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 |
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
The Directors have decided not to transfer any amount to the General Reserve for the year under review.
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.
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.
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.
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.
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.
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.
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.
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.
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 Managementâs 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 Companyâs 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 Managementâs 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 armâs length basis and in the ordinary course of the Companyâs 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 Agreementâ 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 yearsâ 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 Companyâs Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Companyâs 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 Companyâs Power Grids business from the Companyâs 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. Directorsâ 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 Companyâs 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 Companyâs 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 Companyâs operations.
32. Internal Control Systems and their adequacy:
The details on Internal Control Systems and their adequacy are provided in the Managementâs 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 Membersâ 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 Companyâs 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 Managementâs 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 Â 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 ,Â
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, Âreflow 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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