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Notes to Accounts of ABB India Ltd.

Dec 31, 2015

A) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs, 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended December 31, 2015, the amount of per share dividend recommended and provided for distributions to equity shareholders is Rs, 3.70/-. (December 31, 2014 : Rs, 3.70/-)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company and other declarations received from shareholders, the above shareholding represents both legal and beneficial ownerships of shares.

b) There is no movement in the share capital during the current and previous year.

1. Segment reporting

A) Primary segment reporting (by business segments)

i) Composition of business segments

The Company's business segments are organized around products and system solutions provided to its customers, which include utilities, industries, channel partners and original equipment manufacturers.

Power Systems segment (PS) offers turnkey systems and services for transmission and distributions for power grid and power plants. The segment offers the instrumentation, control and the entire balance of power plants, which improve performance and energy efficiency through flexible alternating current transmission systems, high voltage direct current systems, network management systems and utility communications.

Power Products segment (PP) manufactures, engineers, supplies key components to transmit and distribute electricity, improving power supply and energy efficiency. The segment produces transformers, high and medium voltage switchgears, circuit breakers, capacitors, distribution relays, insulation paper and paper board components etc.

Process Automation segment (PA) provides customers with integrated solutions for control, plant optimization and industry specific application knowledge. The industries served include oil and gas, power, chemicals and pharmaceuticals, pulps and paper, metals and minerals, marine and turbo charging.

Discrete Automation and Motion segment (DM) provides products, with related services, that are used as components in machinery and automation systems. The segment covers a wide range of products and services including power electronics systems, motors and generators, drives, robots etc.

Low Voltage Products segment (LP) manufactures products and systems that provide protection, control and measurement for electrical installations, enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service.

ii) The accounting policies used in the preparation of the financial statements of the Company are also applied for segment reporting.

iii) Segment revenues, expenses, assets and liabilities are those, which are directly attributable to the segment or are allocated on an appropriate basis. Corporate and other revenues, expenses, assets and liabilities to the extent not allocable to segments are disclosed in the reconciliation of reportable segments with the financial statements.

iv) Inter segment transfer pricing

Inter segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company.

v) Figures in brackets are in respect of the previous year.

2. The Company has taken several premises and vehicles under cancelable and non-cancelable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. Rental expenses towards cancelable and non-cancelable operating lease charged to the statement of profit and loss amounts to Rs, 52.93 crores (Previous Year Rs, 44.80 crores).

Some of the lease agreements have escalation clause ranging from 5% to 15%. There are no exceptional / restrictive covenants in the lease agreement. There are no assets given on operating lease.

3. Excise duty on sales amounting to Rs, 530.43 crores (Previous year Rs, 423.64 crores) has been reduced from sales in the statement of profit and loss. Excise duty reversal on decrease in inventory of finished goods amounting to Rs, 0.90 crores (December 31, 2014: Rs, 3.10 crores) has been accounted in the statement of profit and loss under the head "(Increase) / decrease in inventories of finished goods, work-in-progress and traded goods".

4. Long term borrowings represent 600, unsecured, rated, listed, redeemable, non-convertible debentures of face value of Rs, 1.0 crore each aggregating to Rs, 600.00 crores on private placement basis. The debentures are repayable after 3 years from the date of allotment being September 4, 2015. The debentures carry interest rate of MIBOR plus 80 basis points. The proceeds have been utilized towards working capital and other corporate purposes including refinancing the Company's debt.

5. Short term borrowings represent unsecured short term loan and overdraft facility from banks. The same is repayable on demand and carries interest @ 9% to 11% p.a.

The Company is contesting the demands and the management believes that its position will likely be upheld in the various appellate authorities / courts. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company's financial position.

In respect of the above contingent liabilities, the future cash outflows are determinable only on receipt of judgment pending at various forums / authorities.

6. Related party disclosures

a) List of related parties

Party where control exists:

ABB Limited, Zurich, Switzerland (Ultimate Holding Company)

ABB Asea Brown Boveri Limited, Zurich, Switzerland (Holding Company)

Other Related parties with whom transactions have taken place during the year:

Fellow subsidiaries:

ABB (Asea Brown Boveri), S.A.,Paco de Arcos, Portugal ABB Inc., Saint-Laurent Quebec, Canada.

ABB (China) Ltd.,Beijing,China ABB Inc.,Cary, NC,United States

ABB (Hong Kong) Ltd.,Hong Kong, Hong Kong ABB Industries (L.L.C.).,Dubai,United Arab Emirates

ABB (Private) Ltd. ,Harare ,Zimbabwe., ABB Industries FZ.,Dubai,United Arab Emirates

ABB (Pty) Ltd.,Gaborone,Botswana ABB Information Systems Ltd.,Zurich,Switzerland

ABB (Pvt) Ltd.,Lahore,Pakistan ABB International Marketing Ltd., Zurich, Switzerland

ABB A/S.,Skovlunde,Denmark ABB Intra AG, Zurich, Switzerland

ABB AB.,Västerås,Sweden ABB Investments (Pty) Ltd,Modderfontein,South Africa

ABB AG.,Mannheim,Germany ABB Jiangjin Turbo Systems Company Limited.,Chongqing,China

ABB AG.,Vienna,Austria ABB Jiangsu Jingke Instrument Transformer Co., Ltd.,Suqian, Jiangsu,China

ABB AS.,Billingstad,Norway ABB K.K.,Tokyo,Japan

ABB AS.,Jüri,Estonia ABB Limited.,Auckland,New Zealand

ABB Australia Pty Limited.,Sydney,Australia ABB Limited.,Bangkok,Thailand

ABB Automation Co. Ltd.,Riyadh,Saudi Arabia ABB Limited.,Dar Es Salaam,United Republic of Tanzania

ABB Automation GmbH, Mannheim, Germany. ABB Limited.,Dhaka,Bangladesh

ABB Automation L.L.C.,Abu Dhabi,United Arab Emirates ABB Limited.,Nairobi,Kenya

ABB Automation Products GmbH.,Ladenburg,Germany ABB Limited.,Warrington,United Kingdom

ABB Bailey Beijing Engineering Co. Ltd.,Beijing,China ABB Limited/Jordan LLC.,Amman,Jordan

ABB Bailey Japan Limited.,Shizuoka-Ken,Japan ABB LLC.,Muscat,Oman

ABB Beijing Drive Systems Co. Ltd.,Beijing,China ABB LLP.,Almaty,Kazakhstan

ABB Beteiligungs-Management GmbH, Germany ABB Logistics Center Europe GmbH.,Menden,Germany

ABB Bulgaria EOOD.,Sofa,Bulgaria ABB Ltd. ,Hanoi ,Vietnam.

ABB B V, Rotterdam, Netherlands ABB Ltd., Zagreb, Croatia.

ABB Capital, B.V.,Amsterdam,Netherlands ABB Ltd.,Dublin,Ireland

ABB Chongqing Transformer Company Ltd.,Chongqing,China ABB Ltd.,Kampala,Uganda

ABB CL Logistic S.A., Montevideo, Uruguay ABB Ltd.,Kyiv,Ukraine

ABB Contracting Company Ltd.,Riyadh,Saudi Arabia ABB Ltd.,Lusaka,Zambia

ABB D.o.o., Ljubljana, Slovenia ABB Ltd.,Lusaka,Zambia

ABB d.o.o.,Belgrade,Serbia ABB Ltd.,Moscow,Russian Federation

ABB Ecuador S.A.,Quito,Ecuador ABB Ltd.,Seoul,Korea, Republic of

ABB Electrical Industries Ltd.,Riyadh,Saudi Arabia ABB Ltd.,Taipei,Taiwan, Province of China

ABB Electrical Machines Ltd.,Shanghai,China ABB Ltd.,Zagreb,Croatia

ABB Elektrik Sanayi A.S.,Istanbul,Turkey ABB Ltda.,Osasco,Brazil

ABB Engg. Technologies Co. (KSCC).,Safat,Kuwait ABB LV Installation Materials Co. Ltd.,Beijing,China

ABB Engineering (Shanghai) Ltd.,Shanghai,China ABB Malaysia Sdn Bhd.,Subang Jaya,Malaysia

ABB Engineering Trading and Service Ltd.,Budapest,Hungary ABB Management Services Ltd.,Zurich,Switzerland

ABB Equity Limited.,St. Peter's Port,Guernsey ABB Manufacturing Sdn. Bhd.,Subang Jaya,Malaysia

ABB ESAP Limited.,St. Peter's Port,Guernsey ABB Mexico S.A. de C.V.,San Luis Potosi SLP,Mexico

ABB Finance B.V.,Amsterdam,Netherlands ABB N.V.,Zaventem,Belgium

ABB for Electrical Industries (ABB ARAB) S.A.E.,Cairo,Egypt ABB Near East Trading Ltd.,Amman,Jordan

ABB France.,Les Ulis,France ABB Norden Holding AB, Västerås, Sweden

ABB FZ-LLC.,Dubai,United Arab Emirates ABB Oryx Motors and Generator Service LLC, Doha, Qatar

ABB Generators Ltd, Nanchang, China. ABB Oy.,Helsinki,Finland

ABB Genway Xiamen Electrical Equipment Co. Ltd.,Xiamen,China ABB Power Equipment (Xiamen) Co., Ltd.,Xiamen,China

ABB Global Industries and Services Private Limited.,Bengaluru,India ABB Pte. Ltd.,Singapore,Singapore

ABB Global Marketing FZ LLC.,Dubai,United Arab Emirates ABB Qatar LLC., Doha, Qatar

ABB Group Accounting Services B.V.,Rotterdam,Netherlands ABB Research Ltd.,Zurich,Switzerland

ABB Hefei Transformer Co. Ltd.,Hefei,China ABB S.A., Les Ulis, France

ABB High Voltage Switchgear (Xiamen) Company Ltd.,Xiamen,China ABB S.A.,Buenos Aires,Argentina

ABB High Voltage Switchgear Co. Ltd.,Beijing,China ABB S.A.,Casablanca,Morocco

ABB Holdings Sdn. Bhd.,Subang Jaya,Malaysia ABB S.A.,Lima,Peru

ABB Import & Export Services Ltd., Oranjestad/Aruba (NA), Aruba (Nl) ABB S.A.,Panama,Panama

ABB S.A.,Santiago,Chile Asea Brown Boveri Lanka (Private) Limited

ABB S.p.A.,Milan,Italy Asea Brown Boveri Ltd.,Port Louis,Mauritius

ABB s.p.r.l.,Kinshasa Gombe,The Democratic Republic of Congo Asea Brown Boveri Ltda.,Bogotá,Colombia

ABB s.r.o.,Prague,Czech Republic Asea Brown Boveri Ltda.,La Paz, Plurinational State of Bolivia

ABB Schweiz AG.,Baden,Switzerland Asea Brown Boveri S.A., Caracas, Venezuela

ABB Sécheron S.A.,Satigny,Switzerland Asea Brown Boveri S.A.,Douala,Cameroon

ABB Service Co. Ltd.,Al Khobar,Saudi Arabia Asea Brown Boveri S.A.,Madrid,Spain

ABB Shanghai Motors Co. Ltd.,Shanghai,China Asea Brown Boveri S.A.,Metamorphossis Attica ,Greece

ABB Shanghai Transformer Co. Ltd.,Shanghai,China Asea Brown Boveri S.A.E., Cairo, Egypt

ABB SIA.,Riga,Latvia Baldor Electric (Asia) PTE Ltd.,Singapore,Singapore

ABB South Africa (Pty) Ltd.,Longmeadow,South Africa Baldor Electric (Shanghai) Company Ltd.,Shanghai,China

ABB Sp. z o.o.,Warsaw,Poland Baldor Electric Company.,Fort Smith, AR,United States

ABB Stotz-Kontakt GmbH.,Heidelberg,Germany Baldor UK Ltd.,Bristol, England,United Kingdom

ABB Technologies Ltd., Tirat Carmel, Israel Busch-Jaeger Elektro GmbH.,Mannheim/Lüdenscheid,Germany

ABB Technologies S.A., Dakar, Senegal Electrical Materials Center.,Riyadh,Saudi Arabia

ABB Technologies W.L.L.,Bahrain,Bahrain K-Tek Level Engineering Pvt. Ltd., Navi Mumbai, India

ABB Technology Ltd.,Zurich,Switzerland Maska Power Transmission (Changzhou) Co.Ltd.,Changzhou,China

ABB Technology Oy, Helsinki, Finland Newave Energy AG.,Neuenhof,Switzerland

ABB Technology SA.,Abidjan,Cote d'Ivoire Newave SA.,Quartino,Switzerland

ABB Transformers S.A.E.,El-Nozha El-Gedida,Egypt Power-One Italy S.p.A.,Siena,Italy

ABB Transmission & Distribution Ltd.,Abu Dhabi,United Arab Emirates Power-One Renewable Energy (China) Co. Ltd.,Shenzhen, China.

ABB Turbo Systems (Hong Kong) Limited.,Hong Kong,Hong Kong Power-One Renewable Energy Solutions India Private Ltd.,Mumbai,India

ABB Turbo Systems AG.,Baden,Switzerland Power-One Renewable Energy Solutions LLC.,Delaware,United States

ABB Turbo Systems Holding Ltd, Baden,Switzerland. PT ABB Sakti Industri.,Jakarta,Indonesia

ABB Turbochargers S.A.E.,Suez,Egypt Pucaro Elektro-Isolierstoffe GmbH.,Roigheim,Germany

ABB UAB, Vilnius, Lithuania Shantou Winride Switchgear Co., Ltd.,Longhu District Shantou,China

ABB Verwaltungs AG.,Zurich,Switzerland Spirit IT B.V, Eindhoven, Netherlands.

ABB Xiamen Electrical Controlgear Co. Ltd.,Xiamen,China Striebel & John GmbH & Co. KG.,Mannheim,Germany

ABB Xiamen Low Voltage Equipment Co. Ltd.,Xiamen,China Sucursal Panama de ABB SA.,Panama,Panama

ABB Xiamen Switchgear Co. Ltd.,Xiamen,China Thomas & Betts Asia (Singapore) Pte. Ltd, Singapore

ABB Xi'an High Power Rectifer Company Limited.,Xi'an,China Thomas & Betts Corporation.,Knoxville, TN,United States

ABB Xi'an Power Capacitor Company Limited.,Xi'an,China Thomas & Betts India Private Ltd.,Andhra Pradesh,India

ABB Xinhui Low Voltage Switchgear Co. Ltd.,Xinhui ,China Thomas & Betts Limited ,Saint-Jean-sur-Richelieu, Quebec,Canada.,

ABB Zhongshan Transformer Company Ltd.,Zhongshan,China Thomas & Betts Power Solutions LLC.,Delaware,United States

ABB, Inc.,Paranaque, Metro Manila,Philippines Trasfor SA.,Monteggio,Switzerland

ABB, s.r.o.,Bratislava,Slovakia Tropos Networks, Inc.,Wilmington, Delaware,United States

ABBNG Limited.,Lagos,Nigeria Turbo Systems United Co. Ltd.,Tokyo,Japan

Asea Brown Boveri (Pty) Ltd., Windhoek, Namibia Ventyx (UK) Ltd.,Surrey,United Kingdom

Asea Brown Boveri Electrica SGPS (Angola) Limitada.,Luanda,Angola Ventyx Inc.,Atlanta,United States

Key managerial personnel:

Managing director: Mr. Bazmi R. Husain (upto December 31, 2015)

Company secretary Mr. B. Gururaj

Chief fnancial offcer: Mr. T. K. Sridhar (Effective July 24, 2015)

Mr. Amlan Datta Majumdar (upto March 10, 2015)

b) Nature of provisions:

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31, 2015 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Loss orders: A provision for expected loss on construction contracts is recognized when it is probable that the contract costs will exceed total contract revenue. For all other contracts loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

iii) Provision for litigation represents claims against the Company not acknowledged as debts that are expected to materialize in respect of matters in litigation. The outflow would depend on the cessation of the respective events.

iv) Provision for sales tax represents mainly the differential sales tax liability on account of non – collection of declaration forms. The outflow would depend on the cessation of the respective events.

7. The employees of the Company are entitled to purchase shares of ABB Limited., Zurich (the ultimate holding company) on the settlement date, at a price fxed based on the fair market price on the grant date under ABB employee share acquisition plan. During the year, the Company has been cross charged Rs, Nil (Previous Year Rs,.0.08 crores) towards the above including administrative charges and this has been charged in the statement of proft and loss under the head salaries, wages and bonus.

The Institute of Chartered Accountants of India has issued a guidance note on accounting for 'employee share-based payments', which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged as above. Accordingly, the Company is of the opinion that there is no further accounting treatment/ disclosure required under the said guidance note.

8. Derivative Instruments

i) Forward cover for foreign currency trade receivables outstanding as of balance sheet date is Rs, 271.45 crores (Previous Year Rs, 349.05 crores).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs, 433.12 crores (Previous Year Rs, 384.91 crores).

iii) Forward cover for foreign currency trade payables outstanding as of balance sheet date is Rs, 716.56 crores (Previous Year Rs, 577.89 crores).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs, 440.94 crores (Previous Year Rs, 116.55 crores).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is payable Rs, 187.33 crores (Previous year payable was Rs, 267.31 crores).

9. Commodity Contracts

The Company uses commodity future contracts to hedge risk against fuctuation in commodity prices. The following are outstanding future contracts entered into by the Company as on December 31, 2015.

Notes:

a) Gratuity Plan

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity Act, 1972 or as per the Company's scheme, whichever is higher.

b) Provident Fund Plan

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The Contribution by employee and employer together with interest are payable at the time of separation from service or retirement whichever is earlier.

c) Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as inflation, market growth and other factors applicable to the period over which the obligation is expected to be settled.

d) The Company expects to contribute Rs, 13.00 crores (Previous Year Rs, 20.00 crores) to gratuity fund and Rs, 18.00 crores (Previous Year Rs, 20.00 crores) to provident fund in 2016.

e) The attrition rate for gratuity varies from 1% to 8% for various age groups.

10. In accordance with the provisions of Companies Act, 2013, the Company is required to contribute Rs, 5.60 crores towards CSR expenditure for the year against which actual capital expenditure is Rs, 1.24 crores and revenue expenditure is Rs, 0.46 crores. The said provision is frst time applicable for the company from January 1, 2015.

11. The previous year figures have been regrouped/ reclassified, where necessary, to conform with the current year's classifications.


Dec 31, 2014

1. Corporate information

ABB India Limited (''the Company'') has served utility and industry customers for over six decades with the complete range of engineering, products, solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in the global market.

a) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of '' 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pay dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended December 31,2014, the amount of per share dividend recommended and provided for distribution to equity shareholders is Rs. 3.70 (December 31,2013: Rs. 3.00)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company and other declarations received from shareholders, the above shareholding represents both legal and beneficial ownerships of shares.

d) There is no movement in the share capital during the current and previous year.

2. Amalgamation

a) The Hon''ble High Court of Bombay vide its Order dated September 27, 2013 had sanctioned the Scheme of Amalgamation of Baldor Electric India Private Limited (Baldor), a wholly owned subsidiary, with ABB India Limited (the Company). The Scheme become effective on November 1,2013 with appointed date being April 1,2012. The excess of the Company''s cost of acquisition of equity and preference shares in the Baldor over the par value of the equity and preference shares cancelled, was adjusted in the books of the Company out of the amount available in the General Reserve account as on December 31, 2011. The amount adjusted was Rs. 33.97 crores.

b) Net profit of Rs. 2.42 crores of Baldor from the appointed date i.e, April 1, 2012 to December 31, 2012 of the earlier financial year had been disclosed separately in the previous year statement of profit and loss.

3. Segment reporting

A) Primary segment reporting (by business segments)

i) Composition of business segments

The Company''s business segments are organized around products and system solutions provided to its customers, which include utilities, industries, channel partners and original equipment manufacturers.

Power Systems segment (PS) offers turnkey systems and services for transmission and distributions for power grid and power plants. The segment offers the instrumentation, control and the entire balance of power plants, which improve performance and energy efficiency through flexible alternating current transmission systems, high voltage direct current systems, network management systems and utility communications.

Power Products segment (PP) manufactures, engineers, supplies key components to transmit and distribute electricity, improving power supply and energy efficiency. The segment produces transformers, high and medium voltage switchgears, circuit breakers, capacitors, distribution relays, insulation paper and paper board components etc.

Process Automation segment (PA) provides customers with integrated solutions for control, plant optimization and industry specific application knowledge. The industries served include oil and gas, power, chemicals and pharmaceuticals, pulps and paper, metals and minerals, marine and turbo charging.

Discrete Automation and Motion segment (DM) provides products, with related services, that are used as components in machinery and automation systems. The segment covers a wide range of products and services including power electronics systems, motors and generators, drives, robots etc.

Low Voltage Products segment (LP) manufactures products and systems that provide protection, control and measurement for electrical installations, enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service.

ii) The accounting policies used in the preparation of the financial statements of the Company are also applied for segment reporting.

iii) Segment revenues, expenses, assets and liabilities are those, which are directly attributable to the segment or are allocated on an appropriate basis. Corporate and other revenues, expenses, assets and liabilities to the extent not allocable to segments are disclosed in the reconciliation of reportable segments with the financial statements.

iv) Inter segment transfer pricing

Inter segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company.

v) Figures in brackets are in respect of the previous year.

(Rs. in Crores)

As at December 31, 2014 2013

29. Contingent liabilities

i) Excise duty / service tax and sales tax liabilities in dispute 674.12 384.83

ii) Custom duty liabilities in dispute 2.07 16.14

iii) Claims against the Company not acknowledged as debts 8.85 8.85

iv) Income tax matters in dispute 44.27 210.70

The Company is contesting the demands and the management believes that its position will likely be upheld in the various appellate authorities / courts. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position.

4. The Company has taken several premises and vehicles under cancelable and non-cancelable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. Rental expenses towards cancelable and non- cancelable operating lease charged to the statement of profit and loss amounts to Rs. 44.80 crores (Previous Year Rs. 37.71 crores).

Some of the lease agreements have escalation clause ranging from 5% to 15%. There are no exceptional / restrictive covenants in the lease agreement. There are no assets given on operating lease.

5. Excise duty on sales amounting to Rs. 423.64 crores (December 31,2013: Rs. 474.78 crores) has been reduced from sales in the statement of profit and loss. Excise duty reversal on decrease in inventory of finished goods amounting to Rs. 3.10 crores (December 31,2013: Rs. 2.43 crores) has been accounted in the statement of profit and loss under the head "(Increase) / decrease in inventories of finished goods, work-in-progress and traded goods.

6. Short term borrowings represent unsecured short term loan and overdraft facility from banks. The same is repayable on demand and carries interest @9% to 11% p.a.

7. Related party disclosures

a) List of related parties

Party where control exists:

ABB Limited, Zurich, Switzerland (Ultimate Holding Company)

ABB Asea Brown Boveri Ltd., Zurich, Switzerland (Holding Company)

Other Related parties with whom transactions have taken place during the year:

Fellow subsidiaries:

ABB (Asea Brown Boveri), S.A., Paco de Arcos, Portugal

ABB (China) Ltd., Beijing, China

ABB (Hong Kong) Ltd., Hong Kong, Hong Kong

ABB (Nambia) (Pty) Ltd., Windhoek, Namibia

ABB (Private) Ltd., Harare, Zimbabwe

ABB (Pty) Ltd., Gaborone, Botswana

ABB (Pvt) Ltd., Lahore, Pakistan

ABB A/S., Skovlunde, Denmark

ABB AB., Vasteras, Sweden

ABB AG., Mannheim, Germany

ABB AG., Vienna, Austria

ABB AS., Billingstad, Norway

ABB AS., Juri, Estonia

ABB Australia Pty Limited., Sydney, Australia

ABB Automation Co. Ltd., Riyadh, Saudi Arabia

ABB Automation EOOD, Rakovski, Bulgaria

ABB Automation GmbH., Mannheim, Germany

ABB Automation L.L.C., Abu Dhabi, United Arab Emirates

ABB Automation Products GmbH., Ladenburg, Germany

ABB B.V., Rotterdam, Netherlands

ABB Bailey Beijing Engineering Co. Ltd., Beijing, China

ABB Bailey Japan Limited., Shizuoka-Ken, Japan

ABB Beijing Drive Systems Co. Ltd., Beijing, China

ABB Bulgaria EOOD., Sofia, Bulgaria

ABB BV, Rotterdam, Netherlands

ABB Capital, B.V, Amsterdam, Netherlands

ABB Chongqing Transformer Company Ltd., Chongqing, China

ABB CL Logistic S.A., Montevideo, Uruguay

ABB Contracting Company Ltd., Riyadh, Saudi Arabia

ABB D.o.o., Ljubljana, Slovenia

ABB d.o.o., Belgrade, Serbia

ABB Ecuador S.A., Quito, Ecuador

ABB Electrical Industries (ABB ARAB) S.A.E., Cairo, Egypt

ABB Electrical Industries Ltd., Riyadh, Saudi Arabia

ABB Electrical Machines Ltd., Shanghai, China

ABB Elektrik Sanayi A.S., Istanbul, Turkey

ABB Engg. Technologies Co. (KSCC)., Safat, Kuwait

ABB Engineering (Shanghai) Ltd., Shanghai, China

ABB Engineering Trading and Service Ltd., Budapest, Hungary

ABB Equity Limited., St. Peter''s Port, Guernsey

ABB ESAP Limited., St. Peter''s Port, Guernsey

ABB Finance B.V, Amsterdam, Netherlands

ABB for Electrical Industries (ABB ARAB) S.A.E., Cairo, Egypt

ABB France., Les Ulis, France

ABB FZ-LLC., Dubai, United Arab Emirates

ABB Genway Xiamen Electrical Equipment Co. Ltd., Xiamen, China ABB Global Industries and Services Limited., Bengaluru, India ABB Global Marketing FZ LLC., Dubai, United Arab Emirates ABB Group Accounting Services B.V., Rotterdam, Netherlands ABB Hefei Transformer Co. Ltd., Hefei, China

ABB High Voltage Switchgear (Xiamen) Company Ltd., Xiamen, China

ABB High Voltage Switchgear Co. Ltd., Beijing, China

ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia

ABB Import & Export Services Ltd., Oranjestad/Aruba (NA), Aruba (Nl)

ABB Inc., Cary, NC, United States ABB Inc., St. Laurent, Quebec, Canada ABB Industries (L.L.C.)., Dubai, United Arab Emirates ABB Industries FZ., Dubai, United Arab Emirates ABB Information Systems Ltd., Zurich, Switzerland ABB International Marketing Ltd., Zurich, Switzerland ABB Intra AG, Zurich, Switzerland

ABB Jiangjin Turbo Systems Company Limited., Chongqing, China

ABB Jiangsu Jingke Instrument Transformer Co., Ltd., Suqian, Jiangsu, China

ABB K.K., Tokyo, Japan

ABB Limited., Auckland, New Zealand

ABB LIMITED., Bangkok, Thailand

ABB Limited., Dar Es Salaam, United Republic of Tanzania

ABB Limited., Dhaka, Bangladesh

ABB Limited., Nairobi, Kenya

ABB Limited., Warrington, United Kingdom

ABB Limited/Jordan LLC., Amman, Jordan

ABB LLC., Doha, Qatar

ABB LLC., Muscat, Oman

ABB LLP, Almaty, Kazakhstan

ABB Logistics Center Europe GmbH., Menden, Germany

ABB Ltd., Dublin, Ireland

ABB Ltd., Hanoi, Viet Nam

ABB Ltd., Kampala, Uganda

ABB Ltd., Kyiv, Ukraine

ABB Ltd., Lusaka, Zambia

ABB Ltd., Moscow, Russian Federation

ABB Ltd., Seoul, Republic of Korea

ABB Ltd., Taipei, Taiwan, Province of China

ABB Ltd., Zagreb, Croatia

ABB Ltda., Osasco, Brazil

ABB LV Installation Materials Co. Ltd., Beijing, China ABB Malaysia Sdn Bhd., Subang Jaya, Malaysia ABB Management Services Ltd., Zurich, Switzerland ABB Manufacturing Sdn. Bhd., Subang Jaya, Malaysia ABB Mexico S.A. de C.V., San Luis Potosi SLP, Mexico ABB N.V., Zaventem, Belgium ABB Near East Trading Ltd., Amman, Jordan ABB Norden Holding AB, Vasteras, Sweden ABB Oy., Helsinki, Finland

ABB Power Equipment (Xiamen) Co., Ltd., Xiamen, China

ABB Pte. Ltd., Singapore, Singapore

ABB Research Ltd., Zurich, Switzerland

ABB S.A., Les Ulis, France

ABB S.A., Buenos Aires, Argentina

ABB S.A., Casablanca, Morocco

ABB S.A., Lima, Peru

ABB S.A., Panama, Panama

ABB S.A., Santiago, Chile ABB S.p.A., Milan, Italy

ABB s.p.r.l., Kinshasa Gombe, Democratic Republic of the Congo

ABB s.r.o., Prague, Czech Republic

ABB Schweiz AG., Baden, Switzerland

ABB Secheron S.A., Satigny, Switzerland

ABB Service Co. Ltd., Al Khobar, Saudi Arabia

ABB Shanghai Motors Co. Ltd., Shanghai, China

ABB Shanghai Transformer Co. Ltd., Shanghai, China

ABB SIA., Riga, Latvia

ABB South Africa (Pty) Ltd., Longmeadow, South Africa

ABB Sp. z o.o., Warsaw, Poland

ABB Stotz-Kontakt GmbH., Heidelberg, Germany

ABB Technologies Ltd., Tirat Carmel, Israel

ABB Technologies S.A., Dakar, Senegal

ABB Technologies W.L.L., Bahrain, Bahrain

ABB Technology Ltd., Zurich, Switzerland

ABB Technology SA., Abidjan, Cote d''Ivoire

ABB Transformers S.A.E., El-Nozha El-Gedida, Egypt

ABB Transmission & Distribution Ltd., Abu Dhabi, United Arab Emirates

ABB Turbo Systems (Hong Kong) Limited., Hong Kong, Hong Kong

ABB Turbo Systems AG., Baden, Switzerland

ABB Turbochargers S.A.E., Suez, Egypt

ABB UAB, Vilnius, Lithuania

ABB Verwaltungs AG., Zurich, Switzerland

ABB Xiamen Electrical Controlgear Co. Ltd., Xiamen, China

ABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen, China

ABB Xiamen Switchgear Co. Ltd., Xiamen, China

ABB Xi''an High Power Rectifier Company Limited., Xi''an, China

ABB Xi''an Power Capacitor Company Limited., Xi''an, China

ABB Xinhui Low Voltage Switchgear Co. Ltd., Xinhui , China

ABB Zhongshan Transformer Company Ltd., Zhongshan, China

ABB, Inc., Paranaque, Metro Manila, Philippines

ABB, s.r.o., Bratislava, Slovakia

ABBNG Limited., Lagos, Nigeria

Asea Brown Boveri Electrica SGPS (Angola) Limitada., Luanda, Angola Asea Brown Boveri Lanka (Private) Limited., Colombo, Sri Lanka

Asea Brown Boveri Ltd., Port Louis, Mauritius

Asea Brown Boveri Ltda., Bogota, Colombia

Asea Brown Boveri Ltda., La Paz, Plurinational State of Bolivia

Asea Brown Boveri S.A., Caracas, Venezuela

Asea Brown Boveri S.A., Douala, Cameroon

Asea Brown Boveri S.A., Madrid, Spain

Asea Brown Boveri S.A., Metamorphossis Attica, Greece

Asea Brown Boveri S.A.E., Cairo, Egypt

Baldor Electric (Asia) PTE Ltd., Singapore, Singapore

Baldor Electric (Shanghai) Company Ltd., Shanghai, China

Baldor Electric Company de Mexico SA de CV, El Salto, Jalisco, Mexico

Baldor Electric Company., Fort Smith, AR, United States

Baldor Electric Switzerland AG, Feuerthalen, Switzerland

Baldor Holdings Inc, Boreham, USA

Baldor UK Ltd., Bristol, England, United Kingdom

Busch-Jaeger Elektro GmbH., Mannheim/Ludenscheid, Germany

Electrical Materials Center., Riyadh, Saudi Arabia

K-Tek Level Engineering Pvt. Ltd., Navi Mumbai, India

Maska Power Transmission (Changzhou) Co.Ltd., Changzhou, China

Newave Energy AG., Neuenhof, Switzerland

Newave SA., Quartino, Switzerland

Power-One Italy S.p.A., Siena, Italy

Power-One Renewable Energy Solutions India Private Ltd., Mumbai, India

Power-One Renewable Energy Solutions LLC., Delaware, United States

PT ABB Sakti Industri., Jakarta, Indonesia

Pucaro Elektro-Isolierstoffe GmbH., Roigheim, Germany

Shantou Winride Switchgear Co., Ltd., Longhu District Shantou, China

Striebel & John GmbH & Co. KG., Mannheim, Germany

Sucursal Panama de ABB SA., Panama, Panama

Thomas & Betts Corporation., Knoxville, TN, United States

Thomas & Betts India Private Ltd., Andhra Pradesh, India

Thomas & Betts Power Solutions LLC., Delaware, United States

Trasfor SA., Monteggio, Switzerland

Tropos Networks, Inc., Wilmington, Delaware, United States Turbo Systems United Co. Ltd., Tokyo, Japan Ventyx (UK) Ltd., Surrey, United Kingdom Ventyx Inc., Atlanta, United States

Key management personnel:

Managing director: Mr. Bazmi R Husain

Chief financial officer: Mr. Amlan Datta Majumdar

8. Exchange rate variation - (gain) / loss (net) for the year includes gain on account of fair valuation of foreign exchange forward contracts for firm trade commitments amounting to Rs.1.03 crores (Previous Year loss of Rs.3.52 crores).

9. Provisions

a) Movement in provisions: (Figures in brackets are in respect of the previous year)

b) Nature of provisions:

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31,2014 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Provision for sales tax represents mainly the differential sales tax liability on account of non - collection of declaration forms. The outflow would depend on the cessation of the respective events.

iii) Provision for litigation represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation. The outflow would depend on the cessation of the respective events.

10. The employees of the Company are entitled to purchase shares of ABB Limited., Zurich (the ultimate holding company) on the settlement date, at a price fixed based on the fair market price on the grant date under ABB employee share acquisition plan. During the year, the Company has been cross charged Rs. 0.08 crores (Previous Year Rs. 1.37 crores) towards the above including administrative charges and this has been charged in the statement of profit and loss under the head salaries, wages and bonus.

The Institute of Chartered Accountants of India has issued a guidance note on accounting for ''employee share-based payments'', which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged as above. Accordingly, the Company is of the opinion that there is no further accounting treatment / disclosure required under the said guidance note.

11. Derivative Instruments

i) Forward cover for foreign currency trade receivables outstanding as of balance sheet date is Rs. 349.05 crores (Previous Year Rs. 341.51 crores).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs. 384.91 crores (Previous Year Rs. 446.77 crores).

iii) Forward cover for foreign currency trade payables outstanding as of balance sheet date is Rs. 577.89 crores (Previous Year Rs. 772.56 crores).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs. 116.55 crores (Previous Year Rs. 320.42 crores).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is payable Rs. 267.31 crores (Previous Year payable is Rs. 190.60 crores).

12. The previous year figures have been regrouped / reclassified, where necessary, to conform with the current year''s classifications.


Dec 31, 2013

1. Corporate information

ABB India Limited (''the Company'') has served utility and industry customers for over six decades with the complete range of engineering, products, solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in the global market.

2. Amalgamation

a) 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 ABB India Limited (the 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, engaged in trading of motors, drives and other mechanical products forming part of Discrete Automation and Motion segment of the Company. With effect from appointed date all rights, duties, powers and obligations of Baldor have become those of the Company. All the assets and liabilities, including reserves of Baldor were accounted for using pooling of interests method in the books of accounts of the Company.

b) Pursuant to and in accordance with the Order of the Hon''ble High Court of Bombay, the excess of the Company''s cost of acquisition of equity and preference shares in the Baldor over the par value of the equity and preference shares cancelled, has been adjusted in the books of the Company out of the amount available in the General Reserve account as on December 31, 2011. The amount adjusted is Rs 33.97 crores.

The Hon''ble High Court of Bombay had, while sanctioning the Scheme, directed that a note in this regard should be prominently included by the Company in its Statement of Accounts for the financial year ending on December 31, 2013 submitted for approval of its shareholders. Hence, this note has been included in compliance with the Court''s Order.

c) Net profit of Rs 2.42 crores of Baldor from the appointed date i.e, April 1, 2012 to December 31, 2012 of the previous financial year has been disclosed separately in the current year statement of profit and loss. The financial results of current year incorporates the operating results of Baldor.

3. Segment reporting

A) Primary segment reporting (by business segments) i) Composition of business segments

The Company''s business segments are organized around products and system solutions provided to its customers, which include utilities, industries, channel partners and original equipment manufacturers.

Power Systems segment (PS) offers turnkey systems and services for transmission and distribution for power grid and power plants. The segment offers the instrumentation, control and the entire balance of power plants, which improve performance and energy efficiency through flexible alternating current transmission systems, high voltage direct current systems, network management systems and utility communications.

Power Products segment (PP) manufactures, engineers, supplies key components to transmit and distribute electricity, improving power supply and energy efficiency. The segment produces transformers, high and medium voltage switchgears, circuit breakers, capacitors, distribution relays, insulation paper and paper board components etc.

Process Automation segment (PA) provides customers with integrated solutions for control, plant optimization and industry specific application knowledge. The industries served include oil and gas, power, chemicals and pharmaceuticals, pulps and paper, metals and minerals, marine and turbo charging.

Discrete Automation and Motion segment (DM) provides products, with related services, that are used as components in machinery and automation systems. The segment covers a wide range of products and services including power electronics systems, motors and generators, drives, robots etc.

Low Voltage Products segment (LP) manufactures products and systems that provide protection, control and measurement for electrical installations, enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service.

ii) The accounting policies used in the preparation of the financial statements of the Company are also applied for segment reporting.

iii) Segment revenues, expenses, assets and liabilities are those, which are directly attributable to the segment or are allocated on an appropriate basis. Corporate and other revenues, expenses, assets and liabilities to the extent not allocable to segments are disclosed in the reconciliation of reportable segments with the financial statements.

iv) Inter segment transfer pricing

Inter segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company.

v) Figures in brackets are in respect of the previous year.

4. The Company has taken several premises under cancelable and non-cancelable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. Rental expenses towards cancelable and non-cancelable operating lease charged to the statement of profit and loss amounts to Rs 37.71 crores (Previous Year Rs 37.25 crores).

Some of the lease agreements have escalation clause ranging from 5% to 15%. There are no exceptional / restrictive covenants in the lease agreement. There are no assets given on operating lease.

5. Research and development expenditure of Rs Nil (Previous Year Rs 8.56 crores) on revenue account has been incurred during the year.

33. Short term borrowings represent unsecured short-term loan and overdraft facility from banks. The same is repayable on demand and carries interest @ 9% to 11% p.a.

6. Exchange rate variation - (gain) / loss (net) for the year includes loss on account of fair valuation of foreign exchange forward contracts for firm trade commitments amounting to Rs 3.52 crores (Previous Year gain of Rs 5.68 crores).

7. The employees of the Company are entitled to purchase shares of ABB Limited., Zurich (the ultimate holding company) on the settlement date, at a price fixed based on the fair market price on the grant date under ABB employee share acquisition plan. During the year, the Company has been cross charged Rs 1.37 crores (Previous Year Rs 0.20 crores) towards the above including administrative charges and this has been charged in the statement of profit and loss under the head salaries, wages and bonus.

The Institute of Chartered Accountants of India has issued a guidance note on accounting for ''employee share-based payments'', which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged as above. Accordingly, the Company is of the opinion that there is no further accounting treatment / disclosure required under the said guidance note.

8. Derivative Instruments

i) Forward cover for foreign currency trade receivables outstanding as of balance sheet date is Rs 341.51 crores (Previous Year Rs 455.33 crores).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs 446.77 crores (Previous Year Rs 208.86 crores).

iii) Forward cover for foreign currency trade payables outstanding as of balance sheet date is Rs 772.56 crores (Previous Year Rs 673.78 crores).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 320.42 crores (Previous Year Rs 501.59 crores).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is payable Rs 190.60 crores (Previous Year payable is Rs 54.68 crores).

9. Excise duty on sales amounting to Rs 474.78 crores (December 31, 2012: Rs 461.37 crores) has been reduced from sales in the statement of profit and loss. Excise duty reversal on increase in inventory of finished goods amounting to Rs 2.43 crores (December 31, 2012: Rs 0.16 crores) has been accounted in the statement of profit and loss under the head "(Increase)/ decrease in inventories of finished goods, work-in-progress and traded goods"

10. The Company has entered into contracts for sales of goods with a private company in which one of the directors of the Company is also a director which requires approval of the Central Government under section 297 of the Companies Act, 1956. The Company is in the process of obtaining the necessary approvals.

11. Pursuant to the amalgamation of Baldor Electric India Private Limited with the Company, the figures of the current year are not strictly comparable to those of the previous year. The figures of the previous year have been regrouped / reclassified, where necessary, to conform with the current year''s classifications.


Dec 31, 2012

1. Corporate information

ABB Limited (-the Company-) has served utility and industry customers for over six decades with the complete range of engineering, products, solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in the global market.

a) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pay dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended December 31, 2012, the amount of per share dividend recognised as distributions to equity shareholders was Rs 3/-. (December 31, 2011: Rs 3/-)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company and other declarations received from shareholders, the above shareholding represents both legal and benefcial ownerships of shares.

d) There is no movement in the share capital during the current and previous year.

2. Proposed amalgamation

The Board of Directors have approved the amalgamation of Baldor Electric India Private Limited, Pune (a 100% subsidiary of ABB Limited) with the Company on September 26, 2012. The amalgamation scheme was fled with the Honourable High Court of Bombay on November 27, 2012. In terms of the scheme appointed date proposed is April 1, 2012. Pending approval of the scheme by the High Court, no effects of the amalgamation has been recognized in the fnancial statements.

3. Acquisitions

a) During the previous year the Company had acquired with effect from April 1, 2011 three businesses; (a) Transformer Insulation - Boards and Components, (b) Low Voltage Breakers and Switches and (c) Vacuum Interrupters from M/s. ABB Global Industries and Services Limited, for an aggregate consideration of Rs 400.00 crores on a slump sale basis. Net Assets acquired was Rs 353.58 crores and goodwill capitalized on acquisition was Rs 46.42 crores.

b) During the previous year the Company had acquired 100% equity shares of Baldor Electric India Private Limited, Pune (Baldor) from Baldor Holdings Inc., USA and Baldor Electric Switzerland AG, Switzerland, for a total consideration of Rs 33.90 crores. Baldor became a wholly owned subsidiary of the Company effective December 1, 2011.

4. Segment reporting

A) Primary segment reporting (by business segments)

i) Composition of business segments

The Company-s business segments are organized around products and system solutions provided to its customers, which include utilities, industries, channel partners and original equipment manufacturers.

Power Systems segment (PS) offers turnkey systems and services for transmission and distributions for power grid and power plants. The segment offers the instrumentation, control and the entire balance of power plants, which improve performance and energy effciency through fexible alternating current transmission systems, high voltage direct current systems, network management systems and utility communications.

Power Products segment (PP) manufactures, engineers, supplies key components to transmit and distribute electricity, improving power supply and energy effciency. The segment produces transformers, high and medium voltage switchgears, circuit breakers, capacitors, distribution relays, insulation paper and paper board components etc.

Process Automation segment (PA) provides customers with integrated solutions for control, plant optimization and industry specifc application knowledge. The industries served include oil and gas, power, chemicals and pharmaceuticals, pulps and paper, metals and minerals, marine and turbo charging.

Discrete Automation and Motion segment (DM) provides products, with related services, that are used as components in machinery and automation systems. The segment covers a wide range of products and services including power electronics systems, motors and generators, drives, robots etc.

Low Voltage Products segment (LP) manufactures products and systems that provide protection, control and measurement for electrical installations, enclosures, switchboards, electronics and electromechanical devices for industrial machines, plants and related service.

ii) The accounting policies used in the preparation of the fnancial statements of the Company are also applied for segment reporting.

iii) Segment revenues, expenses, assets and liabilities are those, which are directly attributable to the segment or are allocated on an appropriate basis. Corporate and other revenues, expenses, assets and liabilities to the extent not allocable to segments are disclosed in the reconciliation of reportable segments with the fnancial statements.

iv) Inter segment transfer pricing

Inter segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business risks, within an overall optimization objective for the Company.

v) Figures in brackets are in respect of the previous year.

(Rs in Crores)

As at December 31, 2012 2011

5. Contingent liabilities

i) Excise duty / service tax and sales tax liabilities in dispute 364.68 420.26

ii) Custom duty liabilities in dispute 2.02 3.83

iii) Claims against the Company not acknowledged as debts 8.85 8.85

iv) Income tax matters in dispute 254.05 19.22

The Company is contesting the demands and the management believes that its position will likely be upheld in the various appellate authorities / courts. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company-s fnancial position.

6. The Company has taken several premises under cancelable and non-cancelable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. Rental expenses towards cancelable and non-cancelable operating lease charged to the statement of proft and loss amounts to Rs 37.25 crores (Previous Year Rs 29.56 crores).

Some of the lease agreements have escalation clause ranging from 5% to 15%. There are no exceptional / restrictive covenants in the lease agreement. There are no assets given on operating lease.

7. Research and development expenditure of Rs 8.56 crores (Previous Year Rs 0.40 crores) on revenue account has been incurred during the year.

8. Short term borrowings represent unsecured overdraft facility from banks. The same is repayable on demand and carries interest @ 9% to 11% p.a.

9. Related party disclosures

a) List of related parties

Party where control exists:

ABB Limited, Zurich, Switzerland (Ultimate Holding Company)

ABB Asea Brown Boveri Limited, Zurich, Switzerland (Holding Company)

Other Related parties with whom transactions have taken place during the year:

Subsidiary:

Baldor Electric India Pvt. Ltd., Pune, India (with effect from December 1, 2011)

Remuneration to directors and chief fnancial offcer does not include provision for leave encashment and gratuity as it is provided in the books on the basis of actuarial valuation for the Company as a whole.

10. Exchange rate variation - (gain) / loss (net) for the year includes gain on account of fair valuation of foreign exchange forward contracts for frm trade commitments amounting to Rs 3.47 crores (Previous Year gain of Rs 47.15 crores includes gain on frm trade commitments and embedded derivative contracts).

11. Provisions

a) Movement in provisions: (Figures in brackets are in respect of the previous year)

b) Nature of provisions:

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31, 2012 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Provision for sales tax represents mainly the differential sales tax liability on account of non-collection of declaration forms. The outfow would depend on the cessation of the respective events.

iii) Provision for litigation represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation. The outfow would depend on the cessation of the respective events.

12. The employees of the Company are entitled to purchase shares of ABB Limited, Zurich (the ultimate holding company) on the settlement date, at a price fxed based on the fair market price on the grant date under ABB employee share acquisition plan. During the year, the Company has been cross charged Rs 0.20 crores (Previous Year Rs 0.11 crores) towards the above including administrative charges and this has been charged in the statement of proft and loss under the head salaries, wages and bonus.

The Institute of Chartered Accountants of India has issued a guidance note on accounting for -employee share-based payments-, which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefts in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged above. Accordingly, the Company is of the opinion that there is no further accounting treatment / disclosure required under the said guidance note.

13. Derivative Instruments

i) Forward cover for foreign currency trade receivables outstanding as of balance sheet date is Rs 455.33 crores (Previous Year Rs 297.80 crores).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs 208.86 crores (Previous Year Rs 333.99 crores).

iii) Forward cover for foreign currency trade payables outstanding as of balance sheet date is Rs 673.78 crores (Previous Year Rs 691.75 crores).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 501.59 crores (Previous Year Rs 372.58 crores).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is payable Rs 54.68 crores (Previous Year payable is Rs 64.30 crores).

14. Excise duty on sales amounting to Rs 461.37 Crores (December 31, 2011: Rs 323.29 Crores) has been reduced from sales in the statement of proft and loss. Excise duty on increase in inventory of fnished goods amounting to Rs 0.16 Crores (December 31, 2011: Rs 3.63 Crores) has been accounted in the statement of proft and loss under the head "cost of raw material and components consumed and project bought outs".

15. The Company has defned beneft gratuity plan and provident fund plan managed by trusts. The following table summarises the component of net beneft expenses recognised in the statement of proft and loss and the funded status and amounts recognised in the balance sheet.

Notes:

i) Gratuity Plan

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity Act, 1972 or as per the Company-s scheme, whichever is higher.

ii) Provident Fund Plan

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The Contribution by employee and employer together with interest are payable at the time of separation from service or retirement whichever is earlier.

iii) Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as infation, market growth and other factors applicable to the period over which the obligation is expected to be settled.

iv) The Company expects to contribute Rs 16.00 crores (Previous Year Rs 10.60 crores) to gratuity fund and Rs 15.00 crores (Previous Year Rs 18.68 crores) to provident fund in 2013.

v) The attrition rate for gratuity varies from 1% to 8% for various age groups.

16. The fgures of the previous year have been regrouped / reclassifed, where necessary, to conform with the current year-s classifcations.


Dec 31, 2011

1. Related Party Disclosures a) List of Related Parties Party where control exists:

ABB Limited, Zurich, Switzerland (Ultimate Holding Company)

ABB Asia Brown Bovary Limited, Zurich, Switzerland (Holding Company)

b) Nature of provisions:

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31, 2011 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Provision for Sales Tax represents mainly the differential sales tax liability on account of non - collection of declaration forms. The outflow would depend on the cessation of the respective events.

iii) Provision for litigation represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation. The outflow would depend on the cessation of the respective events.

2. The employees of the Company are entitled to purchase shares of ABB Limited, Zurich (the ultimate holding company) on the settlement date, at a price fixed based on the fair market price on the grant date under ABB Employee Share Acquisition Plan. During the year, the Company has been cross charged Rs 1,101 thousand (Previous Year Rs 3,045 thousand) towards the above including administrative charges and this has been charged in the profit and loss account under the head Salaries, Wages and Bonus.

The Institute of Chartered Accountants of India has issued a Guidance Note on Accounting for 'Employee Share-based Payments', which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged above. Accordingly, the Company is of the opinion that there is no further accounting treatment/ disclosure required under the said Guidance Note.

3. Derivative Instruments

i) Forward cover for foreign currency debtors outstanding as of balance sheet date is Rs 2,977,989 thousand (Previous Year Rs 2,120,925 thousand).

ii) Forward cover for expected future sales or highly probable forecast transactions of balance sheet date is Rs 3,339,859 thousand (Previous Year Rs 4,044,113 thousand).

iii) Forward cover for foreign currency creditors outstanding as of balance sheet date is Rs 6,917,460 thousand (Previous Year Rs 6,440,017 thousand).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 3,725,846 thousand (Previous Year Rs 4,428,841 thousand).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is Rs 643,043 thousand (Previous Year Rs 431,549 thousand).

4. Sales are net of excise duty amounting to Rs 3,232,891 thousand (Previous Year Rs 3,222,035 thousand ). Excise duty on increase in inventory of finished goods amounting to Rs 36,278 thousand (Previous Year reversal of excise duty Rs 2,328 thousand) has been accounted in the profit and loss account under the head 'Cost of Materials and Erection Services'.

Notes :

i) Gratuity Plan

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity Act, 1972 or as per the Companies Scheme, whichever is higher.

ii) Provident Fund Plan

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The Contribution by employee and employer together with interest are payable at the time of separation from service or retirement whichever is earlier.

iii) Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as inflation, market growth and other factors applicable to the period over which the obligation is expected to be settled.

iv) The Company expects to contribute Rs 105,997 thousand (Previous Year Rs 96,649 thousand) to Gratuity Fund and Rs 186,754 thousand (Previous Year Rs 132,327 thousand) to Provident Fund in 2012.

v) The attrition rate for gratuity varies from 1% to 8% for various age groups.

5. Prior year comparatives

Pursuant to the acquisition of businesses, the figures of the current year are not strictly comparable to those of the previous year. The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current year's classifications.


Dec 31, 2010

1. Nature of Operations

ABB Limited (the Company) has served utility and industry customers for over 60 years with the complete range of engineering, products, solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in the global market.

(Rs in Thousands) As at December 31, 2010 2009

2. Contingent Liabilities

i) Claims against the Company not acknowledged as debts in respect of sales tax, excise and other matters 2,956,464 1,685,368

ii) Bills discounted - -

The above excludes bills co-accepted by the customers bankers/guaranteed by the State Governments Rs 51 thousand (Previous Year Rs 1,473 thousand)

iii) Income tax matters in dispute 110,936 130,379

The Company does not expect any reimbursements in respect of the above contingent liabilities and it is not practicable to estimate the timings of cash outflows, if any, in respect of matters above pending resolution of the arbitration / appellate proceedings.

3. Estimated amount of contracts remaining to be executed on capita! account and not provided for (net of advances) 627,364 450,055

4. The Company has taken several premises under cancelable and non-cancelable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. The Company has non-cancelable operating lease obligations of Rs 48,448 thousand (Previous year Rs 46,533 thousand) payable within one year and Rs 104,802 thousand (Previous Year Rs 131,949 thousand) payable later than one year but not later than five years and Rs 55,325 thousand (Previous Year Rs 77,941 thousand) payable later than five years as on December 31, 2010. Rental expenses towards cancelable and non-cancelable operating lease charged to the profit and loss account amounts to Rs 191,653 thousand (Previous Year Rs 230,552 thousand).

Some of the lease agreements have escalation clause ranging from 5% to 15%. There are no exceptional / restrictive covenants in the lease agreement.

5. Capacities, Production, Stock and Turnover (Refer Schedule 12)

5.1 Capacities

a) Installed capacities are as certified by the Managing Director, but not verified by the auditors, being a technical matter.

5.2 Production

a) Production of finished goods is inclusive of production for captive use.

b) "Others" represent internally manufactured components, sold during the year. The Company considers these meant for sale when actually sold. Since the quantitative denominations of these items are dissimilar, it is impracticable to disclose the quantitative information in respect of production and turnover.

5.3 Project items

a) These comprise sale of equipment and miscellaneous items meant for execution of projects and trading items. Since the quantitative denominations of these items are dissimilar, it is impracticable to disclose the quantitative information in respect thereof.

b) Purchases of these items during the year aggregated to Rs 20,958,914 thousand (Previous Year Rs 23,165,639 thousand).

5.4 Work-in-Progress

a) The Work-in-Progress at the beginning of the year amounted to Rs 2,219,033 thousand (Previous Year Rs 1,899,009 thousand).

6. Interest charge for the year includes Rs Nil (Previous Year Rs 9 thousand) being interest on fixed period loans. During the year the Company has capitalised interest on borrowing cost Rs Nil (Previous Year Rs 2,395 thousand).

7. Research and development expenditure of Rs 110,161 thousand (Previous Year Rs Nil) on revenue account has been incurred during the year.

8. Related Party Disclosures

a) List of Related Parties

Party where control exists:

ABB Limited, Zurich, Switzerland (Ultimate Holding Company)

ABB Asea Brown Boveri Limited, Zurich, Switzerland (Holding Company)

Other Related parties with whom transactions have taken place during the year:

Fellow subsidiaries:

ABB (China) Ltd., Beijing, China

ABB (Hong Kong) Ltd., Hong Kong

ABB (Pty) Ltd., Gaborone, Botswana

ABB A/S, Skovlunde, Denmark

ABB AB, Vasteras, Sweden

ABB AG, Mannheim, Germany

ABB AS, Billingstad, Norway

ABB AS, Tallinn, Estonia

ABB Australia Pty Limited, Sydney, Australia

ABB Automation GmbH, Mannheim, Germany

ABB Automation Products GmbH, Ladenburg, Germany

ABB Azerbaijan LLC, Baku, Azerbaijan

ABB Bailey Beijing Engineering Co. Ltd., Beijing, China

ABB Beijing Drive Systems Co. Ltd., Beijing, China

ABB Bomem Inc., Quebec, Canada

ABB BV, Rotterdam, Netherlands

ABB Capital, B.V., Amsterdam, Netherlands

ABB Chongqing Transformer Company Ltd., Chongqing, China

ABB CL Logistic S.A., Montevideo, Uruguay

ABB Contracting Company Ltd., Riyadh, Saudi Arabia

ABB d.o.o., Belgrade, Serbia

ABB D.o.o., Ljubljana, Slovenia

ABB Electrical Industries Ltd., Riyadh, Saudi Arabia

ABB Electrical Machines Ltd., Shanghai, China

ABB Electroengineering Ltd., Moscow, Russian Federation

ABB Elektrik Sanayi A.S., Istanbul, Turkey

ABB Engg. Technologies Co. (KSCC), Safat, Kuwait

ABB Engineering (Shanghai) Ltd., Shanghai, China

ABB Engineering Trading and Service Ltd., Budapest, Hungary

ABB ESAP Limited, St. Peters Port, Guernsey

ABB France SAS, Rueil Malmaison cedex, France

ABB FZ-LLC, Dubai, United Arab Emirates

ABB Global Industries and Services Limited, Bangalore, India

ABB Global Marketing FZ LLC, Dubai, United Arab Emirates

ABB High Voltage Switchgear (Xiamen) Company Ltd., Xiamen, China

ABB High Voltage Switchgear Co. Ltd., Beijing, China

ABB Holding AS, Billingstad, Norway

ABB Holdings (Pty) Ltd., Sunninghill, South Africa

ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia

ABB Inc., Norwalk CT, United States of America

ABB Inc., St. Laurent, Quebec, Canada

ABB Industries (L.L.C.), Dubai, United Arab Emirates

ABB Industries FZ, Dubai, United Arab Emirates

ABB LV Installation Materials Co. Ltd., Beijing, China

ABB Malaysia Sdn Bhd., Subang Jaya, Malaysia

ABB Management Services Ltd., Zurich, Switzerland

ABB Mexico S.A. de C.V., Tlalnepantla, Mexico

ABB N.V., Zaventem, Belgium

ABB Near East Trading Ltd., Amman, Jordan

ABB Oy, Helsinki, Finland

ABB Power Systems and Automation Technology S.A.E, Cairo, Egypt

ABB Pte. Ltd., Singapore, Singapore

ABB Qatar LLC, Doha, Qatar

ABB Research Ltd., Zurich, Switzerland

ABB S.A. de CV, San Salvador, El Salvador

ABB S.A., Buenos Aires, Argentina

ABB S.A., Casablanca, Morocco

ABB S.A., Lima, Peru

ABB S.A., Panama, Panama

ABB S.A., Rueil-Malmaison, France

ABB S.A., Santiago, Chile

ABBS.p.A., Milan, Italy

ABB s.r.o., Prague, Czech Republic

ABB Schweiz AG, Baden, Switzerland

ABB Secheron S.A., Satigny, Switzerland

ABB Service (Private) Ltd., Harare, Zimbabwe

ABB Service Co. Ltd., Al Khobar, Saudi Arabia

ABB Shanghai Motors Co. Ltd., Shanghai, China

ABB South Africa (Pty) Ltd., Modderfontein, South Africa

ABB Sp. zo.o., Warsaw, Poland

ABB SRL, Bucharest, Romania

ABB Stotz-Kontakt GmbH, Heidelberg, Germany

ABB Technologies S.A., Dakar, Senegal

ABB Technologies W.L.L., Bahrain, Bahrain

ABB Technology AB, Vasteras, Sweden

ABB Technology Ltd., Zurich, Switzerland

ABB Technology SA, Abidjan, Cote Dlvoire

ABB Transmission & Distribuition Automation Equipment (Xiamen)

Co. Ltd., Xiamen, China

ABB Transmission & Distribution Ltd., Abu Dhabi, United Arab Emirates

ABB Trasmissione & Distribuzione S.p.A., in liquidazione, Milan,Italy

ABB Turbo Systems (Hong Kong) Limited, Hong Kong, Hong Kong

ABB Turbochargers S.A.E., Suez, Egypt

ABB Turbo-Systems AG, Baden, Switzerland

ABB UAB, Vilnius, Lithuania

ABB Xiamen Electrical Controlgear Co. Ltd., Xiamen, China

ABB Information Systems Ltd., Zurich, Switzerland

ABB Instrumentation Ltd., Warrington, United Kingdom

ABB International Marketing Ltd., Zurich, Switzerland

ABB Intra AG, Zurich, Switzerland

ABB Jiangjin Turbo Systems Company Limited, Chongqing, China

ABB K.K., Tokyo, Japan

ABB Limited, Auckland, New Zealand

ABB LIMITED, Bangkok, Thailand

ABB Limited, Nairobi, Kenya

ABB Limited, Warrington, United Kingdom

ABB LLC, Al Hamriya, Oman

ABB LLP., Almaty, Kazakhstan

ABB Logistics Center Europe GmbH, Menden, Germany

ABB Ltd, Dublin, Ireland

ABB Ltd., Hanoi, Vietnam

ABB Ltd., Kiev, Ukraine

ABB Ltd., Lusaka, Zambia

ABB Ltd., Moscow, Russian Federation

ABB Ltd., Seoul, Korea, Republic Of Korea

ABB Ltd., Taipei, Taiwan, Province Of China

ABB Ltd., Zagreb, Croatia

ABB Ltd., Osasco, Brazil

ABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen, China

ABB Xiamen Switchgear Co. Ltd., Xiamen, China

ABB Xian Power Capacitor Company Limited, Xian, China

ABB Xinhui Low Voltage Switchgear Co. Ltd., Xinhui, China

ABB, Inc., Paranaque, Metro Manila, Philippines

ABB, s.r.o., Bratislava, Slovakia

ABBNG Limited, Lagos, Nigeria

Asea Brown Boveri (Pty) Ltd., Windhoek, Namibia

Asea Brown Boveri Electrica SGPS (Angola) Limitada, Luanda, Angola

Asea Brown Boveri Ltd., Port Louis, Mauritius

Asea Brown Boveri Ltda., Bogota, Colombia

Asea Brown Boveri Ltda., La Paz, Bolivia

Asea Brown Boveri S.A., Madrid, Spain

Asea Brown Boveri S.A., Metamorphossis Attica, Greece

Asea Brown Boveri S.A.E., Cairo, Egypt

Busch-Jaeger Elektro GmbH, Mannheim/Ludenscheid, Germany

Electrical Materials Center, Riyadh, Saudi Arabia

PT ABB Installation Materials, Jakarta, Indonesia

PT ABB Jasa Indonesia, Jakarta, Indonesia

PT ABB Sakti Industri, Jakarta, Indonesia

PT ABB Transmission and Distribution, Jakarta, Indonesia

Pucaro Elektro-lsolierstoffe GmbH, Roigheim, Germany

Turbo Systems United Co. Ltd., Tokyo, Japan

Remuneration to directors and chief financial officer does not include Provision for Leave Encashment and Gratuity as it is provided in the books on the basis of actuarial valuation for the Company as a whole. During the previous year the remuneration to Whole-time Director Mr. K Rajagopal for the year ended December 31,2009 is for the period from January 1 to July 31,2009. The remuneration to Chief Financial Officer includes payment made to Mr. K Rajagopal for the period August 1 to August 31,2009 and to Mr. Amlan Datta Majumdar for the period September 1 to December 31,2009.

9. Exchange rate variation - (Gain) / Loss (net) for the year includes loss on account of fair valuation of foreign exchange forward contracts for firm trade commitments and embedded derivative contracts amounting to Rs 562,025 thousand (Previous Year Rs 112,395 thousand). The pro rata difference between the forward contract rate and the exchange rate on the date of transaction to be charged to profit and loss account is Rs 59,625 thousand (Previous Year Rs 58,223 thousand).

10. The employees of the Company are entitled to purchase shares of ABB Limited., Zurich (the ultimate holding company) on the settlement date, at a price fixed based on the fair market price on the grant date under ABB Employee Share Acquisition Plan. During the year, the Company has been cross charged Rs 3,045 thousand (Previous Year Rs 15,462 thousand) towards the above including administrative charges and this has been charged in the profit and loss account under the head Salaries, Wages and Bonus.

The Institute of Chartered Accounants of India has issued a Guidance Note on Accounting for Employee Share-based Payments, which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged above. Accordingly, the Company is of the opinion that there is no further accounting treatment/ disclosure required under the said Guidance Note.

11. Derivative Instruments

i) Forward cover for foreign currency debtors outstanding as of balance sheet date is Rs 2,120,925 thousand (Previous Year Rs 1,292,530 thousand).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs 4,044,113 thousand (Previous Year Rs 2,979,301 thousand).

iii) Forward cover for foreign currency creditors outstanding as of balance sheet date is Rs 6,440,017 thousand (Previous Year Rs 6,748,480 thousand).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 4,428,841 thousand (Previous Year Rs 1,929,404 thousand).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is Rs 431,549 thousand (Previous Year Rs 668,879 thousand).

12. Sales are net of excise duty amounting to Rs 3,222,035 thousand (Previous Year Rs 2,573,696 thousand) and liquidated damages amounting to Rs 1,128,098 thousand (Previous Year Rs 173,470 thousand). Reversal of excise duty on increase in inventory of finished goods amounting to Rs 2,328 thousand (Previous Year charge of Rs 9,575 thousand) has been accounted in the profit and loss account under the head Cost of Materials and Erection Services.

13. The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current years classifications.


Dec 31, 2009

1. Nature of Operations

ABB Limited (the Company) has served utility and industry customers for over 60 years with the complete range of engineering, products, solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in the global market.

(Rs in Thousands)

Rest of India Total Word

2. Contingent Liabilities

i) Claims against the Company not acknowledged as debts in respect of sales tax, excise and 1,685,368 1,307,042 other matters

ii) Bills discounted

The above excludes bills co-accepted by the customers bankers/guaranteed - - by the State Governments Rs 1,473 thousand (Previous Year Rs 17,774 thousand)

iii) Income tax matters in dispute 130,379 83,637

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of 450,055 1,090,215 advances)

4. The Company has taken several premises under cancelable and non-cancelable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. The Company has non-cancelable operating lease obligations of Rs 46,533 thousand (Previous year Rs 63,296 thousand) payable within one year and Rs 131,949 thousand (Previous Year Rs 130,213 thousand) payable later than one year but not later than five years and Rs 77,941 thousand (Previous Year Rs Nil) payable later than five years as on December 31,2009. Rental expenses towards cancelable and non-cancelable oprating lease charged to the profit and loss account amounts to Rs 230,552 thou- sand (Previous Year Rs 207,197 thousand).

5. Capacities, Production, Stock and Turnover (Refer Schedule 12)

5.1 Capacities

a) Installed capacities are as certified by the Managing Director, but not verified by the auditors, being a technical matter.

5.2 Production

a) Production of finished goods is inclusive of production for captive use.

b) "Others" represent internally manufactured components, sold during the year. The Company considers these meant for sale when actually sold. Since the quantitative denominations of these items are dissimilar, it is impracticable to disclose the quantitative information in respect of production and turnover.

5.3 Project items

a) These comprise sale of equipment and miscellaneous items meant for execution of projects and trading items. Since the quantitative denominations of these items are dissimilar, it is impracticable to disclose the quantitative information in respect thereof.

b) Purchases of these items during the year aggregated to Rs 23,165,639 thousand (Previous Year Rs 26,181,596 thousand).

5.4 Work-in-Progress

a) The Work-in-Progress at the beginning of the year amounted to Rs 1,899,009 thousand (Previous Year Rs 1,262,058 thousand).

6. Interest charge for the year includes Rs 9 thousand (Previous Year Rs 4,387 thousand) being interest on fixed period loans. During the year the Company has capitalised interest on borrowing cost Rs 2,395 thousand (Previous Year Rs 21,293 thousand).

7. Research and development expenditure of Rs Nil (Previous Year Rs 21,715 thousand) on revenue account has been incurred during the year.

8 Related Party Disclosures a) List of Related Parties

Party where control exists:

ABB Asea Brown Boveri Limited, Zurich (Holding Company)

Other Related parties with whom transactions have taken place during the year: Fellow subsidiaries:

ABB (China) Ltd., Beijing, China

ABB (Hong Kong) Ltd., Hong Kong, Hong Kong

ABB (P.J.S.C), Teheran, Iran

ABB (Pvt) Ltd., Lahore, Pakistan

ABB A/S, Skovlunde, Denmark

ABB AB, Vasteras, Sweden

ABB AG, Mannheim, Germany

ABB AG, Vienna, Austria

ABB AS, Billingstad, Norway

ABB AS, Tallinn, Estonia

ABB Australia Pty Limited, Sydney, Australia

ABB Automation Co. Ltd., Riyadh, Saudi Arabia

ABB Automation GmbH, Mannheim, Germany

ABB Automation L.L.C., Abu Dhabi, United Arab Emirates

ABB Automation LLC, Moscow, Russian Federation

ABB Automation Products GmbH, Ladenburg, Germany

ABB Bailey Beijing Controls Co. Ltd., Beijing, China

ABB Beijing Drive Systems Co. Ltd., Beijing, China

ABB Bomem Inc., Quebec, Canada

ABB BV, Rotterdam, Netherlands

ABB Capital, B.V., Amsterdam, Netherlands

ABB Chongqing Transformer Company Ltd., Chongqing City, China

ABB CL Logistic S.A., Montevideo, Uruguay

ABB Contracting Company. Ltd., Riyadh, Saudi Arabia

ABB d.o.o., Belgrade, Serbia

ABB Ecuador S.A., Quito, Ecuador

ABB Electrica SGPS, Lda., Luanda, Angola

ABB Electrical Industries Ltd., Riyadh, Saudi Arabia

ABB Electrical Machines Ltd., Shanghai, China

ABB Electroengineering Ltd., Moscow, Russian Federation

ABB Elektrik Sanayi A.S., Istanbul, Turkey

ABB Malaysia Sdn Bhd, Subang Jaya, Malaysia

ABB Management Services Ltd., Zurich, Switzerland

ABB Mexico S.A. de C.V., Tlalnepantia, Mexico

ABB N.V., Zaventem, Belgium

ABB Near East Trading Ltd., Amman, Jordan

ABB Oy, Helsinki, Finland

ABB Power Systems and Automation Techology S.A.E, Cairo, Egypt

ABB Qatar LLC, Doha, Qatar

ABB S.A., Buenos Aires, Argentina

ABB S.A. Casablanca, Morocco

ABB S.A. Lima, Peru

ABB S.A. Panama, Panama

ABB S.A., Rueil-Malmaison, France

ABB S.A., Santiago, Chile

ABB S.p.A., Milan, Italy

ABB s.r.o., Praque, Czech Republic

ABB Schweiz AG, Baden, Switzerland

ABB Secheron S.A., Satigny, Switzerland

ABB Service Co. Ltd., Al Khobar, Saudi Arabia

ABB Shanghai Motors Co. Ltd., Sanghai, China

ABB South Africa (Pty) Ltd, Sunninghill, South Africa

ABB Sp. zo.o., Warsaw, Poland

ABB Stotz-Kontaki GmbH, Heidelberg, Germany

ABB Technologies Ltd., Tirat Carmel, Israel

ABB Technologies W.L.L, Bahrain, Bahrain

ABB Technology AB, Vasteras, Sweden

ABB Technology Ltd., Zurich, Switzerland

ABB Technology SA, Abidjan, Cote Dlvoire

ABB Ltd., Taipei, Taiwan, Province Of China

ABB Ltd., Zagreb, Croatia

ABB Ltda., Osasco, Brazil

ABB Engg. Technologies Co. (KSCC), Safat, Kuwait ABB Engineering (Shanghai) Ltd., Shanghai, China

ABB Engineering Trading and Service Ltd., Budapest, Hungary

ABB ESAP Limited, St. Peters Port, Guernsey

ABB France SAS, Rueil Malmaison cedex, France

ABB Global industries and Services Limited, Bengaluru, India

ABB High Voltage Switchgear Co. Ltd., Beijing, China

ABB Holdings (Pty) Ltd., Sunninghill, South Africa

ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia

ABB Inc., Norwalk, CT, United States

ABB Inc., St. Laurent, Quebec, Canada

ABB Industries (L.L.C.), Dubai, United Arab Emirates

ABB Industries FZ, Dubai, United Arab Emirates

ABB Industriunderhall AB, Degerfors, Sweden

ABB Industry Pte. Ltd., Singapore

ABB Information Systems Ltd., Zurich, Switzerland

ABB International Marketing Ltd., Zurich, Switzerland

ABB Jiangjin Turbo Systems Company Limited, Chongqing, China

ABB K.K. Tokyo, Japan

ABB Limited, Auckland, New Zealand

ABB Limited, Bangkok, Thailand

ABB Limited, Dar Es Salaam, Tanzania

ABB Limited, Warrington, United Kingdom

ABB Logistics Center Europe GmbH, Menden, Germany

ABB Ltd., Dublin, Ireland

ABB Ltd., Jordan, Amman, Jordan

ABB Ltd., Hanoi, Vietnam

ABB Ltd., Kiev, Ukraine

ABB Ltd., Lusaka, Zambia

ABB Ltd., Seoul, South Korea

ABB LV Installation Materials Co. Lid., Beijing, China

ABB Transmission & Distribuition Automation Equipment (Xiamen) Co. Ltd., Fujian, China

ABB Transmissione & Distribution Ltd., Abu Dhabi, United Arab Emirates

ABB Turbo Systems (Hong Kong) Limited, Hong Kong, Hong Kong

ABB Turbo-Systems AG, Baden, Switzerland

ABB UAB, Vilnius, Lithuania

ABB Xiamen Electrical Controlgear Co. Ltd., Fujian Province, China

ABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen, China

ABB Xiamen Switchgear Co. Ltd., Xiamen, China

ABB, Xiamen Power Capacitor Company Limited, Xian, China

ABB, Xinhui Low Voltage Switchgear Co, Ltd., Xinhui (Guangdong), China

ABB, Inc., Paranaque, Metro Manila, Philippines

ABB, s.r.o, Bratislava, Slovakia

ABBNG Limited, Abuja, Nigeria

Asea Brown Boveri Ltd., Port Louis, Mauritius

Asea Brown Boveri Ltda., Bogota, Columbia

Asea Brown Boveri Ltda., La Paz, Bolivia

Asea Brown Boveri S.A., Caracas, Venezuela

Asea Brown Boveri S.A., Madrid, Spain

Asea Brown Boveri S.A., Metamorphossis Attica, Greece

Asea Brown Boveri S.A.E., Cairo, Egypt

Busch-Jaeger Elektro GmbH, Mannheim/Ludenscheid, Germany

Electrical Materials Center, Riyadh, Saudi Arabia

PT ABB Installation Materials, Jakarta, Indonesia

PT ABB Jasa Indonesia, Jakarta, Indonesia

PT ABB Sakti Industri, Jakarta, Indonesia

PT ABB Transmission and Distribution, Jakarta, Indonesia

Pucaro Elektro-lsolierstoffe GmbH, Roigheim, Germany

Associate: (erstwhile)

Integra Hindustan Control Limited

(ceased to be associate from 25th April, 2008 on divestment of shares by the Company)

Key Management Personnel:

Managing Director: Mr. Biplab Majumder

Whole-time Director: Mr. K Rajagopal (ceased to be director w.e.f. August 1, 2009)

Chief Financial Officer: Mr. Amlan Datta Majumdar (w.e.f. September 1, 2009)

Mr. K Rajagopal (From August 1, 2009 to August 31, 2009)

xv) Remuneration to Chief Financial Officer

Remuneration to directors and chief financial officer does not include provision for leave encashment and gratuity as it is provided in the books on the basis of actuarial valuation for the Company as a whole. The remuneration to Whole-time Director Mr. K Rajagopal for the year ended December 31, 2009 is for the period from January 1 to July 31, 2009. The remuneration to Chief Financial Officer includes payment made to Mr. K Rajagopal for the period August 1 to August 31, 2009 and to Mr. Amlan Datta Majumdar for the period September 1 to December 31, 2009. The remuneration to Whole-time Director for 2008 to Mr. K Rajagopal is for the period February 19, 2008 to December 31, 2008. The remuneration to Chief Financial Officer Mr. K Rajagopal for 2008 is for the period upto February 18, 2008.

9. The pro rata difference between the forward contract rate and the exchange rate on the date of transaction to be charged to profit and loss account is Rs 58,223 thousand (Previous Year Rs 5,024 thousand).

10. The employees of the Company are entitled to purchase shares of ABB Asea Brown Boveri Ltd., Zurich (the ultimate holding company) on the settlement date, at a price fixed based on the fair market price on the grant date under ABB Employee Share Acquisition Plan. During the year, the Company has been cross charged Rs 15,462 thousand (Previous Year Rs 35,567 thousand) towards the above including administrative charges and this has been charged in the profit and loss account under the head Salaries, Wages and Bonus.

The Institute of Chartered Accounants of India has issued a Guidance Note on Accounting for Employee Share-based Payments, which is applicable to employee share based payment plans. The scheme detailed above is managed and administered, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged above. Accordingly, the company is of the opinion that there is no further accounting treatment/ disclosure required under the said Guidance Note.

11. Derivative Instruments

i) Forward cover for foreign currency debtors outstanding as of balance sheet date is Rs 1,292,530 thousand (Previous Year Rs 2,352,388 thousand).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs 2,979,301 thousand (Previous Year Rs 2,922,990 thousand).

iii) Forward cover for foreign currency creditors outstanding as of balance sheet date is Rs 6,748,480 thousand (Previous Year Rs 6,896,877 thousand).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 1,929,404 thousand (Previous Year Rs 6,998,974 thousand).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is Rs 668,879 thousand (Previous Year Rs 136,072 thousand).

12. Excise duty on sales amounting to Rs 2,573,696 thousand (Previous Year Rs 5,032,076 thousand) has been reduced from sales in profit and loss account and excise duty on increase in inventory of finished goods amounting to Rs 9,575 thousand (Previous Year Rs 453 thousand) has been accounted in the profit and loss account under the head Cost of Materials and Erection Services.

13. The Company has defined benefit gratuity plan and provident fund plan managed by trusts. The following table summarises the component of net benefit expenses recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet.

14. The figures of the previous year have been regrouped / reclassified, where necessary, to conform with the current years classifications.

 
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