house and at various educational and research institutions and also at collaborators' factories to enhance knowledge and experience in various aspects related to current technology in areas of product design and development, manufacturing, commissioning and servicing. Joint projects have been taken up with the parent companies. Infrastructure facilities and technical knowledge of various reputed academic institutions, laboratories and development centers were utilised by sponsoring industrial projects.

(2) benefits derived as a result of above efforts

(i) Product improvement

As a result of the above efforts product quality and reliability have improved. Product improvement was done on PLC based controllers and microprocessor based energy meters, PLCC equipment, energy meters, electrostatic precipitators and controllers, bag filters and fans, ventilation and refrigeration systems, scrubbers, industrial fans, fly ash conveying systems, distance protection relays, fault locators and DC/DC converters, P-type relays, bell type tanks for power transformers and CVT manufacturing processes.

(ii) Cost reduction

Substantial cost reduction was achieved in Spacom relays, lower and medium end PLCs and turbochargers.

Cost reduction was possible because of material reduction, standardisation, import substitution, application engineering, product engineering and manufacturing, reduction in manufacturing cycle time, computerisation and improved First Pass Yield.

(iii) Product development

Important products developed were 36KV outdoor vacuum circuit breaker, traction transformer, protection systems for generators, transformers and transmission lines, various types of bag filters, ESPs, fans, air distribution units, dampers, fans for locomotives, high efficiency fans, simple KWH meters, new version of alpha energy meter, various software, regulated power supplies, automation products, high efficiency, high safety motors and weldable bushings.

(iv) Import substitution

Import substitution was carried out for various products like 24KV switchgear plug and socket arrangement, carrier component of high voltage circuit breakers, various electronic controllers, various mechanical components and indigenous spark gaps.

(3) Imported technology (imported during last 5 years)

(i) Technology imported

- Distance relay RELZ100 1994

- Electric energy meteres 1994

- Multistage steam turbines upto 6MW 1994

- Advant controller 1995

- Advant stations 1995

- Digital thyristor controller for DC motor drive 1995

- Relay modules REXA, RXSB4, RXKL 1995

- Indoor vacuum circuit breaker 1995

- Power capacitors 1995

- Induction generators 1995

- Medium voltage circuit breaker type VD4E & VD-4 1996

- Electrical power transformers (upto 1,00,000 KVA) 1997

Electrical traction transformers (upto 10,000 KVA) 1997

- Relay modules :

REL511, REL521, RAPDK, RAEDK, RAZK, RALK 1997

(ii) Has Technology been fully absorbed?

Yes, except in the following products :

Certain range of EHV circuit breakers, Spacom range relays, relay modules, power transformers upto 220KV, induction generators, DC capacitors, AC series capacitors and furnace capacitors.

(C) Foreign exchange earnings and outgo

(a) Activities related to exports :

Initiatives taken to increase exports, development of new export markets for products and services and export plans

The Company's thrust to increase export of products and services to ABB group companies has resulted in sharp increase of 130% in physical exports for HV Apparatus during the year.

The Transmission business has been allocated the world market for EDF SF6 circuit breakers except Europe. New markets in Sough Africa and South Korea have been developed during the year. This segment also exported discconnectors for a project in Kyrghystan.

The Company continues to do well in the deemed export market within the country where the projects are funded by multilateral funding agencies.

The Company is also working to develop export market mainly through ABB Group Companies in Europe for power capacitors, PCBs, automation systems and application software.

During the year the Company was accorded "Export House" status in accordance with the provisions of Exim Policy valid for a period of three years from 1 April, 1998. The Company also established a representative office in Bangladesh to develop South Asian Export market for its Transmission/Distribution equipments and Power Plants.

(b) Total Foreign exchange used and earned

(Rs. in Thousands)

a. Foreign exchange earned (including deemed exports) 1,563,056

b. Foreign exchange used 1,324,516

c. Net foreign exchange earned 238,540


Dec 31, 1997

The Directors have great pleasure in presenting their Forty-eighth Annual Report and Accounts for the year ended 31 December, 1997.

Financial Results (Rs. in Thousands) For the year For the year ended 31 ended 31 December, 1997 December, 1996

Profit before taxation and Extraordinary items 863,460 1,228,299 Profit on sale of the Transportation undertaking - 473,773

Payment received under an agreement for Non-compete covenant in respect of the Transportation business - 332,100

Profit before Taxation 863,460 2,034,172 Less : Provision for taxation-Income tax 215,000 485,000 Profit after Taxation 648,460 1,549,172 Less : Transfer to Foreign Projects Reserve Account 3,600 3,000 Debenture Redemption Reserve Account 4,477 4,478 Balance brought forward from last year 227,449 134,265 Amount available for appropriation 867,832 1,675,959 Appropriations General Reserve 390,000 1,200,000 Interim Dividend - 93,191 Proposed Final Dividend 207,092 155,319 Corporate Dividend Tax thereon 20,709 - Balance carried forward 250,031 227,449 --------- ----------- 867,832 1,675,959 --------- -----------

Dividend

The Directors recommend payment of following dividend :

A dividend at the rate of Rs. 5 per share for the year ended 31 December 1997 on 41,418,356 equity shares of Rs.10 each (Previous year at the rate of Rs.8 per share, including Rs. 3 per share of interim dividend on 31,063,767 equity shares of Rs.10 each). 207,092 248,510

Corporate Dividend tax thereon 20,709 -

Performance Review

Operations

The performance of your Company in the year 1997 was reflective of the sluggish economic environment in the country. Sales and other income for the year was Rs. 10,842 million (Rs.11,856 million for the previous year). Except for the Transmission and Distribution segment, the other two segments i.e., Power Generation and Industry and Building Systems recorded lower revenues during the year.

Power Generation Segment

This segment is equipped to provide total range of products, services and solutions for power plants. During the year, the Combined Cycle Power Plant for GVK Industries was synchronised as per schedule and this project was completed satisfactorily on time. The Company also secured a prestigious order for rehabilitation of power plant at Panipat from Haryana State Electricity Board. The year also witnessed the finalisation of an EPC contract for 2 x 535 MW project from Daewoo Power, Korba. The segment has also booked a couple of major orders for small power plants in the Industry Sector.

The segment, regardless of the slow progress of the power sector in the country, is poised for substantial growth.

Transmission and Distribution Segment

The Company in this segment maintained leadership in high and medium voltage switchgear, substations and network protection systems. It also offers turnkey solutions, life extension and retrofit services. In spite of a decelerating demand in the market, this segment maintained growth during the year both in terms of revenues and profits. The segment introduced new products like 72.5 kV switchgears for the U.S. Market and indigenous static relays. Major substations commissioned during the year include 220 kV switchyard for Andhra Pradesh State Electricity Board and 145 kV switchyard for Bhushan Steel Limited. The segment has registered an impressive growth in export of HV apparatus and PLCC equipment.

This segment is expected to accomplish steady growth in line with the market.

Industrial and Building Systems Segment

This segment offers products, turnkey solutions and services in areas such as drives, power electronics, process automation, motors, low voltage switchgear and systems, instrumentation, industrial fans, superchargers, industrial heating, ventilation, etc. It also provides single source capability for application oriented and comprehensive solutions for industries in chemical, oil and gas, steel, pulp and paper, cement, aluminium, minerals, mining, material handling, automobiles and a host of other industries. This segment which has witnessed excellent growth in the past couple of years slowed down in the current year in terms of revenues and order booking mainly due to deceleration in the core sector of the economy like steel, cement etc. The segment's profitability during the year was adversely affected on account of margin slippages.

During the year, a process control system for petrochemical complex of Reliance Industries Limited at Hasira was commissioned.

This segment is expected to record good growth in the long term in line with the country's economy and is expected to play a significant role in the Company's future.

Results and Profitability

The Company's profit before taxation decreased by about 30 per cent over the previous year to Rs 863.5 million, mainly due to lower revenues and cost overruns in some of the projects in the Industry Segment. The lower profits have also to be viewed in the backdrop of a slowing Indian economy, high real rates of interest and the large investments made by the Company in setting of new manufacturing facilities. The profit after taxation was Rs. 648.5 million in 1997 (Rs.1,549 million in 1996) after providing Rs. 215 million for taxation (Rs.485 million in 1996). The cash flow from operating activities for the Company during the year has been in line with the profits in spite of delays in payment of bills by our customers. The Company's earnings in foreign exchange increased smartly to Rs.1,419 million compared to the previous year of Rs.1,109 million (excluding extraordinary income of Rs.332 million). Order Book

During the year, the Company secured orders worth Rs.19,365 million. Amongst the major orders booked were, an order for 2 x 535 MW power plant, rehabilitation of rotors, orders for substations, switchgears, ventilation systems, paint finishing systems and ash handling systems. Order backlog at the end of the year 1997 was Rs.20,762 million.

Future Prospects

The Company will be commissioning its green field transformer project at Vadodara in the third quarter of 1998. To begin with, it will start manufacture of power transformers in the range of 66kV to 220kV 10 MVA and above, traction transformers and transformer for arc and industrial furnaces. The Company's turbine manufacturing facility already manufactures industrial turbines and auxiliaries for power plants and is well positioned to enhance the Company's power generation business once the current economic downturn is reversed and the power sector takes off. In general, the Company's prospects look bright in the medium and long term, when the Indian economy is expected to go back to high growth rates witnessed in the years 1992-95.

Debentures

The Directors confirm that the funds raised through 18% Non-Convertible

Debentures through private placement were utilized for the working capital requirements of the Company.

Fixed Deposits

Fixed deposits totalling to Rs. 1,184,500 due for repayment on or before 31.12.1997 were not claimed by the depositors as on that date. As on the date of this report, deposits amounting to Rs. 13,000/- have been claimed, paid or renewed.

Depository

The Company has entered into an Agreement with the National Securities Depository Limited which is the first Depository established in India under the Depositories Act, 1996 for facilitating, holding and settlement of trades in Securities in the Electronic form. In view of this, shareholders of the Company have the option to dematerialise and convert their scrips into electronic holding by opening an account with any of the Depository participants. A note on the Depository system is mailed with the annual report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under Sub-Section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A which forms part of the Directors' Report.

Environment Compliance

The Company has in place, a system for controlling and monitoring pollutants in all factories which has resulted in all of our units complying with environmental standards and legislation. We have submitted environmental statement reports for all our factories to the local authorities.

The environmental management system (EMS) - ISO 14001 has been certified for our Nasik unit. The first round of environmental audit, an internal Company program for all our Company units has been completed. Some of the major accomplishments in this area are, air pollution control system for controlling acid fumes, recycling of waste water, etc.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with Companies (Particulars of Employees) (Amendment) Rules, 1994 and forming part of this Directors' Report is given in the Annexure - B.

Board of Directors

Mr. Hubert Lienhard resigned as a Director of the Company with effect from 26 February, 1997. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Director.

Mr. Jorgen Centerman resigned as a Director of the Company with effect from 26 February, 1997. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Director.

The Board of Directors appointed Mr. Aloke Mookherjea, as an Additional Director of the Company with effect from 22 August 1997 and as Whole-time Director of the Company with effect from 1 September 1997. His appointment to the office of the Whole-time Director is for a period from 1 September, 1997 to 31 December, 2000 and the terms and conditions of such appointment and remuneration are placed before the ensuing Annual General Meeting for the approval of the Members of the Company as required under Section 269 read with Schedule XIII to the Companies Act, 1956. Being appointed as an Additional Director Mr. Aloke Mookherjea will hold office as a Director of the Company upto the date of the forthcoming Annual General Meeting.

The Board of Directors appointed Mr.S.K.Nagpal, Chief Financial Officer of the Company as an Additional Director, thereby Mr. Nagpal is deemed to be a Whole-time Director of the Company for a period from 18 December 1997. His appointment to the office of the Whole-time Director is with effect from 18 December, 1997 to 31 December, 1998 and the terms and conditions of such appointment and remuneration are placed before the ensuing Annual General Meeting for the approval of the Members of the Company as required under Section 269 read with Schedule XIII to the Companies Act, 1956. Being appointed as an Additional Director Mr. S.K. Nagpal will hold office as a Director of the Company upto the date of the forthcoming Annual General Meeting.

Under the Articles of Association of the Company, Mr. Alexis Fries retires from the Board of Directors by rotation and is eligible for re-appointment.

Under the Articles of Association of the Company, Mr. Jakob Disch and Mr. Bo Martin Waern were appointed as Additional Directors of the Company on 18 December, 1997 and shall hold office of Director upto the date of the 48th Annual General Meeting of the Company.

Auditors

You are requested to appoint Auditors and fix their remuneration.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo - Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of Energy

(a) Energy Conservation Measures taken during 1997

The thrust during the year was on systems rather than devices for energy conservation. Areas of work were: heating systems, air- conditioning and refrigeration, compressed air systems, etc. Electronic ballasts are now standard in all office areas.

Training programmes were conducted continuously for all levels of employees for enhanced awareness. Workmen were trained in local language for increased effectiveness.

(b) Proposals being Implemented for reduction of energy consumption

Areas covered are heating systems, transformers, illumination systems, electric motors and electroplating process. In large processes, the emphasis is in adopting the latest technology and/or ensuring optimum batch quantity. Increased importance is given to systems as a whole rather than individual devices. All the manufacturing units are going for energy audit on a regular basis.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent Impact on cost of production of goods.

Total energy saving is estimated at around 300,000 units of electricity per annum. This saving, however, has no appreciable impact on cost of goods as the Company's production processes are not energy intensive.

(B) Technology Absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carded out by the company

The major areas are air pollution control equipment, paint finishing systems, fan technology, recovery of valuable material from gases, bag filters, scrubber model study, Electro Static Precipitators (ESP), three phase capacitors, higher rating capacitor units, series capacitors, Static Condensors (STATCON), weldable bushings, spark gap, Power Line Carrier Communication (PLCC) systems, electrical transducers, AF protection couplers, AF shift channel, fibre optic equipment, fault recorders, energy meters, application specific power supplies, instrumentation transformers, medium voltage switchgear, vacuum circuit breakers, auxiliary motors for Indian Railways (specifically for 3-phase locos), special motors for steel industries, brake motors, watercooled frequency converter for induction furnaces, special watercooled heatsinks and watercooled reactor for furnace applications.

(2) Benefits derived as a result of above R&D

The Company could absorb new and upcoming technologies. State-of-the art products meeting domestic as well as global requirements were introduced as a results of extensive R&D. These activities also helped the Company in developing technical expertise, which in turn resulted in offering customers total integrated electrical engineering solutions.

Benefits have been reflected also in terms of:

* Product quality enhancement

* Increased productivity and exports

* Increased market share

* Local expertise development

* Reduction in material cost and foreign exchange outgo

* Reduction in product delivery time

* Improved supply management

(3) Future plan of action

Introduction of more cost effective, state-of-the-art products with enhanced features is planned so as to become a full range electrical supplier in India. Specific areas include energy efficient motors, flame proof motors, induction generators, advanced numerical relays, DC arc furnaces, economical energy meters, digital PLCC systems, automated meter reading systems, three phase power capacitors, active filters, furnace capacitors and improved quality capacitors. The Company also plans to promote intelligent solutions for fast bus transfer and load shedding and islanding scheme to select customers.

(4) Expenditure on R&D

(Rs. in Thousands)

i. Capital 54,619 ii. Revenue 156,791 iii. Total 211,410 iv. Total R&D expenditure as a percentage of turnover 1.95%

(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises were conducted in-house and at various educational and research institutions and also at collaborators' factories and at ABB global R&D Centres to enhance the knowledge and experience in various aspects related with current technology, in areas of product design and development, manufacturing, commissioning and servicing. Joint projects have been taken up with the parent companies. Job rotation between Corporate R&D Centre of the Company and Corporate Research Centres in Europe has been initiated. Also, infrastructure facilities and technical knowledge of various reputed academic institutions, laboratories and development centres have been utilised by sponsoring industrial projects.

(2) Benefits derived as a result of above efforts

(i) Product improvement

To cater to the existing and new markets and to meet varied customer needs, product improvement was done on PLC based control for induction furnace, PLCC equipment, transducers, energy meters, control unit for medium frequency furnace, electrostatic precipitator and its electronic controllers, scrubbers, industrial fans, fly ash conveying systems, instrument transformers, fuse failure relay, medium and high voltage circuit breakers, etc.

(ii) Cost Reduction

Substantial cost reduction was achieved in energy meters through inhouse development and indigenisation. Cost reduction was also achieved in medium voltage switchgears, instrument transformers, capacitors, electrostatic precipitators, bag filters, low voltage apparatus and systems, fly ash handling systems and relays. Cost reduction was mainly due to design optimization, alternative raw material usage, improved plant layout, introduction of modern manufacturing facilities, computerised design documentation systems, etc.

(iii) Product Development

Important products developed were auxiliary motors for Indian Railways, roller table motors for steel plants, energy meters, low noise induction furnace, high ambient temperature motors, power swing blocking relays, communication modem RTDC impedance measuring unit, meltprocessor for induction furnaces, kWH meter, computerised billing extraction software, data analyser on windows, electronic controller, VD4 vacuum circuit breaker, new 36kV switchgear, scrubbers, air distribution units, fly ash handling auxiliaries/softwares, etc.

(iv) Import Substitution

Import substitution was carried out for various products like EPIC controller, ESP and bag filter components, energy meters, transducers, etc.

(3) Imported Technology (Imported during last 5 years)

(i) Technology Imported

* Environmental services, surge arrester, programmable PLCC system, fault recorder, turbochargers, digital drives and process automation systems 1993

* Distance relay RELZ100, electric energy meters and multistage steam turbines upto 6 MW 1994

* Advant controller, advant stations, digital thyristor controller for DC motor drive, relay modules REXA, RXSB4, RXKL indoor vacuum circuit breaker, power capacitors and induction generators 1995

* Medium voltage circuit breaker type VD4E & VD-4 1996

* Electrical power transformers (upto 1 ,00,000 KVA), electrical traction transformers (upto 10,000 KVA) and relay modules : REL511, REL521, RAPDK, RAEDK, RAZK and RALK 1997

(ii) Has technology been fully absorbed?

Yes, except in the following products :

Induction generators, certain relay modules and power capacitors.

(c) Foreign Exchange earnings and outgo

(a) Activities related to exports; initiative taken to increase exports, development of new export markets for products and services, export plans

The Company is giving a major thrust to increase export of its products and services mainly to ABB Group Companies in Asia Pacific, Europe and to some extent, the Americas. The Company seeks to do this through cost leadership in specific products. The Company is also focussing on the deemed export market, within the country, funded by multilateral funding agencies.

The Company exports HV apparatus to Europe and Asia Pacific Regions and PLCC equipment and transducers to Europe and South America.

Power capacitors, relays and PCBs are exported to the ABB Group Companies in Italy, Sweden and Singapore. Application software for ABB Companies in Europe is a potential area for exports, for which a Software Development Centre has been established during the year in Bangalore.

Pollution control equipment and Industrial fans were also delivered during the year to Middle East and South East Asia; and motors to Africa and South East Asia.

The Company's exclusive export cell targets the South Asian market consisting of Bangladesh, Sri Lanka and Nepal. The Company would soon be establishing representative offices in these countries and would mainly focus on transmission and distribution equipment and power plants. The first order for a small substation from Bangladesh was received during the year. The Company expects to get a significant share of these markets in the long term.

(b) Total Foreign Exchange used and earned

(Rs. in Thousands)

a. Foreign exchange earned (including deemed exports) 1,418,722

b. Foreign exchange used 1,503,727

c. Net foreign exchange used 85,005


Dec 31, 1996

The Directors have great pleasure in presenting their Forty-seventh Annual Report and Accounts for the year ended 31st December, 1996.

Dividends

Interim Dividend An interim dividend at the rate of Rs. 3.00 per share on 31,063,767 equity shares of Rs. 10 each for the year ended 31st December, 1996, was paid in January, 1997 absorbing Rs. 93,191 thousands (Previous year - nil)

Final Dividend The Directors recommend payment of following final dividend, subject to deduction of tax.

A final dividend at the rate of Rs. 5.00 per share for the year ended 31st December, 1996 on 31,063,767 equity shares of Rs. 10 each (previous year at the rate of Rs. 4.00 per share on 31,063,767 equity shares of Rs. 10 each) 155,319 124,255

Performance Review

Operations

The Directors are pleased to report that your Company had another good year of performance in 1996. Sales and Other income for the year increased to Rs. 11,856 million (Rs. 9,185 million for the previous year). All the three business segments witnessed growth in sales.

Power Generation Segment This segment presently contributes about a fourth of the Company's revenues. The businesses in this segment offer a comprehensive range of solutions for utilities and industry, including combined cycle, steam, hydro and co-generation plants. The Company has made substantial investments in both facilities and capabilities to meet the changing requirements of customers.

Besides setting up power plants, retrofit and life extension and modernisation of existing power plants is an important activity. Air pollution control systems are also a part of this segment which provides electrostatic precipitators, filters etc.,

During the year, all the three Gas Turbines of the combined cycle power plant for GVK Industries Ltd. at Jegurupadu (Andhra pradesh) ere commissioned as per schedule. This is the first fast track IPP project in the country to start generating electricity. The Company takes pride in having been associated with this major milestone in the power sector.

This segment is expected to become the largest of the Company's business in the future, offering turnkey solutions for large, medium and small power plants.

Transmission and Distribution Segment The Company is a market leader in High Voltage and Medium Voltage Switchgear and is a reputed supplier in Substations. The Company has been in this segment for over two decades and is a leading supplier to major utilities and industries.

This segment also offers complete packages for protection, monitoring and communication of Transmission and Distribution networks. During the year, this business segment contributed about a third of the Company's revenues. This segment is expected to grow steadily with the market in the future.

Industry and Building Systems Segment This segment provides products, systems and services for process control and automation, drives, switchgear, robotics, motors and other electricals. It offers single source capability for application oriented tailor-made solutions for various industries like pulp and paper, cement, mining, chemical, petrochemical, refineries and automobile sectors. This segment has taken up a number of new businesses like low voltage apparatus and systems and robotics and has witnessed a spectacular growth in the past couple of years. During the year the segment contributed over a third of the Company's revenues.

Results and Profitability The Company's profit before taxation and extraordinary income increased by more than 22 per cent over the previous year to Rs. 1,228 million. This was achieved in the face of stiff competition in almost all businesses and the resulting pressure on prices. The profit after taxation (including extraordinary income) increased from Rs. 625 million in 1995 to Rs. 1,549 million in 1996 after providing Rs. 485 million for taxation (1995 Rs. 378 million). The cash flow of the Company during the year, however, was less satisfactory, mainly due to delays in payment of bills by our customers. There has been liquidity problems in the money market throughout the year. In addition, high real rates of interest in the money market and a depressed capital market led to the postponement of major investment decisions by the customers and delays in project implementation. The Company's earnings in foreign exchange (including extraordinary income) were Rs. 1,441 million as compared to the previous year of Rs. 1,061 million.

Order Book During the year, the Company secured orders worth Rs. 13,022 million. Amongst the major orders booked are, a 350 MW Multi-fuel Power plant in the private sector, an Electrostatic Precipitator for a State Electricity Board, a Terminal automation system for an oil refinery and a captive power plant in the private sector. Significant orders were also received for substations, switchgears, automation and drives. Order backlog at the end of 1996 was Rs. 12,217 million. Both the industry and Transmission segments recorded good increase in orders. The power generation segment could have concluded a couple of major orders but for procedural delays.

Divestment of Transportation Business The entire undertaking relating to the Transportation business was transferred as a going concern to ABB Daimler-Benz Transportation (India) Limited, (ADtranz), by your Company on 1st August, 1996, after the receipt of all requisite approvals. The Company has received almost all the proceeds from ADtranz against the sale consideration, details of which are provided in the cash flow statement for the year 1996. The business results of the Transportation business for the period 1st January, 1996 to 31st July, 1996 have been duly included in the Company's results for the year 1996.

Future Prospects With the formal inauguration of the Company's Turbine manufacturing facility at Baroda during the year, the Company has become a full-fledged power equipment manufacturer/turnkey contractor. This plant already manufactures Industrial Turbines, Heat Exchangers and other auxiliaries required for power plants. With the company's businesses focussed on the basic infrastructure sector of power, the company is well positioned to realize its growth plans.

Bonus Shares At the Extraordinary General Meeting of the Company held on 17th December, 1996, the shareholders authorised the Company to capitalise a sum of Rs. 103,545,890 from Share premium Account of the Company, by issue of 10,354,589 new Bonus Equity Shares of Rs. 10/- each credited as fully paid up, in the proportion of one New Bonus Equity Share for every three equity shares held. The allotment of the said New Bonus Equity Shares has been made to such persons, whose names have been on the Register of Members of the Company on 3rd January, 1997, being the Record Date. These shares shall qualify for any dividend that may be declared by the Company in respect of the year ending 31st December, 1997 and thereafter.

Debentures The Directors confirm that the funds raised through 18% Non-Convertible Debentures through private placement were utilized for the working capital requirements of the Company.

Fixed Deposits Fixed deposits totalling to Rs.1,590,500 due for repayment on or before 31st December, 1996 were not claimed by the depositors as on that date. As on the date of this report, deposits amounting to Rs.191,000 have been claimed, paid or renewed.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under Sub-Section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure - A which forms part of the Directors' Report.

Environment Compliance The Company has in place, a system for controlling and monitoring pollutants in all factories which has resulted in all of our units complying with environmental standards and legislation. We have submitted environmental statement reports for all our factories to the local authorities.

The environmental management system (EMS)-ISO 14001 is being implemented at our Nasik unit, which will be followed by other units. Some of the major accomplishments in this area are recycling of treated water, improved ventilation systems, reduced air and dust emissions and safe disposal of waste and contaminated chemicals.

Particulars of Employees The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with Companies (Particulars of Employees) (Amendment) Rules, 1994 and forming part of this Directors' Report is given in the Annexure - B.

Board of Directors Mr. Mantosh Sondhi resigned as Director of the Company with effect from 22nd August, 1996. The Directors place on record their appreciation of the excellent contribution made by him while he was a Director of the Company and its Chairman.

Mr. K.N. Shenoy desired to relinquish the office of Executive Chairman of the Board with effect from 1st September, 1996 (before the expiry of his term on 31st August, 1998) which was accepted by the Board. The Directors place on record their appreciation for the ceaseless efforts, devoted and sincere services provided by Mr. K.N. Shenoy during his tenure as Managing Director and Executive Chairman of the Board, which have been the main contributing factors to the present sound position of the Company and its pre-eminent position in the Indian Industry and also in ABB Group.

At the request of the Board, Mr. K.N. Shenoy agreed to continue his association with the Company as a Director and Chairman of the Board.

The Board of Directors appointed Mr. K.K. Kaura, Vice President, power Generation Segment of the Company as an Additional Director; thereby Mr. Kaura is deemed to be a Whole-time Director of the Company with effect from 17th October, 1996. His appointment to the Office of the Whole-time Director for a period of 5 years from 17th October, 1996 and the terms and conditions of such appointment and remuneration were approved by the Members of the Company at the Extraordinary General Meeting held on 17th December, 1996. Being appointed as Additional Director of the Company, Mr. Kaura will hold office as a Director of the Company upto the date of the forthcoming Annual General Meeting. Notices in writing, proposing him as candidate for the post of Director of the Company have been received from some members.

Mr. C.K. Tikku resigned as a Director of the Company on 20th February, 1997. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Director of the Company.

The Board of Directors appointed Mr. Vijay Karan as a Director of the Company with effect from 20th February, 1997 in the casual vacancy caused by the resignation of Mr. C.K. Tikku. He would hold office upto the date of the forthcoming Annual General Meeting and is eligible for re-appointment.

Mr. Goran Lindahl resigned as a Director of the Company with effect from 7th February, 1997. The Directors place on record their appreciation of the valuable advice and guidance given by him while he was a Director of the Company.

The Board of Directors appointed Mr. Tommy Lekberg as a Director of the Company with effect from 20th February, 1997 in the casual vacancy caused by the resignation of Mr. Goran Lindahl. He would hold office upto the date of the forthcoming Annual General Meeting and is eligible for re-appointment.

Under the Articles of Association of the Company, Mr. K.N. Shenoy, Mr. Vijay Karan and Mr. Tommy Lekberg retire from the Board of Directors by rotation and are eligible for re-appointment.

Auditors There is a proposal to appoint Messrs. Bharat S. Raut & Co., Chartered Accountants, as Auditors of the Company in place of the retiring Auditors M/s. A.F. Ferguson & Co. The retiring auditors have informed the Company that they do not wish to seek re-appointment as Auditors of the Company at the forthcoming Annual General Meeting.

Bharat S. Raut & Co., Chartered Accountants, are a member of the world renowned firm KPMG Klynveld Peat Marwick Goerdeler SA who are one of the Auditors of the ABB group of Companies internationally.

The Board of Directors would like to thank M/s. A.F. Ferguson & Co. the outgoing Auditors, for their co-operation, understanding and excellent services rendered to the Company during their long association as the Statutory Auditors.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo - Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of Energy

(a) Energy Conservation Measures taken during 1996 In-house training and communication programs were conducted to foster awareness among employees at various levels. Electronic ballast and compact fluorescent lamps were installed and old equipments like motors, welding machines, furnaces, autoclaves and compressed air systems were refurbished/replaced.

Energy conservation projects were also reviewed quarterly.

(b) Proposals being implemented for reduction of energy consumption Areas covered are refurbishment of old transformers to reduce losses, soft starters for motors, optimising batch loads for ovens, compact fluorescent lamps, replacement of old inefficient motors by modern high efficiency ones and usage of dynamic voltage regulators.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods.

Energy saving of the order of 969,700 units of electricity is estimated per annum. This saving, however, has no appreciable impact on cost of goods as the Company's production processes are not energy intensive.

(B) Technology Absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the Company

The major areas are Air pollution control equipment, Industrial technology, Air ventilation and Air-conditioning, Environmental services, Electrostatic Precipitator model studies, Protection relays, Distribution relays, Electrical rotating machines, Electrical transducers, Power line carrier communication systems, Fibre optic equipment, Energy meters, AF protection couplers, Fault recorders, Arc and Induction furnaces, Medium voltage switchgear, High voltage switchgear, Low voltage apparatus and systems, Turbocharger components, Thyristor drive products, Thyristor controlled reactors, Series capacitor systems and Instrument transformers.

(2) Benefits derived as a result of above R&D

The Company could introduce state-of-the-art products meeting domestic as well as global requirements as a result of extensive R&D. R&D activities also helped in offering customers total integrated electrical engineering solutions.

Benefits have been reflected also in terms of

* Product quality enhancement * Increased productivity and exports * Local expertise development * Reduction in material cost and foreign exchange outgo * Reduction in product delivery time

(3) Future plan of action

Introduction of more numbers of cost-effective state-of-the-art products with enhanced features is planned so as to become a full range electrical supplier in India. Specific areas include products for advanced flexible automation, eco-efficient and eco-friendly products, numerical protection products, DC arc furnaces, economical energy meters, digital PLCC systems, master safeguard systems, three phase power capacitors, active filters, power CVTs, indoor and outdoor vacuum circuit breakers, low voltage switchgear products, etc.

(4) Expenditure on R&D

(Rs. in Thousands)

i. Capital 115,180 ii Revenue 99,923 --------- iii Total 215,103 --------- iv Total R & D expenditure as percentage of turnover 1.81%

(b) Technology Absorption, Adaptation and Innovation

(1) Efforts made towards technology absorption, adaptation and innovation

Extensive training and skill building exercises conducted in-house and at various educational and research institutions and also at collaborators' factories and ABB global R&D Centres to enhance knowledge and experience in various aspects related with latest technology in areas of product design and development, manufacturing, commissioning and servicing. Also, infrastructure facilities and technical knowledge of various reputed academic institutions, laboratories and development centres are utilized by sponsoring industrial projects.

(2) Benefits derived as a result of above efforts

(i) Product improvement

To cater to existing and new markets and meet varied customer needs, product improvement was done on PLCC equipments, transducers, energy meters, control unit for medium frequency furnace, electrostatic precipitator and its electronic controllers, bag filters, locomotive fans and blowers, paint finishing system, instrument transformers, turbocharger components and medium voltage circuit breakers.

(ii) Cost Reduction

Cost reduction was achieved in Industrial DC and AC drives, Instrument transformers, Disconnectors, Heat exchangers, Electrostatic precipitators, Bag filters, Low voltage apparatus and systems, Energy meters and Relays. Cost reduction was mainly due to design optimization, alternative raw material usage, improved plant layout, introduction of modern manufacturing facilities, computerised design documentation systems.

(iii) Product Development

Important products introduced were energy meters, protection coupler, low noise induction furnace, high ambient temperature motors, power swing blocking relays, auto reclosure relays, communication modem impedance measuring unit, open control systems for process automation, modified version of turbochargers.

(iv) Import Substitution

Import substitution was carried out for turbocharger components, mechanical and electrical items used in DC and AC drives, Electrostatic precipitator and bag filter components, Rogowski coils, components for low voltage apparatus, energy meters and transducers.

(3) Imported Technology (Imported during last 5 years)

(i) Technology Imported

* Fans, blowers, dampers, Electrostatic precipitators, bag filters, air treatment including pollution control equipment, air-conditioning and refrigeration equipment, high vacuum closed conveying system, SF6 circuit breakers and VRC vacuum contactors, high current diode/ thyristor rectifiers 1992

* Environmental services, surge arresters, programmable PLCC systems, fault recorders, turbochargers, digital drives, process automation systems 1993

* Distance relay RELZ100, Energy meters, multistage steam turbines upto 6 MW 1994

* Advant controller, advant stations, digital thyristor controller for DC motor drives, relay modules REXA, RXDSB4, RXKL, indoor Vacuum Circuit breakers, power Capacitors 1995

* Medium voltage circuit breaker type VD4E & VD-4, Protective Relays 1996

(ii) Has technology been fully absorbed?

Yes, except in the following products:

Power capacitors, Vacuum circuit breakers, Induction generators, M2000 series of motors.

(c) Foreign exchange earnings and outgo

(a) Activities related to exports; initiative taken to increase exports, development of new export markets for products and services, export plans

The Company is actively seeking to increase physical exports by becoming a low cost export base and centre of excellence, primarily for ABB Group Companies in Europe and Americas. The Company is also concentrating on the deemed export market, where contracts are funded by multilateral financial agencies.

The Company is exporting PLCC equipment and components to China, Europe and South America, and Drives/EDF breakers in kits to Europe and Middle East. Potential markets for Breakers, Instrument Transformers and Substation include South East Asia.

The Company also exports Relays and PCBs for ABB Group in Italy and Sweden and software for Industrial Automation systems for which a lot of potential exists. The year also witnessed the delivery of an Induction Furnace to Thailand, Pollution control and Industrial fans to Middle East and South East Asia.

The Company has also created an exclusive export cell to give exports a major thrust. The Company's focus is on development of export markets in South Asia and South East Asia where, as part of the ABB Asia Pacific group, it is well positioned.


Dec 31, 1995

The Directors have greast pleasure in presenting their Forty-sixth Annual Report and Accounts for the year ended 31st December, 1995.

Dividend

The Directors recommend payment of following dividend, subject to deduction of tax.

Ad dividend at the rate of Rs.4.00 per share for the year ended 31st December, 1995 on 31,063,767 equity shares of Rs.10 each (previous year at the rate of Rs.3.50 per share on 31,063,767 equity shares of Rs.10 each)

Performance Review

Operations

The Directors are pleased to report that your Company had another good year of performance in 1995. Sales and Other income for the year increased to Rs.9,185 million (Rs.6,435 million for the previous year). The various business segments withnessed good growth in sales and profitability. In the Power Segment, the combined cycle power plant for National Thermal Power Corporation at Gandhar was commissioned as per schedule.

The Business Area, High Voltage Switchgear in the Transmission Segment, recdorded an impressive growth, both in apparatus and turnkey business. The exports in this area grew to Rs.121 million.

The Industry Segment introduced a number of new products in 1995 including Direct Torque Control Drives, Digital Static Excitation Systems for hydro/thermal generators, Advanced Process Control Software for Petrochemical Industries, imported Roller table motors etc.

The Pollution and Environment Control Segment also registered an impressive growth in revenues. It received several prestigious contracts including Bag House Conversion retrofit project for a 210 MW Coal fired power plant unit and Ash handling system for TPS 3 x 200 MW units.

Finance SThe Company's profit before taxation has for the first stime crossed Rs.1,000 million and amounted to Rs.1,003 million (Rs.788 million in the previous year). This could be achieved despite growing competition in all areas, resulting in price pressure and adverse impact of fluctuations in exchange rates.

This was also despite the ongoing investment programme for the manufacture of Turbines at Baroda, Low Voltage Apparatus at Bangalore and Low Voltage Systems at Nasik.

The profit after taxation increased from Rs.508 million in 1994 to Rs.625 million in 1995 after providing Rs.377 million for taxation (1994 Rs.280 million).

The cash flow position of the Company during the year was satisfactory, after investment in facilities for the new products. Towards the end of the year, there have been undue delays in payment of bills by our major customers due to the severe liquidity crunch in the money market.

The Company's earnings in foreign exchange at Rs.1,061 million was lower as compared to the previous year of Rs.1,355 million, mainly on account of a drop in contracts executed with funding by IDA.

Order Book

During the year, your Company secured orders worth Rs.10,923 million. Amongst the major orders booked are, Revamp of Cold Rolling mill for SAIL, Rourkela, Electrostatic Precipitator for SAIL, Bokaro, and a Co-generation power plant in the private sector. Significant Orders were also received for Substation, Switchgears, Process Automation Systems and Drives. The Order backlog at the end of 1995 was Rs.11,486 million. Both the Industry and Transmission Segments recorded good increase in orders. However, the Power Generation Segment could not conclude major orders because of procedural delays.

Divestment of Transportation Business

Your Company has for many years been in the railway transportation business manufacturing components of electric locomotives like Tapchangers and Breakers, Signalling relays and Supervisory remote control systems. These have been only a part of the transportation activity, which is carried out by the ABB Group.

The ABB Group and Daimler-Benz AG, Germany have merged their transportation activities worldwide with effect from 1st January, 1996. A Joint Venture Company has been incorported in Germany under the name and style 'ABB Daimler-Benz Transportation AG' ("AD Tranz"), 50% of whose share capital is held by ABB Zurich and the balance 50% by Daimler-Benz AG, Germany. The transportation activities of both ABB Group and Daimler-Benz AG, Germany will be carried out by subsidiaries of the above referred AD Tranz. In India,a Company called 'ABB Daimler-Benz Transportation (India) Limited' (the new Company) has been incorporated as a subsidiary of AD Tranz.

Consequently, it is considered advisable for your Company also to transfer its existing transportation business to the new Company, effective 1st January, 1996. The proposed transfer of the undertaking relating to transportation business as a going concern to the new Company will be for a total consideration of Rs.831 million (Rupees eight hundred and thirty-one million) subject to the receipt of all requisite approvals. A part of this consideration is for the Company agreeing, not to compete with the new Company in this business. The necessary approval of the shareholders for the above transfer is being put up in an Extraordinary General Meeting, scheduled for 22nd February, 1996.

The proceeds of the sale will be utilized for the business of the Company.

Future Prospects

During the year, the ABB Group has taken a majuority stake in a boiler manufacturing Company, now called ABB ABL Limited. Your Company has started quoting for power plants, with boilers to be supplied by ABB ABL Limited.

The investment programme in facilities to manufacture turbines at Baroda is progressing satisfactorily and the manufacture of certain class of turbines has already commenced. Similarly, production of Low Voltage Apparatus and Systems has also started at Bangalore/Nasik. Thesse new activities will provide good long term growth prospects for your Company.

Debentures

The Directors confirm that the funds raised through 18% Non-Convertible Debentures through private placement were utilised for the working capital requirements of the Company.

Fixed Deposits

Fixed deposits totalling to Rs.1,816,500 due for repayment on or before 31.12.1995 were not claimed by the depositors as on that date. As on the date of this report, deposits amounting to Rs.403,000 have been claimed and paid or renewed.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under Sub-Section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in Annexure - A which forms part of the Directors' Report.

Environment Compliance

The Company has in place, a system for controlling and monitoring pollutants in al factories, which has resulted in all of our units complying with environmental standards and legislation. We have submitted environmental statement reports for all our factories to the local authorities.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 1994 and forming part of this Directors' Report is given in Annexure - B.

Board of Directors

Mr. Manfred Simon resigned as the Director of the Company with effect from 3rd May, 1995. The Directors place on record their appreciation of the excellent contribution made by him while he was a Director of the Company.

The Board appointed Dr. Hubert Lienhard as a Director of the Company with effect from 3rd May, 1995 in the casual vacancy caused by the resignation of Mr. Manfred Simon. He would hold office upto the date of the forthcoming Annual General Meeting and is eligible for reappointment.

Mr. Jorgen Centerman was appointed as a Director of the Company in place of Mr. A.K. Bhattacharyya who was retiring by rotation at the last (45th) Annual General Meeting of the Company and was unwilling to be reappointed.

Mr. U. Mahesh Rao resigned as the Director of the Company with effect from 7th September, 1995. The Directors place on record their appreciation of the excellent contribution made by him while he was a Director of the Company.

Under the Articles of Association of the Company, Mr. Mantosh Sondhi and Mr. A. Bennborn retire from the Board of Directors by rotation and are eligible for reappointment.

Auditors

You are requested to appoint Auditors and fix their remuneration.

Conservation of Energy, Technology Absorption, Foregin Exchange Earnings and outgo - Companies (Disclosure of particulars in the Report of Directors) Rules, 1988.

A. Conservation of Energy

a. Energy Conservation Measures taken during 1995

Training programs were conducted by reputed consultants in the field of energy conservation for the engineers directly responsible for this activity. Film shows and exhibitions were arranged to foster general awareness. Major areas of work were installation of elecctronic ballasts, compact fluorescent lamps, refurbishment/replacement of old equipment, motors, compressed air systems, timers etc. One manufacturing unit was audited by a reputed auditing agency.

b. Proposals being implemented for reduction of energy consumption

Areas covered include replacement of old and inefficient motors by modern high efficiency ones, fluid pumping systems, dynamic voltage regulators and photosensitive switches for illumination systems. Programs for employee awareness are on a regular basis. These measures are now being widely implemented across regional and branch offices also.

c. Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated at around 1,009,600 units of electricity per annum. This saving, however, has no appreciable impact on cost of goods as the Company's production processes are not energy intensive.

B. Technology Absorption

a. Research and development (R&D)

1. Specific areas in which R&D is carried out by the Company

The major areas are air pollution control equipment, air distribution and handling units, environmental services, refrigeration systems, protection relays, distribution relays, rotating machines, electrical transducers, Power Line Carrier Communication (PLCC) systems, fault recording systems, fibre optic equipment, medium voltage switchgear, high voltage circuit breakers, energy meters, thyristor controlled reactors, motor starters, series capacitor systems, instrument transformers, low voltage apparatus and systems, tapchanger components and disconnectors.

2. Benefits derived as a result of above R&D

The Company could introduce state of the art products as a result of extensive R&D.

Benefits have been reflected also in terms of

-- Reduction in material cost & foreign exchange outgo.

-- Reduction in throughput time.

-- Increased exports and customer base.

-- Enhanced product field performance.

3. Future plan of action

Introduction of more numbers of cost effective and state of the art products with enhanced features is planned. Specific areas include Power CVTs, better transient response CTs, indoor and outdoor vacuum circuit breakers, man-machine interface systems, SF6 insulated ring main units, large AC drives, digital crane controllers, numeric protection relays, Rogowski coils, products for distribution automation and disconnectors.

4. Expenditure on R&D

(Rs. in Thousands) i. Capital 29,801 ii. Recurring 112,251 -------- iii. Total 149,052 -------- iv. Total R&D expenditure as a percentage of turnover 1.59%

b. Technology Absorption, Adaptation and Innovation

1. Efforts made towards technology absorption, adaptation and innovation

Extensive training at collaborators' factories to improve knowledge in areas of design, development & manufacturing, development of quality standards, joint projects with principals, continuous quality audits by principals; and use of infrastructure facilities and technical knowledge of various reputed academic institutions, laboratories and development centres by sponsoring industrial projects.

2. Benefits derived as a result of above efforts

i. Product improvement

The satisfy customer needs, and enhancement in field performance, product improvement was done on instrument transformers, tapchangers and turbocharger components, electrostatic precipitators and its controls, bag filters, fans, refrigeration systems, PLCC equipment, transducers, digital electrode regulator for are furnace and timers.

ii. Cost Reduction

Cost reduction was achieved in electrostatic precipitators, bag filters, heat exchangers, high current rectifiers, static excitation systems, crane controls, protection relays and timers. This included design optimization, alternative raw materials, reduction in process time due to improved plant layout, computerizsed design documentation systems, and reduced inhouse engineering cycle times due to additional testing facilities.

iii. Product Development

Important products developed are programmable PLCC with twin channels, electrostatic precipitators, bag filters, fans, air distribution units, dampers, electronic controllers, vacuum circuit breakers, SC controllers, multi-bus, relay modules and disconnectors.

iv. Import Substitution

Import substitution was carried out for tapchanger components DBTF auxiliary switch and crank shaft, turbocharger components, rolling mills controls, fabric for box filter, pulse valves, critical components of HA2 circuit breaker and VRC vacuum contactors, discrete electronic components, rogowski coils, etc.

3. Imported Technology (Imported during last 5 years)

i. Technology Imported

-- Clean room systems 1991 -- Current transformers 1191 -- Micro computer controlled thyristor rectifiers 1991 -- Fans, blowers, dampers, Electrostatic precipitators, bag filters, air treatment including pollution control equipment, air-conditioning and refrigeration equipment. 1992

-- High vacuum closed conveying system 1992 -- SF6 circuit breakers & VRC vacuum contactors 1992 -- High current diode/thyristor rectifiers 1992 -- Environmental services 1993 -- Surge arrestors 1993 -- Programmable PLCC system 1993 -- Fault recorder 1993 -- Turbochargers 1993 -- Digital drives 1993 -- Process automation systems 1993 -- Distance relay RELZ100 1994 -- Energy meters 1994 -- Multistage steam turbines upto 6 MW 1994 -- Advant controller 1995 -- Advant stations 1995 -- Digital thyristor controller for DC motor drive 1995 -- Relay modules REXA, RXDSB4, RXKL 1995 -- Indoor Vacuum Circuit Breaker 1995 -- Power Capacitors 1995

ii. Has technology been fully absorbed?

Yes, except in the following products:

Relay module REXA, Advant stations, Advant controllers, power capacitors, vacuum circuit breakers, energy meters and 390 kV Surge arrestors.

C. Foreign exchange earnings and outgo

a. Activities related to exports; initiative taken to increase exports, development of new export markets for products and services, export plans

The Company is actively seeking to increase physical exports primarily by becoming a low cost export base for ABB Group Companies in South East Asia, Europe and South America. In addition, the Company is also concentrating on the deemed export market, where contracts are funded by multilateral financial agencies.

The Company's Andheri Unit is exporting PLCC equipments to Europe, South America and is likely to become a sourcing base for the ABB Group for PLCCs. The Baroda unit exports Drives/EDF breakers in kits to Europe and has exported during the year Substations to the Middle East. Potential markets for Breakers, Instrument Transformers and Substation include South East Asia. A separate export group has been formed in Baroda to develop the South East Asian market for its products.

The Copany's Peenya unit already exports PCBs for ABB Group in Sweden, Malaysia and Germany. It also exports software for Industrial Automation systems for which, there exists a lot of potential. Peenya is likely to become the exclusive sourcing base for certain types of PCBs for ABB Group. The Company's Calcutta unit exports Air Pollution Control equipment, HVAC equipment and Fans to the Middle East, SAARC countries and South East Asia.

The Company has also created an exclusive export cell, to give exports a major thrust. The Company's focus is on development of export markets in South East Asia, where, as part of the ABB Asia Pacific group, it is well positioned. The Company has also entered into consortium/partnership relationship with other ABB Group Companies for exports. The Company is constantly striving to improve its quality and delivery to access the export markets, with cost leadership, being the major competitive advantage.

Most of the Company's Business Areas have already received ISO 9001/9002 accreditation, which along with the Company's Customer focus programme, will benefit immensely the export business. Some of the recent orders bagged by the Company includes PLCC terminals, drives, PCBs, Substations, pollution control equipments, fans and instrumentation transformers.

b. Total Foreign Exchange used and earned

(Rs. in Thousands)

a. Foreign exchange earned (including from deemed exports) 1,061,037 b. Foreign exchange used 1,734,263 --------- Net foreign exchange used 673,226


Dec 31, 1994

The Directors have great pleasure in presenting their Forty-fifth Annual Report and Accounts for the year ended 31st December, 1994.

Financial Results (Rs. in Thousands)

For the Year For the year ended 31st ended 31st December, 1994 December, 1993

Profit before Taxation 787,806 525,518 Less: Provision for Taxation-Income tax 280,000 220,000 ------- -------- Profit after Taxation 507,806 305,518 Less: Transfer to Foreign Projects Reserve Account 3,000 6,500 Debenture Redemption Reserve Account 5,224 3,565 ------- ------- 499,582 295,453 Balance of Profit of the erstwhile Flakt India Ltd for 1993, net of appropriation 4,505 - Balance brought forward from last year 75,359 41,501 ------- ------- Amount available for appropriation 579,446 336,954 ======= ======= Appropriations General Reserve 350,000 200,000 Proposed Dividend 108,723 61,595 Balance carried forward 120,723 75,359 ------- ------- 579,446 336,954 ======= =======

Dividends

The Directors recommend payment of following dividend, subject of deduction of tax

A dividend at the rate of Rs. 3.50 per share for the year ended 31st December, 1994 on 31,063,767 equity shares of Rs. 10/- each (previous year at the rate of Rs. 3.00 per share on 20,531,678 equity shares of Rs. 10/- each.) 108,723 61,595 ------- --------

Amalgamation

Pursuant to the Scheme of Amalgamation which was approved by the High Courts of Bombay and Calcutta on 15th June 1994 and 22nd June 1994 respectively, the erstwhile Flakt India has been amalgamated with the Company upon completion of the necessary formalities on 5th October 1994. In accordance with the said Scheme of Amalgamation, the entire undertaking and assets and liabilities of the said erstwhile Flakt India Limited have been transferred to the Company. Accordingly, the assets and liabilities and income and expenditure of the erstwhile Flakt India Limited have been incorporated in the accounts of the current year only and not in the figures of the previous year.

Consequently the figures of the previous year are not comparable with the fixtures of the current year. The details of the accounting treatment of giving effect to the amalgamation are provided in Note 2 of Schedule 17 to the Accounts.

Performance Review

Operations

The Directors are pleased to report that your Company had another good year of performance in 1994. Sales and other income for the year rose to Rs. 6,435 million (Rs. 4,725 million for the earlier year). There was an all round growth in profitability in the various business segments. In the Power Segment, execution of the combined cycle power plant for National Thermal Power Corporation at Gandhar is almost nearing completion. In the Process Automation business of the Industry Segment, your Company continues to increase activities in pulp and paper, cement and caustic soda sectors. The sub-station business in the Transmission segment is also steadily growing in volume.

Finance

The Company's profit before taxation increased to Rs. 788 million. Operating margins were maintained in spite of increased expenditure for the expanding business activities of the Company. The Profit after taxation increased from Rs. 306 million in 1993 to Rs. 508 million in 1994 after providing Rs. 280 million for Taxation (1993 Rs. 220 million).

The Company could maintain during the year, satisfactory cash flow position, despite delays in payment of bills by our major customers. The resultant improvement in cash flow enabled the Company to achieve substantial reduction in interest cost over the previous year.

The Company's net earnings in foreign exchange at Rs. 569 million is lower than the previous year of Rs. 1,268 million, on account of lower billing on IDA contracts and higher raw material/component imports.

Order Book

During the year, the Company secured orders worth Rs. 8,611 million. Amongst the major orders booked are the modernization of Hot Strip Mills and electricals for slab casters of SAIL, Bokaro and Process Automation Systems for Chemical industries. Significant orders were also received for Sub-Stations, Pollution Control Equipment, Switchgears and High Current Rectifiers. The order back-log at the end of 1994 was satisfactory at Rs. 9,840 million. The activities in the Power Generation and Industry Segments were at a high level throughout 1994. The investments in infrastructure have gathered momentum after the Government's new economic and liberalization policies.

Customer Focus

During the year, under review, the Company's Customer Focus Programme gained further momentum in its quest for giving the best value to customers by defect reduction, on-time delivery, cycle time reduction, process improvements, improving the quality of Suppliers, integrating them into the mainstream business as partners etc. The Company has moved from the initial stages of creating an awareness and intensive training programmes to the implementation of Customer Focus techniques. These Customer Focus Programmes have already started bearing fruit.

During the year, the Company received the ISO 9001/9002 certification in the Business Areas of Industrial Process Automation, Drives, Relays & Protection Systems, Medium Voltage Switchgear and the manufacturing unit at Calcutta, producing Pollution Control Equipment. The remaining Business Areas expect to receive such accreditation during 1995.

Future Prospects

ABB Group has offered to take a majority stake in a BIFR registered boiler manufacturing Company in India, which will enable the Company to provide the full range of equipment and turnkey services for building power plants in the country. The programme of modernisation of the existing plants and expansion of facilities at various locations are progressing satisfactorily. During the year, Company made a successful entry in the Low Voltage Switchgear business which looks promising.

Debentures

The Directors confirm that the funds raised through 18% Non-Convertible Debentures through private placement were utilised for the working capital requirements of the Company.

Bonus Shares

During the year, the Company issued 6,843,893 Bonus Equity Shares of Rs. 10/- each credited as fully paid-up, in the proportion on one New Bonus Equity Share for every three Equity Shares held.

Fixed Deposits

Fixed deposits totalling to Rs. 2,064,000 due for repayment on or before 31.12.1994 were not claimed by the depositors as on that date. As on the date of this report, deposits amounting to Rs. 771,500 have been claimed and paid or renewed.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo.

The particulars as prescribed under Sub-Section (1) (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure-A which forms part of the Directors' Report.

Environment Compliance

The Company has in place, a system for controlling and monitoring pollutants in all factories. An environment audit was conducted during the year by external agencies and reports submitted to local authorities.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo-Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.

A. Conservation of Energy

a. Energy Conservation Measures Taken During 1994

Extensive programmes were conducted for employee awareness against waste of energy at all levels. Major areas of work were, installation of electronic ballasts, compact fluorescent lamps, optimal sizing of ovens, improvement in insulation and proper batch loading patterns. Timers were used to switch off equipment when not required. Two manufacturing units were also audited by reputed auditing agencies.

b. Proposals being implemented for reduction of energy consumption

Areas covered under this are, proper sizing of motors and replacement of old and inefficient motors by modern high efficiency ones. Further avenues being explored are ovens, compressed air systems and fluid pumping systems. More programmes are under way for employee awareness and extension of the measures to regional offices.

c. Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods

Total energy saving is estimated around 655,756 units of electricity per annum. This saving, however, has no appreciable impact on cost of goods as the Company's production processes are not energy intensive.

B. Technology Absorption

a. Research and Development (R&D)

1. Specific areas in which R&D is carried out by the Company.

The major areas are air pollution control equipment, air distribution units, dust conveying systems, dryers and drying systems, surge arrestors, medium voltage switchgear, high voltage circuit breakers (self extinguishing type), energy meters, thyristor controlled reactors, motor starters, turbo-chargers, motors, low tension current transformers, series capacitor systems, automated control systems for automatic pouring furnace and quiet medium frequency coreless induction furnaces.

2. Benefits derived as a result of above R&D

Benefits comprise of development of a sound technological based to cater to the needs of a highly demanding customer base, meeting world class quality norms, cost reduction, development of new products, enhancing exports etc. Benefits have been reflected in the form of reduced costs, improved customer satisfaction, reduction in engineering cycle time and saving in foreign exchange.

3. Future plan of action

Further improvement is planned in the areas of technological strength, reduction in cost and throughput time, indigenization, etc. Specific areas include numeric busbar differential protection schemes, surge arrestors in lower voltage classes, energy metering systems, fibre optics for power line carrier communication equipment, high tension capacitors, and Rogowski coils for non-sinusoidal currents.

4. Expenditure on R&D

(Rs in Thousands) 1. Capital 17,612 ii. Recurring 67,638 ------- iii. Total 85,250 ------ iv. Total R&D expenditure as a percentage of turnover 1.32%

b. Technology Absorption, Adaptation and Innovation

1. Efforts made towards technology absorption, adaptation and innovation.

Extensive training at Collaborators' factories to improve technological know-why, continuing education programmes on various aspects of manufacturing, quality engineering, product design, product reliability and closer interaction with customers through specific programmes. Extensive use of technical knowledge of various reputed academic institutions by sponsoring industrial projects.

2. Benefits derived as a result of above efforts.

i. Product Improvement

To satisfy customer needs, product improvement was done on medium voltage breakers for higher reliability, motors, powerline carrier communication systems, transducers, high voltage switchgear, static frequency convertor for induction furnaces, automated control and weighing for induction furnaces, electrostatic precipitators, fans multicyclones and bag filters.

ii. Cost Reduction

Cost reduction was achieved in medium voltage breakers, turbochargers, motors, electrostatic precipitators, bag filters, heat exchangers. This includes optimistion of designs, alternative raw materials, reduction in manpower by simplified process, computerised designs and order handling systems and reduced engineering times.

iii. Product Development

Important products developed are new medium voltage breaker, roller table motor for steel mills, micro-processor based transducers, air distribution units, bag filters, chillers, condensers and dampers.

iv. Import Substitution

Import substitution was carried out for various components in turbo-chargers, tap changers, medium and high voltage breakers, pulse valve for bag filters, chillers, electronic controllers, etc. This comprised of development of indigenous suppliers, substitution by locally available equivalent raw materials etc. A lot of programmes were conducted for vendor education and improvement.

3. Imported Technology (Imported during last 5 years)

i. Technology Imported

- Paint finishing systems including accessories 1990 - Ash grain and other material handling system 1990 - High voltage circuit breakers 1990 - Clean room systems 1991 - Current transformers 1991 - Micro computer controlled thyristor rectifiers 1991 - Fans, blowers, dampers, electrostatic precipitators, bag filters, air treatment including pollution control equipment, air-conditioning and refrigeration equipment. 1992 - High vacuum closed conveying system 1992 - SF6 circuit breakers & VRC vacuum contractors 1992 - High current diode/thyristor rectifiers 1992 - Environmental services 1993 - Surge arrestors 1993 - Programmable PLCC system 1993 - Fault recorder 1993 - Turbochargers 1993 - Digital drives 1993 - Process automation systems 1993 - Distance relay RELZ100 1994 - Energy meters 1994 - Multistage steam turbines upto 6 MW 1994

ii. Has technology been fully absorbed?

Yes, except the following products:

SF6 circuit breakers, surge arrestors, power capacitors, air pollution control equipment, paint finishing systems, fans, electrostatic precipitators, bag filters, dampers, process automation systems and relays.

c. Foreign Exchange earnings and outgo

a. Activities relating to exports; initiative taken to increase exports, development of new export markets for products and services, export plans

The Company continues to be well positioned for the deemed export market where contracts are funded by multilateral financing agencies. In addition to this, the Company is striving to increase physical exports primarily by becoming a low cost export base for ABB companies in Europe, South America and South East Asia.

The Company's Andheri unit has already exported PLCC equipments to Europe and South America and could become a sourcing base for the entire range of PLCCs. The Company's Baroda unit exports drives/EDF breakers in kits to Europe and the USA and is eying the South East Asian market to export the complete breakers. A potential export market for this, includes Malaysia and Philippines. The Company's Peenya unit has already executed orders for PCBs for ABB Sweden. A lot of potential exists for export of engineering software from Peenya for Industrial Automation Systems.

The Company has also created an exclusive export cell to give a major export thrust. It has entered into a consortium/partnership with other ABB Companies for exports to the neighboring countries and the Middle East, and is constantly improving its cost, quality, and delivery to tap the export markets. The competitive advantage for exports is derived from cost leadership.

Exports is one of the thrust areas which will be benefiting immensely from the Company's customer focus programme, apart from 9001 accreditation. Some of the export orders recently bagged by the Company include PLCC terminals, drives, PCBs, substations and pollution control equipments.

b. Total Foreign Exchange used and earned

(Rs. in Thousands) Total Foreign Exchange Earned (includingr from deemed exports) 1,354,954

Total Foreign Exchange used 786,316 --------- Net Foreign Exchange Earned 568,638 ---------


Dec 31, 1993

The Directors have great pleasure in submitting their Forty-fourth Annual Report and Accounts for the year ended 31st December, 1993.

Dividends:

The Directors recommend payment of following dividend, subject to deduction of tax.

A dividend at the rate of Rs.3.00 per share for the year ended 31st December, 1993 on 20,531,678 equity shares of Rs.10/- each (previous year at the rate of Rs.3.00 per share on 9,860,590 equity shares of Rs.10/- each.)

Operations:

The Directors are pleased to report taht your Company had another excellent year of performance in 1993. Sales and other income for the year rose by 43% to Rs.4,725 million (Rs.3,269 million for the earlier year). Almost all the segments showed encouraging growth and profitability. In particular, in the Power Segment, execution of the Gandhar Combined Cycle Power Plant which is an NTPC project is progressing very statisfactorily.

Finance:

Inspite of sluggish growth in the Indian economy, Profit Before Taxation increased by 66% to Rs.526 million. With a higher provision for taxation at Rs.220 fmillion (1992: Rs.149 million), Profit After Tax has increased from Rs.167 million in 1992 to Rs.306 million in 1993.

The cash flow position also remained satisfactory despite continuing delays in payment of bills by our major customers viz. State Electricity Boards and some other Public Sector Undertakings.

The Company's earnings in foreign exchange also improved very significantly. The gross earnings in lforeign exchange in 1993 reached Rs.1,661 million against Rs.650 million in the previous year. The net foreign exchange earnings of the Company for the year are Rs.1,268 million against Rs.169 million in 1992.

Order Book:

During the year, the Company has received orders worth Rs.6,215 million. Among the orders booked are the local contracts for a Combined Cycle Power Plant and the MSEB High Voltage Direct Current Transmission Project. Significant orders were also dreceivfed for Mine Hoists, Arc Furnaces and Capacitors.

The order backlog at the end of 1993 was comfortable at Rs.6,758 million. The thrust on power generation by the private sector will be beneficial to your Company and we along with our parent company are in the final stages of negotiation for two such projects. Barring unforeseen circumstances, the prospects for 1994 are encouraging.

ISO 9001 Certification:

The Company has received ISO 9001 accreditation for the quality system for Power System Communication Products, Transducers and SCADA Systems and for Energy Metering and Management Systems, as well as for Contract Manufacturing of Electronics Assemblies produced at the Andheri Unit in Bombay. Design/Development, Production, Installation and Servicing of High Voltage Capacitors manufactured at the Company's Peenya Unit in Bangalore are also now covered by ISO Certification.

The ISO 9001 accreditation certificates for most of the other products manufactured at various Units are expected in 1994.

Future Prospects:

India is recognised as a focal country by the ABB Group. According to Mr. Percy Barnevik, President & Chief Executive Officer of ABB, Switzerland, the Group expects its sales in India to touch Rs.6,000 crores by the turn of the century. A part of this will obviously be shared by your Company.

The programme for modernisation and expansion of facilities at the different Units of the Company is progressing well. The work on the infrastructural facilities for servicing and assembly of large turbines and generators has startged at Baroda.

Your Company is also planning to expand its activities by forming Joint Ventures, through acquisitions and by forming strategic alliances. Negotiations to achieve this purpose are already in progress. A major revamp of the electronic facilities at Bomay and Bangalore has been made, and a new training centre has also been added at Bangalore. There are plans under consideration to develop the Bangalore estasblishment into a software export centre for the ABB Group in due course.

Debentures:

During the year under report, 300,000 15% Non-Convertible Debentures of Rs.100/- each and 252,233 , 13.5% (Series II) Secured Non-Convertible Debentures of Rs.100/- each issued on private placement basis by the Company have been redeemed as per the terms of the said debentures.

The Directors confirm that the funds raised through the said Secured Non-Convertible Debentures were utilised for working capital requirements of the Company.

Bonus Shares:

At the Extraordinary General Meeting of the Company held on 7th January, 1994 the shareholders authorised the Company to capitalise a sum of Rs.68,438,930 out of the amount standing to the General and Free Reserves of the Company as at 31st December, 1992, by issue of 6,843,893 New Bonus Equity shares of Rs.10/- each credited as fully paid up, in the proportion of one New Bonus Equity Share for every three equity shares held. The allotment of the said New Bonus Equity Shares will be made to such persons whose names have been on the Register of Members of the Company on 8th February, 1994, being the Record Date.

Amalgamation of Flakt India Limited with the Company:

Pursuant to the Order of the Bombay High Court dated 12th January, 1994 the meetings of the Shareholders, Secured Creditors and Unsecured Creditors of the Company were to be held on the afternoon of the 25th February, 1994 for the purpose of approving the Scheme of Amalgamation of Flakt India Limited with the Company.

Environment Compliance:

The Company has in place a system for controlling and monitoring pollutants in all factories. An environment audit was conducted during the year by external agencies and reports submitted to local authorities.

Directors:

The Directors express their profound sorrow at the sad and sudden demise of Mr. A.V. Subramanian, a Director of the Company, in July 1993 and place on record their appreciation of the valuable contribution made by him while he was a Director of the Company.

(A) Conservation of Energy:

(a) Energy Conservation Measures taken During 1993:

The Company has formed an Energy Conservation Committed for the implementation of major energy conservation measures. Major steps include use of natural light, provision of damper control for air-conditioned areas, elimination of compressed air leakages to the maximum extent possible of electronic chokes and screw compressors at all the units.

(b) Proposals being implemented for reduction of energy consumption:

This broadly covers efficient use of ovens and recovery of exhaust energy in diesel fired systems. It is further planned to introduce energy efficient electronic chockes and compact fluorescent lamps.

(c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods:

Total energy saving estimated is around 464,200 units of electricity per annum. This saving, however, has no appreciable impact on cost of goods as the Company's production processes are not energy intensive.

(B) Technology Absorption:

(a) Research and Development (R&D):

(1) Specific areas in which R&D 8 is carried out by the Company

The major areas are medium and high voltage circuit breakers (self extinguishing type), capacitor voltage transformers with mixed dielectric, surge arrestors, power capacitors, rotating machines (motors), introduction and are melting furnaces, turbochargers, protective relays and systems, microprocessor based instrumentation and computer aided design software.

(2) Benefits derived as a result of above R&D:

Benefits mainly com prise of absorption and adaptation of technology for local needs, products to satisfy customer needs, cost reduction, development of new products and improving/broadening the technological base of the company.

Future plan of action:

Future plans include further reduction of cost, through put time and development time of new products without sacrificing reliability and quality. Major areas include self-extinguishing SF6 circuit breakers, Voltage grading capacitors, instrument transformer protection devices, energy metering devices, vacuum circuit breakers for power distribution, power capacitors, static reactive power compensating devices, numercial protections, frequency converters, medium frequency coreless furnace etc.

(4) Expenditure on R&D:

(Rs. in thousands)

(i) Capital 9,008 (ii) Recurring 39,400 ------- (iii) Total 48,408 ------- (iv) Total R&D expenditure as a percentage of turnover 1.07%

(b) Technology Absorption, Adaptation and Innovation:

(1) Efforts made towards technology absorption, adaptation and innovation.

Extensive training and skill building exercises conducted in-house, at various educational and research institutions and at collaborator's factories to enhance knowledge and experience in various aspects of product design and development, manufacturing, commissioning and servicing. All these efforts were aimed primarily at designing and supplying products which meeting customers' expectations.

(2) Benefits derived as a result of above efforts:

(i) Product improvement:

To cater to existing and new markets and meet varied customer needs, product improvement done on motors, relays, industrial process automation system, high and medium voltage circuit breakers, PLCC equipment, turbochargers and static frequency converter for induction furnaces.

(ii) Cost Reduction:

Raw material and process cost reduction was achieved in capacitor voltage transformer with mixed dielectric, relay components and medium voltage circuit breakers. This includes optimisation of designs and processes. A PC-CNC interface weas developed to reduce machining time and manpower requirement.

(iii) Product Development:

Important products developed are CVT using mixed dielectric, optimised medium voltage switch cubicle, programmable PLCC equipment, fault recorder, software for carrier performance analysis, photovoltaic lighting system, earthquake reinforcement cage for relay system and series capacitor over voltage protector.

(iv) Import Substitution:

Import substitution was taken up in the following areas:

Paper for capacitor unit was replaced by pp film adopting new designs, indigeneous source for pp film, surge arrestor components, turbocharger components, medium and high voltage circuit breaker and contract components.

(3) Imported Technology (Imported during last 5 years):

(i) Technology Imported:

- Protective relays & systems 1989 - High voltage circuit breakers 1990 - Current transformers 1991 - Micro-computer controlled thyrisor rectifiers 1991 - SF6 circuit lbreakers & VRC vacuum contactors 1992 - High current diode/thystor rectifiers 1992 - Surge arrestors 1993 - Programmable PLCC system 1993 - Fault recorder 1993 - Turbocharger 1993 - Digital drives 1993 - Process automation systems 1993

(ii) Has technology been fully absorbed?

Yes, except for the following products:

Current transformers, surge arrestors, turbochargers, SF6 circuit breakers, vacuum contractors, power capacitors and process automation system.

(C) Foreign exchange earnings and outgo:

(a) Activities relasting to exports; initiative taken to increase exports, development of new export markets for products and services, export plans.

The company has created an exclusive export cell to give a major export thrust. The company iis striving to improve its export earnings through:

(i) Consortium/Partnership with other ABB Companies for Exports to the neighbouring countries and Middle East markets.

(ii) Buy back arrangements with ABB Companies.

(iii) Besides, the Company is constantly striving to improve its quality and delivery to come upto world class standards. ISO 9001 accreditation will also help the export drive.

(iv) The Company has positioned itself well for the deemed export market, where contracts are financed by Multilateral funding agencies.

(b) Total Foreign Exchange used and earned:

(Rs. in thousands)

Total Foreign Exchange Earned (including from deemed exports) 1,660,752

Total Foreign Exchange used 393,043 ---------- Net Foreign Exchange Earnings 1,267,709 ----------

For and on behalf of the Board of Directors

Mantosh Sondhi Chairman

Bombay 25, February, 1994.


Dec 31, 1992

The Directors have pleasure in submitting their Forty-third Annual Report and Accounts for the year ended 31st December, 1992.

DIVIDEND: The Directors recommend payment of following dividend subject to deduction of tax: A dividend at the rate of Rs.3.00 per share for the year ended 31st December, 1992 (previous year at the rate of Rs. 2.80 ) on 9,860,590 Equity Shares of Rs.10 each

REVIEW OF PERFORMANCE OPERATIONS The Directors are pleased to report that your Company's performance for the year 1992 has been excellent. The income for the year ended 31st December, 1992 was Rs. 3,269 million compared Rs. 2,621 million for the previous year. The order backlog at the end of the year was higher at Rs. 5,274 million as compared to the 1991 figure of Rs. 2,544 million. During the year under review, the Company successfully bagged the Gandhar Combined Cycle Power Plant as a member of an international consortium, an order worth Rs. 2,210 million.

The Company's operations in 1992 were affected by escalation in input costs due to partial convertibility of the Rupee and high inflation for most of the year. The State Electricity Boards who are the biggest customers of your Company faced a deteriorating financial position which affected your Company by way of delay in payment of bills. This resulted in substantial additional interest burden. In spite of the above, the Company was able to protect its margins and the increased sales volume resulted in a higher profit before taxation for the year at Rs. 315.7 million as compared to Rs. 170.5 million for the previous year.

The provision for taxation is higher at Rs. 149 million compared to Rs. 71.3 million for the previous year consequent to the increase in profits.

FINANCE: During the year under Report, the Company issued and allotted 500,000,18% Non- convertible Debentures of Rs.100 each to Financial Institutions by way of a private placement to secure long term funds towards working capital needs of the Company.

The Directors confirm that the funds raised through the Non- convertible Debentures were utilised for working capital requirments of the Company.

Effective from 1st January, 1993, 10,671,088 equity shares of Rs. 10 each for cash at a premium of Rs. 50 per share were allotted to the existing shareholders of the Company as Rights Shares and additional shares against the retention of 15% of over-subscription, to the employees under the employees quota and to the Collaborators of the Company ABB Asea Brown Boveri Limited, Zurich, Switzerland, in order to increase their shareholding in the Company to 51% after allotment of the said 10,671,088 equity shares.

CONSERVATION OF ENERGY: A) Energy Conservation Measures Taken During 1992.

The major steps taken include use of sunlight in shop floor,, installation of power factor improvement capacitors, efficient use of compressors, panel air-conditioners, air-curtains in air conditioned area, and use of energy efficient ovens and motors in processing shop.

b) Additional Investment and proposals being implemented for reduction of consumption of energy. A committee has been formed to organise energy auditing, continuous review and take appropriate steps for conservation of energy at the different manufacturing units. An action plan has been drawn up to effect conservation in office area. Air-conditioning, compressed air systems, rotating machines, electrical heating and diesel generators.

c) Impact of measures (a) and (b) above for reduction of energy consumption and consequent impact on cost of production of goods.

Total estimated energy saving would be around 220,000 units of electricity per annum. The saving, however, will not have any appreciable impact on cost of goods as the production process is not energy intensive.

B) TECHNOLOGY ABSORPTION:

a) RESEARCH & DEVELOPMENT (R&D) 1. Specific areas in which R&D is carried out by the company The major areas include medium and high voltage circuit breakers and instrument transformers, power capacitors, rotating machines, induction and arc melting furnaces, turbochargers, protective relays, power electronics, SCADA system, PLCC system microprocessor based instrumentation, process automation, computer aided design software, substation and industrial power system design.

2. Benefits derived as a result of the above R&D The benefits to the company are from increasing the technical base, absorption and adaptation of technology, improvement of products, cost reduction, development of new products and, above all satisfying customers technical requirements.

3. Future plan of action: Efforts will be made to make R&D more result oriented in improving the products, developing new products reducing cost, substituting imported items and satisfying customer requirements. The major areas of concern will be self pressure generating SF6 circuit breaker, vacuum contactor, CVT with mixed dielectric, voltage grading capacitors, vacuum cast turbine blade, medium frequency induction furnace, static var compensator, surface mounted services, numerical protections, SPIDER family of network control etc.

4. Expenditure on R&D (Rs. in Thousands) (i) Capital ........................................... 588.00 (ii) Recurring .......................................... 26,761.00 (iii) Total ............................................ 27,349.00 (iv) Total R&D expenditure as % of turnover.............. 87% b) Technology Absorption, Adaptation & Innovation

1. Efforts made towards technology absorption, adaptation and innovation:

Training was imparted to the technical personnel both inhouse and at the Collaborator's place in order to gain experience in various activities such as design manufacturing, testing, commissioning, tool design, trouble shooting and to gather KNOW-WHY information. The products manufactured under collaboration are continuously being modified, suitable for variying customer needs and operating conditions.

2. BENIFITS DERIVED AS A RESULT OF THE ABOVE EFFORTS.

(i) Product improvement. To cater to larger market and varied customer requirments with enhanced rellability, product improvement was done on EDF circuit breaker, static poser directional relay, static converter for induction furnace, current transformer, PLCC module, motors and arno-converters for railways, BECOS net work control system, and MVCB panel.

(ii) Cost Reduction. It includes optimisation of designs, alternative raw materials, reduction of manhours by computerisation etc., Major cost reduction was achieved in circuit breakers, instrument transformers, relays MVCB panel and PLCC systems.

(iii) Product Development: The important products developed are SF6 circuit breakers type LTB-D1, CVT using mixed dielectrics, static directional relay, static melt energy counter for induction furnace, current and DC voltage transducers, new series of squirrel cage TEFC motors, switchover logic digital DC converter, high current rectifier, thyristor controller reactor, and MVCB interlocking device.

(iv) Import Substitution: Import substitution programmes for various components and items pertaining to several products were taken up such as components of SF6 circuit breaker, turbocharger (VTR 250 ), pouring furnance, HT capacitors, MVCB panel.

3. IMPORTED TECHNOLOGY (IMPORTED DURING THE LAST 5 YEARS):

(i) TECHNOLOGY IMPORTED Year of Import Product Induction furnace/heating equipments ......................1988 Microcomputer/microprocessor based system .................1988 Microprocess or based electronic weighing system...........1988 Frequency converters.......................................1988 High voltage circuit breakers..............................1990 Current transformer........................................1991 Microcomputer controlled thyristor rectifiers..............1991 SF6 circuit breakers and VRC contactors....................1992 High current diode/thyristor rectifiers....................1992

(ii) Has technology been fully absorbed? To a large extent, technology has been absorbed and where required adapted to our customers' requirements.

(iii) Technology has not been fully absorbed in case of the following products : SF6 circuit breakers, VRC contactor, current transformer, frequency converters and high current rectifiers. C) FOREIGN EXCHANGE EARNINGS AND OUTGO: a) Activities relating to exports; initiative taken to increase exports, developement of new export markets for products and services, export plans:

The Company has created an exclusive Export cell besides thrust on export sales by each of the business areas for their products. The Export cell has been exploring markets especially in the middle East, East and Far East for the products, we are manufacturing and has also established direct contacts with number of overseas customers and also been participating in more overseas tenders, through linkages with ABB Companies worldwide.

b) Total foreign exchange used and earned : (Rs.in Thousands) Total Foreign Exchange Earned (including from deemed exports).....650,388 Total Foreign Exchange Used.......................................481,292


Dec 31, 1991

The Directors have pleasure in submitting their Forty-second Annual Report and Accounts for the year ended 31st December, 1991.

Dividends : (Rs. in Thousands) For the year For the year ended 31st ended 31st Dec. 1991 Dec. 1990

The Directors recommend payment of following dividend, subject to deduction of tax:

A dividend at the rate of Rs. 2.80 per share for the year ended 31st December, 1991, (Previous year at the rate of Rs. 2.70) on 9,860,590 Equity Shares of Rs. 10 each........ 27,610 26,624

Review of Performance: Operations : The year 1991 has been an extremely difficult one for the Indian economy. The year witnessed severe balance of payments problem, a high inflation rate coupled with a sharp decline in Gross Domestic Product (GDP) due to slow down in agriculture and industrial growth.

In spite of the above, the company's performance for the year 1991 has been very satisfactory. The income for the year ended 31st December, 1991 was Rs. 2,621 million compared to Rs. 2,271 million for the earlier year. The order backlog at the end of the year was higher at Rs. 2,544 million compared to the 1990 figure of Rs 2,306 million in spite of the delays in the finalisation of major orders by the customers.

The company's operations in 1991 were affected by escalation in input costs due to devaluation and severe restrictions on imports. In addition, due to dearer credit policy of the Government and higher margin monies on imports, the Company has to absorb substantial additional interest burden. The introduction of Exim Scrips consequent to changes in Trade Policy added to the costs of imports. It is gratifying that in spite of the above cost escalations, the profit before tax for the year at Rs. 170.5 million was substantially higher than Rs 142.2 million for the previous year.

The provision for taxation is higher at Rs 71.3 million compared to Rs. 55.8 million in the previous year due to increase in Corporate Tax rate from 40 to 45%. the effective increase in tax rate inclusive of surcharge was 5.75%. During the year, the Company has discontinued manufacturing of EPABX systems, being not a part of the Company's core business.

The Associate company Integra Hindustan Control Limited is performing satisfactorily. The business at other Associate Companies, i.e. Gujarat Prime Movers Limited and National Switchgears Limited has also picked up.

Finance : During the year under Report, out of 140,000 13.5% Non-Convertible Debentures of Rs. 100 each, 55,550 debentures have been redeemed as per the terms of the said debentures.

The third annual instalment of the 15% 100,000 1989-92 Secured Non-Convertible Debentures issued by the Company has been paid to the debenture holders as per the terms of the issue of the said debentures.

The Directors confirm that the funds raised through the Non-convertible 15% 1989-92, 15% 1993 and 13.5% 1993 debentures were utilised for working capital requrirements of the Company.

As you are aware, the Company at its Extraordinary General Meeting on 29th November issue of rights Equity Shares in the ratio of 1:2 to the existing shareholders and the issue of additional equity shares to ABB Asea Brown Boveri Limited, Zurich, Switzerland, who are the foreign collaborators of the Company to make their shareholding equivalent to 51% of the increased paid-up Share Capital. The necessary approval from Reserve Bank of India has already been received. The approval from the Controller of Capital Issues is now awaited.

Fixed Deposits : 785 deposits totalling Rs 4,504,000 due for repayment on or before 31st December, 1991 were not claimed by the depositors as on that date. As at the date of this Report deposits amounting to Rs 3,069,000 have been claimed and paid or renewed. -


Dec 31, 1990

The Directors have pleasure in submitting their Forty first Annual Report and Audited Accounts for the year ended 31st December, 1990.

Dividends : The Directors recommend payment of following dividend, subject to deduction of tax. A dividend at the rate of 27% per share for the year ended 31st December, 1990 (previous year at the rate of 25% on pro rata basis) on 9,860,590 Equity Shares of Rs. 10 each.

Review of Performance: Operations The year 1991 has been an extremely difficult one for the Indian economy. The year witnessed severe balance of payments problem, a high inflation rate coupled with a sharp decline in Gross Domestic Product (GDP) due to slow down in agriculture and industrial growth. In spite of the above, the Company's performance for the year 1991 has been very satisfactory. The income for the year ended 31st Decemeber, 1991 was Rs 2,621 million compared to Rs 2,271 million for the earlier year. The order backlog at the end of the year was higher at Rs 2,544 million compared to the 1990 figure of Rs 2,306 million in spite of the delays in the finalisation of major orders by the customers. The Company's operations in 1991 were affected by escalation in input costs due to devaluation and severe restrictions on imports. In addition, due to dearer credit policy of the Government and higher margin monies on imports, the Comdpany had to absorb substantial additional interest burden. The introduction of Exim Scrips consequetn to changes in Trade Policy added to the costs of imports. It is gratifying that in spite of the above cost escalations, the profit before tax for the year at Rs 170.5 million was substantially higher than Rs 142.4 million for the previous year. The provision for taxation is higher at Rs 71.3 million compared to Rs 55.8 million in the previous year due to increase in Corporate Tax rate from 40 to 45%. The effective increase in tax rate inclusive of surcharge was 5.75%. During the year, the Company has discountinued manufacturing of EPABX systems, being notg a part of the Company's core business. The Associate company Integra Hindustan Control Limited is performing satisfactorily. The business at other Associate Companies, i.e. Gujarat Prime Movers Limited and National Switchgears Limited has also picked up.

Finance: During the year under Report, out of 140,000 13.5% Non-convertible Debentures of Rs 100 each, 55,550 debentures have been redeemed as per the terms of the said debentures. The third annual instalement on the 15% 100,000 1989-92 Secured Non-convertible Debentures issued by the Company has been paid to the debenture holders as per the terms of the issue of the said debentures. The Directors confirm that the funds raised through the Non-convertible 15% 1989-92, 15% 1993 and 13.5% 1993 debentures were utilised for working capital requirements of the Company. As you are aware, the Company at its Extraordinary General Meeting on 29th November, 1991 had approved issue of Rights Equity Shares in the ratio of 1:2 to the existing shareholders and the issue of additional equity shares to ABB Asea Brown Boveri Limited, Zurich, Switzerland, who are the foreign collaborators of the Company to make their shareholding equivalent to 51% of the increased paid-up Share Capital. The necessary approval from Reserve Bank of India has already been received. The approval from the Controller of Capital Issues is now awaited.

Fixed Deposits: 785 deposits totalling Rs 4,504,000 due for repayment on or before 31st December, 1991 were not claimed by the depositors as on that date. As at the date of this Report deposits amounting to Rs 3,069,000 have been claimed and paid or renewed.

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