ABB POWER PRODUCTS AND SYSTEMS INDIA LIMITED

Final Information Memorandum

Dated March 19, 2020

ABB POWER PRODUCTS AND SYSTEMS INDIA LIMITED

ABB Power Products and Systems India Limited was incorporated on February 19, 2019 at Bengaluru as a public limited

company under the Companies Act, 2013, and was granted the certificate of incorporation by the Registrar of Companies,

Bangalore (“RoC”). For further details, see “History and Certain Corporate Matters” beginning on page 37.

Registered Office: 8th Floor, Brigade Opus, 70/401, Kodigehalli Main Road, Bengaluru 560 092, Karnataka, India

Tel: +91 80 2204 1800

Email: [email protected]; Website: https://new.abb.com/grid/appsil

Contact Person: Poovanna Ammatanda, General Counsel, Company Secretary and Compliance Officer

CIN: U31904KA2019PLC121597

INFORMATION MEMORANDUM FOR LISTING OF 42,381,675 EQUITY SHARES OF FACE VALUE OF ₹2 EACH

NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS

INFORMATION MEMORANDUM

OUR PROMOTER: ABB ASEA BROWN BOVERI LTD

GENERAL RISK

Investments in equity and equity related securities involve a degree of risk and investors should not invest in any equity shares of our Company

unless they can afford to take the risk of losing their entire investment. Investors are advised to read the risk factors carefully before taking a

decision to invest in the equity shares of our Company. For taking an investment decision, investors must rely on their own examination of our

Company, including the risks involved. Specific attention of the investors is invited to “Risk Factors” on page 6.

COMPANY’S ABSOLUTE RESPONSIBILITY

Our Company, having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all

information with regard to our Company, which is material in the context of the issue of equity shares pursuant to the Scheme, that the

information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect,

that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this

Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material

respect. This Information Memorandum is filed pursuant to the Scheme, and is not an offer to the public at large.

LISTING

The Equity Shares of the Company are proposed to be listed on the BSE Limited (“BSE”) and the National Stock Exchange of India Limited

(“NSE”). For the purpose of this listing, the Designated Stock Exchange is BSE. The Company has submitted this Information Memorandum

with BSE and NSE and the same has been made available on the Company’s website, https://new.abb.com/grid/appsil. The Information

Memorandum would also be made available on the website of BSE (www.bseindia.com) and NSE (www.nseindia.com).

REGISTRAR AND SHARE TRANSFER AGENT

KFin Technologies Private Limited*

Selenium, Tower B

Plot 31-32, Gachibowli

Financial District, Nanakramguda

Serilingampally Mandal

Hyderabad 500 032

Telangana *Formerly known as Karvy Fintech Private

Limited

Tel: +91 40 6716 2222

Fax: +91 40 2342 0814

Email: [email protected]

Investor Grievance Email: [email protected]

Website: www.kfintech.com

Contact Person: N. Shiva Kumar

SEBI Registration: INR000000221

https://kprism.karvy.com/aboutus.aspx

(i)

TABLE OF CONTENTS

SECTION I: GENERAL ................................................................................................................................................ 1

DEFINITIONS, ABBREVIATIONS AND INDUSTRY RELATED TERMS .......................................................... 1 CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL AND MARKET DATA ................................. 4 FORWARD-LOOKING STATEMENTS .................................................................................................................... 5

SECTION II: RISK FACTORS ..................................................................................................................................... 6

SECTION III: INTRODUCTION ............................................................................................................................... 18

GENERAL INFORMATION ...................................................................................................................................... 18 CAPITAL STRUCTURE ............................................................................................................................................. 20 SCHEME OF ARRANGEMENT ............................................................................................................................... 24 STATEMENT OF TAX BENEFITS ........................................................................................................................... 28

SECTION IV: ABOUT OUR COMPANY ................................................................................................................. 30

OUR BUSINESS ........................................................................................................................................................... 30 HISTORY AND CERTAIN CORPORATE MATTERS .......................................................................................... 37 OUR MANAGEMENT ................................................................................................................................................ 40 OUR PROMOTER, PROMOTER GROUP AND GROUP COMPANIES ............................................................ 45

DIVIDENDS .................................................................................................................................................................. 50

SECTION V: FINANCIAL INFORMATION ........................................................................................................... 51

FINANCIAL STATEMENTS...................................................................................................................................... 51

SECTION VI: LEGAL AND OTHER INFORMATION ........................................................................................ 118

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ............................................................ 118 OTHER REGULATORY AND STATUTORY DISCLOSURES .......................................................................... 121

SECTION VII: OTHER INFORMATION............................................................................................................... 123

MAIN PROVISIONS OF ARTICLES OF ASSOCIATION .................................................................................. 123 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................................... 128 DECLARATION ........................................................................................................................................................ 129

1

SECTION I: GENERAL

DEFINITIONS, ABBREVIATIONS AND INDUSTRY RELATED TERMS

This Information Memorandum uses certain definitions and abbreviations which, unless the context otherwise indicates or

implies, shall have the meaning as provided below. References to any legislation, act, regulation, rules, guidelines or

policies shall be to such legislation, act, regulation, rules, guidelines or policies as amended, supplemented or re-enacted

from time to time, and any reference to a statutory provision shall include any subordinate legislation made from time to

time under that provision.

General Terms

Term Description

“our Company”, “the Company”,

“APPSIL” or “Resulting Company”

ABB Power Products and Systems India Limited, a company incorporated under the

Companies Act, 2013 and having its registered office at 8th Floor, Brigade Opus, 70/401,

Kodigehalli Main Road, Bengaluru 560 092, Karnataka, India

“We”, “us” or “our” Unless the context otherwise indicates or implies, refers to our Company

Company Related Terms

Term Description

Appointed Date April 1, 2019

Articles of Association/ AoA The Articles of Association of our Company, as amended from time to time

Auditor The Statutory Auditors of our Company, namely, B S R & Co. LLP

Board Board of directors of our Company

INABB/ Transferor ABB India Limited

Share capital Share capital of the Company

Director(s) Director(s) of our Company

Demerged Undertaking All the businesses, undertakings, assets, liabilities, properties, operations and properties, of

whatsoever nature and kind and wheresoever situated, forming part of the Power Grid Business

as a going concern

Demerger The demerger of the Demerged Undertaking and subsequent transfer to our Company pursuant

to the Scheme with effect from Effective Date

Designated Stock Exchange BSE

Effective Date December 1, 2019

Equity Shares Equity shares of the Company having a face value of ₹2 each

Information Memorandum/ IM This Final Information Memorandum dated March 19, 2020 filed with the Stock Exchanges for

listing of Equity Shares and referred to as the Information Memorandum or IM

“Key Managerial Personnel” or

“KMP”

Key managerial personnel of our Company in accordance with Regulation 2(1)(bb) of the SEBI

ICDR Regulations as described in “Our Management” on page 40

Memorandum of Association/ MoA The Memorandum of Association of our Company, as amended

NCLT National Company Law Tribunal, Bengaluru Bench

Power Grids Business The development, engineering, manufacturing and sale of products, systems and projects that

relate to the business of: (a) power grids automation; (b) power grids integration; (c) high

voltage products; and (d) transformers, in each case, which were carried on by the Transferor.

Promoter The promoter of our Company, ABB Asea Brown Boveri Ltd

Promoter Group Persons and entities constituting the promoter group of our Company in terms of Regulation

2(1)(pp) of the SEBI ICDR Regulations. For details, see section “Our Promoter, Promoter

Group and Group Companies” on page 45

Record Date December 23, 2019

Registered Office Registered office of the Company located at 8th Floor, Brigade Opus, 70/401, Kodigehalli Main

Road, Bengaluru 560 092, Karnataka, India

Registrar and Transfer Agent KFin Technologies Private Limited (formerly known as Karvy Fintech Private Limited)

Registrar of Companies/ RoC Unless specified otherwise, the Registrar of Companies, Bangalore

Scheme/ Scheme of Arrangement Scheme of arrangement between INABB and the Company and their respective shareholders

and creditors as approved by the National Company Law Tribunal, Bengaluru Bench on

November 27, 2019

Share Entitlement Ratio Share entitlement ratio as set out under the Scheme being one fully paid-up Equity Share of

face value ₹2 each in the Company for every five fully paid up equity share(s) of face value ₹2

each of INABB

Stock Exchanges BSE and NSE

2

Technical/ Industry Related Terms/ Abbreviations

Term Description

AC Alternating current

API Application programming interface

CIGRE International Council on Large Electric Systems

CII Confederation of Indian Industry

CMM Coordinate-measuring machine

DC Direct current

EPC Engineering procurement construction

ERP Enterprise resource planning

FICCI Federation of Indian Chambers of Commerce and Industry

HVDC High-voltage direct current

IEEMA Indian Electrical And Electronic Manufacturer Association

kV kiloVolt

LV Low voltage

NABL National Accreditation Board for Testing and Calibration Laboratories

OEM Original equipment manufacturer

R&D Research and development

SCADA Supervisory control and data acquisition

T&D Transmission and distribution

TEC Telecommunication Engineering Center

TLC Technical lead centre

TOSA Trolley Bus Optimisation Systeme Alimentation

UHVDC Ultra high voltage direct current

Conventional and General Terms / Abbreviations

Term Description

₹/Rs./Rupees/INR Indian Rupees

BSE BSE Limited

CCI Competition Commission of India

CDSL Central Depository Services (India) Limited

CHF Swiss franc

CIN Corporate Identity Number

Companies Act, 2013 Companies Act, 2013, along with the relevant rules made thereunder

Depositories NSDL and CDSL

Depositories Act Depositories Act, 1996

DIN Director Identification Number

EPS Earnings Per Share

FEMA Foreign Exchange Management Act, 1999, read with rules and regulations there under

FEMA Regulations The Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, the Foreign

Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments)

Regulations, 2019 or the Foreign Exchange Management (Debt Instruments) Regulations,

2019, as applicable

Financial Year/ Fiscal/ FY Unless stated otherwise, the period of 12 months ending December 31 of that particular year

GoI or Government or Central

Government

Government of India

GST Goods and Services Tax

India Republic of India

IT Information Technology

KYC Know your customer

Listing Regulations Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)

Regulations, 2015

MCA Ministry of Corporate Affairs

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

RBI The Reserve Bank of India

SCRA Securities Contracts (Regulation) Act, 1956

SCRR Securities Contracts (Regulation) Rules, 1957

SEBI Securities and Exchange Board of India constituted under the SEBI Act

SEBI Act Securities and Exchange Board of India Act, 1992

3

Term Description

SEBI Circulars SEBI circular no. CFD/DIL3/CIR/2017/21 dated March 10, 2017, SEBI circular no.

CFD/DIL3/CIR/2017/26 dated March 23, 2017, SEBI circular no. CFD/DIL3/CIR/2017/105

dated September 21, 2017, SEBI circular no. CFD/DIL3/CIR/2018/2 dated January 3, 2018 and

SEBI circular no. SEBI/HO/CFD/DIL1/CIR/P/2019/192 dated September 12, 2019, including

any amendments, notifications, circulars thereof.

SEBI ICDR Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations, 2018

State Government The government of a state in India

Stock Exchanges BSE and NSE

STT Securities transaction tax

U.S./USA/United States United States of America

USD/US$ United States Dollars

Wilful Defaulter An entity or person categorised as a wilful defaulter by any bank or financial institution or

consortium thereof, in terms of regulation 2(1)(lll) of the SEBI ICDR Regulations

4

CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL AND MARKET DATA

Certain Conventions

All references to “India” contained in this Information Memorandum are to the Republic of India.

Unless stated otherwise, all references to page numbers in the Information Memorandum are to the page numbers of the

Information Memorandum.

Financial Data

Our Company was incorporated on February 19, 2019 with our first financial year commencing on February 19, 2019 and

ending on March 31, 2020. We subsequently made an application to the Regional Director, South East Region, Ministry

of Corporate Affairs, Hyderabad on November 5, 2019 to change our first financial year to February 19, 2019 to December

31, 2019. Pursuant to an order bearing no. F.No:10/19/Karnataka/RD (SER)/2(41) of 2013/2019/6328 dated December 12,

2019, passed by the Regional Director, South East Region, Ministry of Corporate Affairs, our Company’s financial year

commences on January 1 and ends on December 31 of a given year. Accordingly, all references to a particular financial

year is to the 12 months ended December 31 of that year. The Board has approved the audited financial statements for the

first financial period ended December 31, 2019 on February 28, 2020. Pursuant to Section 96 of the Companies Act, 2013,

our Company being a newly incorporated Company, is required to hold its first annual general meeting within a period of

nine months from the close of the first financial year i.e. September 30, 2020, where the first financial statements of the

Company shall be placed. Therefore, please note, this Information Memorandum contains the audited financial statement

for the first financial period ended December 31, 2019 as approved by its Board at their meeting held on February 28, 2020,

and is yet to be adopted by the Shareholders at their annual general meeting.

Further, please note that financial information in respect of the Demerged Undertaking forms part of the audited financial

statements prepared by INABB and is reported separately. The reported financial statements of INABB is available on the

website of the BSE and NSE and on the website of INABB respectively. The reference to the audited financial information

of INABB is being provided solely for information purposes and such information does not form part of the Information

Memorandum.

In this Information Memorandum, any discrepancies in any table between the total and the sums of the amounts listed are

due to rounding off. All figures in decimals have been rounded off to the second decimal and all the percentage figures

have been rounded off to two decimal places.

Currency and Units of Presentation

All references to:

• “Rupees” or “₹” or “INR” or “Rs.” are to Indian Rupee, the official currency of the Republic of India;

• “CHF” are to Swiss Franc, the official currency of Switzerland;

• “CZK” are to Czech koruna, the official currency of the Czech Republic.

• “SEK” are to Swedish krona, the official currency of Sweden.

• “USD” or “US$” or “$” are to United States Dollar, the official currency of the United States of America.

Our Company has presented certain numerical information in this Information Memorandum in “lakh”, “million” and

“crores” units or in whole numbers where the numbers have been too small to represent in such units. One million represents

1,000,000 and one billion represents 1,000,000,000. One lakh represents 100,000 and one crore represents 10,000,000.

Industry and Market Data

Unless stated otherwise, industry data used throughout this Information Memorandum have been obtained or derived from

publicly available information as well as various industry publications and sources. Industry publications generally state

that the information contained in such publications has been obtained from publicly available documents from various

sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be

assured. Although we believe the industry and market data used in this Information Memorandum is reliable, it has not

been independently verified.

5

FORWARD-LOOKING STATEMENTS

This Information Memorandum contains certain “forward-looking statements”. All statements contained in this

Information Memorandum that are not statements of historical fact constitute “forward-looking statements”. All statements

regarding our expected financial condition and results of operations, business, plans and prospects are “forward-looking

statements”. These forward-looking statements generally can be identified by words or phrases such as “aim”, “anticipate”,

“believe”, “expect”, “estimate”, “intend”, “likely to”, “seek to”, “shall”, “objective”, “plan”, “project”, “will”, “will

continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe our strategies,

objectives, plans or goals are also forward-looking statements. All forward-looking statements whether made by us or any

third parties in this Information Memorandum are based on our current plans, estimates, presumptions and expectations

and are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from

those contemplated by the relevant forward-looking statement, including but not limited to, regulatory changes pertaining

to the power industry and our ability to respond to them, our ability to successfully implement our strategy, our growth and

expansion, technological changes, our exposure to market risks, general economic and political conditions which have an

impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated

turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial

markets in India and globally, changes in domestic laws, regulations and taxes and changes in competition in the power

industry. Important factors that could cause actual results to differ materially from our expectations include, but are not

limited to, the following:

• The Company was incorporated on February 19, 2019 and as a result of which there may be certain uncertainties in

the integration of the Power Grids Business into a newly incorporated such as our Company.

• There is no guarantee that, once listed, there will be a liquid market for the Equity Shares.

• Our flexibility in managing our operations is limited by the regulatory environment and the policies of the GoI which

governs the power sector. Changes in government policies and other macro-economic factors can adversely impact

the Company’s business.

• We could face risks and uncertainties while developing our Power Grids Business.

• The power grids industry is intensely competitive and our inability to compete effectively may adversely affect the

Power Grids Business, results of operations and financial condition.

• If we are unable to establish and maintain an effective system of internal controls and compliances, our business and

reputation could be adversely affected.

• Compliance with, and changes in, environmental, health and safety laws and regulations may adversely affect our

financial condition and results of operations.

• Our ability to adopt new technology to respond to new and enhanced products poses a challenge in our business. The

cost of implementing new technologies for our operations could be significant and could adversely affect our business,

results of operations, cash flows and financial condition.

For further discussion of factors that could cause the actual results to differ from the expectations, see “Risk Factors” and

“Our Business” on pages 6 and 30, respectively. By their nature, certain market risk disclosures are only estimates and

could be materially different from what actually occurs in the future. As a result, actual future gains or losses could

materially differ from those that have been estimated and are not a guarantee of future performance.

Forward-looking statements reflect current views as of the date of this Information Memorandum and are not a guarantee

of future performance. There can be no assurance to investors that the expectations reflected in these forward-looking

statements will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such

forward-looking statements and not to regard such statements to be a guarantee of our future performance.

Neither our Company, our Promoter, our Directors, nor any of their respective affiliates have any obligation to update or

otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of

underlying events, even if the underlying assumptions do not come to fruition.

6

SECTION II: RISK FACTORS

An investment in the Equity Shares involves a high degree of risk. Prospective investors should carefully consider all of

the information set forth in this Information Memorandum, and the risks and uncertainties described below, before making

a decision to invest in the Equity Shares. Any of the following risks, individually or together, could adversely affect our

business, financial condition, results of operations or prospects, which could result in a decline in the value of the Equity

Shares and the loss of all or part of an investment in the Equity Shares. While we have described the risks and uncertainties

that our management believes are material, these risks and uncertainties may not be the only risks and uncertainties we

face. Additional risks and uncertainties, including those we currently are not aware of or deem immaterial, may also have

an adverse effect on our business, results of operations, financial condition and prospects. Prospective investors should

pay particular attention to the fact that our Company is incorporated under the laws of India and is subject to a legal and

regulatory environment which may differ in certain respects from that of other countries.

This Information Memorandum also contains forward-looking statements that involve risks, assumptions, estimates and

uncertainties. Our actual results could differ from those anticipated in these forward-looking statements as a result of

certain factors, including the considerations described below and elsewhere in this Information Memorandum. For further

details, see “Forward-Looking Statements” on page 5 of the Information Memorandum. The financial and other related

implications of risks concerned, wherever quantifiable, have been disclosed in the risk factors below. However, there are

risk factors the potential effects of which are not quantifiable and therefore no quantification has been provided with

respect to such risk factors. In making an investment decision, prospective investors must rely on their own examination

of our Company and the terms of the Offer, including the merits and the risks involved.

Please note that our Company has been newly incorporated and has commenced business operations from the Effective

Date. The business operations of our Company comprise of the Power Grids Business, which were transferred to our

Company pursuant to the Scheme. While the following section includes material risks in relation to the business operations

of our Company, post the Effective Date, for complete details in relation to the Power Grids Business, including the

historical performance, previous milestones and risk factors, the disclosures in the section below should be read with the

information available on the websites of the Stock Exchanges, and financial statements, investor presentations and

corporate disclosures issued by INABB.

1. The Company was incorporated on February 19, 2019 and there may be certain uncertainties in the integration of

the Power Grids Business into a newly incorporated such as our Company.

The Company was incorporated on February 19, 2019 and commenced business from the Effective Date of the Scheme

which provided for the transfer of the Power Grids Business to us as a going concern. Accordingly, there may also be

certain uncertainties in the integration of the Power Grids Business into a newly incorporated company such as our

Company. While post the Effective Date, experienced personnel in the Power Grids Business have been transferred to the

Company, the Company may be unable to effectively integrate the Power Grids Business, and efficiently operate the

business of the Company, thereby adversely impacting the results of the Company’s operations and profitability of the

business. Additionally, consequent upon completion of the Scheme, INABB is required to effect transfer of, inter alia,

properties, approvals, employees, existing contracts and intellectual property of the Power Grids Business to our Company.

INABB’s inability to effect all such transfers in a timely manner may materially impact the ability of the Company to carry

on and undertake business operations, in compliance with applicable laws.

2. There is no guarantee that, once listed, there will be a liquid market for the Equity Shares.

There is no public market for the Equity Shares prior to the listing and an active public market for the Equity Shares may

not develop or sustain after the allotment of Equity Shares. Listing of the Equity Shares does not guarantee that a trading

market for the Equity Shares will develop. The market price of the Equity Shares may be subject to significant fluctuations

in response to, among other factors, variations in our operating results of our Company, market conditions specific to the

industry we operate in, developments relating to India, volatility in the securities markets in India and other jurisdictions,

variations in the growth rate of financial indicators, variations in revenue or earnings estimates by research publications,

and changes in economic, legal and other regulatory factors. Accordingly, prospective shareholders should be prepared to

hold their Equity Shares for an indefinite period of time.

3. Our flexibility in managing our operations is limited by the regulatory environment and the policies of the GoI

which governs the power sector. Changes in government policies and other macro-economic factors can adversely

impact the Company’s business.

A large part of our business is regulated by the Central government and State governments in India. We require regulatory

7

approvals, sanctions, licenses, registrations and permissions to operate and expand our businesses. Changes in the

government policies and other macro-economic factors including a slowdown in government investments in the power

sector, any significant reductions in incentives for renewable energy expansion in India, poor financial health of the

transmission and distribution sector and state electricity boards, unfavourable terms and conditions of government

contracts, as revised from time to time etc. may impact the Company’s business and operations.

The power industry in India is regulated by laws, rules and directives issued by governmental and regulatory authorities.

These laws, rules and directives have changed significantly over the years. There are likely to be more reforms, such as

reforms implemented under the Electricity Act, 2003 in the ensuing years. There can be no assurance that these reforms,

including changes to the current regulatory bodies or to the existing rules and directives, will be favourable to our business.

If such changes are not favourable, our business and financial results could be adversely affected.

4. We face risks and uncertainties when developing our Power Grids Business

The development of our Power Grids Business involves numerous risks and uncertainties and require extensive research,

planning and due diligence. Our customers may be required to incur significant capital expenditure for land and

interconnection rights, regulatory approvals, equipment procurement, legal and other work. Success in developing a

particular project is contingent upon a number of factors, including but not limited to:

• securing appropriate land, with satisfactory land use permissions, on reasonable terms;

• accurately assessing resource availability at levels deemed acceptable for project development and operations;

• receiving critical components and equipment (that meet our design specifications) on schedule and on acceptable

commercial terms;

• securing necessary project approvals, licences and permits in a timely manner;

• availability of adequate grid infrastructure and obtaining rights to interconnect the project to the grid or to transmit

energy; and

• obtaining financing on competitive terms.

We/ our customers could face delays or unexpected difficulties in completing our projects as a result of these or other

factors. If we experience such problems on a number of our projects, our business, financial condition, results of operations

and prospects could be materially and adversely affected.

5. The power grids industry is intensely competitive and our inability to compete effectively may adversely affect the

Power Grids Business, results of operations and financial condition.

The power grids business is highly competitive. Competitors in the power grids business may succeed in developing

products/ services that are more effective, popular or cheaper than the Company’s, which may render the Company’s

products uncompetitive and adversely affect the business, results of operations and financial condition of the Company.

Further, our competitors may have greater financial, manufacturing, research and development, marketing and other

resources, broader product ranges and larger, stronger sales forces, which may make them more competitive than us.

Additionally, if one of our competitors or their customers acquires any of our customers or suppliers, we may lose business

from the customer, which may adversely affect our business, results of operations and financial condition.

6. If we are unable to establish and maintain an effective system of internal controls and compliances, our business

and reputation could be adversely affected.

We are newly incorporated Company, and operate the Power Grids Business, from the Effective Date. We intend to manage

regulatory compliance by monitoring and evaluating our internal controls, and ensuring that we are in compliance with all

relevant statutory and regulatory requirements. However, there can be no assurance that deficiencies in our internal controls

and compliances will not arise, or that we will be able to implement, and continue to maintain, adequate measures to rectify

or mitigate any such deficiencies in our internal controls, in a timely manner or at all. As we continue to grow, there can

be no assurance that there will be no instances of inadvertent non-compliances with statutory requirements, which may

subject us to regulatory action, including monetary penalties, which may adversely affect our business and reputation.

7. Compliance with, and changes in, environmental, health and safety laws and regulations may adversely affect our

financial condition and results of operations.

We are subject to environmental, health and safety regulations. A violation of health and safety laws or failure to comply

with the requirements of the relevant health and safety authorities could lead to, among other things, a temporary shutdown

8

of all or a portion of our transmission and substation facilities and the imposition of costly compliance procedures.

Governments may take steps towards the adoption of more stringent environmental, health and safety regulations, and we

cannot assure you that we will be at all times in full compliance with these regulatory requirements. Due to the possibility

of unanticipated regulatory developments, the amount and timing of future expenditures to comply with regulatory

requirements may vary substantially from those currently anticipated. If there is any unanticipated change in the

environmental, health and safety regulations to which we are subject, we may need to incur substantial capital expenditures

to comply with such new regulations. Our costs of complying with current and future environmental, health and safety

laws and our liabilities arising from failure to comply with applicable regulatory requirements may adversely affect our

business, financial condition and results of operations.

8. Our ability to adopt new technology to respond to new and enhanced products poses a challenge in our business.

The cost of implementing new technologies for our operations could be significant and could adversely affect our

business, results of operations, cash flows and financial condition.

The industry in which we operate is subject to significant technological changes, with the constant introduction of new and

enhanced products. Our success will depend in part on our ability to respond to technological advances and emerging

standards and practices on a cost effective and timely basis. We cannot assure you that we will be able to successfully make

timely and cost-effective enhancements and additions to our technological infrastructure, keep up with technological

improvements in order to meet our customers’ needs or that the technology developed by others will not render our products

less competitive or attractive. Our failure to successfully adopt such technologies in a cost effective and a timely manner

could increase our costs and lead to us being less competitive in terms of our prices or quality of products we sell. Further,

implementation of new or upgraded technology may not be cost effective, which may adversely affect our business, results

of operations, cash flows and financial condition.

9. Our ability to pay dividends in the future will depend on our earnings, financial condition, working capital

requirements, capital expenditures and restrictive covenants of our financing arrangements.

We have not declared dividends on our Equity Shares since our incorporation. Our ability to pay dividends in the future

will depend on our earnings, financial condition, cash flow, working capital requirements, capital expenditure and

restrictive covenants of our financing arrangements. Any future determination as to the declaration and payment of

dividends will be at the discretion of our Board and will depend on factors that our Board deems relevant, including among

others, our future earnings, financial condition, cash requirements, business prospects and any other financing

arrangements. We cannot assure you that we will be able to pay dividends in the future.

10. Our management team and other key personnel, are critical to our continued success and the loss of any such

personnel could adversely affect our business.

The management of the Company was heading the Demerged Undertaking in INABB, prior to the Demerger and brings

with them depth of experience in the business of the Company. Further, pursuant to the effectiveness of the Scheme, as on

December 31, 2019, the Company had 2,244 employees, who have previously been associated with the Power Grids

Business in INABB. Our success significantly depends upon the continued service of our management team and other key

personnel. These executives possess technical and business capabilities that are difficult to replace. If we lose the services

of any of these executives for any reason, we may be unable to replace them in a timely manner or at all, which may affect

our ability to continue to manage and expand our business. We cannot assure you that any contingency plans which we

may implement to replace these executives will be successful. Further, as we expect to continue to expand our operations

and develop new products, we will need to continue to attract and retain experienced management and key research and

development personnel. If we are unable to attract and retain qualified personnel, our business, results of operations and

financial condition may be adversely affected.

11. Upon listing, our Promoter along with the Promoter Group will continue to collectively hold substantial

shareholding in our Company.

Our Promoter and members of the Promoter Group hold 75% of the share capital of our Company, for details of their

shareholding pre and post the Scheme, see “Capital Structure” on page 20. Our Promoter will continue to exercise

significant influence over our business policies and affairs and all matters requiring shareholders’ approval, including the

composition of our Board, the adoption of amendments to our certificate of incorporation, the approval of mergers, strategic

acquisitions or joint ventures or the sales of substantially all of our assets, and the policies for dividends, lending,

investments and capital expenditures. This concentration of ownership also may delay, defer or even prevent a change in

control of our Company and may make some transactions more difficult or impossible without the support of these

stockholders. The interests of the Promoter as our controlling shareholder could conflict with our interests or the interests

of its other shareholders.

9

12. Our inability to meet our obligations, including financial and other covenants under our debt financing

arrangements could adversely affect our business, results of operations and cash flows.

As of December 31, 2019, our Company does not have any financial indebtedness availed from external lenders. Our

Company has however, availed of an unsecured short term loan facility of `5,000 million from INABB, which is repayable

in one or more tranches, as may be requested by INABB, on or before January 31, 2020 or such other date as may be agreed

between the parties in writing which is not later than March 31, 2020. Further, as of December 31, 2019, we are in the

process of availing facilities from external lenders to meet our business requirements. Going forward, our ability to meet

our debt service obligations and repay our outstanding borrowings will depend primarily on the cash generated by our

business. Further, our financing agreements could contain certain restrictive covenants that limit our ability to undertake

certain types of transactions, any of which could adversely affect our business and financial condition. We may be required

to obtain prior approval from our lenders for, among other things:

• effecting any change in the capital structure;

• undertaking any merger, de-merger, amalgamation, consolidation or corporate reconstruction;

• change the nature of the business of our relevant borrowing company;

• undertaking any new project or implementing any scheme of expansion or acquiring fixed assets or incurring major

capital expenditure or incurring capital expenditure which is not in the ordinary course of business;

• prepaying loans;

• declaring dividends;

• investing, lending, extending advances or placing deposits with any other concern;

• entering into borrowing arrangements;

• creating any charges, lien or encumbrances over its assets;

• selling, assigning, mortgaging or disposing off any fixed assets charged to a lender;

• changing the ownership pattern or management structure of our Company; and

• making amendments to the Memorandum and Articles of Association.

Lenders typically have the right to, inter-alia, accelerate payment of loans in the event of a default and require us to

maintain certain financial ratios. In addition, cross default provisions may be automatically triggered by defaults under

other financing arrangements.

If we fail to meet our debt service obligations or covenants provided under the financing agreements, the relevant lenders

could, inter-alia, impose penal and default interests, accelerate the maturity of our obligations and declare all amounts

payable in respect of the facility to be due and payable immediately or otherwise on demand. In the event of any such

acceleration, we may have to dedicate a substantial portion of our cashflow from operations to make payments under such

financing documents, thereby reducing the availability of cash for our working capital requirements and other general

corporate purposes.

Any of these circumstances or other consequences could adversely affect our business, credit rating, prospects, financial

condition and results of operations. Moreover, any such action initiated by our lenders could adversely affect the price of

the Equity Shares.

13. Our Company has allotted fractional shares to APPSIL Fractional Shares Trust 2019 pursuant to the Scheme

which may be transferred by the APPSIL Fractional Shares Trust 2019 to realise value for its beneficiaries.

Pursuant to the Scheme, which provides for the allotment of fractional shares by the Company to the shareholders of

INABB as consideration for the Demerger, our Company has entered into a trust deed with the Venu Nuguri, Ajay Singh

and Poovanna Ammatanda (“Trustees” and such trust deed shall be referred to as “Trust Deed”). Our Company has

allotted 9,266 Equity Shares, aggregating 0.02% of the total issued and paid up share capital of the Company, to the APPSIL

Fractional Shares Trust 2019. As per the terms of the Trust Deed, the APPSIL Fractional Shares Trust 2019 holds such

Equity Shares in lieu of fractional entitlements, on behalf of certain shareholders of INABB who are entitled to fractional

shares along with fractional entitlement (“Beneficiaries”) pursuant to the terms of the Trust Deed. The trustees of the Trust

are authorised sell such fractional shares or any part thereof allotted to it on the stock exchanges in accordance with the

provisions of the Trust Deed and upon such sale/realisation, pay the proceeds thereof to the Beneficiaries. Any sale of

such shares in a single tranche could impact the trading price of our Equity Shares.

14. Our contracts are governed by the laws of various countries and disputes arising from such contracts may be subject

to the exclusive jurisdiction of courts situated in such countries.

Most of the contracts executed with our distributors and customers are customarily governed by the laws of the country in

which the distributor or customer is incorporated. Further, any disputes related to such contracts may be subject to the

10

exclusive jurisdiction of courts situated in such countries. Any lawsuits with respect to such disputes must be instituted in

a court having jurisdiction over the contract, which may cause difficulty for our Company to manage such suits and to

obtain enforcement of awards and may also lead to greater costs for managing such litigation.

15. We are involved in certain legal proceedings that if decided against us may have a material adverse impact on our

business operations, results of operations and financial conditions.

Our Company is involved in certain legal proceedings pending at different stages of adjudication before various courts and

tribunals, appellate authorities and arbitrators. There can be no assurance that these legal proceedings will be decided in

our favor. Decisions in any of the aforesaid proceedings adverse to our interests may have a material adverse effect on our

business, future financial performance and results of operations. If the courts or tribunals rule against our Company, we

may face monetary and/or reputational losses and may have to make provisions in our financial statements, which could

increase our expenses and our liabilities. Furthermore, we may also not be able to quantify all the claims in which we are

involved. For details of litigations outstanding as on the date of this document, see “Outstanding Litigations and Material

Developments” on page 118 of this Information Memorandum.

16. We may enter into related party transactions which may potentially involve conflicts of interest with the equity

shareholders.

We may enter into transactions with our Promoter, Promoter Group, parties having significant influence and associate

companies. We cannot assure you that such transactions, individually or in the aggregate, will not have an adverse effect

on our financial condition and results of operations. While we believe that all such transactions will be conducted on an

arm’s length basis, such related party transactions may potentially involve conflicts of interest and we may obtain more

favourable terms if such transactions are entered into with unrelated parties. Further, we cannot assure you that such

transactions, individually or in the aggregate, will always be in the best interests of our minority shareholders and will not

have an adverse effect on our business, results of operations, cash flows and financial condition.

17. Some of our offices and manufacturing plants are located on leased premises. Any failure to renew lease

agreements or their renewal on terms unfavourable to us may adversely affect our business, financial condition

and results of operations.

As of the date of this Information Memorandum, we have 17 offices, including our Registered Offices, spread across

various cities in India, including Ahmedabad, Chennai, Chandigarh, Bengaluru, Bhubaneswar, Mumbai, Hyderabad,

Faridabad, Lucknow and Kolkata. Some of our offices are located on leased premises. Further, our LV capacitor in

Bengaluru is located on a leased premises. In case of non-renewal of our leases or if such agreements are renewed on

unfavorable terms and conditions, we may be forced to procure alternative space for our existing offices and manufacturing

plants and incur additional costs in such relocation. This may cause a disruption in our operations or result in increased

costs, or both, which may materially and adversely affect our business, financial condition and results of operations in

respect of such defaulting premises.

18. Our insurance coverage may not be sufficient or may not adequately protect us against all material hazards, which

may adversely affect our business, results of operations and financial condition.

Our operations are subject to a number of risks generally associated with the transmission of electricity. These risks include

explosions, fires, earthquakes and other natural disasters and calamities, breakdowns, failures or substandard performance

of equipment, improper installation or operation of equipment, accidents, acts of terrorism, operational problems,

transportation interruptions and labour disturbances. These risks can cause personal injury and loss of life and damage to,

or the destruction of, property and equipment (including infrastructure developed by us) and may result in the limitation or

interruption of our business operations and the imposition of civil or criminal liabilities.

In the event of personal injuries, fires or other accidents suffered by our employees or other people, we could face claims

alleging that we were negligent, provided inadequate supervision or be otherwise liable for the injuries. Our Company has

obtained insurance policies for our operations including property all risk insurance covering material damage, breakdown

and business interruption, commercial general liability insurance, erection all risk insurance for project sites, marine cargo

(transit) insurance, directors and officers liability insurance, group personal accident, group term life, group mediclaim

policies, employee compensation. Our policies are subject to customary exclusions, including for terrorism in certain cases,

limits and customary deductibles.

While we believe that the insurance coverage would be reasonably adequate to cover the normal risks associated with the

operation of our business, we cannot assure you that any claim under the insurance policies maintained by us will be

honoured fully, in part or on time, or that we have taken out sufficient insurance to cover all our losses. In addition, our

insurance coverage shall expire from time to time. We intend to apply for the renewal of our insurance coverage in the

11

normal course of our business, but we cannot assure you that such renewals will be granted in a timely manner, at acceptable

cost or at all. To the extent that we suffer loss or damage for which we did not obtain or maintain insurance, and which is

not covered by insurance, exceeds our insurance coverage or where our insurance claims are rejected, the loss would have

to be borne by us and our results of operations, cash flows and financial performance could be adversely affected.

19. Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions.

Our Articles and Indian law govern our corporate affairs. Legal principles relating to these matters and the validity of

corporate procedures, directors’ fiduciary duties and liabilities, and shareholders’ rights may differ from those that would

apply to a corporate entity in another jurisdiction. Shareholders’ rights under Indian law may not be as extensive as

shareholders’ rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their

rights as one of our shareholders than as a shareholder of a corporate entity in another jurisdiction.

20. Investors in Equity Shares may be unable to enforce a judgment of a foreign court against us.

Our Company is a limited liability company incorporated under the laws of India. Other than Frank Duggan, our Chairman

and Non-Executive Director, all of our Directors and our Key Management Personnel are residents of India. Majority of

our Company's assets and the assets of our Directors are located in India. Decrees in India whether domestic or foreign

have to be enforced under the provisions of the CPC and recognition and enforcement of foreign judgments has been laid

down under Section 13 of the CPC. Additionally, upon the production of a certified copy of the foreign judgment, an Indian

court presumes that the judgment was pronounced by a competent court of jurisdiction unless contrary proved. India is not

a party to any international treaty with respect to enforcement of foreign judgments. Under Section 44A, judgments from

courts in reciprocating countries can be enforced directly in India. The CPC only permits the enforcement of monetary

decrees, not being in the nature of any amounts payable in respect of taxes, other charges, fines or penalties and does not

include arbitration awards. Thus, in the event of a judgment being passed from a non- reciprocating country against our

Company for civil liability, it would not be enforceable in India and it would be required to institute new proceedings in

India and obtain a decree from an Indian court. Based on the final judgment obtained from a non-reciprocating country, a

fresh suit can be initiated within three years of obtaining such final judgment. The United States for instance has not been

declared as a reciprocating territory for the purposes of the CPC and thus a judgement of a court outside India may be

enforced in India only by a suit and not by proceedings in execution.

India has reciprocal recognition and enforcement of judgments in civil and commercial matters with only a limited number

of jurisdictions, which include the United Kingdom, Singapore and Hong Kong. For a judgement from a jurisdiction with

reciprocity to be enforceable, it must meet the requirements as laid down in the CPC. If the Indian court believes that the

amount of damages awarded was excessive or inconsistent with public policy in India, it is unlikely that an Indian court

would award damages on the same basis, or to the same extent, as was awarded in a final judgement rendered by a court

in another jurisdiction. In addition, any person seeking to enforce a foreign judgement in India is required to obtain prior

approval of the RBI, to repatriate any amount recovered pursuant to the execution of the judgement.

21. You may be restricted in your ability to exercise pre-emptive rights under Indian law and may be adversely affected

by future dilution of your ownership position.

Under the Companies Act, a company incorporated in India must offer its shareholders pre-emptive rights to subscribe and

pay for a proportionate number of shares to maintain their existing ownership percentages before the issuance of any new

shares, unless the pre-emptive rights have been waived by adoption of a special resolution by holders of three-fourths of

the shares who have voted on the resolution, or unless the company has obtained approval from the Government of India

to issue without such special resolution, subject to votes being cast in favour of the proposal exceeding the votes cast

against such proposal. However, if the law of the jurisdiction you are in does not permit you to exercise your pre-emptive

rights without our Company filing an offering document or a registration statement with the applicable authority in the

jurisdiction you are in, you will be unable to exercise your pre-emptive rights unless our Company makes such a filing. To

the extent that you are unable to exercise pre-emptive rights granted in respect of the Equity Shares, your proportional

interest in our Company would be reduced.

22. If we are unable to patent new processes and protect our proprietary information or other intellectual property, our

business may be adversely affected.

We rely on a combination of patents, non-disclosure agreements and non-competition agreements to protect our proprietary

intellectual property. While we intend to defend against any threats to our intellectual property, we cannot assure you that

our patents, trade secrets or other agreements will adequately protect our intellectual property. Our patent rights may not

prevent our competitors from developing, using or commercializing products that are functionally equivalent or similar to

our products. Further, our patent applications may fail to result in patents being issued, and our existing and future patents

may be insufficient to provide us with meaningful protection or a commercial advantage. We cannot assure you that patents

issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors or that such

12

patents will be found to be valid or sufficiently broad to protect our processes or to provide us with any competitive

advantage. We may be required to negotiate licenses for patents from third parties to conduct our business, which may not

be available on reasonable terms or at all.

We also rely on non-disclosure agreements and non-competition agreements with certain employees, consultants and other

parties to protect trade secrets and other proprietary rights that belong to us. We cannot assure you that these agreements

will not be breached, that we will have adequate remedies for any breach or that third parties will not otherwise gain access

to our trade secrets or proprietary knowledge. Any inability to patent new processes and protect our proprietary information

or other intellectual property, could adversely affect our business.

While we follow due processes to ensure that our new products, services, solutions, new features, processes and associated

materials/information do not infringe any third-party IP rights, we cannot assure that there will not be any event where a

third-party claim a potential infringement of their IP rights on a feature, product, service or a process that is newly

developed, transferred or acquired from elsewhere, or procured from a supplier. Any inability to defend against such third-

party claim could adversely affect our business.

23. Any delay, interruption or reduction in the supply of raw materials, factories, infrastructure and equipment to

manufacture our products may adversely affect our business, results of operations, financial condition and cash

flows.

We depend on third-party vendors and suppliers as well as entities within the ABB group with whom we place purchase

orders from time to time, for the purchase of raw materials and equipment. Further to facilitate smooth supplies of raw

materials, we also have long term frame agreements for our key materials and strategic suppliers. We are currently sourcing

a significant portion of our raw materials from multiple vendors. We may face delays in supply on account of force majeure

conditions applicable to a particular vendor, which may delay our equipment manufacturing / supply of equipment’s to our

customers for a short term. Additionally, our factories, infrastructure and equipment may not continue to perform as there

is a risk of factory and equipment failure due to wear and tear in the ordinary course of business, latent defects, design error

or operator error, early obsolescence or force majeure events, among other things. Any such reductions or interruptions in

the supply of raw materials, factories, infrastructure or equipment, and any inability on our part to find alternate sources

for the procurement of such raw materials, factories, infrastructure or equipment, may have a temporary short term impact

on our ability to manufacture our products in a timely or cost effective manner.

24. We face foreign exchange risks that could adversely affect our results of operations and cash flows.

A portion of our total revenues and expenditures is denominated in currencies other than Indian Rupees. Although we

closely follow our exposure to foreign currencies and regularly enter into hedging transactions in an attempt to reduce the

risks of currency fluctuations, these activities are not always sufficient to protect us against incurring potential losses if

currencies fluctuate significantly. In addition, the policies of the Reserve Bank of India (“RBI”) may also change from

time to time, which may limit our ability to effectively hedge our foreign currency exposures and may have an adverse

effect on our results of operations and cash flows. Any such losses on account of foreign exchange fluctuations may

adversely affect our results of operations and cash flows.

25. Any deterioration in the general economic conditions in India and globally could adversely affect our business

and results of operations.

Our performance and the growth of our business are necessarily dependent on the health of the overall Indian economy.

Any slowdown in the Indian economy or future volatility in global commodity prices could adversely affect our business.

Additionally, an increase in trade deficit, a downgrading in India’s sovereign debt rating or a decline in India’s foreign

exchange reserves could negatively affect interest rates and liquidity, which could adversely affect the Indian economy and

our business. Any downturn in the macroeconomic environment in India could also adversely affect our business, results

of operations, financial condition and the trading price of the Equity Shares.

India’s economy could be adversely affected by a general rise in interest rates, adverse weather conditions affecting

agriculture, commodity and energy prices as well as various other factors. A slowdown in the Indian economy could

adversely affect the policy of the GoI towards our banking and finance industry, which may in turn adversely affect our

financial performance and our ability to implement our business strategy.

The Indian economy is also influenced by economic and market conditions in other countries, particularly emerging market

conditions in Asia. A decline in India’s foreign exchange reserves may also affect liquidity and interest rates in the Indian

economy, which could adversely impact our financial condition. A loss of investor confidence in other emerging market

13

economies or any worldwide financial instability may adversely affect the Indian economy, which could materially and

adversely affect our business and results of operations and the market price of the Equity Shares.

26. The audit reports on the audited financial statements issued by Statutory Auditors included certain qualifications.

The audit reports on the audited financial statements included a qualification for financial period ended December 31, 2019

that as per the applicable accounting standard, since this demerger of the Power Grids Business is a common control business

combination, the financial information necessitates restatement by the transferee i.e., the Company, at carrying amounts not

from the Appointed Date but from the beginning of the preceding period in the financial statements which happens to be the

date of incorporation i.e. February 19, 2019. Consequentially, the Company is required as per Ind AS 103 to give effect to

the business combination from February 19, 2019. However, the Company has recognized the impact of the business

combination only from April 1, 2019 i.e. the Appointed Date. Accordingly, the Statutory Auditors are unable to comment

on the resultant impact on the Company’s statement of profit and loss (including other comprehensive income), statement

of changes in equity and statement of cash flows for the period from February 19, 2019 to March 31, 2019. We cannot assure

you that our audit reports for any future fiscals will not contain qualifications, emphasis of matters or other observations

which affect our results of operations in future periods.

27. A significant change in the Government of India’s economic liberalization and deregulation policies could

adversely affect our business and the price of our Equity Shares.

A large part of our business and customers are located in India or are related to and influenced by the Indian economy. The

Government of India has traditionally exercised, and continues to exercise, a dominant influence over many aspects of the

economy. Unfavourable government policies including those relating to the internet and e-commerce, consumer protection

and data-privacy, could adversely affect business and economic conditions in India, and could also affect our ability to

implement our strategy and our future financial performance. Since 1991, successive governments, including coalition

governments, have pursued policies of economic liberalization, including significantly relaxing restrictions on the private

sector and encouraging the development of the Indian financial sector. However, the members of the Government of India

and the composition of the coalition in power are subject to change. As a result, it is difficult to predict the economic

policies that will be pursued by the Government of India. For example, there may be an increasing number of laws and

regulations pertaining to the internet and e-commerce, which may relate to liability for information retrieved from or

transmitted over the internet or mobile networks, user privacy, content restrictions and the quality of services and products

sold or provided through the internet. Furthermore, the growth and development of e-commerce may also result in more

stringent consumer protection laws that may impose additional burdens on online businesses generally. The rate of

economic liberalization could change and specific laws and policies affecting the financial services industry, foreign

investment, currency exchange and other matters affecting investment in our securities could change as well. Any

significant change in India's economic liberalization and deregulation policies could adversely affect business and

economic conditions in India generally and our business in particular.

28. Changing laws, rules and regulations and legal uncertainties, including adverse application of tax laws and

regulations, across the multiple jurisdictions we operate in, may materially adversely affect our business and

financial performance.

Our business and financial performance could be materially adversely affected by changes in the laws, rules, regulations

or directions applicable to us and our general businesses, or the interpretations of such existing laws, rules and regulations,

or the promulgation of new laws, rules and regulations.

The governmental and regulatory bodies may notify new regulations and/ or policies, which may require us to obtain

approvals and licenses from the government and other regulatory bodies, impose onerous requirements and conditions on

our operations, in addition to those which we are undertaking currently, or change the manner in which we conduct KYC

or authenticate our customers. Any such changes and the related uncertainties with respect to the implementation of new

regulations may have a material adverse effect on our business, financial condition and results of operations.

In addition, unfavorable changes in or interpretations of existing, or the promulgation of new, laws, rules and regulations

including foreign investment laws governing our business, operations and investments in our Company by non-residents,

could result in us being deemed to be in contravention of such laws and/ or may require us to apply for additional approvals.

Tax and other levies imposed by the central and state governments in India that affect our tax liability include central and

state taxes and other levies, income tax, turnover tax, goods and service tax, stamp duty and other special taxes and

surcharges which are introduced on a temporary or permanent basis from time to time. The final determination of our tax

liabilities involves the interpretation of local tax laws and related regulations in each jurisdiction as well as the significant

14

use of estimates and assumptions regarding the scope of future operations and results achieved and the timing and nature

of income earned and expenditures incurred. Moreover, the central and state tax scheme in India is extensive and subject

to change from time to time. For instance, the Government of India has implemented a comprehensive national goods and

services tax (“GST”) regime with effect from July 1, 2017 that combines taxes and levies by the central and state

governments into a unified rate structure. Any future increases or amendments may affect the overall tax efficiency of

companies operating in India and may result in significant additional taxes becoming payable. If the tax costs associated

with certain transactions because of a particular tax risk materializing are greater than anticipated, it could affect the

profitability of such transactions.

Any change in Indian tax laws could have an effect on our operations. For instance, the Taxation Laws (Amendment)

Ordinance, 2019 (“Tax Amendment Ordinance”). The new tax ordinance issued by the Ministry of Finance, Government

of India on September 20, 2019, amended certain provisions of the Income Tax, Act, 1961 for assessment year beginning

on or after the 1st Day of April 2020, and prescribed certain changes to the income tax rate applicable to companies in

India. According to the Taxation Laws Amendment Act, 2019, certain domestic companies can henceforth voluntarily opt

in favour of a concessional tax rate of 25.17%. This tax amendment stipulates that a Company opting for lower tax rate ,

has to forgo all specified exemptions/deductions claims under the Income Tax Act,1961. Further ,this option once

exercised cannot be subsequently withdrawn for the same or any other tax year. The Company is currently in the process

of evaluating this option.

In addition, we are subject to tax related inquiries and claims. We may be particularly affected by claims from tax authorities

on account of income tax assessment and GST that combines taxes and levies by the central and state governments into

one unified rate of interest with effect from July 1, 2017. We cannot predict whether any new tax laws or regulations

impacting our services will be enacted, what the nature and impact of the specific terms of any such laws or regulations

will be or whether, if at all, any laws or regulations would have an adverse effect on our business.

Further, the Government of India announced the interim union budget for Fiscal 2020, and the Finance Act, 2019 (the

“Finance Act”), which introduced various amendments. The Finance Act stipulates the sale, transfer and issue of securities

through exchanges, depositories or otherwise to be charged with stamp duty. The Finance Act has also clarified that, in the

absence of a specific provision under an agreement, the liability to pay stamp duty in case of sale of securities through

stock exchanges will be on the buyer, while in other cases of transfer for consideration through a depository, the onus will

be on the transferor. The stamp duty for transfer of securities other than debentures, on a delivery basis is specified at

0.015% and on a non-delivery basis is specified at 0.003% of the consideration amount.

The Government of India has also announced the union budget for Fiscal 2020, pursuant to which the Finance Act, 2019

has introduced various amendments. As such, there is no certainty on the impact that the Finance Act, 2019 may have on

our business and operations or on the industry in which we operate. In addition, unfavourable changes in or interpretations

of existing, or the promulgation of new laws, rules and regulations including foreign investment laws governing our

business, operations and group structure could result in us being deemed to be in contravention of such laws or may require

us to apply for additional approvals. We may incur increased costs relating to compliance with such new requirements,

which may also require management time and other resources, and any failure to comply may adversely affect our business,

results of operations and prospects. Uncertainty in the applicability, interpretation or implementation of any amendment

to, or change in, governing law, regulation or policy, including by reason of an absence, or a limited body, of administrative

or judicial precedent may be time consuming as well as costly for us to resolve and may affect the viability of our current

business or restrict our ability to grow our business in the future.

A change of law that requires us to treat and extend benefits to our outsourced personnel, and personnel retained on a

contractual basis, similar to our full-time employees may create potential liability for us. If we fail to comply with current

and future health and safety and labor laws and regulations at all times, including obtaining relevant statutory and regulatory

approvals, this could materially and adversely affect our business, future financial performance and results of operations.

29. If inflation were to rise in India, we might not be able to increase the prices of our services at a proportional rate

in order to pass costs on to our customers and our profits might decline.

Inflation rates in India have been volatile in recent years, and such volatility may continue in the future. India has

experienced high inflation in the recent past. Increased inflation can contribute to an increase in interest rates and increased

costs to our business, including increased costs of transportation, salaries, and other expenses relevant to our business.

High fluctuations in inflation rates may make it more difficult for us to accurately estimate or control our costs. Any

increase in inflation in India can increase our expenses, which we may not be able to pass on to our customers, whether

entirely or in part, and the same may adversely affect our business and financial condition. In particular, we might not be

15

able to reduce our costs or increase the amount of commission to pass the increase in costs on to our customers. In such

case, our business, results of operations, cash flows and financial condition may be adversely affected.

Further, the GoI has previously initiated economic measures to combat high inflation rates, and it is unclear whether these

measures will remain in effect. There can be no assurance that Indian inflation levels will not worsen in the future.

30. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

Under current Indian tax laws and regulations, unless specifically exempted, capital gains arising from the sale of equity

shares in an Indian company are generally taxable in India. A securities transaction tax (“STT”) is levied on and collected

by an Indian stock exchange on which equity shares are sold. Any gain realised on the sale of equity shares held for more

than 12 months, which are sold using any other platform other than on a recognised stock exchange and on which no STT

has been paid, are subject to long term capital gains tax in India. Until March 31, 2018, any gain realised on the sale of

equity shares, listed on a stock exchange and held for more than 12 months was not subject to capital gains tax in India if

STT was paid on the transaction. However, with the enactment of the Finance Act, 2018 the exemption previously granted

in respect of payment of long term capital gains tax has been withdrawn and such taxes are now payable by the investors

with effect from April 1, 2018. The Finance Act, 2018 provided that existing investors are eligible for relief on such capital

gains accrued until January 31, 2018 and any long term capital gains made after January 31, 2018 shall be subject to

taxation.

Further, any gain realised on the sale of listed equity shares held for a period of 12 months or less will be subject to short

term capital gains tax in India. In cases where the seller is a non-resident, capital gains arising from the sale of the equity

shares will be partially or wholly exempt from taxation in India in cases where the exemption from taxation in India is

provided under a treaty between India and the country of which the seller is resident.

Historically, Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of other

countries may be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the equity shares.

Our Company cannot predict whether any tax laws or other regulations impacting it will be enacted, or predict the nature

and impact of any such laws or regulations or whether, if at all, any laws or regulations would have a material adverse

effect the Company’s business, financial condition, results of operations and cash flows.

31. Financial instability, economic developments and volatility in securities markets in other countries may also cause

the price of the Equity Shares to decline.

The Indian market and the Indian economy are influenced by economic and market conditions in other countries,

particularly emerging Asian market countries. Financial turmoil in Europe and elsewhere in the world in recent years has

affected the Indian economy. In recent times, the Indian financial markets had been negatively affected by the volatility in

global financial market, including on account of certain European nations’ debt troubles and move to break away by the

United Kingdom from the European Union. Although, economic conditions are different in each country, investors’

reactions to developments in one country can have adverse effects on the securities of companies in other countries,

including India. Currencies of a few Asian countries have in the past suffered depreciation against the U.S. Dollar owing

to, amongst other, the announcements by the U.S. government that it may consider reducing its quantitative easing

measures. A loss of investor confidence in the financial systems of other emerging markets may cause increased volatility

in Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide financial instability could

also have a negative impact on the Indian economy. Financial disruptions may occur and could harm our business, future

financial performance and the prices of the Equity Shares.

The global credit and equity markets have experienced substantial dislocations, liquidity disruptions and market corrections

in recent years. Liquidity and credit concerns and volatility in the global credit and financial markets have increased

significantly with the bankruptcy or acquisition of, and government assistance extended to, several major U.S. and

European financial institutions. These and other related events, such as the European sovereign debt crisis, have had a

significant impact on the global credit and financial markets as a whole, including reduced liquidity, greater volatility,

widening of credit spreads and a lack of price transparency in global credit and financial markets. In response to such

developments, legislators and financial regulators in the United States and other jurisdictions, including India, have

implemented a number of policy measures designed to add stability to the financial markets.

However, the overall impact of these and other legislative and regulatory efforts on the global financial markets is uncertain,

and they may not have the intended stabilizing effects. In the event that the current difficult conditions in the global credit

16

markets continue or if there is any significant financial disruption, such conditions could have an adverse effect on our

business, future financial performance and the trading price of the Equity Shares.

32. Any adverse change in India's credit rating by an international rating agency could materially adversely affect our

business and profitability.

India’s sovereign rating is Baa2 with a “negative” outlook (Moody’s), BBB-with a “stable” outlook (S&P) and BBB-with

a “stable” outlook (Fitch). Any adverse change in India’s credit ratings by international rating agencies may adversely

impact the Indian economy and consequently our business.

33. The occurrence of natural or man-made disasters could adversely affect our results of operations, cash flows and

financial condition. Hostilities, terrorist attacks, civil unrest and other acts of violence could adversely affect the

financial markets and our business.

The occurrence of natural disasters, including cyclones, storms, floods, earthquakes, tsunamis, tornadoes, fires, explosions,

man-made disasters, including acts of terrorism and military actions, and pandemics such as COVID-19, could adversely

affect our results of operations, cash flows or financial condition, including in the following respects:

• A natural or man-made disaster, could result in damage to our assets or losses in our projects, or the failure of our

counterparties to perform, or cause significant volatility in global financial markets.

• Political tension, civil unrest, riots, acts of violence, situations of war or terrorist activities may result in disruption of

services and may potentially lead to an economic recession and/or impact investor confidence.

Terrorist attacks and other acts of violence or war may adversely affect the Indian securities markets. In addition, any

deterioration in international relations, especially between India and its neighbouring countries, may result in investor

concern regarding regional stability which could adversely affect the price of the Equity Shares. In addition, India has

witnessed local civil disturbances in recent years and it is possible that future civil unrest as well as other adverse social,

economic or political events in India could have an adverse impact on our business. Such incidents could also create a

greater perception that investment in Indian companies involves a higher degree of risk and could have an adverse impact

on our business and the market price of the Equity Shares.

34. Any future issuance of Equity Shares may dilute prospective investors’ shareholding and sales of our Equity Shares

by our Promoter or other major shareholders may adversely affect the trading price of the Equity Shares.

Any future issuance of Equity Shares by us, such as a primary offering or pursuant to a preferential allotment, may dilute

your shareholding in us, adversely affect the trading price of our Equity Shares and could affect our ability to raise capital

through an issuance of our securities. In addition, any perception by investors that such issuances or sales might occur

could also affect the trading price of our Equity Shares.

Additionally, the disposal of Equity Shares by any of our significant shareholders or our Promoter, any future issuance of

Equity Shares by any of our significant shareholders or Promoter, any future issuance of Equity Shares by us or the

perception that such issuances or sales may occur may significantly affect the trading price of the Equity Shares. We cannot

assure you that we will not issue Equity Shares or that such shareholders will not dispose of, pledge or encumber their

Equity Shares in the future.

35. Significant disruptions of information technology systems or breaches of data security could adversely affect our

business.

Our business is dependent upon increasingly complex and interdependent information technology systems, including

Internet-based systems, to support business processes as well as internal and external communications. The size and

complexity of our computer systems make them potentially vulnerable to breakdown, malicious intrusion and computer

viruses. We cannot assure you that we will not encounter disruptions in the future. Any such disruption may result in the

loss of key information and/or disruption of production and business processes, which could materially and adversely affect

our business and results of operations.

In addition, our systems are potentially vulnerable to data security breaches, whether by employees or others that may

expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other

intellectual property, or could lead to the public exposure of personal information (including sensitive personal information)

of our employees, clinical trial patients, customers and others. Any such security breaches could have an adverse effect on

17

our business, reputation, results of operations and financial condition.

36. Our customers may not be able to fulfil their obligations towards us, as a result of their poor financial health or

for other reasons, which may have an adverse effect on our business, financial condition, results of operations

and prospects.

Our customers may not be able to fulfil their obligations towards us, as a result of their poor financial health, bankruptcy

or for other reasons. If, for any reason, any of our customers become unable or unwilling to fulfil their contractual

obligations our business, financial condition, results of operations and prospects may be adversely affected. Bringing action

against our customers to enforce their contractual obligations is often difficult and there can be no assurance that if we

initiate any legal proceedings against any such entities, we will receive a judgment in our favour or on a timely basis. A

failure by any of our customers to meet its contractual commitments, or an insolvency or liquidation of any of our

customers, could have an adverse effect on our financial condition and results of operations.

18

SECTION III: INTRODUCTION

GENERAL INFORMATION

ABB Power Products and Systems India Limited was incorporated on February 19, 2019 at Bengaluru as a public limited

company under the Companies Act, 2013, and was granted the certificate of incorporation by the RoC. For further details,

see “History and Certain Corporate Matters” on page 37.

Registered Office of our Company

8th Floor, Brigade Opus

70/401, Kodigehalli Main Road

Bengaluru 560 092

Karnataka, India

Tel: +91 80 2204 1800

CIN: U31904KA2019PLC121597

Registration number: 121597

Address of the Registrar of Companies

Our Company is registered with the Registrar of Companies, Bangalore situated at the following address:

Registrar of Companies, Bangalore

Registrar of Companies

‘E’ Wing, 2nd Floor

Kendriya Sadana

Koramangala

Bangalore 560 034

Tel: +91 80 2563 3105

Fax: +91 80 2553 8531

Board of Directors

The following table sets out the current details regarding our Board as on the date of filing of this Information

Memorandum:

Name DIN Designation Address

Frank Duggan 02937233 Chairman and Non-

Executive Director

Flat 454, 302 Jumeira Bay, PO Box No.11070, Dubai, UAE

Venu Nuguri 07032076 Managing Director 2168, B.M. Kaval, 2nd Cross, HAL 3rd Stage, Bangalore 560 075,

Karnataka, India

Sanjeev Sharma 07362344 Non-Executive Director Phoenix Bangalore One, Flat No. 2141, No. 1, Dr. Rajkumar Road,

Rajajinagar Bangalore 560 010, Karnataka, India

Mukesh Butani 01452839 Independent Director N-134, Panchsheel Park, New Delhi 110 017, New Delhi, India

Akila

Krishnakumar

06629992 Independent Director S-67, Golden Enclave, HAL Airport Road, Bengaluru

Nishi Vasudeva 03016991 Independent Director 21-A, Land Breeze, 52 Pali Hill, Bandra, Mumbai 400050

For further details of our Directors, see the section titled “Our Management” on page 40.

Designated Stock Exchange

The designated stock exchange is BSE.

Demat Credit

Our Company has executed tripartite agreements with the Registrar and Share Transfer Agent and the Depositories i.e.,

NSDL and CDSL, respectively, for admitting our Company’s Equity Shares in dematerialised form and has been allotted

ISIN INE07Y701011.

19

General Counsel, Company Secretary and Compliance Officer

Poovanna Ammatanda is the General Counsel, Company Secretary and Compliance Officer of our Company. His contact

details are as follows:



Bengaluru 560 092

Karnataka, India

Tel: +91 80 2204 1800

Statutory Auditors

B S R & Co. LLP

Embassy Golf Links Business Park

Pebble Beach, B Block, 3rd Floor

Off Intermediate Ring Road

Bengaluru 560 071

Tel: +91 80 4682 3310

Fax: +91 80 4682 3999


Firm Registration Number: 101248W/W-100022

Peer review number: 011748

Registrar and Share Transfer Agent

KFin Technologies Private Limited*

Selenium, Tower B

Plot 31-32, Gachibowli

Financial District, Nanakramguda

Serilingampally Mandal

Hyderabad 500 032

Telangana

Tel: +91 40 6716 2222

Fax: +91 40 2342 0814


Investor Grievance Email: [email protected]

Website: www.kfintech.com

Contact Person: N Shiva Kumar

SEBI Registration: INR000000221

*Formerly known as Karvy Fintech Private Limited

Legal Advisor to the Company

Cyril Amarchand Mangaldas

Prestige Falcon Tower

3rd Floor, Brunton Road

Craig Park Layout

Victoria Layout

Bengaluru 560 025

Karnataka

India

Tel: +91 80 2558 4870

20

CAPITAL STRUCTURE

Equity Share capital of our Company prior to the consummation of the Scheme is as set forth below:

Particulars Amount (in ₹)

Authorised Share Capital

250,000 Equity Shares of ₹2 each 500,000

Issued, Subscribed and Paid-up Share Capital

50,000 Equity Shares of ₹2 each fully paid up 100,000

Securities Premium Nil

Equity Share capital of our Company upon consummation of the Scheme is as set forth below:

Particulars Amount (in ₹)

Authorised Share Capital

50,000,000 Equity shares of ₹2 each 100,000,000

Issued, Subscribed and Paid-up Share Capital

42,381,675(1)(2) Equity Shares of ₹2 each fully paid up 84,763,350

Securities Premium Nil (1) Pursuant to the Scheme, 42,381,675 Equity Shares were issued and allotted to the shareholders of INABB as per the Share Entitlement Ratio as

consideration for the Demerger (2) Includes 9,266 Equity Shares issued to the APPSIL Fractional Shares Trust 2019 pursuant to consolidation of fractional entitlements as per the

terms of the Scheme

1. Changes in the Authorised Capital

Set out below are the changes in the authorised capital since the incorporation of our Company.

Effective Date Particulars

December 12, 2019* The authorised share capital of ₹500,000 divided into 250,000 Equity Shares of ₹2 each was

increased to ₹100,000,000 divided into 50,000,000 Equity Shares of ₹2 each pursuant to

Clause 20.1(a) of the Scheme * Form SH-7 was filed with the RoC on December 11, 2019.

Notes to the Capital Structure

2. Share Capital History of our Company

a. The history of the Equity Share capital of our Company is provided in the following table:

Date of Allotment No. of Equity

Shares

Allotted

Face

value

(₹)

Issue Price per

Equity Share (₹)

Nature of

Consideration

Nature of

Allotment

Cumulative

number of

Equity Shares

February 19, 2019 50,000 2 2 Cash Initial subscribers

to the MoA(1)

50,000

December 24, 2019 42,381,675 2 NA Consideration

other than Cash

Pursuant to the

Scheme(2)

42,431,675

December 24, 2019 (50,000) 2 NA NA Cancelled

pursuant to the

Scheme(3)

42,381,675

(1) Allotment of 49,994 Equity Shares to INABB (represented by its authorised representative, Tyagavalli Krishnaswam Sridhar) and one Equity Share each to Sunil Laxman Naik, Bhanutej Keshavrao Patil, Choodamani Nurani Kumar, Eluppai Asthagiri Karthikeyan,

Jayanta Kumar Chatterjee and Harshavardhan Satishrao Nalawade who held such Equity Shares as nominees on behalf INABB, who

is the beneficial owner of such Equity Shares (2) Allotment to shareholders of INABB as on the Record Date, as per the Share Entitlement Ratio, and includes 9,266 Equity Shares issued

to the APPSIL Fractional Shares Trust 2019 pursuant to consolidation of fractional entitlements as per the terms of the Scheme, which

was credited to the demat account of the APPSIL Fractional Shares Trust 2019 on February 24, 2020 (3) Pursuant to the Scheme the allotment of 50,000 Equity Shares made to the initial subscribers to the MoA was cancelled

3. Issue of Shares for consideration other than cash

a. Our Company has not issued any Equity Shares out of revaluation of reserves or unrealized profits.

b. Other than the allotment of Equity Shares pursuant to the Scheme, our Company has not issued Equity

Shares for consideration other than cash as on date of this Information Memorandum.

21

4. History of the Equity Share Capital held by our Promoter

Upon consummation of the Scheme, our Promoter, ABB Asea Brown Boveri Ltd, holds 31,786,256 Equity Shares,

equivalent to 75% of the issued, subscribed and paid-up Equity Share capital of our Company.

a. Build-up of our Promoter’s shareholding in our Company

Set forth below is the build-up of the shareholding of our Promoter since incorporation of our Company:

Date of

allotment/

Transfer

Nature of

allotment

No. of

Equity

Shares

Nature of

consideration

Face

value

per

Equity

Share

Issue

price/

Transfer

Price per

Equity

Share

Percentage

of the pre-

Scheme

capital

(%)

Percentage

of the

post-

Scheme

capital

(%)

ABB Asea Brown Boveri Ltd

December

24, 2019

Allotment

pursuant to

the Scheme

31,786,256 Consideration

other than cash

2 NA Nil 75

b. Shareholding of our Promoter and Promoter Group

Other than our Promoter, our Promoter Group members do not hold any Equity Shares.

c. Details of Lock-in

In accordance with paragraph (III)(A)(3) of Annexure 1 of the SEBI circular bearing no.

CFD/DIL3/CIR/2017/21 as amended by SEBI circular bearing no. CFD/DIL3/CIR/2018/2 dated January 3,

2018, the shareholding of our Promoter and the shareholders of our Company is exempt from lock-in, since

the shareholding of our Company post effectiveness of the Scheme is exactly similar to the shareholding

pattern of INABB i.e., the Transferor under the Scheme.

5. Employee Stock Options

As on the date of this Information Memorandum, our Company does not have any employee stock option scheme.

22

6. Shareholding Pattern of our Company

The table below presents the shareholding of our Company as on the date of this Information Memorandum:

Category

(I)

Category of

shareholder

(II)

Number of

shareholders

(III)

Number

of fully

paid up

Equity

Shares

held

(IV)

Number

of

Partly

paid-up

Equity

Shares

held

(V)

Number of

shares

underlying

Depository

Receipts

(VI)

Total

number of

shares held

(VII)

=(IV)+(V)+

(VI)

Shareholding

as a % of

total number

of shares

(calculated

as per

SCRR, 1957)

(VIII) As a

% of

(A+B+C2)

Number of Voting Rights

held in each class of

securities

(IX)

Number of

shares

Underlying

Outstanding

convertible

securities

(including

Warrants)

(X)

Shareholding

, as a %

assuming full

conversion of

convertible

securities ( as

a percentage

of diluted

share

capital)

(XI)=

(VII)+(X) As

a % of

(A+B+C2)

Number of

Locked in

shares

(XII)

Number of

Shares pledged

or otherwise

encumbered

(XIII)

Number of

Equity Shares

held in

dematerialized

form

(XIV) Number of Voting

Rights

Total

as a

% of

(A+B+

C)

Number

(a)

As a

% of

total

Shares

held

(b)

Class:

Equity

Shares

Total Number

(a) As a

% of

total

Shares

held

(b)

(A) Promoter

and

Promoter

Group

1 31,786,256 - - 31,786,256 75 31,786,256 31,786,256 75 - 31,786,256 - - - 31,786,256

(B) Public* 57,406 10,595,419 - - 10,595,419 25 10,595,419 10,595,419 25 - 10,595,419 - - - 10,271,294

(C) Non

Promoter-

Non Public

- - - - - - - - - - - - - - -

(C1) Shares

underlying

DRs

- - - - - - - - - - - - - - -

(C2) Shares held

by

Employee

Trusts

- - - - - - - - - - - - - - -

Total 57,407 42,381,675 - - 42,381,675 100 42,381,675 42,381,675 100 - 42,381,675 - - - 42,057,550

* Includes 9,266 Equity Shares issued to the APPSIL Fractional Shares Trust 2019

22

7. Details of Equity Shareholding of the major Shareholders of our Company

1. The ten largest Equity Shareholders of the Company and the number of Equity Shares held by them as on

the date of this Information Memorandum are set forth in the table below:

Sl.

No.

Name of the Shareholder No. of Equity Shares Percentage of the paid

up share capital (%)

1. ABB Asea Brown Boveri Ltd 31,786,256 75.00

2. Life Insurance Corporation of India 1,910,110 4.51

3. Reliance Capital Trustee Co Limited 1,258,467 2.97

4. SBI Large & Midcap Fund 698,148 1.65

5. ICICI Prudential Life Insurance Company

Limited 394,255 0.93

6. Aberdeen Global Indian Equity Limited 283,787 0.67

7. General Insurance Corporation of India 242,144 0.57

8. HDFC Trustee Company Limited 236,124 0.56

9. Amundi Funds SBI FM Equity India 218,324 0.52

10. Vanguard Emerging Markets Stock Index

Fund 163,478 0.39

Total 37,191,093 87.75

2. The ten largest Equity Shareholders of the Company and the number of Equity Shares held by them 10 days

prior to the date of this Information Memorandum are set forth in the table below:

Sl.

No.

Name of the Shareholder No. of Equity Shares Percentage of the paid

up share capital (%)

1. ABB Asea Brown Boveri Ltd 31,786,256 75.00

2. Life Insurance Corporation of India 1,910,110 4.51

3. Reliance Capital Trustee Co Limited 1,258,467 2.97

4. SBI Large & Midcap Fund 698,148 1.65

5. ICICI Prudential Life Insurance Company

Limited 394,255 0.93

6. Aberdeen Global Indian Equity Limited 283,787 0.67

7. General Insurance Corporation of India 242,144 0.57

8. HDFC Trustee Company Limited 236,124 0.56

9. Amundi Funds SBI FM Equity India 218,324 0.52

10. Vanguard Emerging Markets Stock Index

Fund 163,478 0.39

Total 37,191,093 87.75

8. Except for Venu Nuguri, our Managing Director, who holds Equity Shares as a trustee of the APPSIL Fractional

Shares Trust 2019, on behalf of such shareholders of INABB who are allotted fractional entitlements, none of our

Directors hold any Equity Shares in the Company.

9. As on the date of the Information Memorandum, our Company has allotted 42,381,675* Equity Shares to equity

shareholders of INABB pursuant to the Scheme approved by the NCLT under Sections 230 to 232 of the Companies

Act, 2013 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder.

*Includes 9,266 Equity Shares issued to the APPSIL Fractional Shares Trust 2019

10. As of the date of the filing of this Information Memorandum, the total number of shareholders of our Company is

57,407.

23

11. There are no outstanding warrants, options or rights to convert debentures, loans or other instruments into the Equity

Shares as on the date of this Information Memorandum.

12. At least 25% of the post-Scheme paid up share capital of our Company comprises of Equity Shares allotted to public

shareholders.

13. There shall be only one denomination of the Equity Shares, unless otherwise permitted by law. Our Company shall

comply with such disclosure and accounting norms as may be specified by SEBI from time to time.

24

SCHEME OF ARRANGEMENT

A scheme of arrangement (“Scheme”) was entered into between (i) INABB (“INABB” / “Transferor”) (a subsidiary of our

Promoter, ABB Asea Brown Boveri Ltd) and (ii) our Company (“Company” / “Transferee”) and their respective shareholders

and creditors, pursuant to the provisions of Section 230 to 232 and other applicable provisions of the Companies Act, 2013,

which provided for inter alia the Demerger of the Power Grids Business of INABB (“Demerged Undertaking”) and the

consequent issuance of Equity Shares by the Company to the shareholders of INABB as per the Share Entitlement Ratio.

The Scheme was approved by our Board pursuant to its resolution dated March 5, 2019 and the board of INABB pursuant to

its resolution dated March 5, 2019. Pursuant to an order dated June 27, 2019, passed by the NCLT, meetings of the equity

shareholders and the creditors of INABB were convened. The equity shareholders and the creditors of INABB approved the

Scheme at court convened meetings, each held on August 9, 2019. The NCLT approved the Scheme on November 27, 2019.

The Appointed Date of the Scheme is April 1, 2019 and the Effective Date is December 1, 2019.

The Scheme provided for the transfer by way of a demerger of the Demerged Undertaking and the consequent issue of Equity

Shares by the Company to the shareholders of INABB in accordance with the Share Entitlement Ratio, and various other

matters consequential or integrally connected therewith, including the re-organisation of the share capital of the Transferee,

pursuant to Sections 230 to 232 of the Companies Act, 2013, the SEBI Circulars and in compliance with the Income Tax Act,

1961.

Rationale for the Scheme

The rationale for the Scheme, inter-alia includes:

• Steps taken by INABB to realign its business to focus, simplify and lead in digital industries for enhanced customer value

and shareholders returns, including the separation of INABB’s portfolio of digital industries from its traditional, long

gestation, projects led, business of power grids, by transfer of the Power Grids Business to the Company.

• The simplification of INABB’s business model and structure with the implementation of the new organization is expected

to provide each business with full operational ownership of products, functions, R&D and territories. These actions are

likely to position INABB with a leadership role in digital solutions, and evolving technologies such as artificial intelligence

in India, while allowing our Company to independently focus on a likely leadership position in the Power Grids Business

with its unique and established market dynamics.

• With continuous advances in technology driving an unprecedented rate of development, the Transferor’s customers’

businesses in the country are being profoundly impacted. Indian customers are looking for more complete solutions,

combining the right products with leading engineering expertise and domain capability.

• The new structure with a demerged self-contained Power Grids Business is likely to help deliberate refocusing onto

industrial customers. Focus on digital industries in an era of energy and fourth industrial revolution, needs to be

distinguished from the slower cycle, government influenced, financing support enabled large projects of Power Grids

Business.

• The proposed Demerger is expected to assist the Power Grids Business to independently pursue the business excellence

built over a long period in the power infrastructure with its robust and time tested business model.

• The Demerger and consequent issue of Equity Shares by the Company are proposed to allow shareholders of INABB and

the Company to invest in the distinct key businesses and allow shareholders of both companies to unlock the value of their

investments.

25

Salient Features of the Scheme

Transfer and vesting of the Demerged Undertaking

The Appointed Date of the Scheme is April 1, 2019 and the Effective Date is December 1, 2019. With effect from the Appointed

Date, the Demerged Undertaking stood demerged from the Transferor and transferred to, and vested in or be deemed to be

transferred to, and vested in the Transferee as a going concern, in accordance with the provisions of the Income Tax Act, 1961,

Section 230 to 232 of the Companies Act, 2013 and other applicable law.

Upon the coming into effect of the Scheme, all immoveable properties of the Transferor and all the rights, title, interest and

claims of the Transferor in any immoveable properties including any leasehold/ leave and license/ right of way properties of

the Transferor forming part of the Demerged Undertaking, without any further act or deed, stood transferred to and vested in

or deemed to have been transferred to or vested in the Transferee.

All assets, estate, rights, title, interest and authorities acquired by the Transferor on or after the Appointed Date and prior to

the Effective Date forming part of the Demerged Undertaking stood transferred to and vested or be deemed to have been

transferred to or vested in the Transferee upon the coming into effect of the Scheme, without any further act, instrument or

deed.

Upon coming into effect of the Scheme and with effect from the Appointed Date, all Demerged Liabilities (i.e., all liabilities

which relate exclusively or predominantly out of the activities or operations of the Power Grids Business, liabilities under tax

laws which arise exclusively or predominately out of the activities or operation of the Power Grids Business on or after the

Appointed Date, the specific loans or borrowings (including debentures, if any), raised, incurred and utilized solely for the

Power Grids Business), whether or not provided in the books of the Transferor stood transferred to the Transferee to the extent

that they are outstanding as on the Effective Date.

All the Demerged Liabilities and obligations incurred by the Transferor for the operation of the Demerged Undertaking on or

after the Appointed Date and prior to the Effective Date shall be deemed to have been incurred for and on behalf of the

Transferee and to the extent any Demerged Liabilities were outstanding on the Effective Date, they also stood transferred to

the Transferee and became the liabilities and obligations of the Transferee.

On the Scheme becoming effective, all employees of the Transferor who are either primarily engaged in the Power Grids

Business or jointly identified by the Board and the board of the Transferor as being necessary for the proper function of the

Power Grids Business, including its future development, and who are in service of the Transferor on the date immediately

preceding the Effective Date were deemed to have become the employees of the Transferee with effect from the Appointed

Date.

Upon the coming into effect of the Scheme, any suit, appeal, legal or other proceeding of whatever nature, whether criminal

or civil, including before any statutory of quasi-judicial authority or tribunal, under any applicable law, by or against the

Transferor in relation to the Demerged Undertaking is pending on the Effective Date or is instituted any time thereafter, the

same shall be continued, prosecuted and enforced by or against the Transferee, as the case may be, after the Effective Date, in

the same manner and to the same extent as it would have been continued, prosecuted and enforced by or against the Transferor

in relation to the Demerged Undertaking as if the Scheme had not been made.

Any suit, appeal, legal or other proceeding, whether criminal or civil, including before any statutory of quasi-judicial authority

or tribunal under any tax law relating to the Demerged Undertaking and pertaining to the period prior to the Appointed Date,

shall be continued, prosecuted and enforced by or against the Transferor. Any such proceeding in relation to the Demerged

Undertaking and pertaining to the period on or after the Appointed shall be continued, prosecuted and enforced by or against

the Transferee, as the case may be, after the Effective Date, in the same manner and to the same extent as it would have been

continued, prosecuted and enforced by or against the Transferor in relation to the Demerged Undertaking as if the Scheme had

not been made.

26

Upon coming into effect of the Scheme and subject to the provisions of the Scheme, all contracts, deeds, bonds, schemes,

insurance, letters of intent, undertakings, arrangements, policies, agreements and other insurances forming part of the

Demerged Undertaking to which the Transferor was a party or to the benefit of which the Transferor was eligible and which

was subsisting or having effect on the Effective Date, shall continue against or in favour of the Transferee, as the case may be.

Upon effectiveness of the Scheme, the Transferor shall be liable for any tax payable to appropriate authorities under applicable

laws relating to tax and shall be entitled to any refunds of tax for appropriate authorities under tax laws, which, in each case,

arise from the operation or activities of the Demerged Undertaking prior to the Appointed Date and Transferee shall be liable

for any tax payable to appropriate authorities under applicable laws relating to tax and shall be entitled to any refunds of tax

for appropriate authorities under tax laws, which, in each case, arise from the operation or activities of the Demerged

Undertaking, on or after the Appointed Date.

Consideration

Upon the Scheme becoming effective and in consideration of vesting of the Demerged Undertaking from the Transferor to the

Transferee, the Transferee has issued and allotted one fully paid Equity Share of ₹2 each of the Transferee for every five fully

paid up equity shares of ₹2 each held in the Transferor (“Share Entitlement Ratio”) to the shareholders of the Transferor,

holding fully paid up equity shares in the Transferor as on the Record Date.

Further, the Scheme provides for treatment of any fractional shares allotted to the shareholders of the Transferor by the

Transferee as consideration for the demerger of the Demerged Undertaking. The Scheme states that if the allotment of shares

by the Transferee results in any shareholders being issued fractional shares, the Transferee may decide to consolidate all such

fractional entitlements and thereupon allot equity shares in lieu thereof to a trustee who should hold the shares in trust on behalf

of such shareholders who are allotted fractional entitlements. Further, the Scheme also provides that the trustee so appointed

should sell the shares on the stock exchanges at such time and price as it deems fit and distribute the net proceeds (subject to

tax deductions and other expenses, as applicable) to the shareholders of the Transferor in proportion of their respective

fractional entitlements. Accordingly, the Company has approved the allotment of 9,266 Equity Shares to the APPSIL Fractional

Shares Trust 2019 pursuant to consolidation of fractional entitlements as per the terms of the Scheme.

Cancellation of share capital

Pursuant to the provisions of Sections 230 to 232 of the Companies Act, 2013, the shareholding of the Transferor in the

Transferee has been cancelled without any further act, instrument or deed, immediately following the issuance of the Equity

Shares in accordance with the Scheme.

Approvals for the Scheme

The NCLT, Bengaluru Bench vide its order delivered on November 27, 2019 has approved the Scheme of Arrangement.

Corporate Approvals

The proposed Scheme was placed before the audit committee of INABB at its meeting held on March 5, 2019. The share

entitlement ratio reports issued by S R B C & Co. LLP and B.B. & Associates, Chartered Accountants dated March 5, 2019

and March 4, 2019, respectively, were tabled before the chairman of the audit committee (“Valuation Reports”). Further, the

fairness report dated March 5, 2019 issued by ICICI Securities Limited and auditors’ certificate dated March 5, 2019 issued

by B S R & Co. LLP were placed before the chairman of the audit committee. A draft of the report of the audit committee of

INABB was approved by the audit committee, which authorised the chairman to submit the signed report to the board of

directors of INABB.

The board of directors of INABB, at its meeting held on March 5, 2019, took into account the report submitted by the audit

committee recommending the draft Scheme between the Transferor, Transferee and their respective shareholders and creditors,

the Valuation Reports and their recommendation of the share entitlement ratio i.e., one equity share of face value and paid up

value of ₹2 each of the Transferee credited as fully paid up, be allotted for every five equity shares of the Transferor, pursuant

27

to the Scheme, the fairness opinion dated March 5, 2019 prepared by ICICI Securities Limited and the auditors’ certificates

dated March 5, 2019 issued by B S R & Co. LLP issued pursuant to the SEBI Circulars, and unanimously approved the Scheme

and the share entitlement ratio.

The Board of the Transferee, at its meeting held on March 5, 2019, took note of the draft Scheme, Valuation Reports with the

share entitlement ratio report, and approved the report prepared under Section 232 of the Companies Act, 2013 explaining the

effect of the draft Scheme on each class of shareholders, key managerial personnel, promoter and non-promoter shareholders,

with particulars of the share entitlement ratio.

The shareholders of the Transferor (including the public shareholders of the Transferor), at their meeting held on August 9,

2019, approved the Scheme with the requisite majority prescribed under the Companies Act, 2013 and the SEBI circulars. The

creditors of the Transferor, at their meeting held on August 9, 2019, approved the Scheme with the requisite majority prescribed

under the Companies Act, 2013 and the SEBI circulars.

Other Approvals in relation to the Scheme

In compliance with the observations of the CCI, the Transferor and Transferee have executed necessary affidavit undertakings

confirming that the Transferor Company and the Transferee Company are not obligated to notify the Scheme to the CCI for

the reason that the Scheme envisages an intra-group reorganisation that would be exempt under item 8, Schedule I of the CCI

(Procedure in regard to the transaction of business relating to combination) Regulations, 2011.

BSE has been appointed as the Designated Stock Exchange by INABB, for the purpose of coordinating with the SEBI. INABB,

pursuant to a letter dated March 11, 2019, submitted an application with a copy of the Scheme, seeking the no objection from

the Stock Exchanges on the proposed Scheme between the Transferor and Transferee. INABB has received a no-objection

letter regarding the Scheme from BSE on May 28, 2019 and from NSE on May 28, 2019.

The Transferor and the Transferee had applied to the NCLT under the provisions of Sections 230 to 232 of the Companies Act,

2013 for approval of the Scheme and the NCLT vide its order delivered on November 27, 2019, approved the Scheme, subject

to compliance with the following:

a) The Transferor and Transferee have to compound offences, as per Section 188 of the Companies Act, 2013, as may be

applicable.*

b) The Transferor and Transferee have to comply with the no objection certificates from BSE and NSE in terms of the Listing

Regulations, and any other stipulations therein.

c) The Transferor and Transferee have to comply with all the regulations of RBI, FEMA and SEBI, as may be applicable.

d) The Transferor and Transferee have to comply with the final orders of the Enforcement Directorate, Services Tax

Intelligence and Commissioner of CGST (Appeals) and CCI, in the respective matters, which are pending adjudication.

*There are no proceedings in respect of which compounding is required.

28

STATEMENT OF TAX BENEFITS

STATEMENT OF TAX BENEFITS AVAILABLE TO ABB POWER PRODUCTS AND SYSTEMS INDIA LIMITED

AND ITS SHAREHOLDERS UNDER THE APPLICABLE LAWS IN INDIA

To

The Board of Directors

ABB POWER PRODUCTS AND SYSTEMS INDIA LIMITED

8th Floor, Brigade Opus, 70/401, Kodigehalli Main Road,

Bengaluru 560 092

Subject: Statement of special tax benefits (“the Statement”) available to ABB Power Products and Systems India Limited

(“the Company”) and its shareholders prepared in accordance with the requirement in Paragraph 9(L) of Part A of Schedule

VI of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended

(“the Regulations”)

We, hereby report that there are no special tax benefits available to the Company and the shareholders of the Company, under

the Income Tax Act 1961, as amended (the “Act”) by the Finance Act, 2019 i.e. applicable for financial year 2019-20, relevant

to the assessment year 2020-2021 presently in force in India as on the date of this certificate.

We were informed that this statement is only intended to provide general information to the investors and is neither designed

nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the

changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications

arising out of their participation in the offer for sale particularly in view of the fact that certain recently enacted legislation may

not have a direct legal precedent or may have a different interpretation on the possible special tax benefits, which an investor

can avail. Neither we are suggesting nor advising the investors to invest money based on the Statement.

Our views expressed herein are based on the facts and assumptions indicated to us. No assurance is given that the revenue

authorities/ courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its

interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent

to such changes. We shall not be liable to the Company for any claims, liabilities or expenses relating to this assignment except

to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or

intentional misconduct. We will not be liable to any other person in respect of this statement.

We hereby consent to the extracts of this certificate being used in the Draft Red Herring Prospectus, Red Herring Prospectus

and Prospectus of the Company in connection with the Offer and the submission of this certificate to the Securities and

Exchange Board of India, the stock exchanges where the Equity Shares of the Company are proposed to be listed, the relevant

Registrar of Companies in India.

29

For M K TYAGI & CO.,

Chartered Accountants

Firm Reg No. 009124S

Mukesh Kumar Tyagi

Partner

Membership No. 075169

UDIN: 20075169AAAAAS4417

Place: Bengaluru

Date : 18th March 2020

30

SECTION IV: ABOUT OUR COMPANY

OUR BUSINESS

Some of the information in the following discussion, including information with respect to our plans and strategies, contain

forward-looking statements that involve risks and uncertainties. You should read the section “Forward-Looking

Statements” on page 5 for a discussion of the risks and uncertainties related to those statements. Our actual results may

differ materially from those expressed in or implied by these forward-looking statements. This section should be read in

conjunction with the section “Risk Factors” on page 6.

In this section “the Company”, “our Company”, “we”, “us” and “our” refers to ABB Power Products and Systems India

Limited.

Please note that our Company has been newly incorporated and has commenced business operations from the date of

effectiveness of the Scheme. The business operations of our Company comprise of the Power Grids Business, which was

transferred to our Company pursuant to the Scheme. While the following section includes material risks in relation to the

business operations of our Company, post effectiveness of the Scheme, for complete details in relation to the Power Grids

Business, including the historical performance, previous milestones and risk factors, the disclosures in the section below

should be read with the information available on the websites of the Stock Exchanges, and financial statements, investor

presentations and corporate disclosures issued by INABB, which are available on www.abb.co.in.

Overview

We are amongst the global leaders in power technologies and aspire to be the partner of choice for enabling a stronger,

smarter and greener grid. Formed pursuant to the Demerger of the Power Grid Business of INABB, our Company is young

but backed with a significant sectoral experience of over 50 years. With five manufacturing facilities spread across Gujarat

and Karnataka, 17 sales offices and established customer relationships, we are poised to innovate and create value in the

power technologies space.

Our Power Grids Business presently consists of four business lines, namely, (i) grid automation, (ii) grid integration, (iii)

high voltage products, and (iv) transformers. We provide product, system, software and service solutions across the power

value chain that are designed to meet the growing demand for electricity with minimum environmental impact. Our

portfolio includes a complete range of high-voltage products, transformers, grid automation products, HVDC and power

quality products and systems. These solutions support utility, industry and transport and infrastructure customers to plan,

build, operate and maintain their power infrastructure. They are designed to facilitate safe, reliable and efficient integration,

transmission and distribution of bulk and distributed energy generated from conventional and renewable sources.

The history of the ABB group dates back to the late 19th century and has a long standing record of innovation and

technological leadership in many industries. The ABB group has been one of the pioneers in technological developments

and has had a continuous focus on introducing new technologies to India. The history of the ABB group’s power grids

business dates back to over 130 years ago when the ABB group installed the world’s first three-phase transmission system

in Sweden, in 1893. This has been followed by several significant milestones in relation to our Power Grids Business.

We also have a deep rooted presence in India since 1949. INABB, the ABB group’s flagship company in India was

incorporated in 1949 as the Hindustan Electric Company Limited. The company’s name was changed to Hindustan Brown

Boveri Limited in 1965. After the merger of Asea Limited with Hindustan Brown Boveri Limited, the company’s name

was changed to Asea Brown Boveri Ltd in 1989. The name of the company was changed to ABB Ltd with effect from

April 16, 2003, and subsequently to ABB India Limited in 2013. The Power Grids Business of INABB was transferred to

our Company pursuant to the Scheme.

Our first manufacturing plant in India was set up at Maneja, Gujarat in 1965 and was initially set up as a circuit breaking

manufacturing facility. We have over the years expanded the facility and invested in setting up manufacturing units for

traction transformers, power transformers till 765 kV, dry type transformers, high voltage circuit breakers till 765kV, hybrid

switchgear and gas insulated switchgear. We began manufacturing at Peenya, Bangalore in 1984 with a production line of

capacitors and subsequently set up a state-of-the-art factory for intelligent electronic devices, capacitors (high and low

voltage). Our manufacturing plant at Peenya hosts (a) a global feeder factory supplying relays to global market, and Indian

market (b) a utility communication business supplying mission critical communication equipment to T&D, industry and

transport customers; and (c) a software intensive solutions for T&D network control and asset management for utilities and

industry. Karnataka is presently our hub for our turnkey business. The facilities are compliant with global manufacturing

standards. Our well-established manufacturing facilities support our ability to cater to our customers. Our major customers

31

include central and state utilities, private utilities and transmission line operators, industries across various segments, rail

and metro operators/OEMs.

The ABB group implemented the first HVDC transmission technology in India 30 years ago and has since delivered some

of India’s most prestigious HVDC links. The most recent project is the Raigarh - Pugalur two-way UHVDC link, which

will enable the balancing of renewable and conventional electricity supply over long distances. The link will have the

capacity to transmit enough electricity to serve around 80 million people. A significant part of equipment and execution of

the Raigarh - Pugalur project are being delivered from India. Another notable link is the North-East Agra UHVDC link

which is the world’s first multi-terminal UHVDC transmission link - one of the most powerful HVDC transmission systems

ever built. Other links in India that the ABB group has delivered include the Vindhyachal project (commissioned in 1989

and was the first back-to-back HVDC station in India) Vizag II, Rihand – Delhi and Chandrapur – Padghe links.

The management of our Company has been associated with the Power Girds Business of INABB, before the Demerger and

brings with them the depth of experience in the business of our Company. Frank Duggan, our Chairman has been the

president of the Europe region of ABB Ltd since 2017 and has also been the chairman of INABB who has closely been

associated with the Power Grids Business. Venu Nuguri, our Managing Director, was the president of the power systems

division of INABB and is also a part of ABB group’s global power systems leadership team. Further, pursuant to the

effectiveness of the Scheme, our employee base comprises of a total of 2,244 employees, as on December 31, 2019, who

have previously been associated with INABB. We believe that our stable, senior management team will help us in

successfully implementing our development and operating strategies over the years. Owing to the understanding of the

industry trends, demands and market changes of our senior management team, we believe that we will be able to adapt and

diversify our operating capabilities and take advantage of market opportunities over the period.

Our Strengths

A deep presence in evolving markets

The power grids markets are driven by increasing adoption of renewable energy, rising demand in emerging countries with

minimum environmental impact, the expansion of distributed power sources such as electric vehicles and storage batteries,

deregulation of the electric power sector in countries and regions, and advances in electric power system reform.

Digitalization in power assets, systems and processes is creating the environment of energy internet with real-time

integrated grid control system and asset performance management with predictive maintenance technologies. Our

Company is continuously developing new features, products and solutions based on core power technologies

complemented by automation and digitalization.

As per the National Electricity Plan II, 2019 issued by Ministry of Power, Government of India (“Electricity Plan”),

installed generation capacity in India will increase from around 350 GW currently to 484 GW at the end of 2021-2022. A

peak demand is expected to grow till the end of Fiscal 2022. The Electricity Plan mentions gas insulated switch gear, hybrid

switch gear, digital substations and reactive power compensation to be one of the technologies of choice to ensure smooth

and trouble-free operation of power systems. The growth in demand and addition of grid connected solar power is expected

lead to investment in associated transmission equipment.

The Company has a deep-rooted presence in the power grids business, operating with five world-class factories in five

manufacturing locations across Gujarat and Karnataka, with local research and development resources empowering the

business to cater to evolving market needs. Our presence in the power grids sector is derived from the ABB group which

has continuously innovated and developed power technologies over the last 130 years and has a proven track record with

worldwide installed base, coupled with lifecycle support services and domain expertise backed by skilled and experienced

workforce.

Our Power Grids Business has been at the forefront in the evolving power grids market since 1989 when we developed the

first back-to-back high voltage direct current transmission link. Since then, our Power Grids Business has been the first in

many trajectories. For instance, in 2017, we commissioned the world’s first multi-terminal UHVDC link i.e., a 6,000 MW

800 kV DC link for central utility. Further, in 2017, we launched the first digital substation for reliable, round the clock

power for India’s largest information technology park.

Long standing presence of the Power Grids Business

INABB’s first manufacturing plant in India was set up at Maneja, Vadodara. It was inaugurated in 1965 and was initially

a circuit breaking manufacturing facility. Over the course of the next six decades, INABB invested in setting up of

32

manufacturing units for traction transformer, power transformers till 765kV, dry type transformers, high voltage circuit

breakers till 765kV, hybrid switchgear and gas insulated switchgear at Maneja and Savli, to become the largest

manufacturing location. INABB started manufacturing at Peenya, Bangalore in 1984 with production line of capacitors

and subsequently, and with further investments in state-of-the-art factory for intelligent electronic devices, capacitors (high

and low voltage). Karnataka is presently our hub for our turnkey business. Our Power Grids Business is one of the leading

players in the power technologies space in India. Since incorporation, we have made notable contributions to the power

sector.

Our long-standing presence in the power sector helps us in identifying trends in the industry at an early stage, thereby

helping us to make the necessary adjustments across our value chain. Over the years, we have come across various issues

related to our products and solutions and have improved them. Our products and solution have a long field record in India

and across the world which also helps us in designing our future products and solutions. Our product design criteria and

expectation of high level of quality from our suppliers, has led us to develop world class suppliers who cater standardized

parts which are used across countries in various ABB PG factories. These suppliers are based in India and around the world.

We take price advantage of the total volume of all ABB factories and negotiate for all the factories across the world by

having short term and long-term contract with the suppliers. This provides us the necessary economies of scale and

efficiencies in our supply chain management.

Access to strong human resources, technical skills and technology

Our Board consists of Directors with a diverse mix of experience in various sectors, particularly in the power grids and

technology sector. Our Managing Director, Venu Nuguri, was the senior group vice president of the power grids business

– South Asia, Middle East and Africa. He was the president of the power systems ABB India and was also a part of the

global power systems leadership team. Our Chairman and Non-Executive Director, Frank Duggan has had a long standing

association with the ABB group since 1984 and has held various positions in various ABB businesses in Europe, Asia and

the Gulf. He is the president of Europe region of ABB Ltd since 2017 and is the chairman of the board of INABB. The

leadership team of our Power Grids business has an average experience of 25 years and the members of our management

team have held several leadership role in the ABB group. Further, the members of the leadership team have also played

active role in industry bodies such as Indian Electrical and Electronics Manufacturers Association and India Smart Grid

Forum.

As of December 31, 2019, our employee base comprises of 2,244 employees. We believe that people are the key pillar of

our Company and the success of the Power Grids Business in the market. Our Company invests in training, upskilling and

new technology for its employees, and has in place various management training programs tailored for different

management segments. These programs have been instrumental in setting up of new manufacturing units, penetrating and

expanding the market presence and in introducing key technologies.

Our Strategies

Focus on solutions for technology disruptions in the sector

The market in which the Company operates, is undergoing unprecedented transformation, both in terms of supply and

demand due to exponential rise of renewable energy sources, rapid increase in distributed power generation, increasing number

of interconnections, changing consumption patterns (e.g. emergence of prosumers), increasing digitalization of the grid, real-time

monitoring and control – asset-management focus, new demand loads (e.g. electrical vehicles, data centres).

Our Company is continuously working on technologies that can make our power grids stronger, smarter and greener. We have

developed eco efficient gas insulated switchgear and circuit breakers. In e-mobility space, we have developed TOSA which is a

flash-charging solution at selected bus stops, which provides a short high-power boost charge while passengers are getting on and

off the bus. We intend to continue to innovate to stay ahead of technology disruptions in the sector.

The ABB group’s wide geographical presence across various countries, help us to understand upcoming trends in the industry

better. Some trends first appear in developed economies before transcending to emerging markets. Our diversified presence helps

us to identify the needs and requirement of different geographies and take it in consideration during the development of the

relevant products and solutions. We believe that this early identification of the upcoming trends coupled with our investments in

R&D ensures that we are one of the front runners whenever there is a disruption in the sector.

Continued leverage of solid base in research and development and engineering

33

Our continued focus on R&D positions us well to deliver value to our customers even in such times of transformation. Our

R&D engineers and scientists strive to develop breakthrough technologies that change the way the power is generated,

transmitted, accessed and consumed.

We focus on short-term evolutionary innovations to existing products and services as well as long-term innovations crucial

to maintaining and strengthening our position as a leader in innovation as well as supporting future growth. To ensure we

are flexible and results-driven, our global research centres and our business units are integrated with leading universities

around the world, in India and our other external partners in a networked environment.

We believe that development of new products, features, localized products and solutions secures as well as creates

additional revenues with increased number of customer engagements and installed bases. R&D in application of alternative

material, design optimization, engineering tools, manufacturing technologies, quality improvement techniques/tools and

value engineering help us in securing and improving profitability.

Our Company participates in various R&D related activities in association with industry bodies, professional technical

groups, forums and policy makers, and our Power Grids Business and R&D have received awards and recognitions in terms

of application of innovation, technical publications and presentations.

In India, our R&D activities pertaining to the Power Grids Business are carried out in the global R&D and technology

centres as well as R&D embedded in the local businesses. We believe that R&D leverages our presence, and competencies

of global centres in India to develop and adapt evolving and new technologies for Indian market and business.

Participation in nation building programs for grid reliability

Energy is a key enabler to growth – economic or social. With millions of Indians lacking access to continuous reliable

power, the progress of the nation will be predicated on delivering clean, sustainable and quality power to all. The integration

of distributed power sources from remote geographies, balancing of intermittent renewable energy and transmission of

such power with minimal losses will culminate to grid reliability. The technologies that enable this form the core of our

business.

We are in regular interaction with government utilities and policy bodies, industrial forums such as IEEMA, CII, FICCI

and technological forums like CIGRE, to introduce products and solution and to shape policy towards a stronger, smarter

and greener grid. We have entered into a memorandum of understanding with a leading academic institute to setup an

operational smart electricity distribution network and management system in its campus which is aimed to serve as a pilot

project for the smart cities mission of Government of India.

Description of our business

Products and Services

The Power Grids Business comprises of four business lines which offer the following products and services:

A. Grid Automation

Grid automation is a smart power transmission and distribution solution and is a key contributor and prerequisite to

building smart grids. Power transmission and distribution operators are faced with ever-increasing efficiency and

supply quality requirements. Grid automation provides scalable solutions from basic monitoring to advanced

protection and control functionality, and are available to both new and existing installations that meet the demands

from all types of power systems including communication, substations, SCADA, network management and control,

enterprise software and microgrids.

B. Grid Integration

As an intermittent, widely dispersed source of energy, solar power presents a challenge to power grids. It demands

sophisticated solutions to balance supply and demand and avoid stress on the grid. Our Company has the advanced

technologies including substation equipment, transformers, control & protection panels, substation automation, power

quality equipment needed for successful grid integration & improving power quality both at the connection point and

at the delivery point with our smart grid solutions for forecasting, controlling, load and demand planning, and energy

storage.

34

The ABB group received the contract for the first HVDC transmission technology in India over 30 years ago and has

since delivered some of India’s key HVDC links. The most recent project is the Raigarh - Pugalur two-way UHVDC

link for transmitting 6000 MW of power, which is aimed to enable the balancing of renewable and conventional

electricity supply over long distances. Another notable link of the ABB group is the North-East Agra UHVDC link

which is multi-terminal UHVDC transmission link for transmitting 6000 MW of power, which is also one of the most

powerful HVDC transmission systems ever built. Other links in India that the ABB group has delivered include the

Vindhyachal, Rihand -Dadri , Chandrapur - Padge and Vizag HVDC projects.

C. High Voltage Products

Our Company offers a comprehensive range of high-voltage products up to 1200 kilovolts AC and 1100 kilovolts DC

that help enhance the safety, quality, reliability and efficiency of power networks while minimizing environmental

impact. Our technology leadership continues to facilitate developments in areas such as ultra-high-voltage power

transmission, enabling smart grids and enhancing eco-efficiency. With a large network of factories and service centres

across the world offering life-cycle support ABB group remains a technology leader in the market of high-voltage

products.

D. Transformers

Our Company offers a complete range of power and distribution transformers designed to grant the reliability,

durability, and efficiency required in utility, industrial, and commercial applications. ABB is a major transformer

manufacturer throughout the world and offers both liquid-filled and dry-type transformers as well as services for

complete life-cycle support, including replacement parts and components. Our portfolio allows utilities and industrials

to maximize the return on transformer assets by ensuring a high reliability, reducing life cycle costs and ensuring

optimized performance while lowering environmental impact.

Quality Control and Quality Assurance

Our Company is ISO9001 – 2015 certified and has an established quality management services with a clear quality policy

objective for focus on customers, factory processes and suppliers. Regular TLC audits carried out by the product technology

lead centres for control and improvement on process and product manufacturing and regular quality audits are carried out

to improve the quality processes/ activities across the value chain.

Our Company has set-up a supplier quality assurance function, followed by regular supplier audits to monitor and improve

supplier performance on quality, delivery and sustainability, actions also started for implementation of statistical process

control across suppliers for improving the incoming component quality. We also have set-up incoming inspection with

modern measuring instruments including helium leak testing M/c, 3D CMM to ensure incoming component quality and

well set-up in-process quality, pictorial WI, skill matrix for flawless production of the products.

We maintain state-of-the-art test facilities and NABL accredited high voltage, mechanical endurance labs for testing the

manufactured products to ensure long lasting site performance of the Products.

Our technology centre comprising of 80 engineers focuses on continuous product innovation and optimisation/

improvements using various sate of art technical software. Further, the availability of world class power TEC training

centre to give customers hands on training in handling our Company’s products to facilitate proper and leading to further

improvement in life cycle of the product.

Sales and Services

Our Company have established network of sales offices and experienced sales and services personnel located close to our

customers. Our Company has 17 sales offices spread across the country.

Competition

We face competition across our product and service portfolio, specifically in certain segments in which we operate such as

our transformer business, our high voltage products business and our grid automation business. We face competition from

multinational companies and home-grown players in the power segment. In our grid integration business, we face

35

competition from EPC companies. As a result of competition, we may face price erosion which can lead to margin dilution

in specific contracts.

We compete with large multinational power companies. Some of our competitors are larger than us and have greater

financial, manufacturing, R&D and other resources. Consequently, our competitors may possess more extensive product

ranges, larger workforce, greater intellectual property resources and broader appeal across various divisions.

Information Technology

Our Company has a defined strategy on use of information technology to support its business operations. The use of

information technology can be classified into the following segments: (a) business application platforms covering ERP

platform, non-ERP platform, workflow and archiving; and (b) business process automation including robotic process

automation and desktop automation.

These segments in the life cycle would have the following elements covered in the scope of information technology service

support: (a) environments and components including, application server management, application common components,

and application platforms as service; (b) development frameworks including, general purpose framework, web framework,

mobile framework, virtual and augmented reality; (c) build and developments including, source control and collaboration,

continuous integration and delivery; and (d) quality which covers areas of automated functional testing to enhance the

ability to deploy solutions faster, security testing to ensure that all solutions deployed are compliant, performance and API

testing to assure solutions are performance efficient and code quality support tools to perform technical code reviews.

Intellectual Property

The ‘ABB’ brand name and logo are registered trademarks, owned by ABB Asea Brown Boveri Ltd, which is the true and

rightful owner of the ABB trademark. The ‘ABB’ trademark is registered under various classes under the Trade Marks

Act, 1999. Pursuant to a letter dated January 18, 2019, ABB Asea Brown Boveri Ltd granted our Company its no-objection

to use the trademark ‘ABB’.

Insurance

We maintain insurance policies to insure our property and such policies include all risk insurance covering material

damage, breakdown and business interruption, commercial general liability insurance, erection all risk insurance for project

sites, marine cargo (transit) insurance, directors and officers liability insurance, group personal accident, group term life,

group mediclaim policies, employee compensation. For further details, see “Risk Factors - Our insurance coverage may

not be sufficient or may not adequately protect us against all material hazards, which may adversely affect our business,

results of operations and financial condition.” on page 10.

Employees

As of December 31, 2019, we employed a total of 2,244 employees comprising of management staff and non-management

staff.

Properties

Our Registered Office is situated at 8th Floor, Brigade Opus, 70/401, Kodigehalli Main Road, Bengaluru 560 092,

Karnataka, India, and located on leased premises.

As of the date of this Information Memorandum, we have 17 offices, including our Registered Offices, spread across

various cities in India, including Ahmedabad, Chennai, Chandigarh, Bengaluru, Bhubaneswar, Mumbai, Hyderabad,

Faridabad, Lucknow and Kolkata. Some of our offices are located on leased premises.

We have six manufacturing plants, out of which our plants in Savli, Halol, Mysore, Maneja and Peenya are located on

owned premises, and our LV capacitor in Peenya, Bengaluru is located on a leased premise.

Corporate and Social Responsibility

Our corporate and social responsibility (“CSR”) is committed towards sustainable and inclusive development of the

community’s social capital through active engagement. Our Company has recently constituted the CSR Committee and

36

will undertake welfare activities as may be decided by the members of the Committee appropriately in accordance with

applicable law.

37

HISTORY AND CERTAIN CORPORATE MATTERS

Brief history

Our Company was incorporated on February 19, 2019 at Bengaluru as a public limited company under the Companies Act,

2013, and was granted the certificate of incorporation by the RoC.

Changes in Registered Office

Except as disclosed below, there has been no change in the Registered Office of our Company since its incorporation:

Date of change Details of change in the Registered Office Reason for change

March 16, 2020 From 21st Floor, World Trade Center, Brigade Gateway, No. 26/1, Dr.

Rajkumar Road, Malleshwaram, West, Bengaluru 560 055, Karnataka,

India to 8th Floor, Brigade Opus, 70/401, Kodigehalli Main Road,

Bengaluru 560 092, Karnataka, India

Administrative convenience

Our Main Objects

The main objects for which our Company has been established and as contained in the Memorandum of Association are

set out hereunder:

“To carry on the business of inventor, developer, manufacturer, buyer, seller, trader, service provider, repairer, dealer,

exchanger, exporter, importer, consultant, e-commerce activities or otherwise deal in all kinds of low, medium, high

voltage products including electric vehicle charging infrastructure, high voltage DC (HVDC) equipment and systems,

Microgrids, solar inverters, modular substations, distribution automation, power protection, wiring accessories,

switchgear, enclosures, cabling, sensing and control, motors, generators, drives, mechanical power transmission,

industrial robots, wind and traction converters, design to optimize the productivity of industrial processes, solutions

include turnkey engineering, control systems, measurement products, life cycle services, outsourced maintenance and

industry specific products like electric propulsion for ships, mine hoists, turbochargers and pulp testing equipment etc; all

power and automation products, systems, batteries, transformers service and software solutions across the generation,

transmission and distribution, grid integration, transmission, distribution and automation solutions, renewable energy,

digitalization solutions for power, industry and infrastructure segments and to carry out all activities in relation to business

of power and automation generally whether or not expressly provided under the MoA.”

Amendments to our Memorandum of Association

Effective Date Particulars

December 12, 2019* The authorised share capital of ₹500,000 divided into 250,000 Equity Shares of ₹2 each was

increased to ₹100,000,000 divided into 50,000,000 Equity Shares of ₹2 each pursuant to Clause

20.1(a) of the Scheme * Form SH-7 was filed with the RoC on December 11, 2019

Major events and milestones of our Company

The table below sets forth some of the key events in the history of our Company:

Calendar year Event

2019 • Transfer of the Power Grids Business pursuant to the Scheme

Time and cost over-runs

As of the date of this Information Memorandum, there have been no time and cost over-runs in the setting up of any of the

establishments of our Company or in respect of our business operations.

Defaults or re-scheduling of borrowings

As of the date of this Information Memorandum, there have been no defaults or re-scheduling/ re-structuring in relation to

borrowings availed by our Company from any financial institutions or banks.

38

Significant financial and strategic partners

As of the date of this Information Memorandum, our Company does not have any significant financial or strategic partners.

Launch of key products or services

For details of key products or services launched by our Company, see “Our Business” on page 30.

Changes in the activities of our Company during the preceding five years

There have been no changes in the activities of our Company since date of its incorporation.

Subsidiaries

As of the date of this Information Memorandum, our Company does not have any subsidiaries.

Holding company

Prior to the effectiveness of the Scheme, our Company was a wholly owned subsidiary of INABB. Post the effectiveness

of the Scheme and upon allotment of Equity Shares, our holding company is ABB Asea Brown Boveri Ltd.

Material Agreements

As of the date of this Information Memorandum, there are no subsisting shareholders’ agreements.

As of the date of this Information Memorandum, there are no agreements entered into by a Key Managerial Personnel or

Promoter or any other employee of our Company, either by themselves or on behalf of any other person, with any

shareholder or any other third party with regard to compensation or profit sharing in connection with dealings in the

securities of our Company.

Details regarding material acquisitions or divestments of business/ undertakings, mergers, amalgamations or any

revaluation of assets, in the last ten years

Other than as disclosed in “Scheme of Arrangement” on page 24, our Company has not acquired any business or undertaking

and has not undertaken any merger, amalgamation or revaluation of assets.

However, ABB Ltd (the holding company of our Promoter) has on December 17, 2018 announced the sale (approximately

80%) of its global power business to Hitachi, Ltd, subject to certain conditions precedent and other contingencies. The

conditions precedent include, among others, the receipt of regulatory approvals and corporate authorizations.

Auditor Qualifications and Management Response

The Auditors have qualified their opinion as follows in relation to the matters specified in Notes 37 of the financial

statements for the period ended December 31, 2019. For details, see, “Financial Statements” on Page 52.

“We draw attention to Note 37 to the financial statements regarding the Scheme of Arrangement (‘Scheme’) for demerger

of the power grid business of ABB India Limited with the Company. The scheme of arrangement (“Scheme”) as envisaged

and entered into between (i) ABB India Limited (“INABB” / “Transferor”) and (ii) the Company (“Company” /

“Transferee”) and their respective shareholders and creditors, pursuant to the provisions of Section 230 to 232 and other

applicable provisions of the Companies Act, 2013, which provided for inter alia the Demerger of the Power Grids Business

of INABB (“Demerged Undertaking”), with an appointed date of April 1, 2019, has been approved by the National Company

Law Tribunal (‘NCLT’) vide its order dated November 27, 2019 and a certified copy has been filed by the Company with

the Registrar of Companies, Bangalore, on 1 December 2019. As per the applicable accounting standard Ind AS 103, since

this demerger is a common control business combination, the financial information necessitates restatement by the transferee

at carrying amounts not from the appointed date but from the beginning of the preceding period in the financial statements

which happens to be the date of incorporation i.e. February 19, 2019. Consequentially, the Company is required as per Ind

AS 103 to give effect to the business combination from 19 February 2019 (date of its incorporation). However, the Company

has recognized the impact of the business combination only from 1 April 2019 (i.e. the appointed date specified in the

scheme). Accordingly, we are unable to comment on the resultant impact on the Company’s statement of profit and loss

(including other comprehensive income), statement of changes in equity and statement of cash flows for the period from 19

February 2019 to March 31, 2019. However, there is no impact of the same on the Company’s balance sheet as at 31

December 2019.”

39

Please also see “Risk Factors - The audit reports on the audited financial statements issued by Statutory Auditors included

certain qualifications” on page 13.

The Board’s response to the qualification is as set out below:

“The management has taken note of the basis for qualified opinion of the Auditors and believes that due to incoherence

between the appointed date i.e., April 1, 2019 and date of incorporation i.e. February 19, 2019 and auditors opinion on

Ind AS 103 such a one off situation has arisen. Further, in addition to what has been stated in Note 37 of the Statements,

we wish to state that in anticipation of reorganisation of ABB India Limited's business by way of said Scheme, the Company

was incorporated. Such date of incorporation is not in control of the Company. The Registrar of Companies issued the

certificate of incorporation on February 19, 2019. The management confirms that, during the period between February

19, 2019 and March 31, 2019, no active business was undertaken other than the initial paid up share capital. In light of

the above, there is no impact on the financial statements of the Company as at December 31, 2019 as affirmed by the

Auditors.”

40

OUR MANAGEMENT

As per our Articles of Association, our Company is required to have not less than three and not more than fifteen Directors.

As on the date of this Information Memorandum, our Company has six Directors out of which three are Independent

Directors.

The following table sets forth details of our Board of Directors as on the date of this Information Memorandum:

S.

No.

Name, designation, address, occupation,

nationality, term and DIN

Age

(years)

Other directorships

1. Frank Duggan

Designation: Chairman and Non-Executive Director

Address: Flat 454, 302 Jumeira Bay, PO Box No.11070,

Dubai, UAE

Occupation: Service

Date of birth: October 19, 1959

Nationality: Irish

Period and term: Three years with effect from

December 24, 2019, and is liable to retire by rotation

DIN: 02937233

60 Nil

2. Venu Nuguri

Designation: Managing Director

Address: 2168, B.M. Kaval, 2nd Cross, HAL 3rd Stage,

Bangalore 560 075, Karnataka, India

Occupation: Service

Date of birth: September 17, 1965

Nationality: Indian


December 2, 2019, and is not liable to retire by rotation

DIN: 07032076

54 • Asea Brown Boveri Lanka (Private) Limited,

Srilanka; and;

• PT ABB Power Grids Indonesia

3. Sanjeev Sharma

Designation: Non-Executive Director

Address: Phoenix Bangalore One, Flat No. 2141, No. 1,

Dr. Rajkumar Road, Rajajinagar Bangalore 560 010,

Karnataka, India

Occupation: Service

Date of birth: November 10, 1965

Nationality: Indian

Period and term: With effect from February 19, 2019,

and is liable to retire by rotation

DIN: 07362344

54

• Asea Brown Boveri Lanka (Private) Limited,

Srilanka;

• ABB Global Industries and Services Private

Limited;

• ABB India Limited;

• ABB Substations Contracting India Private

Limited; and

• Swedish Chamber of Commerce India

41

S.

No.

Name, designation, address, occupation,

nationality, term and DIN

Age

(years)

Other directorships

4. Mukesh Butani

Designation: Independent Director

Address: N-134, Panchsheel Park, New Delhi 110 017,

New Delhi, India

Occupation: Practising Lawyer

Date of birth: May 2, 1964

Nationality: Indian



DIN: 01452839

55 • BMR Business Solutions Private Limited

• International Tax Research and Analysis

Foundation

5. Akila Krishnakumar


Address: S-57, Golden Enclave, HAL Airport Road,

Bengaluru

Occupation: Self-employed professional

Date of birth: March 31, 1962

Nationality: Indian



DIN: 06629992

57

• Heidelbergcement India Limited

• Matrimony.com Limited

• IndusInd Bank Ltd

• Medwell Ventures Private Limited

6. Nishi Vasudeva


Address: 21-A, Land Breeze, 52 Pali Hill, Bandra,

Mumbai 400050

Occupation: Retired

Date of birth: March 30, 1956

Nationality: Indian



DIN: 03016991

63 • HCL Technologies Limited

• L&T Finance Holdings Limited

• Atria Convergence Technologies Limited

• L&T Infrastructure Finance Company Limited

• L&T Infra Debt Fund Limited

Relationship between our Directors

None of our Directors are related to each other.

Brief Biographies of Directors

Frank Duggan is the Chairman and Non-Executive Director of the Company. He holds a bachelor’s degree in electrical

engineering from Dublin Institute of Technology. He is the president of Europe region of ABB Ltd since 2017. He joined

ABB Ltd in 1984 and has held various positions in various ABB businesses in Europe, Asia and the Gulf.

42

Venu Nuguri is the Managing Director of the Company. He holds a bachelor’s degree in electrical engineering from

National Institute of Technology, Warangal, and has attended management courses at the Indian Institute of Management,

Ahmedabad, Indian School of Business, Hyderabad and International Institute of Management Development, Switzerland.

He was previously the senior group vice president of the power grids business – South Asia, Middle East and Africa. He

was the president of the power systems department of INABB and was also a part of the group’s global power systems

leadership team. He is presently the head of the power grids business for South Asia region.

Sanjeev Sharma is a Non-Executive Director of our Company. He has pursued management programs from IMD

Switzerland and INSEAD Singapore. He is the managing director of INABB and the chairman and managing director of

ABB Global Industries and Services Private Limited. He has managed various local business units and divisions in India,

Switzerland, Germany and Malaysia. He is also a director on the board of ABB Substations Contracting India Private

Limited, ABB Global Industries And Services Private Limited and Swedish Chamber Of Commerce India.

Mukesh Butani is an Independent Director of the Company. He holds a bachelor’s degree in commerce from Mumbai

University. He is a certified chartered accountant from the Indian Institute of Chartered Accountants. He founded BMR

Legal Advocates, a tax law firm in India.

Akila Krishnakumar is an Independent Director of the Company. She is an alumnus of Birla Institute of Technology and

Sciences. She was previously the president – global technology and country head of SunGard, which was acquired by

Fidelity National Information Services, Inc.

Nishi Vasudeva is an Independent Director of the Company. She holds a bachelor’s degree in economics from Delhi

University and is an alumnus of Indian Institute of Management, Calcutta. She was the chairman and managing director of

Hindustan Petroleum Corporation Limited till March 2016.

Shareholding of Directors in our Company

None of our Directors hold any Equity Shares in the Company.

Our Articles of Association do not require our Directors to hold any qualification shares.

Changes in our Board in the last three years

Name Date of change Reason

Akila Krishnakumar December 24, 2019 Appointment as Independent Director

Mukesh Butani December 24, 2019 Appointment as Independent Director

Frank Duggan December 24, 2019 Appointment as Chairman and Non-Executive Director

Nishi Vasudeva December 24, 2019 Appointment as Independent Director

Gururaj Bhujangarao December 24, 2019 Resignation as Director

Sridhar Krishnaswamy Tyagavalli December 24, 2019 Resignation as Director

Ismo Haka December 16, 2019 Resignation as Non-Executive Director

Achim Braun December 16, 2019 Resignation as Non-Executive Director

Venu Nuguri December 2, 2019 Appointment as Managing Director

Ismo Haka November 22, 2019 Appointment as Non-Executive Director

Achim Braun November 22, 2019 Appointment as Non-Executive Director

Sridhar Krishnaswamy Tyagavalli February 19, 2019 Appointment as first Director

Sanjeev Sharma February 19, 2019 Appointment as first Director

Gururaj Bhujangarao February 19, 2019 Appointment as first Director

Borrowing Powers of Board

Pursuant to a resolution passed by the Shareholders of our Company on November 29, 2019 and subject to the provisions

of the Companies Act, 2013 and the Articles of Association, the Board is authorised to borrow money, as and when

required, from, including without limitation, any bank and/or other financial institution and/or foreign lender and/or any

body corporate/ entities/ and/or authorities, either in Rupees or in such other foreign currencies as may be permitted by law

from time to time, as may be deemed appropriate by the Board for an aggregate amount not exceeding a sum of `50,000

million for the Company, notwithstanding that money so borrowed together with the monies already borrowed by the

Company, if any (apart from temporary loans obtained from the Company’s bankers in ordinary course of business) may

exceed the aggregate of the paid-up capital of the Company, its free reserves and securities premium.

43

Corporate Governance

The provisions of the Listing Regulations with respect to corporate governance will be applicable to us immediately upon

the listing of our Equity Shares with the Stock Exchanges. In respect of corporate governance, we are in compliance with

the requirements of the applicable laws including the Listing Regulations and the Companies Act, and the rules made

thereunder. The corporate governance framework of our Company is based on an effective and independent Board,

separation of the Board’s supervisory role from the executive management team, and constitution of the Board Committees,

as required under applicable laws.

Our Board has been constituted in compliance with the Listing Regulations and the Companies Act. The Board functions

either as a full board or through various committees constituted to oversee specific functions. The scope and function of

our audit committee, nomination, remuneration and compensation committee, corporate social responsibility committee

and stakeholders’ relationship committee are in accordance with the provisions of the Companies and the Listing

Regulations, as amended from time to time. Further, our executive management provides our Board detailed reports on its

performance periodically.

Currently, our Board has six Directors, with three Independent Directors (including two women Directors) and one

Executive Director. The Chairman of the Board is a Non-Executive Director. We are in compliance with the Listing

Regulations.

Committees of the Board

In addition to the committees of the Board detailed below, our Board of Directors may, from time to time, constitute

committees for various functions.

Audit Committee

Our Audit Committee was constituted on December 24, 2019 with the following members:

1. Mukesh Butani, Chairman

2. Venu Nuguri

3. Akila Krishnakumar

4. Nishi Vasudeva

Nomination and Remuneration Committee

Our Nomination and Remuneration Committee was constituted on December 24, 2019 with the following members:

1. Akila Krishnakumar, Chairperson

2. Frank Duggan

3. Nishi Vasudeva

Corporate Social Responsibility Committee

Our Corporate Social Responsibility Committee was constituted on December 24, 2019 with the following members:

1. Akila Krishnakumar, Chairperson

2. Venu Nuguri

3. Sanjeev Sharma

Stakeholders Relationship Committee

Our Stakeholders Relationship Committee was constituted on December 24, 2019 with the following members:

1. Nishi Vasudeva, Chairperson

2. Venu Nuguri

3. Mukesh Butani

44

Risk Management Committee

Our Risk Management Committee was constituted on December 24, 2019 with the following members:

1. Mukesh Butani, Chairman

2. Frank Duggan

3. Venu Nuguri

4. Nishi Vasudeva

5. Ajay Singh

Our Key Managerial Personnel

Brief Biographies of our Key Managerial Personnel

Venu Nuguri is the Managing Director of our Company. For details in relation to Venu Nuguri, see “- Brief Biographies

of Directors” on page 41.

Ajay Singh is the Chief Financial Officer of our Company. He holds a post graduate honours diploma in systems

management and has completed finance and business control program and senior leadership development program from

the International Institute of Management Development, Switzerland. He is an associate member of the Institute of Cost

and Management Accountants of India. He is presently the region finance director of power grids business for South Asia

region. He was the lead division controller of the power grids business in South Asia. He has over 27 years of experience

and has held various positions in the ABB group including division chief financial officer for power grids business in India

and global product group controller, common apparatus and devices for power product high voltage. He was previously

employed with Hindustan Motors Limited and JP Associates.

Poovanna C. Ammatanda is the General Counsel, Company Secretary and Compliance Officer of the Company. He holds

a bachelor’s degree in law from Bangalore University, a master’s degree with focus on commercial law from Singapore

Management University and is a fellow member of the Institute of Company Secretaries of India. He is a member of the

ABB group’s global legal leadership team of the power grids business with ad interim legal responsibility of South Asia

region. He has previously worked as in-house legal counsel, company secretary with various companies in India and Asia

Pacific jurisdictions.

45

OUR PROMOTER, PROMOTER GROUP AND GROUP COMPANIES

Our Promoter

ABB Asea Brown Boveri Ltd is the Promoter of our Company. As of the date of this Information Memorandum, our

Promoter holds an aggregate of 31,786,256 Equity Shares, aggregating to 75% of the post-Scheme issued, subscribed and

paid-up Equity Share capital of our Company.

Details of our Promoter

Corporate Information

ABB Asea Brown Boveri Ltd is a limited liability company duly established under the laws of Switzerland with principal

offices at Affolternstrasse 44, CH-8050 Zurich, Switzerland. Our Promoter is the direct subsidiary of ABB Ltd, the ABB

Group’s ultimate parent company, and directly or indirectly owns or controls all of the other companies in the ABB Group.

The shares of ABB Ltd are listed on the SIX Swiss Exchange, the NASDAQ OMX Exchange and the New York Stock

Exchange (in the form of American Depositary Shares). The ABB group is a pioneering technology leader with a

comprehensive offering for digital industries. With a history of innovation spanning more than 130 years, the ABB group

is today a leader in digital industries with five customer-focused, globally leading businesses: Electrification, Industrial

Automation, Motion, and Robotics & Discrete Automation, and Power Grids supported by its common ABB Ability™

digital platform. ABB operates in more than 100 countries with about 147,000 employees.

The main objects of ABB Asea Brown Boveri Ltd are to participate in enterprises, particularly those involved in industry,

trading and service activities. ABB Asea Brown Boveri Ltd may acquire, encumber, exploit and sell real estate and

intangible assets in Switzerland and abroad; it may finance other companies and issue guarantees or similar securities to

cover the obligations of those companies.

Board of directors

The board of directors of ABB Asea Brown Boveri Ltd comprises of:

1. Timo Ihamuotila;

2. Maria Varsellona;

3. Thomas Fürer; and

4. Alex Hall

Shareholding pattern

The share capital of ABB Asea Brown Boveri Ltd is CHF 2,768,000,000 divided into 2,768,000 shares of face value of

CHF 1,000 each and is fully paid-up.

Our Promoter Group

As per Regulation 2(1)(pp) of the SEBI ICDR Regulations, our Promoter Group includes:

(i) Our Promoter, namely ABB Asea Brown Boveri Ltd

(ii) Holding Company of our Promoter, namely, ABB Ltd

(iii) Subsidiaries of our Promoter and body corporates in which our Promoter holds 20% or more of the equity share

capital, which includes 484 entities incorporated outside India and the following Indian entities:

1. INABB

2. ABB Global Industries and Services Private Limited

3. ABB Power Technology Services Private Limited

4. ABB Substations Contracting India Private Limited

5. B&R Industrial Automation Private Limited

6. Cherokee India Private Limited

7. Daewoo Power India Limited

8. Newave Energy India Private Limited

9. Power-One Renewable Energy Solutions India Private Limited

10. Powertel India Private Limited

46

Other than ABB Ltd, there are no body corporates which hold 20% or more of the equity share capital of our Promoter.

Further, there are no body corporates in which a group of individuals or companies or a combination thereof acting in

concert, which hold 20% or more of the equity share capital in that body corporate and such group of individuals or

companies or combinations thereof also hold 20% or more of the equity share capital of the Company and are also acting

in concert.

Group companies

The detail of our top five group companies as of the date of this Information Memorandum are set out below:

1. ABB Schweiz AG/ ABB Switzerland Ltd/ ABB Suisse SA


ABB Schweiz AG/ABB Switzerland Ltd/ABB Suisse SA (“ABB Schweiz”) is a private limited company and was

incorporated on January 17, 1990 in Baden, Aargau, Switzerland. The corporate identify number of ABB Schweiz

AG/ABB Switzerland Ltd/ABB Suisse SA is CHE-101.538.426.

The total share capital of ABB Schweiz is 55,000,000 CHF. ABB Asea Brown Boveri AG, Zürich, Switzerland is the sole

shareholder and holds 550,000 shares of 100 CHF each.

Nature of Activities

ABB Schweiz is involved in the business of inter alia, developing, planning, manufacturing, installing, distributing and

trading in equipment, systems, machines, devices and technical products of any kind, particularly in the energy and

automation sectors, and also providing services, primarily in the areas of research, development, information technology,

communications and management and business support, and to attend to the interest of ABB Ltd, Zürich, in Switzerland.

Interest of our Promoter

Our Promoter, ABB Asea Brown Boveri Ltd holds 100% of the capital of ABB Schweiz.

Financial Performance

The financial information derived from the audited financial results of ABB Schweiz AG for the Fiscals ended 2018, 2017

and 2016 is set forth below: (In CHF million except per share data)

Particulars Financial Year ended March 31,*

2018 2017 2016

Equity capital 818.00 786.35 835,.83

Reserves and surplus (excluding revaluation reserves and

including fund balance)

730.60 698.94 748.42

Sales 3,528.81 3,287.98 3,507.71

Profit/(Loss) after tax 281.75 250.54 437.12

Earnings per share (Basic) 512.28 455.53 794.76

Earnings per share (Diluted) 512.28 455.53 794.76

Net asset value per share 1,487.29 1,429.74 1,519.70 *The audited financial statements of ABB Schweiz for Fiscal 2019 are not yet available.

Significant notes of auditors of ABB Schweiz for the last three Financial Years

There are no significant notes of auditors for the last three Financial Years.

2. ABB s.r.o.


ABB s.r.o. is a private limited company and was incorporated on July 20, 1993 under laws of the Czech Republic in Prague,

Czech Republic. The corporate identity number of ABB s.r.o. is 496 82 563.


47

ABB s.r.o. is involved in the business of, inter alia, manufacturing, installing, repairing of electric machines and apparatus,

electronic, installation, repair, inspection and testing of electrical equipment, production of electronic components,

electrical equipment and production and repairs of electric machines, equipment and electronic devices operating on low

voltage, manufacture of machinery and equipment, design of electrical equipment, research and development in the field

of natural and technical sciences or social sciences, testing, provision of technical services measurement, analysis and

control, consultancy, processing of expert studies and assessments, preparation and elaboration of technical designs,

graphic and drawing work, manufacture of metallic constructions and fabricated metal products.


Our Promoter, ABB Asea Brown Boveri Ltd holds 100% of the capital of ABB s.r.o.


The financial information derived from the audited financial results of ABB s.r.o. for the Fiscals ended 2019, 2018 and

2017 is set forth below: (In CZK million except per share data)

Particulars Financial Year ended March 31,

2019 2018 2017

Equity capital 2,033 2,033 2,033



8,644 11,551 13,063

Sales 14.72 15.06 15.05

Profit/(Loss) after tax 3,829 5,001 7,029

Earnings per share (Basic) N/A N/A N/A

Earnings per share (Diluted) N/A N/A N/A

Net asset value per share N/A N/A N/A

Significant notes of auditors of ABB s.r.o. for the last three Financial Years


3. ABB High Voltage Switchgear (Xiamen) Company Ltd.


ABB High Voltage Switchgear (Xiamen) Company Ltd. (“CNHHS”) is a private limited company and was incorporated

on December 21, 1999 under the Laws of the People’s Republic of China in Xiamen City, Fujian Province, China. The

registration number of CNHHS is 91350200612038886J.


CNHHS is involved in the business of, inter alia, manufacture of distribution switch control equipment, other power

transmission, distribution and control equipment, insulating products, other unlisted electrical machinery and equipment;

repair of general equipment, electrical equipment, other machinery and equipment, other unlisted professional equipment;

wholesale of electrical equipment; export of the Company’s self-produced products and import of machinery, equipment,

spare parts, raw and auxiliary materials necessary for the Company, but exclusive of the goods and technology whose

import and export are restricted or prohibited by the state; and lease of other unlisted machinery and equipment.


Our Promoter, ABB Asea Brown Boveri Ltd does not hold any of the share capital of CNHHS.


The financial information derived from the audited financial results of CNHHS for the Fiscals ended 2019, 2018 and 2017

is set forth below: (In USD million)


2019 2018 2017

Equity capital 15.81 15.81 15.81

48


2019 2018 2017



N/A 5.36 4.45

Sales 199.16 196.33 173.78

Profit/(Loss) after tax N/A 12.34 18.30




Significant notes of auditors of CNHHS for the last three Financial Years


4. ABB Electrical Equipment (Xiamen) Co., Ltd.


ABB Electrical Equipment (Xiamen) Co., Ltd. (“CNXDR”) is a private limited company and was incorporated on

December 1, 2004 under the Laws of the People’s Republic of China in Xiamen City, Fujian Province, China. The

registration number of CNHHS is 91350200761747854B.


CNXDR is involved in the business of, inter alia, manufacturing of distribution switch control equipment, manufacturing

of other transmission and distribution switch control equipment, manufacturing of computer peripheral equipment,

wholesale of electrical equipment, wholesale of other mechanical equipment and electronic products, repairing of electrical

equipment, import/export of various kinds of goods and technology other than goods and technology subject to State

limitation or prohibition for import/export, export of self-produced products and import of the machinery equipment, spare

parts and materials required for business other than goods and technology subject to state limitation or prohibition for

import/export, provision of professional design service, engineering and technical research and experimental development,

other technology promotion service, energy-saving technology promotion service and science and technology intermediary

service, other unspecified technology promotion and application service.


Our Promoter, ABB Asea Brown Boveri Ltd does not hold any of the share capital of CNXDR.


The financial information derived from the audited financial results of CNXDR for the Fiscals ended 2019, 2018 and 2017

is set forth below: (In USD million)


2019 2018 2017

Equity capital 9.35 9.35 2.54



1.82 1.82 1.82

Sales 38.49 30.85 28.05

Profit/(Loss) after tax (3.30) 3.69 0.62




Significant notes of auditors of CNXDR for the last three Financial Years


5. ABB AB


49

ABB AB is a private limited company and was incorporated on January 23, 1931, under Swedish law in Västerås, Sweden.

The corporate registration number of ABB Power Grids Sweden AB is 556029-7029.


ABB AB is involved in the business of, inter alia, developing, designing, manufacturing, selling, commissioning, and

maintaining products, spare parts, systems and plants for transmission and distribution of electrical power, for the

automation and improvement of the efficiency of various operations and also to offer services and maintenance solutions

to increase the utilisation and availability of plants, together with other services related thereto.


Our Promoter, ABB Asea Brown Boveri Ltd does not hold any of the share capital of ABB AB.


The financial information derived from the audited financial results of ABB AB for the Fiscals ended 2018, 2017 and 2016

is set forth below: (In SEK million except per share data)

Particulars Financial Year ended March 31*

2018 2017 2016

Equity capital 400 400 400



7,264 10,906 6,928

Sales 30,245 32,944 33,331

Profit/(Loss) after tax 1,658 4,739 1,040

Earnings per share (Basic) 41.5 118.5 26

Earnings per share (Diluted) 41.5 118.5 26

Net asset value per share 191.60 282.70 183.20

*The audited financial statements of ABB AB for Fiscal 2019 are not yet available.

Significant notes of auditors of ABB AB for the last three Financial Years


50

DIVIDENDS

Our Company is a newly incorporated company and hence has not paid any dividend since its incorporation.

The Board is empowered to recommend interim dividend/s and/or final dividend on all the classes of shares after taking

into consideration the following aspects/parameters:

(a) performance of the Company;

(b) overall economic and market conditions within the Country and Globally;

(c) general sectoral and Industry trend on dividend pay-outs;

(d) Company’s cash flow position;

(e) general financial market condition; and

(f) such other factor/s which the Board may consider necessary in arriving at the decision.

The Board shall always endeavour to capitalize the future business opportunities and to increase current level of

performance of the Company.

The Board shall ensure that the dividend declaration and payment will be in accordance with the applicable provisions of

Companies Act, 2013 and rules made thereunder and Listing Regulations.

51

SECTION V: FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Our Company was incorporated on February 19, 2019 with our first financial year commencing on February 19, 2019 and

ending on March 31, 2020. We subsequently made an application to the Regional Director, South East Region, Ministry

of Corporate Affairs, Hyderabad on November 5, 2019 to change our first financial year to February 19, 2019 to December

31, 2019. Pursuant to an order bearing no. F.No:10/19/Karnataka/RD (SER)/2(41) of 2013/2019/6328 dated December 12,

2019, passed by the Regional Director, South East Region, Ministry of Corporate Affairs, our Company’s financial year

commences on January 1 and ends on December 31 of a given year. Accordingly, all references to a particular financial

year is to the 12 months ended December 31 of that year. The Board has approved the audited financial statements for the

first financial period ended December 31, 2019 on February 28, 2020. Pursuant to Section 96 of the Companies Act, 2013,

our Company being a newly incorporated Company, is required to hold its first annual general meeting within a period of

nine months from the close of the first financial year i.e. September 30, 2020, where the first financial statements of the

Company shall be placed. Therefore, this Information Memorandum contains the audited financial statement for the first

financial period ended December 31, 2019 as approved by its Board, and is yet to be adopted by the Shareholders at their

annual general meeting.

[The remainder of this page has intentionally been left blank]

INDEPENDENT AUDITORS’ REPORT

To the Members of ABB Power Products and Systems India Limited

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the financial statements of ABB Power Products and Systems India Limited (“the

Company”), which comprise the balance sheet as at 31 December 2019, and the statement of profit and loss

(including other comprehensive income), statement of changes in equity and statement of cash flows for the

period from February 19, 2019 (date of incorporation) to December 31, 2019 (“the period”), and notes to

the financial statements, including a summary of the significant accounting policies and other explanatory

information.

In our opinion and to the best of our information and according to the explanations given to us, except for the

effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid financial

statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and

give a true and fair view in conformity with the accounting principles generally accepted in India, of the state

of affairs of the Company as at December 31, 2019, and its profit and other comprehensive income, changes

in equity and its cash flows for the period.

Basis for Qualified Opinion

We draw attention to Note 37 to the financial statements regarding the Scheme of Arrangement (‘Scheme’) for

demerger of the power grid business of ABB India Limited with the Company. The scheme of arrangement

(“Scheme”) as envisaged and entered into between (i) ABB India Limited (“INABB” / “Transferor”) and (ii)

the Company (“Company” / “Transferee”) and their respective shareholders and creditors, pursuant to the

provisions of Section 230 to 232 and other applicable provisions of the Companies Act, 2013, which provided

for inter alia the Demerger of the Power Grids Business of INABB (“Demerged Undertaking”), with an

appointed date of April 1, 2019, has been approved by the National Company Law Tribunal (‘NCLT’) vide its

order dated November 27, 2019 and a certified copy has been filed by the Company with the Registrar of

Companies, Bangalore, on 1 December 2019. As per the applicable accounting standard Ind AS 103, since this

demerger is a common control business combination, the financial information necessitates restatement by the

transferee at carrying amounts not from the appointed date but from the beginning of the preceding period in

the financial statements which happens to be the date of incorporation i.e. February 19, 2019. Consequentially,

the Company is required as per Ind AS 103 to give effect to the business combination from 19 February 2019

(date of its incorporation). However, the Company has recognized the impact of the business combination

only from 1 April 2019 (i.e. the appointed date specified in the scheme). Accordingly, we are unable to

comment on the resultant impact on the Company’s statement of profit and loss (including other

comprehensive income), statement of changes in equity and statement of cash flows for the period from 19

February 2019 to March 31, 2019. However, there is no impact of the same on the Company’s balance sheet

as at 31 December 2019.

52

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10)

of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s

Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the

Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India

together with the ethical requirements that are relevant to our audit of the financial statements under the

provisions of the Companies Act, 2013 and we have fulfilled our other ethical responsibilities in accordance

with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained

is sufficient and appropriate to provide a basis for our qualified opinion.

Other Information

The Company’s Management and Board of Directors are responsible for the other information. The other

information comprises the information included in the Company’s annual report, but does not include the

financial statements and our auditor’s report thereon. The annual report is expected to be made available to us

after the date of this auditor’s report.

Our opinion on the financial statements does not cover the other information and we will not express any form

of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information

identified above when it becomes available and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise

appears to be materially misstated.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required

to communicate the matter to those charged with governance and take necessary actions, as applicable under

the applicable laws and regulations.

Management's Responsibility for the Financial Statements

The Company’s management and Board of Directors are responsible for the matters stated in section 134(5)

of the Act with respect to the preparation of these financial statements that give a true and fair view of the

state of affairs, profit/loss and other comprehensive income, changes in equity and cash flows of the Company

in accordance with the accounting principles generally accepted in India, including the Indian Accounting

Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of

adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of

the Company and for preventing and detecting frauds and other irregularities; selection and application

of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and

design, implementation and maintenance of adequate internal financial controls that were operating

effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation

and presentation of the financial statements that give a true and fair view and are free from material

misstatement, whether due to fraud or error.

In preparing the financial statements, management and Board of Directors are responsible for assessing the

Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless management either intends to liquidate the Company

or to cease operations, or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company’s financial reporting process.

53

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or

error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing

our opinion on whether the company has adequate internal financial controls with reference to financial

statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditor’s report to the related

disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future

events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control

that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters that

may reasonably be thought to bear on our independence, and where applicable, related safeguards.

54

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors’ Report) Order, 2016 (“the Order”) issued by the Central

Government in terms of section 143 (11) of the Act, we give in the “Annexure A” a statement on the

matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(A) As required by Section 143(3) of the Act, we report that:

a) We have sought and, except for the matter described in the Basis for Qualified Opinion paragraph,

obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purposes of our audit.

b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above,

in our opinion proper books of account as required by law have been kept by the Company so far

as appears from our examination of those books.

c) The balance sheet, the statement of profit and loss (including other comprehensive income), the

statement of changes in equity and the statement of cash flows dealt with by this Report are in

agreement with the books of account.

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our

opinion, the aforesaid financial statements comply with the Ind AS specified under section 133 of

the Act.

e) On the basis of the written representations received from the directors as on December 31, 2019

taken on record by the Board of Directors, none of the directors is disqualified as on December 31,

2019 from being appointed as a director in terms of Section 164(2) of the Act.

f) The qualification relating to the maintenance of accounts and other matters connected therewith are

as stated in the Basis for Qualified Opinion paragraph above.

g) With respect to the adequacy of the internal financial controls with reference to financial statements

of the Company and the operating effectiveness of such controls, refer to our separate Report in

“Annexure B”.

(B) With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11

of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information

and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at December 31, 2019 on its

financial position in its financial statements - Refer Note 33 to the financial statements;

ii. The Company has made provision, as required under the applicable law or accounting

standards, for material foreseeable losses, if any, on long-term contracts including derivative

contracts- Refer Note 31 C to the financial statements; and

55

iii. There were no amounts which were required to be transferred to the Investor Education and

Protection Fund by the Company.

(C) With respect to the matter to be included in the Auditors’ Report under section 197(16):

In our opinion and according to the information and explanations given to us, the remuneration paid

by the Company to its directors during the current period is in accordance with the provisions of

Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down

under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under

Section 197(16) which are required to be commented upon by us.

for B S R & Co. LLP


Firm's Registration No.: 101248W/W-100022

Amrit Bhansali

Partner

Membership No: 065155

UDIN: 20065155AAAAAJ2036

Place: Bengaluru

Date: 28 February 2020

56

ABB Power Products and Systems India Limited

Annexure – A to the Independent Auditors’ Report

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the financial

statements for the period from February 19, 2019 (date of incorporation) to December 31, 2019 (“the

period”), we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details

and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed

assets are verified every year. In accordance with this programme, fixed assets were verified during

the year and no material discrepancies were noticed on such verification. In our opinion, this

periodicity of physical verification is reasonable having regard to the size of the Company and the

nature of its assets.

(c) All the immovable properties were acquired by the Company during the period, pursuant to a

business combination. Accordingly, as per the information and explanations given to us and on the

basis of our examination of the records of the Company and as per the scheme of arrangement

which has been approved by the National Company Law Tribunal vide its order dated November

27, 2019, the title deeds of immovable properties included in property, plant and equipment are not

yet held in the name of the Company. As explained to us, registration of the title deeds for such

immoveable properties mentioned in the table below, is in process.

Total number of cases Gross block (Rs. in crores) Net block (Rs. in crores)

Freehold land (3 cases) 13.71 13.71

Leasehold land (1 case) 8.82 8.75

Buildings (32 cases) 165.77 155.02

(ii) The inventory, except goods-in-transit and stocks lying with third parties, has been physically

verified by the Management during the period. In our opinion, the frequency of such verification is

reasonable. The discrepancies noticed on such verification between the physical stock and book

records were not material. For stocks lying with third parties at the year-end, written confirmations

have been obtained by the Management.

(iii) According to the information and explanation given to us, the Company has not granted any loans,

secured or unsecured to companies, firms, limited liability partnerships or other parties covered in

the register maintained under section 189 of the Companies Act, 2013 (“the Act”). Accordingly,

the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us, there are no loans, investments,

guarantees and security given in respect of which provisions of section 185 and 186 of the Act are

applicable. Accordingly, the provisions of clause 3(iv) of the Order are not applicable to the

Company.

(v) According to the information and explanations given to us, the Company has not accepted any

deposits from the public. Accordingly, paragraph 3(v) of the Order is not applicable.

57

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules

prescribed by the Central Government of India for maintenance of cost records under Section

148(1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have

been made and maintained. However, we have not made a detailed examination of the records.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of

the records of the Company, amounts deducted/ accrued in the books of account in respect of

undisputed statutory dues including provident fund, employees’ state insurance, income-tax, duty

of customs, goods and services tax, cess and other material statutory dues have been regularly

deposited during the period by the Company with the appropriate authorities. As explained to us,

the Company did not have any dues on account of sales tax, value added tax, service tax and duty

of excise.

According to the information and explanations given to us, no undisputed amounts payable in

respect of provident fund, employees’ state insurance, income-tax, duty of customs, goods and

services tax, cess and other material statutory dues were in arrears as at December 31, 2019 for a

period of more than six months from the date they became payable.

(b) According to information and explanations given to us, there are no dues of income tax, sales tax,

service tax, duty of excise, value added tax, goods and services tax or duty of customs which have

not been deposited by the Company on account of disputes.

(viii) According to the information and explanations given to us, the Company did not have any

outstanding loans or borrowings from any financial institution or bank or government or dues to

debenture holders during the period.

(ix) The Company did not raise any money by way of initial public offer or further public offer

(including debt instruments) and term loans during the period. Accordingly, paragraph 3 (ix) of the

Order is not applicable.

(x) According to the information and explanations given to us, no fraud by the Company or on the

Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations give to us and based on our examination of the

records of the Company, the Company has paid/provided for managerial remuneration in

accordance with the requisite approvals mandated by the provisions of section 197 read with

Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not

a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the

records of the Company, transactions with the related parties are in compliance with sections 177

and 188 of the Act where applicable and details of such transactions have been disclosed in the

financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us and based on our examination of the

records of the Company, the Company has not made any preferential allotment or private placement

of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the

records of the Company, the Company has not entered into non-cash transactions with directors or

persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

58

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act

1934.

for B S R & Co. LLP


Firm’s registration number: 101248W/W-100022

Amrit Bhansali

Partner

Membership number: 065155


Place: Bengaluru


59

Annexure B to the Independent Auditors’ report on the financial statements of ABB Power Products

and Systems India Limited for the period from February 19, 2019 to December 31, 2019.

Report on the internal financial controls with reference to the aforesaid financial statements under

Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

(Referred to in paragraph 1(A)(f) under ‘Report on Other Legal and Regulatory Requirements’

section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statements of ABB Power

Products and Systems India Limited (“the Company”) as of December 31, 2019 in conjunction with our

audit of the financial statements of the Company from February 19, 2019 (‘date of incorporation’) to

December 31, 2019 (‘the period’).

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference

to financial statements and such internal financial controls were operating effectively as at December 31,

2019, based on the internal financial controls with reference to financial statements criteria established by

the Company considering the essential components of internal control stated in the Guidance Note on Audit

of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants

of India (the “Guidance Note”).

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Directors are responsible for establishing and maintaining

internal financial controls based on the internal financial controls with reference to financial statements

criteria established by the Company considering the essential components of internal control stated in the

Guidance Note. These responsibilities include the design, implementation and maintenance of adequate

internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of

its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and

detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely

preparation of reliable financial information, as required under the Companies Act, 2013 (hereinafter

referred to as “the Act”).

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls with reference to

financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and

the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit

of internal financial controls with reference to financial statements. Those Standards and the Guidance Note

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance about whether adequate internal financial controls with reference to financial statements were

established and maintained and whether such controls operated effectively in all material respects.

60

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal

financial controls with reference to financial statements and their operating effectiveness. Our audit of

internal financial controls with reference to financial statements included obtaining an understanding of

such internal financial controls, assessing the risk that a material weakness exists, and testing and evaluating

the design and operating effectiveness of internal control based on the assessed risk. The procedures

selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement

of the standalone financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion on the Company’s internal financial controls with reference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A Company's internal financial controls with reference to financial statements is a process designed to

provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles. A company's

internal financial controls with reference to financial statements include those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the company; (2) provide reasonable assurance that

transactions are recorded as necessary to permit preparation of financial statements in accordance with

generally accepted accounting principles, and that receipts and expenditures of the company are being made

only in accordance with authorisations of management and directors of the company; and (3) provide

reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or

disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial controls with Reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to financial statements,

including the possibility of collusion or improper management override of controls, material misstatements

due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal

financial controls with reference to financial statements to future periods are subject to the risk that the

internal financial controls with reference to financial statements may become inadequate because of

changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

for B S R & Co. LLP


Firm's Registration No.: 101248W/W-100022

Amrit Bhansali

Partner

Membership No: 065155


Place: Bengaluru


61

ABB Power Products and Systems India LimitedBalance sheet as at December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise

Notes December 31, 2019Assets

Non-current assets Property, plant and equipment 3 539.71 Capital work-in-progress 3 56.69 Goodwill 4 31.80 Other intangible assets 4 7.94 Financial assets

Loans 5 4.58 Non-current tax assets (net) 6 11.53 Other non-current assets 7 2.79

655.04

Current assets Inventories 8 493.20 Financial assets

Trade receivables 9 1,792.85 Cash and cash equivalents 10 188.04 Loans 5 8.30 Other financial assets 11 125.58

Other current assets 12 225.722,833.69

Total Assets 3,488.73

Equity and liabilities Equity

Equity share capital 13 8.48Other equity 14 831.34

839.82

Liabilities Non-current liabilities Financial liabilities

Other financial liabilities 15 1.18 Deferred tax liabilities (net) 16 4.16

5.34

62

ABB Power Products and Systems India LimitedBalance sheet as at December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise

Current liabilities Financial liabilities Borrowings 17 347.62 Trade payables

18 6.4618 1,269.05

Other financial liabilities 15 254.70 Other current liabilites 19 626.28 Provisions 20 139.46

2,643.57

Total Equity and liabilities 3,488.73

Summary of significant accounting policies 2

As per our report of even date attached

for B S R & Co. LLP for and on behalf of the Board of Directors ofChartered Accountants ABB Power Products and Systems India LimitedICAI Firm Registration No.: 101248W/W-100022 Corporate identity number (CIN) : U31904KA2019PLC121597

Amrit Bhansali Frank Duggan Venu Nuguri Mukesh Hari ButaniPartner Chairman Managing Director DirectorMembership no.: 065155 DIN: 02937233 DIN: 07032076 DIN: 01452839

Ajay Singh Poovanna C AmmatandaChief financial officer General Counsel &

Company SecretaryPlace: Bengaluru Mumbai (FCS4741)Date: February 28, 2020 February 28, 2020

The accompanying notes are an integral part of the financial statements

Total outstanding dues to micro enterprises and small enterprisesTotal outstanding dues to creditors other than micro enterprisesand small enterprises

63

ABB Power Products and Systems India LimitedStatement of profit and loss for the period from February 19, 2019 to December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise

Notes For the period fromFebruary 19, 2019 to

December 31, 2019

IncomeRevenue from operations 21 3,230.74Other income 22 0.47

Total income 3,231.21

ExpensesCost of raw materials, components consumed andproject bought outs

23 1,752.22

(Increase)/ decrease in inventories of finished goods,work-in-progress and traded goods

24 55.55

Subcontracting charges 269.48Employee benefit expenses 25 249.76Depreciation and amortisation expense 26 48.41Finance costs 27 26.38Other expenses 28 567.97

Total expenses 2,969.77

Profit before exceptional items and tax 261.44

Exceptional items 37 40.79

Profit before tax 220.65Tax expense:

Current tax 16 62.20Deferred tax 16 (6.94)

55.26

Profit for the period 165.39

64

ABB Power Products and Systems India LimitedStatement of profit and loss for the period from February 19, 2019 to December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise

Other comprehensive incomeItems that will not be reclassified to profit or loss in subsequent periods:Re-measurement income on defined benefit plan 0.67Income tax effect 16 (0.17)Other comprehensive income for the period, net of income tax 0.50

Total comprehensive income for the period, net of income tax 165.89

Earnings per equity share of face value of `2 each 29Basic 44.69Diluted 44.69




Amrit Bhansali Frank DugganPartner Chairman Managing Director DirectorMembership no.: 065155 DIN: 02937233 DIN: 07032076 DIN: 01452839




Venu Nuguri Mukesh Hari Butani

65

ABB Power Products and Systems India LimitedStatement of Cash flows for the period from February 19, 2019 to December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise

For the period fromFebruary 19, 2019 to

December 31, 2019

A. Cash flows from operating activities

Profit before tax 220.65

Adjustments to reconcile profit before tax to net cash flows provided by operating activitiesDepreciation and amortisation expense 48.41Unrealised exchange loss / (gains) (net) (0.71)Mark to market change in forward and commodity contracts (20.56)(Profit) / loss on sale of fixed assets (net) 0.34Provision for doubtful debts and advances / Bad debts / advances written off 5.21Interest income (0.47)Interest expense 26.38Operating profit before working capital changes 279.25

Movement in working capitalIncrease / (decrease) in trade payables 192.93Increase / (decrease) in other financial liabilities (44.97)Increase / (decrease) in other liabilities and provisions 14.72(Increase) / decrease in trade receivables (379.00)(Increase) / decrease in inventories (23.62)(Increase) / decrease in other financial assets 123.82(Increase) / decrease in loans and other assets (162.06)Cash generated from operations 1.07Direct taxes paid (net of refunds) (73.73)Net cash flow used in operating activities (72.66)

B. Cash flows from investing activitiesPurchase of property, plant and equipment (79.28)Proceeds from sale of property, plant and equipment 0.08Purchase of intangible assets (0.28)Decrease in capital advances 6.24Interest received 0.47Net cash flow used in investing activities (72.77)

66

ABB Power Products and Systems India LimitedStatement of Cash flows for the period from February 19, 2019 to December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise


December 31, 2019C. Cash flows from financing activities

Proceeds from borrowings 347.62Interest paid (14.15)Net cash flow from financing activities 333.47

Net (decrease) / increase in cash and cash equivalents (A+B+C) 188.04Effect of exchange (loss) / gain on cash and cash equivalents -Cash and cash equivalents at the beginning of the period -Cash and cash equivalents at the end of the period (Refer note 10) 188.04

Components of cash and cash equivalentsCash and bank balances 188.04

188.04Notes:

2) Cash flow statement is made using the indirect method.







1) Cash and cash equivalents at the end of the year represent cash and cheques on hand / remittence in transit and cash anddeposits with banks.

67

ABB Power Products and Systems India LimitedStatement of changes in equity for the period from February 19, 2019 to December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise

a. Equity share capital:

Equity shares of ` 2 each issued, subscribed and fully paidNumber of shares Amount

As at February 19, 2019 50,000 0.01Changes in equity share capital 42,331,675 8.47As at December 31, 2019 42,381,675 8.48

b. Other equity :

Securities Premium General reserve Retained earnings Capital ReserveAmalgamation

adjustment deficitaccount

As at February 19, 2019 - - - - - -Transfer pursuant to scheme of arrangement (Refer note 37) 9.80 507.10 149.93 0.18 (1.56) 665.45Profit for the period - - 165.39 - - 165.39Other comprehensive income (net of tax) - - 0.50 - - 0.50As at December 31, 2019 9.80 507.10 315.82 0.18 (1.56) 831.34





Amrit Bhansali Frank Duggan Venu Nuguri Mukesh Hari ButaniPartner Director Director DirectorMembership no.: 065155 DIN: 02937233 DIN: 07032076 DIN: 01452839

Ajay Singh Poovanna C AmmatandaChief financial officer General Counsel & Company Secretary

(FCS4741)Place: Bengaluru MumbaiDate: February 28, 2020 February 28, 2020

Particulars Total equity

Reserves and surplus

68

ABB Power Products and Systems India LimitedNotes to the financial statements for the period from February 19, 2019 to December 31, 2019

1 Corporate Information

2 Significant accounting policies2.1 Basis of preparation of financial statementsA Statement of compliance

B Functional and presentation currency

C Basis of measurement

2.2 Use of estimates

2.3 Critical accounting estimates and judgements2.3.1 Estimates

The financial statements have been prepared on the historical cost convention and on accrual basis, except for certain financialinstruments (refer accounting policy regarding financial instruments) , which are measured at fair values at the end of each reporting period, asexplained in the accounting policies below.

ABB Power Products and Systems India Limited (‘the Company’) is a public limited company domiciled in India and incorporatedunder the provisions of the Indian Companies Act, 2013 on February 19, 2019. The registered office is located at Bengaluru. TheCompany will serve utility and industry customers, with the complete range of engineering, products, solutions and services in areas ofPower 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.The Company has applied for listing its equity shares in India and its application is under consideration with Securities Exchange Boardof India (SEBI). Once the Company is listed, its shares will be listed on Bombay Stock Exchange (BSE) and National Stock Exchange(NSE).The financial statements are prepared from the date of incorporation i.e. February 19, 2019 to December 31, 2019 ('the period') and thesame has been approved for issue by the Company's Board of Directors on February 28, 2020.

These financial statements are prepared and presented in accordance with Indian Accounting Standards ("Ind AS") notified under theCompanies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 andother relevant provision of the Act as amended from time to time.

The financial statements are presented in Indian Rupees crores, rounded off to two decimal places, except where otherwise indicated.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services as at the date ofrespective transactions.

The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments andassumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts ofassets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts ofrevenues and expenses during the period. Application of accounting policies that require critical accounting estimates involvingcomplex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 2.3.Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes inestimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates arereflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes tothe financial statements.

a. Property, plant and equipmentProperty, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodicdepreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of itslife. The useful lives and residual values of Company's assets are determined by management at the time the asset is acquired andreviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well asanticipation of future events, which may impact their life, such as changes in technology.

69


2.3.2 Judgements

2.4

Deferred tax assets and liabilities are classified as non-current assets and liabilities.The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.

• Expected to be realised or intended to be sold or consumed in normal operating cycle;

b. Employee benefitsThe cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations.An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include thedetermination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and itslong-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at eachreporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plansoperated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of thepost-employment benefit obligation. The mortality rate is based on publicly available mortality tables. Those mortality tables tend tochange only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected futureinflation rate and past trends. Further details about gratuity obligations are given in Note 30.

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognised inthe financial statements is included in the following notes

- Note 34(b) - leases: whether an arrangement contains a lease; and- Note 34(b) - lease classification;

Current and non-current classificationThe Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated ascurrent when it is:

c. Provision for litigations and contingenciesThe provision for litigations and contingencies are determined based on evaluation made by the management of the present obligationarising from past events the settlement of which is expected to result in outflow of resources embodying economic benefits, whichinvolves judgements around estimating the ultimate outcome of such past events and measurement of the obligation amount. Due tothe judgements involved in such estimations the provisions are sensitive to the actual outcome in future periods.

d. Project revenue and costsThe Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or coststo be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationshipbetween input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in whichsuch losses become probable based on the expected contract estimates at the reporting date.

• It is expected to be settled in normal operating cycle;• It is held primarily for the purpose of trading;• It is due to be settled within twelve months after the reporting period; or

• Held primarily for the purpose of trading;

All other assets are classified as non-current.

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after thereporting period.

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period;

The Company classifies all other liabilities as non-current;

• Expected to be realised within twelve months after the reporting period; or

All assets and liabilities have been classified as current or non- current as per the Company’s operating cycle and other criteria set out inSchedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets forprocessing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for thepurpose of current and non- current classification of assets and liabilities, except for projects business. The projects business compriseslong-term contracts which have an operating cycle exceeding one year. For classification of current assets and liabilities related toprojects business, the Company uses the duration of the individual life cycle of the contract as its operating cycle.

A liability is current when:

70


2.5 Foreign Currency

2.6 Revenue Recognition

2.7 Income taxes

Commission income is recognized as per contract terms and when accrued.

Dividend income is recognised when the Company’s right to receive the payment is established, which is generally when shareholdersapprove the dividend.Interest income is recognised on time proportion basis.

The Company has adopted Ind AS 115, “Revenue from Contracts with Customers”. Revenue is recognised to the extent that it isprobable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when thepayment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into accountcontractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company hasconcluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as ithas pricing latitude and is also exposed to inventory and credit risks.

Revenue are stated exclusive of goods and service tax and net of trade and quantity discount.Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to thebuyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received orreceivable, net of returns and allowances, trade discounts and volume rebates.

In case of large transformers, revenue is recognized on achievement of contractual milestone. Revenue recognized in excess of billinghas been reflected under “Other financial assets” as unbilled revenue.

Revenues from long-term contracts are recognized on the percentage of completion method, in proportion that the contract costsincurred for work performed up to the reporting date bear to the estimated total contract costs. Contract revenue earned in excess ofbilling has been reflected under “Other current assets” and billing in excess of contract revenue has been reflected under “Othercurrent liabilities” in the balance sheet. Full provision is made for any loss in the year in which it is first foreseen.

Liquidated damages / penalties are provided for as per the contract terms wherever there is a delayed delivery attributable to theCompany.Revenue from the development services is recognised as per the contract terms and when accrued. When the contract outcome cannotbe measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.

Functional currencyThe functional currency of the Company is the Indian Rupee.

Transactions and translationsInitial recognition transactions in foreign currencies are recorded by the Company at their respective functional currency spot rates atthe date the transaction first qualifies for recognition.Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at thereporting date. The gains or losses resulting from such translations are recognised in the statement of profit and loss.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at theexchange rate prevalent at the date when the fair value was measured. Non-monetary assets and non-monetary liabilities denominatedin a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of the transaction.

Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for theperiod in which the transaction is settled. Revenue, expense and cash flow items denominated in foreign currencies are translated intothe relevant functional currencies using the exchange rate in effect on the date of the transaction.

Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the statement ofprofit and loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in othercomprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to orrecovered from the tax authorities, using the tax rates and tax laws that have been enacted. Deferred income tax assets and liabilities arerecognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financialstatements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that therelated tax benefit will be realized.

71


2.8 Property, plant and equipment

Particulars YearsLeasehold land 98Leasehold improvements 1-10Factory buildings 15-30Other buildings 3-60Furniture and fixtures 10Office equipments 3-5Plant and equipment 2-21Vehicles 5

2.9 Intangible assets

Particulars Years3-103-5

Useful lives estimated by the management in years:

Depreciation methods, useful lives and residual values are reviewed periodically, at each reporting date.

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets arecarried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excludingcapitalised development costs, are not capitalised and the related expenditure is reflected in the statement of profit and loss in theperiod in which the expenditure is incurred.

AmortisationAmortisation is recognised in the statement of profit and loss on a straight line basis over the estimated useful lives of the intangibleassets.The estimated useful life of assets are as follows:

Technical know-how fees

The useful lives of intangible assets are assessed as either finite or indefinite.

Capitalized software costsGoodwill on business acquisition is not amortized but tested for impairment.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted bythe balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to berecovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expensein the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extentthat it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can beutilized. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off therecognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Recognition and measurementFreehold Land is carried at historical cost, all other item of property, plant and equipment is measured at cost, net of accumulateddepreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition ofthe asset. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term constructionprojects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced atintervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed,its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.

All other repair and maintenance costs are recognised in statement of profit or loss as incurred. The Company identifies and determinescost of each component/ part of Property, plant and equipment separately, if the component/ part has a cost which is significant to thetotal cost of the Property, plant and equipment and has useful life that is materially different from that of the remaining asset.Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capitaladvances and cost of assets not ready for use at the balance sheet date are disclosed under capital work- in- progress.

DepreciationThe Company depreciates property, plant and equipment over their estimated useful lives using the straight-line method. Leaseholdassets are depreciated lower of lease period or life of the assets. The estimated useful lives of assets are as follows:

72


2.10 Leases

2.11 Borrowing costs

2.12 Inventories

2.13 Financial instruments2.13.1 Initial recognition

2.13.2 Subsequent measurementa. Non-derivative financial instruments

Provision for obsolescence is made wherever necessary.

The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of theinstrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which areinitially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets andfinancial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition.

(i) Financial assets carried at amortised costA financial asset is subsequently measured at amortised cost if it is held within a business where the objective is to hold the asset inorder to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

Cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringingthem to their existing location and condition.

The factors that the Company considers in determining the provision for slow moving, obsolete and other non-saleable inventoryinclude estimated shelf life, planned product discontinuances, price changes, ageing of inventory and introduction of competitive newproducts, to the extent each of these factors impact the Company’s business and markets. The Company considers all these factors andadjusts the inventory provision to reflect its actual experience on a periodic basis.

Inventories consist of raw materials, work-in-progress, finished goods, traded goods and stores an spares. Inventories are measured atthe lower of cost and net realisable value.The cost of various categories of inventories is arrived at as follows:

Stores, spares, raw materials, components and traded goods - at rates determined on the moving weighted average method.

Goods in Transit – at actual cost.

Work-in-progress and finished goods - at full absorption cost method which includes direct materials, direct labour andmanufacturing overheads. Cost is determined on weighted average method.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial periodof time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed inthe period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with theborrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is anindication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with afinite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern ofconsumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, asappropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives isrecognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to besupportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Whenacquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease,whichever is lower.Lease payments under operating leases are charged to statement of profit and loss on straight line basis over the period of the lease,unless the payments are structured to increase in line with expected general inflation to compensate for the lessor's expectedinflationary cost increases.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and theestimated costs necessary to make the sale.

De-recognitionIntangible assets are de-recognised either on their disposal or where no future economic benefits are expected from their use. Gains orlosses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and thecarrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

73

ABB Power Products and Systems India Limited Notes to the financial statements for the period from February 19, 2019 to December 31, 2019

2.14 Fair value of financial instruments

b. Derivative financial instruments

The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk ofchanges in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carryingamount of the asset and the maximum amount of consideration that the Company could be required to repay.

(ii) Financial assets at fair value through other comprehensive incomeA financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business where theobjective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial assetgive rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. TheCompany has made an irrevocable election for its investments which are classified as equity instruments to present the subsequentchanges in fair value in other comprehensive income based on its business model. Further, in cases where the Company has made anirrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changesin fair value are recognized in other comprehensive income.

(iii) Financial assets at fair value through profit or lossA financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.

Financial assets or financial liabilities, at fair value through profit or loss.This category has derivative financial assets or liabilities which are not designated as hedges.

(iv) Financial liabilitiesFinancial liabilities are subsequently carried at amortized cost using the effective interest method, For trade and other payables maturingwithin one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of theseinstruments.

Certain commercial contracts may grant rights to the Company or the counterparties, or contain other provisions that are considered tobe derivatives. Such embedded derivatives are assessed at inception of the contract and depending on their characteristics, accountedfor as separate derivative instruments and shown at their fair value in the balance sheet with changes in their fair value recognizedthrough profit or loss.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in thestatement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profitor loss and the resulting exchange gains or losses are included in other income / expenses. Assets/ liabilities in this category arepresented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after thebalance sheet date.

(v) DerecognitionA financial asset is primarily derecognised when:• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cashflows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferredsubstantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks andrewards of the asset, but has transferred control of the asset.

Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedgeaccounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but isineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.

Fair value hierarchy: All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair valuehierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilitiesLevel 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectlyobservableLevel 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfershave occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fairvalue measurement as a whole) at the end of each reporting period.

74


2.15 Cash flow statement

2.16 Other incomeOther income is comprised primarily of interest income. Interest income is recognized using the effective interest method.

2.17 Finance costs

2.18 Provisions & Contingent liability and contingent assets

2.19 Impairmenta Financial assets

b Non-financial assetsIntangible assets and property, plant and equipment

Borrowing costs are recognised in the statement of profit and loss using the effective interest method. The associated cash flows areclassified as financing activities in the statement of cash flows.

GeneralA provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that is reasonablyestimable, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of time value ofmoney is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current marketassessments of the time value of money and the risks specific to the liability.Where discounting is used, the increase in the provisiondue to the passage of time is recognised as a finance cost.

Warranty provisionsProvisions for warranty-related costs are recognised when the product is sold to the customer. Initial recognition is based on historicalexperience. The initial estimate of warranty-related costs is revised annually.

Contingent LiabilityA contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognizedbecause it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises inextremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does notrecognize a contingent liability but discloses its existence in the financial statements.

Contingent assetsContingent assets are not recognised or disclosed in financial statements since this may result in the recognition of income that maynever be realised. However, when the realisation of income is virtually certain, then the relatedasset is not a contingent asset and isrecognised.

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, orwhen annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverableamount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverableamount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those fromother assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is consideredimpaired and is written down to its recoverable amount.

Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstancesindicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. thehigher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generatecash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU towhich the asset belongs.

Financial assets (other than at fair value) The Company assesses at each date of balance sheet whether a financial asset or a group offinancial assets is impaired. Ind AS 109 (‘Financial Instruments’) requires expected credit losses to be measured through a lossallowance. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute afinancing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expectedcredit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increasedsignificantly since initial recognition. The Company provides for impairment upon the occurrence of the triggering event.

Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associatedwith investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

75


2.20 Earnings per share

2.21 Employee benefits2.21.1 Gratuity & Provident Fund - Defined benefit plans

2.21.2 Superannuation - Defined contribution scheme

2.21.3 Compensated absences

2.22 Cash and cash equivalents

The Company presents basic and diluted Earnings per share for its ordinary shares. Basic earnings per equity share is computed bydividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares outstandingduring the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of theCompany by the weighted average number of equity shares considered for deriving basic earnings per equity share and also theweighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Thedilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. theaverage market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of theperiod, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

• Service cost including current service cost, past service cost and gains and losses on curtailments and settlements; and• Net interest expense or income.

Provident fund has been considered as a defined benefit plan since any additional obligations on account of investment risk and interestrate risk are required to be met by the Company.

Contribution to Superannuation Fund, is made at pre-determined rates to the Superannuation Fund Trust and is charged to thestatement of profit and loss during the period in which the employee renders the related services. There are no other obligations otherthan the contribution payable to the Superannuation Fund Trust. The Company is in process of setting up the Superannuation FundTrust.

Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefits. TheCompany measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unusedentitlement that has accumulated at the reporting date. The Company presents the entire accumulated leave as a current liability in thebalance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by theamount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversedin the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. Animpairment loss in case of goodwill is not reversed.The carrying amount of the asset is increased to its revised recoverable amount,provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortizationor depreciation) had no impairment loss been recognized for the asset in prior years.

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity ofthree months or less, which are subject to an insignificant risk of changes in value.For the purpose of statement of cash flows, cash and cash equivalents consist of cash and cheque at hand / remittance in transit andcash and deposit with bank.

The present value of the obligation under defined benefit plans are determined based on actuarial valuation using the Projected UnitCredit Method. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefitplans to recognize the obligation on a net basis.The Company is in process of setting up trust for Gratuity and provident fund.

Remeasurement comprising of actuarial gains and losses is recognized in other comprehensive income (OCI) and is reflected in reservesand surplus as part of equity and is not eligible to be reclassified to profit or loss.

The Company recognises the following changes in the net defined benefit obligation as an expense in statement of profit and loss:

76


2.23

Ind AS 116 - Leases

Recent Indian Accounting Standards (Ind AS)

Ind AS 116, LeasesThe Company is required to adopt Ind AS 116 Leases from January 1, 2020. Ind AS 116 replaces existing leases guidance, including IndAS 17 Leases. Ind AS 116 introduces a single Balance sheet lease accounting model for lessees. A lessee recognises a right-of-use assetrepresenting its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There arerecognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard –i.e. lessors continue to classify leases as finance or operating leases.

The following new standards and amendment to Ind AS have not been applied by the Company as they are effective for annual periodsbeginning on or after January 1, 2020:

ii. Leases in which the Company is a lessorNo impact is expected for leases in which the Company is a lessor.

iii. TransitionThe Company is currently evaluating the implication of Ind AS 116 on the financial statements.

Ind AS 12 – Income taxes (amendments relating to income tax consequences of dividend and uncertainty over income taxtreatments)An entity shall recognise the income tax consequences of dividends when it recognises a liability to pay a dividend. Therefore, the entityshall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to wherethe entity originally recognised those past transactions or events. The Company does not expect any significant impact of thisamendment on its financial statements.

Standards issued but not effective on Balance Sheet date:

The Company does not expect any significant impact of this amendment on its financial statements.

i. Leases in which the Company is a lesseeUnder the new standard, the Company will be required to recognise new assets and liabilities for its operating leases. The nature ofexpenses related to those leases will now change because the Company will recognise a depreciation charge for right-of-use assets andinterest expense on lease liabilities. Previously, the Company recognised operating lease expense on a straight-line basis over the term ofthe lease, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments andthe expense recognised. The Company is in the process of evaluating the potential impact of the adoption of Ind AS 116 on accountingpolicies followed in its financial statements. The quantitative impact of adoption of Ind AS 116 on the financial statements in the periodof initial application is not reasonably estimatable as at present.

a. whether an entity considers uncertain tax treatments separately - The entity shall use judgement to determine whether each taxtreatment should be considered separately or together with one or more other uncertain tax treatments based on which approach betterpredicts the resolution of the uncertainty and in determining the approach an entity might consider how it prepares its income taxfilings and supports tax treatments; or how the entity expects the taxation authority to make its examination and resolve issues thatmight arise from that examination.b. the assumptions an entity makes about the examination of tax treatments by taxation authorities- The entity shall assume that ataxation authority will examine amounts it has a right to examine and have full knowledge of all related information when making thoseexaminations.c. how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates - The entity shallconsider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss),tax bases, unused tax losses, unused tax credits and tax rates would depend upon the aforesaid probability.

The amendment to Appendix C of Ind AS 12 outlines the following:

77


Ind AS 103 – Business Combinations and Ind AS 111 - Joint ArrangementsThe amendment to Ind AS 103 relating to re-measurement clarify that when an entity obtains control of a business that is a jointoperation and had rights to the assets and obligations for the liabilities relating to that joint operation immediately before the acquisitiondate, the transaction is a business combination achieved in stages and the entity shall re-measure its previously held interests in thatbusiness. The amendment to Ind AS 111 clarifies that when an entity obtains joint control of a business that is a joint operation, theentity does not re-measure previously held interests in that business. The Company will apply the amendment if and when it obtainscontrol / joint control of a business that is a joint operation.

Ind AS 19 – Plan Amendment, Curtailment or SettlementThe amendment clarifies that when determining past service cost, or a gain or loss on settlement due to plan amendment, curtailmentor settlement, an entity shall remeasure the net defined benefit liability (asset) using the current fair value of plan assets and currentactuarial assumptions, including current market interest rates and other current market prices, reflecting:

b. the benefits offered under the plan and the plan assets before the plan amendment, curtailment or settlement; and

The Company does not expect any significant impact of this amendment on its financial statements.

Further, if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for theperiod after the re-measurement are determined using the assumptions used for the re-measurement. In addition, amendments havebeen included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

a. the benefits offered under the plan and the plan assets before the plan amendment, curtailment or settlement; and

78

ABB Power Products and Systems India LimitedNotes to the financial statements for the period ended December 31, 2019All amount in Indian Rupees in crores, except as stated otherwise

3 Property, plant and equipment and capital work-in-progress

Freehold Leasehold Leasehold Factory Other Plant and Office Furniture Vehiclesland land improvements buildings buildings equipment equipments and fixtures

Gross carrying valueAs at February 19, 2019 - - - - - - - - - -Transfer pursuant to scheme of arrangement (Refer note 37) 13.71 9.53 0.36 130.16 25.74 477.97 5.99 13.02 0.34 676.82Additions - - - 7.95 1.92 49.46 0.12 1.00 - 60.45Disposals - - - - - (4.99) (0.06) (0.29) (0.03) (5.37)

As at December 31, 2019 13.71 9.53 0.36 138.11 27.66 522.44 6.05 13.73 0.31 731.90

Accumulated depreciationAs at February 19, 2019 - - - - - - - - - -Transfer pursuant to scheme of arrangement (Refer note 37) - 0.71 0.17 2.89 1.24 144.07 1.81 2.42 0.18 153.49Depreciation charge for the period - 0.07 0.03 4.42 2.20 35.39 0.51 0.99 0.04 43.65Disposals - - - - - (4.69) (0.03) (0.22) (0.01) (4.95)As at December 31, 2019 - 0.78 0.20 7.31 3.44 174.77 2.29 3.19 0.21 192.19

Net carrying value as at December 31, 2019 13.71 8.75 0.16 130.80 24.22 347.67 3.76 10.54 0.10 539.71

Capital work in progress as at December 31, 2019 56.69

Notes:1) There are no tangible assets given on operating lease.

Total

2) Freehold land, Leasehold land, Factory buildings and other buildings transferred to the Company, pursuant to the scheme of arrangement, as detailed in note 37 is in the process of being registered in the name ofthe Company.

79


4 Intangible assets

Technical Capitalised TotalKnow-how fees Software

Gross carrying valueAs at February 19, 2019 - - - -Transfer pursuant to scheme of arrangement (Refer note 37) 31.80 33.36 2.41 35.77Additions - - 0.28 0.28As at December 31, 2019 31.80 33.36 2.69 36.05

Accumulated amortisation / impairmentAs at February 19, 2019 - - - -Transfer pursuant to scheme of arrangement (Refer note 37) - 22.18 1.17 23.35Amortisation charge for the period - 4.46 0.30 4.76As at December 31, 2019 - 26.64 1.47 28.11

Net carrying value as at December 31, 2019 31.80 6.72 1.22 7.94

The carrying amount of goodwill was allocated to the cash generating units as follows: December 31, 2019

Power Grids business 31.8031.80

Goodwill and CGU's impairment testing

December 31, 2019

Growth rate 5% - 6%Operating margins 6% - 13%Discount rate 9% - 10%

The Company tests whether goodwill has suffered any impairment on an annual basis as at December 31. The recoverable amount of aCash Generating Unit (‘CGU’) is determined based on value-in-use calculations which require the use of assumptions. The calculations usepre-tax cash flow projections based on financial budgets approved by the management. An average of the range of each assumption used ismentioned below.

The above discount rate is based on the Weighted Average Cost of Capital (WACC) which represents the weighted average returnattributable to all the assets of the CGU. These estimates are likely to differ from future actual results of operations and cash flows.Based on the above assessment, there has been no impairment of goodwill.

GoodwillOther intangible assets

80


Non-current CurrentDecember 31, 2019 December 31, 2019

5 Loans(Unsecured considered good, unless otherwise stated)

Security deposits 4.58 4.50Loans to employees - 3.80

4.58 8.30

81


December 31, 2019

6 Non-current tax asset (net)Advance income-tax (net of provision for tax) 11.53

11.53

82


December 31, 2019

7 Other non-current assetsCapital advances 1.85

Advances recoverable in cash or kind (considered doubtful) 1.94Less: Provision for doubtful advances 1.94

-

Taxes and duties recoverable 0.70Prepaid rent 0.24

2.79

83


December 31, 20198 Inventories (valued at lower of cost and net reliasable value)

Raw materials and components (includes goods in transit goods of `109.08) 332.88Work-in-progress 146.42Finished goods 12.15Traded goods 0.49Stores and spares 1.26

493.20

During the period ended December 31, 2019, `1.71 crores was recognised as an expense in relation to inventory obsolescence.

84



9 Trade receivables

UnsecuredConsidered good - 1,792.85Considered doubtful - 107.91Credit impaired 78.73 -

78.73 1,900.76Less:Loss allowance on doubtful trade receivable 78.73 107.91

- 1,792.85

85


December 31, 2019

10 Cash and cash equivalents

Balances with banks- in current accounts 188.04

188.04Cash and cash equivalents in the balance sheet and statement of cash flows

86


December 31, 2019

11 Other current financial assets(Unsecured considered good, unless otherwise stated)

Deposits with customers 11.88Contract revenue in excess of billing / unbilled revenue 66.45Other receivables 22.95Mark to market gain on forward contracts* 13.01Mark to market gain on embedded derivatives* 11.29

125.58

* Mark to maket gain is identified and accounted based on the underlying contracts. The derivativies are recognised at fair value throughstatement of profit & loss.

87


December 31, 201912 Other current assets

Prepaid expenses 1.70Contract assets (refer note 36) 171.08Advances recoverable in cash or kind 42.57Balance with government authorities 10.37

225.72

88


13 Equity

Share capital

Number of shares AmountAuthorised share capitalAt February 19, 2019 250,000 0.05Increase during the period 49,750,000 9.95At December 31, 2019 50,000,000 10.00

Issued equity share capitalEquity shares of `2 each issued, subscribed and fully paid up Number of shares AmountAt February 19, 2019* 50,000 0.01Changes in equity share capital ** 42,331,675 8.47At December 31, 2019 42,381,675 8.48

Terms/rights attached to equity shares

Details of shareholders holding more than 5% of the shares in the Company

Name of the shareholders Number of shares % of holding

ABB Asea Brown Boveri Limited - the holding company 3,17,86,256 75.00%

Shares held by holding / ultimate holding company Number of shares Amount

ABB Asea Brown Boveri Limited - the holding company 31,786,256 6.3631,786,256 6.36

Equity shares

As at December 31, 2019

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

*On incorporation of the Company, pursuant to the scheme of arrangement, the equity shares were held by ABB India Limited. (Refer note37).

**On December 24, 2019 , the Company issued 42,381,675 number of fully paid equity shares having face value of `2 each to the existingequity shareholders of ABB India Limited in the proportion of 1 share for every 5 shares held, pursuant to the scheme of arrangement.Further, 50,000 number of shares issued to the ABB India Limited at the time of incorporation of the Company has been cancelled as perthe aforesaid scheme. (Refer note 37)

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 voteper share. The Company declares and pays dividends in Indian Rupees.

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

89


December 31, 201914 Other equity

a) Securities premiumTransfer pursuant to scheme of arrangement (Refer note 37) 9.80Closing balance 9.80

b) Retained earningsTransfer pursuant to scheme of arrangement (Refer note 37) 149.93Net profit for the period 165.39Other comprehensive income (net of tax) 0.50Closing balance 315.82

c) Amalgation adjustment deficit accountTransfer pursuant to scheme of arrangement (Refer note 37) (1.56)Closing balance (1.56)

d) Capital reserveTransfer pursuant to scheme of arrangement (Refer note 37) 0.18Closing balance 0.18

e) General reserveTransfer pursuant to scheme of arrangement (Refer note 37) 507.10Closing balance 507.10

Total other equity 831.34

Nature and purpose of other reservesa) Securities premium

b) Amalgation adjustment deficit account

c) Capital reserveCapital reserve acquired pursuant to scheme of arrangement.

d) General reserveGeneral reserve acquired pursuant to scheme of arrangement. The Company can use this reserve for payment of dividend and issue offully paid-up shares. As General reserve is created by transfer of one component of equity to another and is not an item of othercomprehensive income, items included in the General reserve will not be subsequently reclassified to statement of profit and loss.

Securities premium acquired pursuant to scheme of arrangement and shall be utilised in accordance with the provisions of CompaniesAct, 2013.

Amalgamation adjustment deficit account is the deficit between the carrying value of assets, liabilities and reserves transferred to theCompany and the consideration discharged by way of the New Equity Shares issued to the shareholders of ABB India Limited pursuantto the demerger of Power Grid Business from ABB India Limited.

90



15 Other financial liabilities

Security deposits received 1.18 0.01Payable towards purchase of fixed assets - 39.25Employee related payables - 37.44Interest accrued but not due - 12.23Mark to market loss on embeded derivatives* - 8.98Mark to market loss on forward contracts* - 9.07Other payables - 147.72

1.18 254.70

* Mark to maket gain is identified and accounted based on the underlying contracts. The derivativies are recognised at fair value throughstatement of profit & loss.

91


December 31, 2019

16 Income taxThe major components of income tax expense for the periodStatement of profit and loss:

Current tax 62.20Deferred tax (6.94)

Income tax expense reported in the statement of profit and loss 55.26

Other comprehensive incomeDeferred tax related to items recognised in OCI during the year: (0.17)

Income tax expense charged to OCI (0.17)

Reconciliation of tax expense and the accounting profit multiplied by India’s domestic tax rateAccounting profit before income tax 220.65At India's statutory tax rate of 25.17% for the period ended December 31, 2019 55.54

Adjustments in respect of current income taxNon-deductible expenses for tax purposes 0.34Change in Income tax rate (3.06)Other deductible expenses for tax purpose 2.44

Income tax expense at effective tax rate of 25.04% 55.26Deferred tax assets/(liabilities) relates to the following:

Property, plant and equipment (59.21)Intangible assets and goodwill (8.76)Provision for doubtful debts and advances 47.47Demerger related expenses 7.49Expenditure debited to the statement of profit and loss but allowable for tax purpose in subsequent years 8.85

Net deferred tax assets/(liabilities) (4.16)

Deferred tax assets 63.81Deferred tax liabilities (67.97)Deferred tax liabilities, net (4.16)

92


December 31, 201917 Borrowings

(At amortized cost)

Loans from related party (Unsecured)Payable to ABB India Limited 347.62

347.62

The above said loan is subsequently repaid on February 11, 2020.

93


December 31, 2019

18 Trade PayablesDues to micro and small enterprises * 6.46

6.46

Dues to creditors other than micro and small enterprisesAcceptances 213.65Other trade payables 1,055.40

1,269.05

1,275.51

*

(i) The principal amount and the interest due thereon remaining unpaid to any supplier as at December 31, 2019Principal amount 4.76Interest 0.87

(ii) The amount of interest paid by the Company along with the amounts of the payment made to the supplier beyond theappointed day for the period ended December 31, 2019Principal amount -Interest -

(iii) The amount of interest due and payable for the period of delay in making payment (beyond the appointed day duringthe year) 0.83

(iv) The amount of interest accrued and remaining unpaid for the period ended December 31, 2019 1.70

(v) The amount of further interest remaining due and payable for the earlier years. -

(vi) The amount (including interest) due as at December 31, 2019 6.46

The Company has amounts due to Micro and Small Enterprises under The Micro, Small and Medium Enterprises Development Act, 2006(MSMED Act) as at December 31, 2019.

The above disclosures are provided by the Company based on the information available with the Company in respect of the registration status of itsvendors/suppliers.

94


December 31, 2019

19 Other current liabilities

Billing in excess of contract revenue (Refer note 36) 280.83Statutory dues payable 31.86Advance from customer 313.59

626.28

95


CurrentDecember 31, 2019

20 Provisions

Provisions for employee benefitsGratuity (Refer note 30) 3.76Provident fund 0.12Leave benefits 20.42

Other provisionsWarranties 92.43Loss orders 22.73

139.46

Nature of provisions:

i)

ii)

Details of changes in provisions during the period ended December 31, 2019

Class of provisions Transfer pursuant toscheme of

arrangement

Additions Amounts used Unused Amountsreversed

As atDecember 31, 2019

Warranties 84.84 18.08 7.19 3.30 92.43

Loss orders 30.09 12.57 19.910.02 22.73

Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail toperform satisfactorily during the warranty period. Provision made as at December 31, 2019 represents the amount of the expected cost based ontechnical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractualwarranty period.

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

96



December 31, 2019

21 Revenue from operations (net)

Sale of products and servicesSale of products 2,483.24Sale of services 706.58

3,189.82Other operating revenues Scrap sales 10.25 Commission income 1.20 Income from development services 26.93 Miscellaneous income 2.54

40.92

Revenue from operations (net) 3,230.74

22 Other income

Finance incomeInterest income: Interest on security deposit 0.07

0.07Other income Interest income 0.40

0.40

0.47

97



December 31, 2019

23 Cost of raw materials, components consumed and project bought outs

Raw material and components consumedInventory at the beginning of the period (Transfer pursuant to scheme of arrangement) 254.22Add : Purchases during the period 1,830.88Less : Inventory at the end of the period 332.88

Cost of raw materials consumed 1,752.22

24 (Increase)/ decrease in inventories of finished goods, work-in-progress and traded goods

Transfer pursuant to scheme of arrangement- Finished goods 13.28- Work-in-progress 200.86- Traded goods 0.47

214.61Closing stock

- Finished goods 12.15- Work-in-progress 146.42- Traded goods 0.49

159.06

55.55

25 Employee benefit expenses

Salaries, wages and bonus 223.01Gratuity expense (Refer note 30) 4.70Provident fund expense (Refer note 30) 3.45Contribution to superannuation and other funds 7.25Staff welfare expenses 11.08Training, recruitment and transfer expenses 0.27

249.76

26 Depreciation and amortisation expense

Depreciation of tangible assets 43.65Amortisation of intangible assets 4.76

48.41

98



December 31, 201927 Finance costs

Interest expenses 18.80Bill discounting and other charges 7.26Interest expense on provisions measured at amortised cost 0.32

26.38

28 Other expenses

Consumption of stores and spares 18.21Packing expenses 7.96Royalty and technology fees 129.92Freight and forwarding 79.59Postage and telephone 0.94Commission (other than sole selling agent) 3.42Power and fuel 42.58Travelling and conveyance 35.83Insurance 15.95Rates and taxes (net) 3.15Rent 9.76Repairs and maintenance: Buildings 1.33 Plant and machinery 15.27 Others 2.65Provision for doubtful debts and advances / Bad debts / advances written off 5.21Loss on sale of fixed assets (net) 0.34Printing and stationery 1.09Bank charges 1.39Legal and professional* 12.88Trade-mark fees 35.26Information technology expenses 6.88Exchange and commodity rate difference (net) 2.01Services from third parties 29.30Testing and inspection charges 8.26Seminar and publicity expenses 3.09Group management fees 66.03Miscellaneous 29.67

567.97

* Includes auditor's remuneration towards the following:Statutory audit and Group audit fees 1.58

99



December 31, 2019

29 Earning per share (EPS)The following reflects the income and share data used in the basic and diluted EPS computations

EarningsProfit attributable to equity shareholders 165.39

SharesWeighted average number of Equity Shares outstanding during the period - basic 3,70,06,224Dilutive effect on shares -Weighted average number of Equity Shares outstanding during the period - diluted 3,70,06,224

Earnings per share of par value ` 2/- each - Basic and diluted (in `) 44.69

100


30 Gratuity and other post-employment benefit plans

Provident fund plan

December 31, 2019A Gratuity

Gratuity provision 3.76Total 3.76

i) Changes in the defined benefit obligation and fair value of plan assets as at Deccember 31, 2019:

Defined benefitobligation

Fair value ofplan assets

Benefit liability

As at February 19, 2019 - - -Transfer pursuant to scheme of arrangement 61.81 55.32 6.49

Gratuity cost charged to profit or loss:Service cost 3.54 - 3.54Net interest expense 3.35 2.19 1.16Total amount recognised in statement of profit and loss (Note 25) 6.89 2.19 4.70

Remeasurement (gains)/losses in other comprehensive income:- 4.13 (4.13)

Actuarial changes arising from changes in financial assumptions 2.12 - 2.12Experience adjustments 1.34 - 1.34Total amount recognised in other comprehensive income 3.46 4.13 (0.67)

Contributions by employer - 6.77 (6.77)Benefits paid (2.81) (2.82) 0.01As at December 31, 2019 69.35 65.59 3.76

ii) Amount recognized in balance sheetDecember 31, 2019

Present value of funded obligations 69.35Fair value of plan assets 65.59Net funded obligation (3.76)Net defined benefit liability recognised in balance sheet (3.76)

The Company has a defined benefit gratuity plan and provident fund plan and is in process of setting up the trusts to manage theaforesaid plans.

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 perthe Company’s scheme, whichever is higher. The plan assets are held by Asea Brown Boveri Ltd Employees Gratuity Fundon behalf of the Company.

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under theProvident Fund and Miscellaneous Provisions Act, 1952. The plan assets are held by ABB India Employees’ Provident FundTrust on behalf of the Company till the period November 30, 2019 and subsequently it has been remiited to the Regionalprovident fund organisation. The Contribution by employee and employer together with interest are payable at the time ofseparation from service or retirement whichever is earlier.

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

The following table sets out movement in defined benefits liability and the amount recognised in thefinancial statements:

Return on plan assets (excluding amounts included in net interestexpense)

101


iii) Expense recognised in profit or loss December 31, 2019

Current Service Cost 3.54Interest Cost 1.16

4.70

iv) Remeasurements recognised in other comprehensive income

Actuarial loss on defined benefit obligation 3.46Return on plan assets excluding interest income (4.13)

(0.67)

v) The major categories of plan assets of the fair value of the total plan assets are as follows:

Investments quoted in active marketsGovernment of India Securities (Central and State) 8.28%High quality corporate bonds (including Public Sector Bonds) 6.45%Cash 17.49%Scheme of insurance - Conventional products 67.78%Total 100.00%

vi) The principal assumptions used in determining gratuity obligations are shown below:

Discount rate 6.90%Future salary increases 7.75%

vii) The following payments are expected contributions to the defined benefit plan in future years

Within the next 12 months (next annual reporting period) 3.46Between 2 and 5 years 31.38Beyond 5 years 45.07Total expected payments 79.91

viii) A quantitative sensitivity analysis for significant assumption as at December 31, 2019 is as shown below:

Assumptions Discount rate Future salaryincreases

Sensitivity analysis1% increase (5.08) 5.731% decrease 5.83 (5.09)

Impact on defined benefit obligation

The average duration of the defined benefit plan obligation at the end of the reporting period is 10 years.

December 31, 2019

The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit obligationas a result of reasonable changes in key assumptions occurring at the end of the reporting period.

102


B Provident fund

Defined benefitobligation

Fair value ofplan assets

Benefit liability

i)

As at February 19, 2019 - - -Transfer pursuant to scheme of arrangement 208.18 204.63 3.55Current service cost 31.57 - 31.57Interest expense 19.97 19.77 0.20Return on plan assets - 14.25 (14.25)Contributions - 30.94 (30.94)Benefit payments (17.73) (17.73) -Actuarial loss 9.99 - 9.99As at December 31, 2019 251.98 251.86 0.12

ii) Amount recognized in balance sheetDecember 31, 2019

Present value of funded obligations 251.98Fair value of plan assets 251.86Net funded obligation (0.12)Net defined benefit liability recognised in balance sheet (0.12)

iii) The principal assumptions are shown below: December 31, 2019Discount rate 6.90%Expected return on EPFO

iv) A quantitative sensitivity analysis for significant assumption as at December 31, 2019 is as shown below:0.5% increase in discount rate (5.22)0.5% decrease in discount rate 8.92

Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach

v) The major categories of plan assets of the fair value of the total plan assets are as follows:

Investments quoted in active marketsGovernment of India Securities (Central and State) 52.14%High quality corporate bonds (including Public Sector Bonds) 34.20%Cash (including Special Deposits) 13.66%Total 100.00%

vii)

viii)The company contributed `3.45 Crores towards employer's contribution for provident fund during the period December 2019.

8.65% for the first year and 8.60% thereafter

The provident plans are applicable only to employees drawing a salary in Indian rupees and there are no other significant foreigndefined benefit plans.

The sensitivity results above determine their individual impact on the plan's end of year defined benefit obligation. In reality, theplan is subject to multiple external experience items which may move the defined benefit obligation in similar or oppositedirection, while the plan's sensitivity to such changes can vary over time

Changes in the defined benefit obligation and fair value of planassets

103


31 Financial InstrumentsA Fair value of financial assets and financial liabilities

Particulars December 31, 2019Financial Assets at fair value/amortised cost :Loans (refer note 5) 12.88Trade and other receivables (refer note 9) 1,792.85Cash and cash equivalents (refer note 10) 188.04Other financial assets (refer note 11) 101.28

Financial assets at fair value through profit and loss :Derivative instruments (refer note 11) 24.30

Total financial assets 2,119.35

Financial liabilities at fair value/amortised cost:Borrowings (refer note 17) 347.62Trade payables (refer note 18) 1,275.51Other financial liability (refer note 15) 237.83

Financial assets at fair value through profit and loss :Derivative instruments (refer note 15) 18.05

1,879.01

B Fair value Hierarchy

Particulars Amount Level 1 Level 2 Level 3

Financial assets at fair value through profit and loss :Derivative instruments (refer note 11) 24.30 - 24.30 -

Financial liabilities at fair value through profit and loss :Derivative instruments (refer note 15) 18.05 - 18.05 -

Valuation techniques and significant unobservable inputs

There were no transfers between Level 1, Level 2 and Level 3 during the period

The Company’s assets and liabilities which are measured at amortised cost for which fair values are disclosed at December 31, 2019

Total financial liabilities

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a)recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financialstatements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified itsfinancial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneaththe table.

The management assessed that the carrying value of trade receivables, loans, trade payables, other financial assets and liabilities andcash and cash equivalents approximate their fair values, due to the short term maturities of these instruments.

The fair value of financial assets and liabilities is included at the amount at which the instruments could be exchanged in a currenttransaction between willing parties other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

The following table presents the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as at December31, 2019:

The Company enters into derivative financial instruments with banks/ financial institutions. Foreign currency forward contracts arevalued using valuation techniques which employs the use of market observable inputs using present value calculations. The modelincorporates various inputs including the deal specific fundamental, market conditions, maturity period, transaction size, comparabletrades, foreign currency spot and forward rates.

104

C Financial risk management

(i) Market risk

Commodity contracts

Buy /Sell

BuyBuy

(ii) Foreign currency risk

a) Unhedged in foreign currency exposure

The following table analyses the unhedged portion of foreign currency exposure as at December 31, 2019:Particulars SEK BDT BTN CNY OthersTrade receivables (` in Crores) 55.83 4.00 7.68 - 4.181% increase 0.56 0.04 0.08 - 0.041% decrease (0.56) (0.04) (0.08) - (0.04)

Trade payables (` in Crores) - 10.39 3.30 9.27 2.111% increase - 0.10 0.03 0.09 0.021% decrease - (0.10) (0.03) (0.09) (0.02)

(b) Fair value of derivative instrumentsAs at December 31, 2019

(` in Crores)(a) Forward contract for export debtors outstanding 10.51(b) Forward contract for import creditors outstanding (9.07)(c) Forward cover for expected future sales / purchases 2.50

(c) Forward contracts outstanding as of December 31, 2019

Currency Number ofContracts (` in Crores)

ExportsAUD 7 4.40CHF 12 26.79EUR 53 73.52SEK 4 32.19USD 154 158.33

295.23

As at December 2019 Aluminium 2 74 MT

The Company uses commodity future contracts to hedge risk against fluctuation in commodity prices. The following are outstandingfuture contracts entered into by the Company as on December 31, 2019.

Year Commodity Number of contracts Contractualquantity

The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of thesefinancial liabilities is to support its operations. The Company’s principal financial assets include trade and other receivables, and cashand cash equivalents that derive directly from its operations.

The Company is exposed to market risk, liquidity risk and credit risk. The Company’s senior management oversees the managementof these risks. The Company’s senior management is supported by a Risk management committee that advises on financial risks andthe appropriate financial risk governance framework for the Company. The Risk management committee provides assurance to theCompany’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedures andthat financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. All derivativeactivities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision.It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviewsand agrees policies for managing each of these risks, which are summarised below.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in marketprices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk andcommodity risk. Financial instruments affected by market risk include loans and borrowings, trade payables, deposits and investments.

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarilywith respect to the SEK. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilitiesdenominated in a currency that is not Company’s functional currency (INR).

As at December 2019 Copper 23 783 MT

105

Currency Number ofContracts (` in Crores)

ImportsCHF 33 52.61EUR 88 93.15SEK 67 116.27USD 159 188.72CNY 43 27.43CNH 1 0.02

478.20

(iii) Interest rate risk

December 31, 2019347.62

(iv) Credit risk

a) Trade receivables

December 31, 2019Balance at the beginning of the period -Transfer as part of scheme of arrangement 190.92Add: Additional ECL provision/(reversal) (2.98)Add: Additional provision 20.67Less: Utilisation/reversal 21.97Balance at the end of the period 186.64

b) Other than trade receivables

The Company's exposure to changes in interest rates relates primarily to the Company's outstanding Payable to ABB India Limited.

Payable to ABB India Limited

The above loan carries an interest rate of 10%. The interest rate is fixed, hence there is no interest rate risk applicable for theCompany. Further, the aforementioned loan has been subsequently repaid on February 11, 2020.

ParticularsReconciliation of loss allowance

The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provisionmatrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forwardlooking estimates. At year end, the historical observed default rates are updated and changes in the forward-looking estimates areanalyzed.Individual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade receivable and theamount of the loss is recognised in the statement of profit and loss within other expenses.

Specific allowance for loss is also been provided by the management based on expected recovery on individual customers.The provision provided in books for trade receivables overdue:

Trade receivables consists of a large number of customers spread across diverse industries.The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivable. Under the simplifiedapproach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLsat each reporting date, right from initial recognition.

The exposure of the Company’s borrowing to interest rate changes at the end of the reporting period are asfollows:

Management believes that the parties from which the receivables are due have strong capacity to meet the obligations and risk ofdefault is negligible or nil and accordingly no provision for expected credit loss has been recorded.

Management does not expect any significant loss from non-performance by counterparties on credit granted during the financial yearthat has not been provided for.

Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstandingaccounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective ofmanaging counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of thecounterparties, taking into account their financial position, past experience and other factors.

106

(v) Liquidity Risk

ParticularsOn

demandLess than 1

yearMore than 1

year TotalPeriod ended

Non-derivativesBorrowings - 347.62 - 347.62Other financial liabilities - 236.65 1.18 237.83Trade payables - 1,275.51 - 1,275.51Total non-derivative liabilities - 1,859.78 1.18 1,860.96

Derivatives (net settled)Embedded derivatives - 8.98 - 8.98Foreign currency - 9.07 - 9.07Total derivative liabilities - 18.05 - 18.05

32 Capital management

Particulars December 31, 2019Borrowings 347.62Trade payables 1,275.51Other financial liabilities 255.88

188.04Net Debt 1,690.97

Total equity 839.82

Capital and net debt 2,530.79

Gearing ratio 67%

December 31, 2019

Less: Cash and cash

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equityreserves attributable to the equity holders of the parent. The primary objective of the Company’s capital management is to maximisethe shareholder value.The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirementsof the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders,return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided bytotal capital plus net debt.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdraftsand debentures. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability offunding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions.Due to the dynamic nature of the underlying businesses, Company maintains flexibility in funding by maintaining availability undercommitted credit lines.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

December 31, 2019

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meetsfinancial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. No changes weremade in the objectives, policies or processes for managing capital during the period ended December 31, 2019.

107


December 31, 201933 Contingent liabilities and contingent assets

Contingent liabilities (Claims against the Company not acknowledged as debts)

Other matters 55.92-

55.92The Company does not have any contingent assets at the balance sheet date.

34 Commitments

(a) Capital commitments

50.66

(b) Non-cancellable operating leases

The schedule of future minimum lease payments in respect of non cancellable operating leases is set out below:ParticularsWithin one year 9.45Later than one year but not later than five years 26.62Later than five years -

-Total 36.07

(c) Finance leaseThere are no assets taken on finance lease as on December 31, 2019.

The Company has taken several premises and vehicles under cancellable and non-cancellable operating leases. These leaseagreements are normally for one to five years and have option of renewal on expiry of lease period based on mutual agreement.

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

Rental expenses towards cancellable and non-cancellable operating lease charged to the statement of profit and loss amounts toRs.9.76 crores for the period ended December 31, 2019.

December 31, 2019

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

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

Estimated amount of contracts remaining to be executed on account of capital commitmentsand not provided for (net of advances)

108


35 Segment information

(i) The entity wide disclosures as required by Ind AS-108 are as follows:

Description For the period fromFebruary 19, 2019 to

December 31, 2019

Sale of products 2,483.24Sale of services 706.58Other operating revenues 40.92Revenue from operations 3,230.74

(ii) Geographical information

Revenue from customers For the period fromFebruary 19, 2019 to

December 31, 2019India 2,699.97Other countries* 530.77

3,230.74*Exports to any single country are not material to be disclosed

Non-current assets** December 31, 2019India 638.93Other countries* -

638.93** Non current assets does not include deferred tax assets, financial instruments and non-current tax assets.

36 Revenue from contracts with customersa) Disaggregated revenue information

Revenue by geography For the period fromFebruary 19, 2019 to

December 31, 2019 2,699.97

530.773,230.74

An operating segment is a component that engages in business activities from which it may earn revenues and incur expenses, includingrevenues and expenses that relate to transactions with any of the other components, and for which discrete financial information isavailable. The company is engaged in the business relating to products, projects and services for electricity transmission and relatedactivities. Accordingly, the Company's activities and business is reviewed regularly by the chief operating decision maker from an overallbusiness perspective, rather than reviewing its products/services as individual standalone components. Thus, the Company has only oneoperating segment, and has no reportable segment in accordance with Ind AS- 108 'Operating Segments'.

IndiaOther countries*

* Exports to any single country are not material to be disclosed.

(iii) Power Grid Corporation of India Limited accounts more than 10% of Company's total revenue from operations.

109


Revenue by offerings For the period fromFebruary 19, 2019 to

December 31, 2019Sale of products 2483.24Sale of services 706.58Other operating revenue 40.92

3,230.74

b) Contract balances December 31, 2019Trade receivables 1,792.85Advance from customers (Contract liabilities) 313.59Billing in excess of contract revenue 280.83Contract assets 171.08Contract revenue in excess of billing / unbilled revenue 66.45

During the period, the company has recognised of ` 173.04 crores arising from opening deferred income as of April 1, 2019.

d) Performance ObligationInformation about the Company’s performance obligations are summarised below:

Execution of long term contract for projectsi.)

ii.)

A contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer andhence is not a financial instrument. In Company’s contracts with customers, since the contractual right to payment arises only uponachievement of milestones specified in the contract, it is believed that the performance completed until the achievement of a particularmilestone should be recorded as a contract asset under non-financial assets.

During the period ` 54.93 crores of contract assets pertaining to the long term contracts as of April 1, 2019 has been reclassified to tradereceivables upon billing to customers on completion of milestones.

c) No significant adjustment expected in contract price for revenue recognised in statement of profit and loss.

Long term (Construction type) contracts - The long term contracts are ordinarily presumed to consist of combined obligations whichare not distinct in the context of the contract (i.e., single performance obligation). This is highly attributed to the long-term constructionnature of the projects, whereby deliverables are typically highly interrelated and combined. The typical scope of turnkey contractsarrangements includes Engineering, manufacturing, shipment, delivery installation, testing, erection and commissioning and civil works.Although there are several components to the overall scope of the contract, the turnkey contracts are generally considered oneperformance obligation.

Products manufacturing and erection, commissioning and installation contracts - These contracts comprising of two performanceobligations of supply of products and erection and commissioning thereof. When the manufacturing stage is complete, factory acceptancetesting procedures are performed to ensure the equipment meets customer specifications and may involve the customer physicallyobserving the testing procedures. Revenue from contracts, where the performance obligations are satisfied over time and otherconsideration, is recognized as per the percentage of completion method. The Company uses the percentage of completion method basedon the costs expended to the date as a proportion of the total costs to be expended.

For certain products like transformers and Gas insulated switchgears, percentage of completion is followed basis acceptance of"Factory Acceptance test" (FAT) carried by the customer basis the Company's assessment that these products being manufacturedhave an alternative use till the time FAT is carried out.

Company as part of its contracts, provides warranties of the equipment for defects arising out of poor workmanship, inferior materialor manufacturing. Such warranty provided is in the nature of assurance warranty and is not accounted for as a separated performanceobligation.

110


e) Remaining performance obligations

f)

37 Business restructuringScheme of arrangement

Particulars Amount

AssetsProperty, plant and equipment 523.33Capital work-in-progress 37.86Goodwill 31.80Other intangible assets 12.42Other non-current assets 7.20Other financial assets 270.85Inventories 469.58Trade Receivables 1,407.44Loans 8.25Other current assets 63.39Total-A 2,832.12LiabilitiesOther financial liabilities 101.24Deferred tax liabilities (net) 10.95Trade payables 1,071.63Other financial liabilities 223.30Other current liabilites 608.10Provisions 142.97Total-B 2,158.19Net assets (A-B) 673.93

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at theend of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue.

The aggregate value of performance obligations that are completely or partially unsatisfied as at December 31, 2019 is ` 5,100.65crores. The conversion to revenue is highly dependent on meeting the delivery schedules, contractual terms and conditions withcustomers, availability of customer sites, changes/ variation in scope/ prices etc. In view of these, it is not practical to define theaccurate percentage of conversion to revenue. However, it will be in a range of 1 to 3 years.

There was no revenue recognised in the current year ended December 31, 2019 from performance obligations satisfied (or partiallysatisfied) in previous periods due to no significant changes in transaction price.

The Board of directors of ABB India Limited on March 5, 2019 granted in-principle approval for the Scheme of Arrangement underSections 230-232 and other applicable provisions of the Companies Act, 2013 (‘the Scheme’) between ABB India Limited ("‘DemergedCompany’), ABB Power Products and Systems India Limited ("‘Resulting Company’ or 'APPSIL'") and their respective shareholders andcreditors for the demerger of Power Grid business from ABB India Limited into APPSIL. The Scheme of Arrangement for Demerger wassubmitted to National Company Law Tribunal (NCLT), Bengaluru Bench for approval. In principal approval of the Demerger Schemewas obtained from NCLT on November 27, 2019 and a certified copy has been filed by the Company with the Registrar of Companies,Bangalore, on December 1, 2019. The financial statements of the Company have been prepared considering the effect of the scheme ofarrangement from the Appointed date ie., April 01, 2019. The scheme has been considered in these financial statements by transferring theassets and liabilities as identified by the management as pertaining to the Power Grid business of ABB India Limited to APPSIL witheffect from the" Appointed Date" at their respective book values as follows:

111


Particulars AmountStamp Duty charges 37.23Professional Charges 1.93Others 1.63Total 40.79

As consideration for the value of net assets transferred, the Company has issued 1 (One) fully paid up equity share of `2 each for every 5(Five) Equity shares of `2 each held by existing shareholders in ABB India Limited. There is no contingent consideration payablepursuant to this acquisition.

As per the applicable accounting standard Ind AS 103 (‘standard’), since this demerger is a common control business combination, thefinancial information necessitates restatement by the Company at carrying amounts not from the appointed date but from the beginningof the preceding period in the financial statements which happens to be the date of incorporation ie February 19, 2019. Consequentially,the Company is required to give effect to the business combination from February 19, 2019 (date of its incorporation). However, theCompany has recognised the impact of the business combination only from April 1, 2019 (i.e. the appointed date specified in the scheme).The management believes that due to incoherence between the appointed date i.e., April 1, 2019 and date of incorporation i.e. February 19,2019 and requirements of Ind AS 103 such a one off situation has arisen. Thus, the statement of profit and loss (including othercomprehensive income), statement of changes in equity and statement of cash flows for the period do not contain the impact of thetransactions of the demerged undertaking from February 19, 2019 to March 31, 2019. However, there is no impact of the same on theCompany’s balance sheet as at December 31, 2019.

Further, the Company has incurred the following cost due to the demerger which has been classified as exceptional items in the statementof profit and loss:

Further, as per the Scheme, the deficit, if any, between the carrying value of assets, liabilities and reserves transferred to the "ResultingCompany" and the consideration discharged by way of the New Equity Shares issued to the shareholders of the "Demerged Company" inlieu of the Demerged Undertaking has been recorded as ‘Amalgamation Adjustment Deficit Account’ in the books of the "‘ResultingCompany".

112

ABB Power Products and Systems India LimitedNotes to the financial statements for the period ended December 31, 2019

38 Related party disclosures

Party where control exists:ABB Limited, Zurich, Switzerland (Ultimate Holding Company)ABB Asea Brown Boveri Limited, Zurich, Switzerland (Holding Company)Entities under common control

Name of the Fellow subsidiaries:

ABB (China) Ltd., Beijing, China ABB Management Services Ltd., Zurich, SwitzerlandABB Mexico S.A. de C.V., San Luis Potosi SLP, Mexico

ABB (Namibia) (Pty) Ltd., Windhoek, Namibia ABB N.V., Zaventem, BelgiumABB (Private) Ltd.; Harare; Zimbabwe ABB Near East Trading Ltd., Amman, JordanABB (Pty) Ltd., Gaborone, Botswana ABB Oy, Helsinki, FinlandABB A/S, Skovlunde, Denmark ABB PG Muscat LLC; Muscat, Oman.; OmanABB AB, Västerås, SwedenABB AG, Mannheim, Germany ABB Power Grids Australia Pty Ltd, Brisbane, Queensland, AustraliaABB AS, Billingstad, Norway ABB Power Grids Bulgaria EOOD, Sevlievo, BulgariaABB Asea Brown Boveri Ltd, Zurich, Switzerland ABB Power Grids Canada Inc, Saint-Laurent, Quebec, CanadaABB Australia Pty Limited, Moorebank, NSW, Australia ABB Power Grids Chile SA, Santiago, ChileABB Automation GmbH, Mannheim, Germany ABB Power Grids Colombia Ltda, Bogotá, ColombiaABB B.V., Rotterdam, Netherlands ABB Power Grids Denmark A/S, Skovlunde, DenmarkABB Beijing Switchgear Limited, BeiJing, China ABB Power Grids Germany AG, Mannheim, GermanyABB Bulgaria EOOD, Sofia, Bulgaria ABB Power Grids Greece Single Member SA; Metamorphossis Attica ; Greece

ABB Business Services Sp. z o.o., Warsaw, PolandABB Contracting Company Ltd., Riyadh, Saudi Arabia ABB Power Grids Italy S.p.A., Milano, ItalyABB Ecuador S.A., Quito, Ecuador ABB Power Grids Ltd., Moscow, Russian FederationABB Electrical Equipment (Xiamen) Co., Ltd., Xiamen, China ABB Power Grids Malaysia Sdn Bhd, Kuala Lumpur, MalaysiaABB Electrical Industries Co. Ltd., Riyadh, Saudi Arabia ABB Power Grids Peru S. A., Lima, Peru

ABB Elektrik Sanayi A.S., Istanbul, Turkey ABB Power Grids Poland Sp. z o.o., Warsaw, PolandABB Engg. Technologies Co. (KSCC), Safat, Kuwait ABB Power Grids Singapore Pte. Ltd., Singapore , Singapore

ABB Power Grids South Africa (Pty) Ltd, Johannesburg, South Africa

ABB Enterprise Software Inc., Atlanta, GA, United States ABB Power Grids Sweden AB, Västerås, SwedenABB for Electrical Industries (ABB ARAB) S.A.E., Cairo, Egypt ABB Power Grids Switzerland Ltd, Baden, SwitzerlandABB Global Industries and Services Private Limited, Bangalore, India ABB Power Products And Systems India Limited, Bengaluru, IndiaABB Global Marketing FZ LLC, Dubai, United Arab Emirates ABB Pte. Ltd., Singapore, SingaporeABB High Voltage Switchgear (Xiamen) Company Ltd., Xiamen, China ABB S.A., Buenos Aires, ArgentinaABB High Voltage Switchgear Co., Ltd. Beijing, Beijing, China ABB S.A., Casablanca, MoroccoABB Inc., Cary, NC, United States ABB S.A., Lima, PeruABB Inc., Saint-Laurent, Quebec, Canada ABB S.A., Santiago, ChileABB India Limited, Bangalore, India ABB S.p.A., Milan, ItalyABB Industries (L.L.C.), Dubai, United Arab Emirates ABB s.r.o., Prague, Czech RepublicABB Industries FZ, Dubai, United Arab Emirates ABB SARL, Kinshasa Gombe, Congo, Democratic Republic of theABB Information Systems Ltd., Zurich, Switzerland ABB Schweiz AG, Baden, Switzerland

ABB Sécheron S.A., Satigny, Switzerland

ABB K.K., Tokyo, Japan ABB Sifang Power System Co. Ltd.; Beijing; ChinaABB Limitada, Maputo, Mozambique ABB South Africa (Pty) Ltd., Modderfontein, South AfricaABB Limited/Jordan LLC., Amman, Jordan ABB Sp. z o.o., Warsaw, PolandABB Limited, Auckland, New Zealand ABB Asea Brown Boveri SRL, BUCHAREST, RomaniaABB Limited, Bangkok, ThailandABB Limited, Dar Es Salaam, Tanzania, United Republic of ABB Supply Operations Ltd., Baden, SwitzerlandABB Limited, Dhaka, Bangladesh ABB Technologies Ltd., Haifa, Israel

ABB (Hong Kong) Ltd., Hong Kong, Hong Kong Special AdministrativeRegion of China

ABB Enterprise Software (PGHV US non-legal entity), Mt. Pleasant, PA,United States

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

ABB Power Grids Argentina S.A.U., Ciudad Autonoma de Buenos Aires, Argentina

ABB Substations Contracting India Private Limited, Banglore, India

ABB Power Grids Hong Kong Limited, Hong Kong, Hong Kong SpecialAdministrative Region of China

113


ABB Limited, Dublin, Ireland ABB Technology SA, Abidjan, Cote d'IvoireABB Limited, Nairobi, KenyaABB Limited, Warrington, United Kingdom ABB Xi'an Power Capacitor Company Limited, Xi'an, ChinaABB LLC,, Muscat, Oman ABB, Inc., Paranaque, Metro Manila, PhilippinesABB LLC, Doha, Qatar ABBNG Limited, Lagos, NigeriaABB Ltd., Hanoi, Viet Nam Asea Brown Boveri Lanka (Private) Limited, Colombo, Sri LankaABB Ltd., Lusaka, Zambia Asea Brown Boveri Ltd., Moka, MauritiusABB Ltd., Moscow, Russian Federation Asea Brown Boveri S.A., Madrid, SpainABB Ltd., Seoul, Korea, Republic of PT ABB Sakti Industri, Jakarta, IndonesiaABB Ltd., Taipei, Taiwan (Chinese Taipei) Pucaro Elektro-Isolierstoffe GmbH, Roigheim, GermanyABB Ltda., São Paulo, Brazil Sucursal Panama de ABB SA, Panama, PanamaABB Malaysia Sdn Bhd., Subang Jaya, Malaysia Trasfor SA; Monteggio; SwitzerlandABB Management Holding Ltd., Zürich, Switzerland

Key managerial personnel :(a) Managing Director Venu Nuguri(b) Non-Executive Director Sanjeev Sharma

(c) Non-Executive cum Independent DirectorsAkhila KrishnakumarNishi VasudevaMukesh Hari ButaniFrank Duggan

(d) Chief Financial Officer Ajay Singh(e) Company Secretary Poovanna C Ammatanda

Transactions with related parties


December 31, 2019

i) Revenue from operationsFellow Subsidiaries- ABB India Limited; Bangalore; India 453.19- ABB Schweiz AG, Baden, Switzerland 90.86- Other fellow subsidiaries 279.04

823.09

ii) Purchases of raw materials, components , project items and traded goods

229.1786.13

159.41474.71

Transaction value in excess of 10% with a fellow subsidiary has been individually disclosed below. All other cases have been grouped and disclosedas 'other fellow subsidiaries'.

Fellow Subsidiaries- ABB India Limited; Bangalore; India- ABB Power Grids Sweden AB; Västerås;- Other fellow subsidiaries

ABB Transmission & Distribution Limited LLC, Abu Dhabi, United Arab Emirates

114


iii) Expenditure on royalty, technology and trade-mark feesHolding Company 35.26

129.640.28

165.18

iv) Expenditure on information technology, engineering, management and other servicesUltimate Holding Company 0.09

55.8224.6229.54

110.07

v) Expenses recovered from group companies

- ABB Power Grids Chile SA; Santiago; Chile 2.342.161.861.817.76

15.93

vi Other capital expenditureFellow Subsidiaries- ABB India Limited; Bangalore; India 2.96- ABB Power Grids Sweden AB; Västerås; Sweden 0.97- ABB Schweiz AG; Baden; Switzerland 0.61

0.274.81

vii) Interest expenses

Fellow Subsidiaries12.23

viii) Loan taken- ABB India Limited; Bengaluru; India 347.62

ix) Remuneration to key managerial personnel

ParticularsShort term employee benefits 0.32Post employment benefits# 0.02Directors' Sitting fees -Commission to Directors -

Total

- Other fellow subsidiaries

- PT ABB Sakti Industri; Jakarta; Indonesia- ABB Power Grids Argentina S.A.U.; Ciudad Autonoma de

Fellow Subsidiaries- ABB Management Holding Ltd.; Zürich; Switzerland- ABB India Limited; Bangalore; India

- ABB Management Holding Ltd.; Zürich; Switzerland

Fellow Subsidiaries

Fellow Subsidiaries- ABB Schweiz AG, Baden, Switzerland- Other fellow subsidiaries



- ABB India Limited; Bangalore; India

The remuneration of key management personnel and a relative of key management personnel of the company are setout below in aggregate for each of the categories specified in Ind AS 24 Related party disclosures

# Does not include gratuity and compensated absences as these are provided in the books of accounts on the basis of actuarial valuation

115


c) Amount due to / from related parties

As atDecember 31, 2019

i) Trade receivablesFellow Subsidiaries

589.34- Other fellow subsidiaries 123.36

712.70- Add/ (Less ) :Impact of foreign currency restatement 1.11

713.81

ii) Other financial assetsFellow Subsidiaries

18.9112.03

- Other fellow subsidiaries 6.5837.52

- Add/ (Less ) :Impact of foreign currency restatement -37.52

iii) Other current assetsFellow Subsidiaries

6.461.42


- Add/ (Less ) :Impact of foreign currency restatement 0.298.57

iv) Trade payablesFellow Subsidiaries

243.1365.03



v)4.39

Fellow Subsidiaries0.68



- ABB South Africa (Pty) Ltd.; Modderfontein; South Africa

ABB India Limited; Bangalore; India

- ABB Schweiz AG; Baden; Switzerland

- ABB Power Grids Sweden AB; Västerås; Sweden

- ABB Power Grids Sweden AB; Västerås; Sweden


Balances in excess of 10% with a fellow subsidiary has been individually disclosed below. All other cases have beengrouped and disclosed as 'other fellow subsidiaries.


Other financial liabilities

- ABB Schweiz AG, Baden, Switzerland


116


vi) Other current liabilities

Fellow Subsidiaries22.812.59






Ajay Singh Poovanna C AmmatandaChief financial officer General Counsel

& Company Secretary(FCS4741)

Place: Bengaluru Place: MumbaiDate: February 28, 2020 Date: February 28, 2020

- ABB Schweiz AG, Baden, Switzerland- ABB South Africa (Pty) Ltd.; Modderfontein; South Africa

117

118

SECTION VI: LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

Except as disclosed in this section, there is no outstanding (i) criminal proceeding; (ii) action taken by regulatory or

statutory authorities; (iii) claim related to direct and indirect taxes (in a consolidated manner); and (iv) other pending

litigation whose outcome could have a material adverse effect on the position of our Company, in each case involving our

Company, its Promoter and Directors. Further, except as disclosed in this section, there are no disciplinary actions

including penalties imposed by SEBI or the Stock Exchanges against our Promoter in the last five financial years including

any outstanding action.

All outstanding litigation, including any litigation involving our Company, its Promoter and Directors, other than criminal

proceedings, actions by regulatory authorities and statutory authorities, disciplinary action including penalty imposed by

SEBI or stock exchanges against the Promoter in the last five financial years including any outstanding action and tax

matters (direct or indirect), would be considered ‘material’ if: (i) the monetary amount of claim by or against the entity or

person in any such pending proceeding is in excess of ₹331.19 million, which is 5% of the total net worth of the Power

Grids Business post-Scheme; or (ii) where monetary liability is not quantifiable, however, the outcome of any such pending

proceedings may have a material bearing on the business, operations, performance, prospects or reputation of the

Company .

Litigation involving our Company

With effect from the Appointed Date, litigations involving the Demerged Undertaking whether pending on the Appointed

Date or which were instituted any time thereafter, have continued to be prosecuted or enforced, as the case maybe, against

our Company. Details of the said litigations, are set forth below:

Civil Litigation against our Company

As of the date of this Information Memorandum, there are no material outstanding civil litigation instituted against our

Company which involve a monetary liability of ₹331.19 million or more, nor any outstanding litigation wherein monetary

liability is not quantifiable, the outcome of which a material bearing on the business, operations, performance, prospects

or reputation of the Company, other than as disclosed below.

Civil Litigation by our Company

Except as disclosed below, there are no outstanding civil litigation by our Company:

1. INABB had initiated arbitration proceedings against the Telangana State Central Power Distribution Corporation

Limited (“TSCPDCL”) for recovery of dues aggregating ₹86.56 million and interest under a contract in relation to

the ‘Andhra Pradesh Energy Efficiency Project – Hyderabad Integrated SCADA Project’. In the said proceedings,

TSCPDCL had claimed an amount of ₹472.49 million as counter claim. The arbitral tribunal pursuant to its award

dated December 30, 2015 (“Award”) partially allowed the claim of INABB and rejected the counter claim of

TSCPDCL. Aggrieved by the Award, TSCPDCL filed two applications under Section 34 of the Arbitration and

Conciliation Act, 1996 before the City Civil Court, Hyderabad, one to challenge the award rejecting its counter claim

(O.P. 66 of 2016) and another to challenge the Award passed in favour INABB (O.P. 1623 2016 changed to C.O.P.

No. 22/2018). In addition, INABB has also filed an application under Section 34 of the Arbitration and Conciliation

Act, 1996 before the said Court, challenging the Award partially allowing its claim (O.P. 916/2016 changed to COP

178/2017). All these matters are currently pending.

2. INABB has filed a suit dated October 11, 2019 (bearing no. Com. O.S. 296/2019) before the Principal City Civil and

Sessions Judge, Bengaluru against Karnataka Power Transmission Corporate Limited (“KPTCL”) and three electricity

supply companies (collectively, the “Defendants”) praying, inter alia, (a) for the issuance of the declaration of date

of commercial operation certificate (“DOC”) pursuant to completion of INABB’s obligations under the contract

entered into between the Defendants and INABB (“Contract”); and (b) for payment of an amount aggregating

₹1,041.69 million to INABB by KPTCL as per the Contract. Pursuant to the terms of the Contract entered into between

INABB and the Defendants, INABB was awarded the contract in two phases in 2007 and 2009, to set up an integrated

extended supervisory control and data acquisition system i.e., SCADA System, including annual maintenance contract

for two years after declaration of the DOC by KPTCL. INABB alleged that upon completion of its contractual

obligations under the Contract, KPTCL refused to issue the DOC and an release an amount of ₹1,041.69 million

payable to INABB pursuant to the terms of the Contract. Aggrieved by the said facts, INABB filed the present suit.

Further, INABB filed an interlocutory application before the Principal City Civil and Sessions Judge, Bengaluru

119

seeking an interim stay to restrain KPTCL from invoking bank guarantees aggregating ₹719 million. The Principal

City Civil and Sessions Judge, Bengaluru pursuant to its order dated October 14, 2019, granted an ex-parte ad-interim

order in favour of INABB restraining KPTCL from invoking the said bank guarantees. This matter is currently

pending.

Criminal Litigation against our Company

As of the date of this Information Memorandum, there are no outstanding criminal litigation against our Company.

Criminal Litigation by our Company

Other than as disclosed below, there are no outstanding criminal litigation initiated by our Company as of the date of this

Information Memorandum.

There are 16 cases filed by our Company against various individuals under the provisions of the Negotiable Instruments

Act, 1881 and the Code of Criminal Procedure, 1973. All these cases have been filed in order to recover sums due to our

Company for which cheques issued in favour of our Bank have been dishonoured. The total pecuniary value involved in

all these matters is ₹45.91 million.

Actions by statutory/ regulatory authorities against our Company

As of the date of this Information Memorandum, there are no actions taken by any statutory or regulatory authority against

our Company.

Material Frauds against our Company

There have been no material frauds committed against our Company in the five years preceding the date of this Information

Memorandum.

Proceedings initiated against our Company for economic offences

As of the date of this Information Memorandum, there are no pending proceedings initiated against our Company for any

economic offences.

Statutory Dues

As of the date of this Information Memorandum, there have been no: (i) instances of non-payment or defaults in payment

of statutory dues by our Company, (ii) overdues to companies or financial institutions by our Company, or (iii) defaults

against companies or financial institutions by our Company.

Outstanding dues to creditors

As of December 31, 2019, the total number of creditors of our Company was 2,978 and the total outstanding dues to these

creditors by our Company was `11,199.52 million.

Litigation involving our Promoter

Civil litigation against ABB Asea Brown Boveri Ltd

As of the date of this Information, there are no material outstanding civil litigation against our Promoter.

Civil litigation by ABB Asea Brown Boveri Ltd

As of the date of this Information, there are no material outstanding civil litigation instituted by our Promoter.

Criminal litigation against ABB Asea Brown Boveri Ltd

As of the date of this Information, there are no outstanding criminal litigation against our Promoter.

Criminal litigation by ABB Asea Brown Boveri Ltd

120

As of the date of this Information, there are no outstanding criminal litigation by our Promoter.

Actions by statutory/ regulatory authorities against ABB Asea Brown Boveri Ltd

As of the date of this Information, there are no pending actions by regulatory and statutory authorities against our Promoter.

Litigation involving our Directors

Civil Litigation against our Directors

As of the date of this Information, there are no material outstanding civil litigation against any of our Directors.

Civil Litigation by our Directors

As of the date of this Information, there are no material outstanding civil litigation against any of our Directors.

Criminal Litigation against our Directors

As of the date of this Information, there are no outstanding criminal litigation against any of our Directors.

Criminal Litigation by our Directors

As of the date of this Information, there are no outstanding criminal litigation by any of our Directors.

Actions by statutory or regulatory authorities against our Directors

As of the date of this Information, there are no pending actions by regulatory and statutory authorities against any of our

Directors.

Litigation involving our Group Companies

Our Group Companies are not involved in any litigation which have a material impact on our Company.

Tax claims

As of the date of this Information Memorandum, there are no claims related to direct and indirect taxes, involving our

Company, Directors and Promoter.

121

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for Listing

The NCLT, vide its order delivered on November 27, 2019 has approved the Scheme of Arrangement between INABB and

the Company and their respective shareholders and creditors. Pursuant to the Scheme, the Demerged Undertaking of the

INABB has been transferred to and vested with our Company on with effect from the Appointed Date, in accordance with

Sections 230 to 232 of the Companies Act, 2013 and applicable laws.

In accordance with the Scheme, the Equity Shares of our Company issued pursuant to the Scheme shall be listed and

admitted for trading on BSE and NSE. Such listing and admission for trading is not automatic and will be subject to

fulfilment by the Company of the listing criteria of BSE and NSE and also subject to such other terms and conditions as

may be prescribed by BSE and NSE at the time of the application by our Company seeking listing. BSE and NSE have,

pursuant to their letters dated February 27, 2020 and February 28, 2020, respectively, granted our Company in-principle

approval for listing of 42,381,675 Equity Shares.

Eligibility Criteria

There being no initial public offering or rights issue, the eligibility criteria in terms of the SEBI ICDR Regulations are not

applicable. Pursuant to the SEBI Circular, our Company filed an exemption application with the Stock Exchanges for

exemption under Rule 19(7) of the SCRR, from the strict enforcement of the requirement of Rule 19(2)(b) of the SCRR

for the purpose of listing of shares of the Company, from SEBI. The SEBI has, pursuant to a letter dated March 13, 2020,

granted our Company relaxation from the applicability of 19(2)(b) of the SCRR, subject to compliance with the following

conditions:

• Clauses 5 and 7 of the SEBI circular no. CFD/DIL3/CIR/2018/2 dated January 3, 2018, if applicable

• There is no variation or deviation from conditions of the Scheme sanctioned by the NCLT

• There is no change in the information/ facts submitted in the application till the date of listing of the Equity Shares of

the Company

The Company shall publish, an advertisement in one English and one Hindi newspaper each with nationwide circulation

and one Kannada newspaper with wide circulation since the Registered Office of the Company is located in Bengaluru,

Karnataka, containing details in accordance with the requirements set out in the SEBI Circular. The advertisement shall

draw specific reference to the availability of this Information Memorandum on our Company’s website.

Prohibition by SEBI

Our Company, Promoter, Directors, the persons in control of the Company and the persons in control of our Promoter are

not prohibited from accessing the capital market or debarred from buying, selling or dealing in securities under any order

or direction passed by SEBI or any securities market regulator in any other jurisdiction or any other authority/court.

None of the companies with which our Promoter, Directors or persons in control of our Company are promoter, directors

or persons in control have been debarred from accessing capital markets under any order or direction passed by SEBI or

any other authorities.

None of our Directors are associated with securities market related business, in any manner and there has been no

outstanding actions initiated by SEBI against our Directors in the five years preceding the date of this Information

Memorandum.

Our Company, Promoter or Directors have not been declared as wilful defaulters by any bank or financial institution or

consortium thereof in accordance with the guidelines on wilful defaulters issued by the RBI.

Our Promoter or Directors have not been declared as fugitive economic offenders.

Confirmation under Companies (Significant Beneficial Ownership) Rules, 2018

Our Company and Promoter are in compliance with the Companies (Significant Beneficial Ownership) Rules, 2018, to the

extent applicable, as on the date of this Information Memorandum.

Disclaimer of BSE

A copy of this Information Memorandum has been submitted to BSE.

122

The BSE had through its letters dated May 28, 2019 issued to INABB given its ‘No Objection’ in accordance with the

provisions of the Listing Regulations and by virtue of that No Objection, BSE’s name in this Information Memorandum

has been used as one of the Stock Exchanges on which our Company’s securities are proposed to be listed.

Disclaimer of NSE

A copy of this Information Memorandum has been submitted to NSE.

The NSE had through its letters dated May 28, 2019 issued to INABB had given its ‘No Objection’ in accordance with the

provisions of the Listing Regulations and by virtue of that No Objection, NSE’s name in this Information Memorandum

has been used as one of the Stock Exchanges on which our Company’s securities are proposed to be listed.

General Disclaimer from the Company

The Company accepts no responsibility for statements made otherwise than in the Information Memorandum or in the

advertisements published in accordance with legal requirements mentioned in the SEBI Circular or any other material

issued by or at the instance of our Company and anyone placing reliance on any other source of information would be

doing so at his or her own risk. All information shall be made available by our Company to the public and investors at large

and no selective or additional information would be available for a section of the investors in any manner.

Listing

BSE and NSE have, pursuant to their letters dated February 27, 2020 and February 28, 2020, respectively, granted our

Company in-principle approval for listing of 42,381,675 Equity Shares. INABB has nominated BSE as the Designated

Stock Exchange for the aforesaid listing of the Equity Shares. The Company has taken steps for completion of necessary

formalities for listing and commencement of trading at BSE and NSE.

Outstanding debenture or bonds and redeemable preference shares and other instruments issued by our Company

There are no outstanding debentures, bonds or redeemable preference shares as of the date of this Information

Memorandum.

Stock Market Data for Equity Shares of our Company

The shares of our Company are not listed on any stock exchanges. Through this Information Memorandum, our Company

is seeking approval for listing of its Equity Shares on BSE and NSE.

Disposal of Investor Grievances

KFin Technologies Private Limited is the Registrar and Share Transfer Agent to our Company, who can be contacted at

the following email id for addressing investors’ grievances: [email protected]

General Counsel, Company Secretary and Compliance Officer

The contact details of Poovanna Ammatanda, our General Counsel, Company Secretary and Compliance Officer are as

follows:



Bengaluru 560 092

Karnataka, India

Tel: +91 80 2204 1800

123

SECTION VII: OTHER INFORMATION

MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Authorised share capital

The Authorised Capital of the Company is or shall be such amount as stated in Clause V of the Memorandum of Association

of the Company, for the time being or as may be varied, from time to time, under the provisions of the Companies Act,

2013 and these Articles, and divided into such numbers, classes and descriptions of shares and into such denominations as

stated therein.

Alteration of capital

Subject to the provisions of the Act, the Company may, from time to time, by ordinary resolution increase the share capital

by such sum, to be divided into shares of such amount, as may be specified in the resolution.

Subject to the provisions of Section 61 of the Act, the Company may, by ordinary resolution:

a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

b) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any

denomination;

c) sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the memorandum;

d) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any

person.

Shares in the Capital of the Company shall be under the control of the Directors

Subject to the provisions of the Act and these Articles, the Shares in the capital of the Company shall be under the control

of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion

and on such terms and conditions and either at a premium or at par or subject to compliance with the provisions of the Act

at a discount and at such time as they may from time to time think fit.

Forfeiture of Shares

If a member fails to pay any call, or installment of a call, on the day appointed for payment thereof, the Board of Directors

may, at any time thereafter during such time as any part of the call or installment remains unpaid, serve a notice on him

requiring payment of so much of the call or installment as is unpaid, together with any interest which may have accrued.

Lien

(i) The Company shall have a first and paramount lien:

a) on every share (not being a fully paid share), for all monies (whether presently payable or not) called, or payable

at a fixed time, in respect of that share; and

b) on all shares (not being fully paid shares) standing registered in the name of a single person, for all monies

presently payable by him or his estate to the Company:

Provided that the Board of Directors may at any time declare any share to be wholly or in part exempt from the provisions

of this Article.

(ii) The Company's lien, if any, on a share shall extend to all dividends payable and bonuses declared from time to time in

respect of such shares.

The Company may sell, in such manner as the Board thinks fit, any shares on which the Company has a lien:

Provided that no sale shall be made:

(i) unless a sum in respect of which the lien exists is presently payable; or

124

(ii) until the expiration of fourteen days after a notice in writing stating and demanding payment of such part of the amount

in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the

share or the person entitled thereto by reason of his death or insolvency.

Shares

The Company, subject to applicable provisions of the Act and shareholder’s approval by way of special resolution, is

authorized to issue shares on preferential basis. Further, the Board of the Company may subject to provision of Section 43

of the Act, issue shares with differential rights as to dividend, voting or otherwise. Subject to the provisions of the Act and

these Articles, the shares in the capital of the Company shall be under the control of the directors of the Company who may

issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion and on such terms and

conditions and either at a premium or at par and at such time as they may from time to time think fit and with sanction of

the Company in the general meeting to give to any person or persons the option or right to call for any shares either at par

or discount or premium, subject to compliance with the provisions of the Act, during such time and for such consideration

as the Board thinks fit. Provided that the option or right to call of shares shall not be given to any person or persons except

with the sanction of the Company in general meeting.

Transfer and transmission of shares

a) The instrument of transfer of any share in the Company shall be executed by or on behalf of both the transferor and

transferee.

b) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register

of members in respect thereof.

c) The instrument of transfer shall be in writing and all provisions of Section 56 of the Act and statutory modification

thereof for the time being shall be duly complied with in respect of all transfer of shares and registration thereof.

The Board may, subject to the provisions of the Act, decline to register:

a) the transfer of a share, not being a fully paid share, to a person of whom they do not approve; or

b) any transfer of shares on which the Company has a lien.

On the death of a member, the survivor or survivors where the member was a joint holder, and his nominee or nominees or

legal representatives where he was a sole holder, shall be the only persons recognised by the Company as having any title

to his interest in the Shares. Any person becoming entitled to a Share in consequence of the death or insolvency of a member

may, upon such evidence being produced as may from time to time properly be required by the Board of Directors to elect

either:

(a) to be registered himself as holder of the Share; or

(b) to make such transfer of the Share as the deceased or insolvent member could have made.

Buyback

Notwithstanding anything contained in these Articles but subject to the provisions of the Act or any other law for the time

being in force, the Company may purchase its own Shares or other specified securities.

Borrowing powers

Subject to the provisions of the Act, the directors may either themselves pay or may from time to time at their discretion

accepts deposits from member, either in advance of calls or otherwise and generally raise or borrow or secure payment of

any sums of money for purposes of the Company. The payment or re-payment of such moneys may be secured in such

manner and upon such manner and upon such terms and conditions in all respects as the directors may think fit and in

particular by the issue of redeemable debentures or debenture stock of the Company or any mortgage or change or other

security charged upon all or any part of the property of the Company, (both present and future) including its uncalled capital

for the time being and other securities may be made assignable free from equities between the Company and the person to

whom the same may be issued.

125

General Meetings

All General Meeting other than Annual General Meeting shall be called Extra-Ordinary General Meeting. The Board of

Directors may, whenever it thinks fit, call an extraordinary General Meeting. No business shall be transacted at any General

Meeting unless a quorum of members is present at the time when the Meeting proceeds to business.

Meetings of Directors

a) The Board of Directors may meet for the conduct of business, adjourn and otherwise regulate its meetings, as it thinks

fit.

b) A director may, and the manager or secretary on the requisition of a director shall, at any time, summon a meeting of

the Board.

c) Quorum for the Board meeting shall be two directors or one third of the total strength of the Board, whichever is

higher.

A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address

registered with the Company and such notice shall be sent by hand delivery or by post or by electronic means, unless a

meeting of the Board is called at shorter notice to transact urgent business subject to the condition that at least one

independent director, if any, shall be present at the meeting. In case of absence of independent directors from such a meeting

of the Board, decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification

thereof by at least one independent director, if any. In case the Company does not have an Independent Director, the

decisions shall be final only on ratification thereof by a majority of the Directors of the Company, unless such decisions

were approved at the Meeting itself by a majority of Directors of the Company.

In accordance with the Act, the participation of directors in a meeting of the Board may be either in person or through

video conferencing or other audio visual means, which are capable of recording and recognising the participation of the

directors and of recording and storing the proceedings of such meetings along with date and time.

Managing Directors/ Whole-Time Director

Subject to the provisions of the Act, the Board may from time to time appoint one or more directors to be managing

directors or whole time directors for such terms, and at such remuneration (whether by way of salary or commission or

participation in profits or partly in one way and partly in another) as it may think fit, and a director so appointed shall not,

while holding that office, be subject to retirement by rotation. But his appointment shall be subject to determination ipso

facto if he ceases from any cause to be a director of the Company or general meeting resolves that his tenure of office of

managing director/whole time director be determined.

Appointment of Directors

Subject to the provisions of Section 149 and Section 161 of the Act, the Board shall have the power at any time, and from

time to time, to appoint a person as an additional director, provided the number of the directors and additional directors

together shall not at any time exceed the maximum strength fixed for the Board under these Articles. Such person shall

hold office only up to the date of the next annual general meeting of the Company but shall be eligible for appointment by

the Company as a director at that meeting subject to the provisions of the Act.

Subject to the provisions of Section 161 of the Act, the Board shall have power at any time, and from time to time or by a

resolution passed by the Company in general meeting, appoint a person, not being a person holding any alternate

directorship for any other director in the Company (or holding directorship in the same company), to act as an alternate

director for a director during his absence for a period of not less than three months from India:

Provided that no person shall be appointed as an alternate director for an independent director unless he is qualified to be

appointed as an independent director under the provisions of this Act;

Provided further that an alternate director shall not hold office for a period longer than that permissible to the director in

whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed

returns to India;

126

Provided also that if the term of office of the original director is determined before he so returns to India, any provision for

the automatic re-appointment of retiring directors in default of another appointment shall apply to the original director, and

not to the alternate director.

If the office of any director appointed by the Company in general meeting is vacated before his term of office expires in

the normal course, the resulting casual vacancy may, in default of, and subject to any regulations in these Articles, be filled

by the Board of Directors at a meeting of the Board which shall be subsequently approved by members in the immediate

next general meeting.

Provided that any person so appointed shall hold office only up to the date up to which the director in whose place he is

appointed would have held office if it had not been vacated.

If at any time the Company obtains any loans or any assistance in connection therewith by way of guarantee or otherwise

from any person, firm, body corporate, local authority, or public body (hereinafter called “the Institution”) debentures or

debenture-stock and enters into any contract or arrangement with the Institution whereby the Institution subscribes for or

underwrites the issue of the Company’s shares or debentures or debenture-stock or provides any assistance to the Company

in any manner whatsoever and it is a term of the relative loan, assistance, or contract or arrangement that the Institution

shall have the right to appoint one or more director or directors (“Nominee Directors”) to the Board of the Company, then

subject to Section 152 and other provisions of the Act, and subject to the terms and conditions of such loan, assistance,

contract or arrangement the Institution shall be entitled to appoint one or more Nominee Directors, as the case may be, to

the Board of the Company, and to remove from office any director so appointed and to appoint another in his place or in

the place a director so appointed who resigns or otherwise vacates his office. Any such appointment or removal shall be

made in writing and shall be served at the office of the Company. The Nominee Director(s) so appointed shall neither be

required to hold any qualification share nor be liable to retire by rotation and shall continue in office for so long as the

relative loan, assistance, contract or arrangement, as the case may be, subsists or so long as the Institution holds any shares

of the Company in terms thereof.

Votes of Members

Subject to the provisions of the Act, votes may be given either personally or by Proxy or, in the case of a body corporate,

by a representative duly authorised under Section 113 of the Act. A member may exercise his vote at a meeting by electronic

means in accordance with section 108 and shall vote only once.

Subject to any rights or restrictions for the time being attached to any class or classes of shares, (i) on a show of hands,

every member present in person shall have one vote; and (ii) on a poll, the voting rights of members shall be in proportion

to his share in paid-up equity share capital.

Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint any other

person (whether a member or not) as his Proxy to attend and vote instead of himself, but a Proxy so appointed shall not

have any right to speak at the meeting.

No member shall be entitled to vote at any General Meeting unless all calls or other sums presently payable by him in

respect of Shares in the Company have been paid.

Dividend

The Company in General Meeting may declare dividend and no dividend shall exceed the amount recommended by the

Board. Subject to the provisions of the Act, the profits of the Company subject to any special rights relating to those to be

created or authorized by these Articles and subject to the provisions herein shall be divisible among the shareholders in

proportion to the amount of capital called upon the Securities held by them respectively.

Subject to the provisions of the Act, the Board may from time to time pay to the member such interim dividend as appear

to it to be justified by the profits of the Company

No Dividend shall bear interest against the Company. All Dividends shall be apportioned and paid proportionately to the

amounts paid or credited as paid on the Shares during any portion or portions of the period in respect of which the Dividend

is paid; but if any Share is issued on terms providing that it shall rank for Dividend as from a particular date such Share

shall rank for Dividend accordingly. The Board of Directors may deduct from any Dividend payable to any member all

sums of money, if any, presently payable by him to the Company on account of calls or otherwise in relation to the Shares

of the Company.

127

Winding Up

The Company may be wound up in accordance with the Act and the Insolvency and Bankruptcy Code, 2016 (to the extent

applicable).

Indemnity

Every officer of the Company shall be indemnified out of the assets of the Company against any liability incurred by him

in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted

or in which relief is granted to him by the court or the tribunal.

128

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the Registered Office of our Company on any working

day (i.e. Monday to Friday and not being a bank holiday in Bengaluru) between 10.00 am and 5.00 pm from the date of

filing of the Information Memorandum with the Stock Exchanges until the listing of Equity Shares on the Stock Exchanges:

• Memorandum and Articles of Association of the Company, as amended till date.

• Certificate of incorporation of our Company dated February 19, 2019.

• Scheme of Arrangement between INABB and the Company and their respective shareholders and creditors as

approved by the National Company Law Tribunal, Bengaluru Bench delivered on November 27, 2019

• Tripartite Agreement with NSDL, Registrar and Transfer Agent and the Company dated May 9, 2019.

• Tripartite Agreement with CDSL, Registrar and Transfer Agent and the Company dated January 7, 2020.

• Statement of tax benefits dated March 18, 2020 from M K Tyagi & Co.

ABB POWER PRODUCTS AND SYSTEMS INDIA LIMITED

Documents

Transcript of ABB POWER PRODUCTS AND SYSTEMS INDIA LIMITED