Energy efﬁ ciency for a connected world ABB Limited ...file/Annual+Report+2007.pdf · 4 ABB...

Energy effi ciency for a connected worldABB Limited - Annual Report 2007India

ABB Limited2nd Floor, East Wing, Khanija Bhavan49, Race Course RoadBangalore - 560001Phone: +91-80-22949150 - 54Fax: +91-80-22949148

www.abb.co.in

© C

opyright 2008 AB

B. A

ll rights reserved.

P

rinted at Repro

3187-1_ABB AR 2k7_Cover 1-4.indd 13187-1_ABB AR 2k7_Cover 1-4.indd 1 4/27/2008 6:24:04 PM4/27/2008 6:24:04 PM

Contents

1 Board of Directors and Other Information

2 5 Year Highlights

4 Corporate Management Committee

5 Welcome to ABB

11 Notice to Members

16 Directors’ Report

31 Management’s Discussion and Analysis

36 CEO/CFO Certifi cation

37 Auditors’ Report

40 Balance Sheet, Profi t & Loss Account and Schedules

51 Notes to Accounts

66 Cash Flow Statement

68 Balance Sheet Abstract and Company’s General Business Profi le


ABB Limited

Board of Directors

Ravi Uppal, Chairman (w.e.f. 26.07.2007)

Biplab Majumder, Managing Director (w.e.f. 26.07.2007)

K. Rajagopal, Whole-time Director (w.e.f. 19.02.2008)

Nasser Munjee

N. S. Raghavan

D. E. Udwadia

A. K. Dasgupta (w.e.f. 26.04.2007)

Bernhard Jucker

Peter Leupp (w.e.f. 26.07.2007)

Veli-Matti Reinikkala (w.e.f. 26.07.2007)

Dinesh Paliwal (upto 25.05.2007)

Tom Eric Sjoekvist (upto 05.07.2007)

Company Secretary

B. Gururaj

Corporate Management Committee

Biplab Majumder

I. K. Sadhu

K. Rajagopal

Ramesh Shankar

Shyam Karmarkar

Pankaj Sachdeva

Madhav M. Digraskar

N. Ravi

Prakash Nayak

Prakash Kanagalekar

S. Karun

Ranjan De

Bankers

ICICI Bank Limited

Canara Bank

The Hongkong & Shanghai Banking Corporation Limited

ABN Amro Bank

HDFC Bank Limited

Deutsche Bank

Industrial Development Bank of India Limited

State Bank of India

Citibank N.A.

Union Bank of India

Auditors

S. R. Batliboi & Co.

Chartered Accountants

Registered Offi ce

2nd Floor, East Wing

Khanija Bhavan

49, Race Course Road

Bangalore - 560 001

Registrar & Share Transfer Agent

Karvy Computershare Private Limited

No. 51/2, T.K.N. Complex

Opp. National College

Basavanagudi

Bangalore - 560 004

ABB Limited, India, Annual Report 2007 1

3187-1_ABB AR 2k7_4Col_Text_(01-12).indd 13187-1_ABB AR 2k7_4Col_Text_(01-12).indd 1 4/27/2008 6:08:16 PM4/27/2008 6:08:16 PM

ABB Limited, India, Annual Report 20072

5 Year Highlights

(Rs in Millions)

Description 2007 2006 2005 2004 2003

Sources of Funds

Share Capital 423.8 423.8 423.8 423.8 423.8

Reserves 15,694.2 11,386.5 8,466.7 6,669.4 5,461.6

Net Worth 16,118.0 11,810.3 8,890.5 7,093.2 5,885.4

Borrowings 5.6 15.5 27.3 14.9 101.0

Funds Employed 16,123.6 11,825.8 8,917.8 7,108.1 5,986.4

Income and Profi ts

Sales & Other Income 60,013.6 43,477.0 30,141.4 23,055.7 15,030.6

Operating Profi t Before Interest and Depreciation 7,632.7 5,504.0 3,692.6 2,582.3 1,722.8

Profi t Before Tax 7,564.6 5,232.1 3,394.8 2,365.2 1,528.9

Tax 2,647.9 1,829.0 1,208.0 860.0 520.0

Profi t After Tax 4,916.7 3,403.1 2,186.8 1,505.2 1,008.9

Dividend / Dividend Tax 558.0 483.3 389.4 335.4 319.5

Retained Earnings 4,358.7 2,919.8 1,797.4 1,169.8 689.4

Other Data

Gross Fixed Assets 6,627.1 5,190.0 4,324.4 3,428.1 3,037.9

Debt Equity Ratio 0.00:1 0.01:1 0.01:1 0.01:1 0.02:1

Net Worth Per Equity Share - Rs 76.1 55.7 42.0 33.5 27.8

Earnings Per Equity Share - Rs 23.2 16.1 10.3 7.1 4.8

Dividend Per Equity Share - Rs 2.2 2.0 1.6 1.4 1.2

Profi t After Taxes as % to Average Net Worth 35.2 32.9 27.4 23.2 18.6

Excludes revaluation of fi xed assets, revaluation reserve and exceptional items.


5 Year Highlights

0

15000

30000

45000

60000

75000

20072006200520042003

Revenues

Rs. in Millions

15,031

23,056

30,141

43,477

60,014

0

1500

3000

4500

6000

20072006200520042003

Profit After Tax

Rs. in Millions

1008.9

1505.2

2186.8

3403.1

4916.7

0

15

30

45

60

20072006200520042003

Return on Capital Employed (%)

27.8

36.3

43.2

50.5

54.6

0

1500

3000

4500

6000

7500

9000

20072006200520042003

Employees & Productivity

4,690 3,439

4,052

5,187 5,535

3,205

6,704

7,439

8,382

10,842

0

2500

5000

7500

10000

12500

Number of EmployeesRevenue per employee (Rs. in Thousands)

Excludes revaluation of fi xed assets, revaluation reserve and exceptional items.




Corporate Management Committee

Left to right (Front row) - Shyam Karmarkar, Head - Marketing & Sales, Prakash Kanagalekar, Head - Operational Excellence, K Rajagopal, Chief Financial Offi cer, Biplab Majumder, Country Manager & Head - Automation Products, Prakash Nayak, Head - Global Services, S Karun, Head - Service

Left to right (Behind) - Inder Sadhu, Head - Power Generation, Pankaj Sachdeva, Head - Power Systems, Madhav Digraskar, Head - Power Products, N Ravi, Head - Process Automation, P C Rajiv, Head - Human Resources, Ranjan Kumar De, Head - Account Management




Welcome to the world of ABB

ABB is one of the world’s leading power and automation engineering companies. We provide solutions for energy-effi cient generation, transmission and distribution of electricity, and for increasing productivity in industrial, commercial and utility operations.

Our portfolio ranges from light switches to robots for painting cars or packing food, and from huge electrical transformers to control systems that manage entire power networks and factories.

We help our customers meet their challenges with minimum environmental impact delivering Power and Productivity for a better world.

Technology & Innovation

ABB’s leading position in power and automation technologies results from strengths such as quality, commitment to customers and above all, successful innovation in our R&D activities. Our approach to technology is based on our key aims of enhancing electrical power reliability, industrial productivity and energy effi ciency.

We work closely with our customers, suppliers and leading academic institutions around the world to develop technologies that will meet both existing and future challenges.

ABB has eight research centers, 6,000 scientists and 70 university collaborations - all working to develop and improve technologies that will make our customers more competitive. We spent $1.2 billion

globally on research and development (including order-related) in 2007, and more than half of our efforts were aimed at improving energy effi ciency.

Our strategy for the future is to focus on developing products and services that use energy more effectively and maximize returns on capital investments. We will continue to invest in existing technologies to ensure their reliability for years to come, while developing new technologies to meet future needs for power and automation systems.

ABB and energy effi ciency

Did you know that as much as 80 percent of available energy is lost in the process of making and distributing electricity, and in its ineffi cient consumption? That means just one-fi fth of the energy we have becomes the power we need.

As the global leader in power transmission and distribution technology and one of the world’s leading automation companies, ABB has found ways to optimize energy use at every step.

From harvesting primary energy resources to transporting, distributing and using electrical power, proven ABB technologies reduce waste by 20 to 30 percent.




ABB in India

ABB has over 5,500 employees and 14 manufacturing facilities across India. We serve customers through an extensive countrywide presence of around 30 marketing offi ces, 8 service centers, 3 logistics warehouses and a network of over 775 channel partners. The ABB Group is increasingly leveraging the Indian operations for projects, products, services, engineering and R&D. Also, as part of ABB’s new regional approach, India has been designated as the hub for the South Asia region.

ABB India continues to bring value to customers through leading-edge technologies, domain expertise and project execution abilities. The products focus continues in the form of range expansion and market penetration.

To meet growing demand, capacity and range expansion is underway across businesses and locations. Several new products and technologies were introduced in the Indian market during 2007. In addition to enhancing the capacity of existing plants, many new manufacturing units are being set up across the country. This includes a global factory for distribution automation in Vadodara commissioned recently.

The company’s technology strengths, wide offering portfolio and unique ability to package solutions and provide a single window approach to verticals continue to be a key differentiator. While the top-line grows, focus on productivity, operational effi ciencies and working capital management continues unabated.

Strong macro economic fundamentals, integration with the world economy, industrial growth and the signifi cant work that still remains to be done with reference to the power sector, continue to offer bright prospects for power and automation technologies. ABB is well positioned to leverage these market opportunities based on its intrinsic technology strengths, market presence, track record, extensive manufacturing base and skill competence.

• ~ 5500 Employees• ~ 775 Channel Partners

FARIDABAD

DELHI

VADODARA

NASHIK

BANGALORE

MUMBAI

CHENNAI

KOLKATA

Corporate Offi ce

Registered Offi ce

Global Corporate Research

Power Technology Centers

Global Operations Centers

Manufacturing facilities

Marketing Offi ces

Training Centers

Service Centers

Logistics Warehouses

HALOL

HARIDWAR




Grid Reliability

Power Systems

Our Power Systems division is a market leader in the engineering of grid systems, power generation systems, network management solutions and substations. Power Systems deliverables include network management, utility communication, transmission and distribution substations, Flexible Alternating Current Transmission Systems (FACTS), High-Voltage Direct Current (HVDC) systems and automation and electrical solutions for power plants. This division also offers automation, control and protection systems and related services for power transmission and distribution networks, power plants and water pumping stations. Our FACTS and HVDC businesses offer technologically advanced solutions designed to increase transmission capacity and stability in power networks. ABB also delivers end-to-end solutions for urban and rural electrifi cation projects. The Power Systems customer base includes central, state and private power utilities as well as industry clients.

Power Products

Our Power Products division is a leading supplier of power transmission and distribution products and services, serving electric, gas and water utilities, as well as industrial and commercial customers, with a broad range of products and services across the power value chain. ABB’s offering includes a broad range of indoor and outdoor circuit breakers, airand gas insulated switchgear, including hybrid switchgear, instrument transformers, disconnectors, high and low voltage capacitors, reactive power compensators, power and distribution transformers and a range of distribution products including Compact Secondary Substations (CSS) and Ring Main Units (RMUs). ABB also provides a full range of lifecycle services from spare parts and equipment repair to training, migration, remote monitoring and technical support.




Industrial Productivity

Process Automation

Our Process Automation division’s products, systems and services give our customers complete automation and optimization solutions and this includes industry-specifi c solutions for plant automation and electrifi cation, energy management, process and asset optimization, analytical measurement and telecommunication. Major industries served include oil and gas, metals and minerals, pulp and paper, chemicals and pharmaceuticals. For product life cycle support, we offer fi eld services, spare parts, remote monitoring, training and upgrades. For asset optimization we offer services for engineering, design, consulting, compliance, validation, benchmarking, plant performance improvement, safety and hazardous operation analysis and reliability analysis. Using our full service program we also offer plant-wide, performance-based maintenance contracts, which provide customers an opportunity to outsource their plant maintenance. The Process Automation division also delivers specialized solutions for turbo charging, as well as propulsion and electrifi cation systems for the marine industry. In addition, the division delivers stand-alone control system products sold through distributors, system integrators and OEMs.

Automation Products

The Automation Products division offers a wide range of products and services including low-voltage switchgear, breakers, switches, control products, DIN-

rail components, enclosures, line protection devices, wiring accessories, instrumentation, drives, motors, generators and power electronics systems. All these products help customers to improve productivity, save energy and ensure safety. The majority of these products are used for industrial applications, but also in buildings, utilities and rail transportation. Channel partners such as distributors, wholesalers, machine builders, system integrators and electrical panel builders form an important customer segment with direct OEM sales comprising the rest.

Robotics

Our Robotics division offers robots, services and modular manufacturing solutions for use in assembly, fi nishing and machine tending. Key markets include the automotive and manufacturing industries, in addition to applications in foundry, packaging and material handling. The division develops standardized manufacturing cells for machine tending, welding, cutting, painting and fi nishing and provides packaged systems to automobile manufacturers for press automation, paint process automation, body-in-white systems (automation systems for adding components to automobile bodies) and power train assembly.




Sustainability

ABB follows a ‘triple bottom line’ approach aimed at achieving a balance in the economic, environmental and social impact of the company’s business to benefi t all our stakeholders.

The company has a dedicated Sustainability team, with location-based representatives, headed by a Country Sustainability Controller. The ABB India Foundation, a registered charitable Trust ensures dedicated focus, independence, regular monitoring and continuity of social initiatives in a planned manner.

ABB in India has put in place a focused sustainability programme with clearly defi ned pillars.

Education

The education pillar focuses on primary education for economically and socially underprivileged children, by supporting schools in the proximity of the company’s major manufacturing locations. At the same time it also focuses on building academia partnerships with higher education technical universities.

As part of its primary education initiative, ABB now supports fi ve government schools across the country and helps them with infrastructure development and basic amenities like drinking water, toilets, classrooms, teaching aids etc. Deeper engagement initiatives likemidday meals, educational excursions, training & development programmes focus on enhancing the quality of education and enriching the learning environment.

Two new schools were taken into the fold in 2007 i.e. the Fatehpura School at Vadodara and the Rajiv

Gandhi Nagar School in Bangalore. New classrooms and benches, revamped facades, improved lighting, drinking water, toilet facilities and provision for play areas have been undertaken at these schools. The existing schools namely Nellagadaranahalli Government (NGH) School in Peenya, Goverdhan School at Nashik and Makarpura School at Vadodara saw continued support in the form of infrastructure enhancement, provision of benches, value education programmes for teachers and students, educational trips, painting competitions and medical camps.

On the high level education engagement, ABB in India strives to foster industry-academia relationships and works with several renowned academic institutions such as the RV College of Engineering, Bangalore, MS University, Vadodara and Indian Institute of Technology - Delhi. Besides facilitating research and development, these relationships also encourage student interface especially in fi elds related to power and automation technologies. Scholarships, provision of lab facilities, visits and placements are some of the initiatives taken under this programme.

Supporting the Differently-abled

Project ‘Roshni’ is a novel initiative, where ABB in India works with NGO-run institutions for the differently-abled, around its major locations. Physically, visually and mentally challenged people are trained in putting together simple components and sub-assemblies which are subsequently absorbed by the company’s manufacturing units. Projects underway include




working with physically and visually impaired at Prerana in Bangalore and the mentally challenged in Prabodhini in Nashik. The latest project added as part of this initiative was ‘Seva Tirth’ in Vadodara. Besides the obvious benefi t of providing an honourable means of livelihood for these differently abled people, the project is also playing a vital role in their rehabilitation.

Access to Electricity

Access to Electricity is a global ABB programme aimed at providing access to electricity and bringing light to those in darkness, especially in areas not connected by the grid. ABB India’s ‘access to electricity’ programme has already brought light to around 900 households and 6,500 people in the interior desert areas of Rajasthan. Scattered dwellings across fi ve hamlets, have been equipped with solar panel units that help bring light to their homes.

Besides resulting in an increase of productive hours, thereby boosting earnings and protecting traditional trades, the simple village folk are now adopting new livelihoods by training and maintaining the units. Moreover, the women can cook at leisure now and the children can study longer.

Special Projects

With special projects, ABB springs into action when there is a ‘need for help’ from communities affected by natural disasters, calamities or epidemics. ABB was actively involved at the time of the Gujarat earthquake and the more recent tsunami.

Welfare / Awareness

ABB India strongly focuses upon the welfare of its employees and providing them a conducive work environment. Towards this effort, the company has appointed a dedicated Country Occupational Health and Welfare Offi cer. Several training & awareness programmes, welfare workshops and health checks are also conducted on a regular basis for the employees and the neighbouring communities.

Environment

ABB India’s commitment to the environment extends beyond its own products and legal compliance requirements. All major manufacturing units of ABB in India are ISO14001 certifi ed. Some of the environmental initiatives underway across the company’s locations include greening programmes, recycling, energy conservation, rainwater harvesting, vermiculture, treatment plants etc. In addition to environment related activities at the company’s own locations. ABB helps with greening initiatives in its main areas of operation

by extending support to programmes such as tree plantation, maintaining traffi c islands, providing tree guards etc.

Safety

Safety is accorded the highest priority by the company. A clear safety policy, several training programmes and communication tools have been put in place. A dedicated Country Safety Controller and a nationwide network of safety offi cers ensure that safety is never compromised - be it the company’s own locations or project sites. Compliance standards and certifi cation processes help extend this commitment beyond employees and the strictest safety regime is followed even with sub-contractors and business partners. Regular audits and ongoing communications help enforce a ‘zero-tolerance’ policy when it comes to violating safety norms. In a unique initiative, the company has recently set up an outdoor-cum-indoor safety training school in Jaipur which helps familiarize and train many of the company’s erection/ commissioning employees, contract workers and even customer personnel actively engaged in power transmission and distribution projects. Safety at ABB goes beyond the professional realms to encompass even the personal safety of employees - for instance wearing of helmets and seat-belts in mandatory.




Notice to Members

NOTICE is hereby given that the FIFTY-EIGHTH ANNUAL GENERAL MEETING of the Members of ABB Limited will be held at The Atria Hotel, “Chancery”, No.1, Palace Road, Bangalore – 560 001, on Tuesday,June 3, 2008 at 11.00 A.M. (IST) to transact the following business:

Ordinary Business:

1. To receive, consider and adopt the Audited Balance Sheet as at December 31, 2007 and the Audited Profi t & Loss Account for the year ended on that date and the Reports of the Directors and the Auditors thereon.

2. To declare a dividend on equity shares.

3. To appoint a Director in place of Mr. D. E. Udwadia, who retires by rotation at this Annual General Meeting, and being eligible, offers himself for re-election.

4. To appoint a Director in place of Mr. Bernhard Jucker, who retires by rotation at this Annual General Meeting, and being eligible, offers himself for re-election.

5. To appoint M/s. S.R. Batliboi & Co., Chartered Accountants, as Statutory Auditors of the Company to hold offi ce from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to authorize the Board of Directors to fi x their remuneration.

Special Business:

6. To consider and if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT Mr. Arun Kanti Dasgupta who was appointed as Director by the Board of Directors of the Company on April 26, 2007, pursuant to Article 151 of the Articles of Association of the Company to fi ll in the casual vacancy caused on the Board, due to the resignation of Mr. K. Sridhar and who holds offi ce up to the date of this Annual General Meeting pursuant to Section 262 of the Companies Act, 1956 and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the offi ce of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation.”


“RESOLVED THAT Mr. Ravi Uppal, who was appointed as an Additional Director by the Board of Directors of the Company on July 26, 2007, pursuant to Article 152 of the Articles of Association of the Company and who holds offi ce upto the date of the ensuing Annual General Meeting under Section 260 of the Companies Act, 1956 and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the offi ce of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation”.


“RESOLVED THAT Mr. Veli-Matti Reinikkala, who was appointed as an Additional Director by the Board of Directors of the Company on July 26, 2007, pursuant to Article 152 of the Articles of Association of the Company and who holds offi ce upto the date of the ensuing Annual General Meeting under Section 260 of the Companies Act,

1956 and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the offi ce of Director, be and is hereby appointed as a Director of the Company, liable to retire by rotation”.

9. To consider, and if thought fi t, to pass, with or without modifi cation, the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to and in accordance with the provisions of Sections 198, 269, 309, 316, 317 and other applicable provisions, if any, of the Companies Act, 1956, including any statutory modifi cation(s) or re-enactment thereof for the time being in force, (”Act”), read with Schedule XIII thereto, consent of the Company be and is hereby accorded for appointment and payment of remuneration to Mr. Biplab Majumder as the Managing Director of the Company (hereinafter referred to as ‘Mr. Majumder’), for a period of 3 (three) years from July 26, 2007 to July 25, 2010 (both days inclusive), on the terms and conditions as set out in the draft agreement to be entered into between the Company and Mr. Majumder, a copy whereof initialed by the Chairman for the purpose of identifi cation has been placed before the meeting, which agreement is hereby specifi cally approved with liberty to the Board of Directors to alter, vary and modify, from time to time, the terms and conditions of the said appointment and / or agreement including review of remuneration annually and / or otherwise, in such manner as may be agreed upon by the Board of Directors and Mr. Majumder, and in accordance with the limits prescribed under Schedule XIII to the Companies Act, 1956 or any statutory amendment(s) and modifi cation(s) thereto.

RESOLVED FURTHER THAT pursuant to the provisions of Sections 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, the remuneration payable to Mr. Biplab Majumder as the Managing Director by way of salary, perquisites, commission and other allowances, shall not exceed 5% of the net profi ts of the Company and if there are more than one such director, 10% for all of them together in that fi nancial year.

RESOLVED FURTHER THAT in the event of any loss or inadequacy of profi ts in any fi nancial year of the Company during the tenure of Mr. Biplab Majumder, Managing Director of the Company, the remuneration, perquisites and other allowances shall be governed by the limits prescribed in Section II of Part II of Schedule XIII to the Companies Act, 1956, as amended from time to time.

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board of Directors of the Company, be and is hereby authorized to do all such acts, deeds, matters or things and they may take such steps necessary, expedient or desirable in this regard.


“RESOLVED THAT Mr. K. Rajagopal, who was appointed as an Additional Director by the Board of Directors of the Company on February 19, 2008, pursu-ant to Article 152 of the Articles of Association of the Company and who holds the offi ce upto the date of the ensuing Annual General Meeting under Section 260 of the Companies Act, 1956, and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the offi ce of Director, be and is hereby appointed as a Director of the Company.



“RESOLVED THAT pursuant to and in accordance with the provisions of Sections 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, including any statutory modifi cation(s) or re-enactment thereof for the time being in force, (”Act”), read with Schedule XIII thereto, consent of the Company be and is hereby accorded for appointment and payment of remuneration to Mr. K. Rajagopal as the Whole-time Director of the Company (hereinafter referred to as ‘Mr. Rajagopal’), for a period of 3 (three) years from February 19, 2008 to February 18, 2011 (both days inclusive), on the terms and conditions as set out in the draft agreement to be entered into between the Company and Mr. Rajagopal, a copy whereof initialed by the Chairman for the purpose of identifi cation has been placed before the meeting, which agreement is hereby specifi cally approved with liberty to the Board of Directors to alter, vary and modify, from time to time, the terms and conditions of the said appointment and / or agreement including review of remuneration annually and / or otherwise, in such manner as may be agreed upon by the Board of Directors and Mr. Rajagopal, and in accordance with the limits prescribed under Schedule XIII to the Companies Act, 1956 or any statutory amendment(s) and modifi cation(s) thereto.

RESOLVED FURTHER THAT pursuant to the provisions of Sections 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956, the remuneration payable to Mr. Rajagopal as the Whole-time Director by way of salary, perquisites, commission and other allowances, shall not exceed 5% of the net profi ts of the Company and if there are more than one such director, 10% for all of them together in that fi nancial year.

RESOLVED FURTHER THAT in the event of any loss or inadequacy of profi ts in any fi nancial year of the Company during the tenure of Mr. Rajagopal, Whole-time Director of the Company, the remuneration, perquisites and other allowances shall be governed by the limits prescribed in Section II of Part II of Schedule XIII to the Companies Act, 1956, as amended from time to time.

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board of Directors of the Company, be and is hereby authorized to do all such acts, deeds, matters or things and they may take such steps necessary, expedient or desirable in this regard.

By Order of the Board For ABB Limited

B. Gururaj Senior Vice President - Place: Vadodara Legal & Compliance andDate: April 25, 2008 Company Secretary

Registered Offi ce:2nd Floor, East Wing,Khanija Bhavan,49, Race Course Road,Bangalore – 560 001

Notes:

1. The relative Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, setting out the material facts in respect of special business under item Nos. 6 to 10 is annexed hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT ONE OR MORE PROXY (IES) TO ATTEND AND VOTE INSTEAD OF HIMSELF / HERSELF AND A PROXY NEED

NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE DULY FILLED, STAMPED, SIGNED AND SHOULD BE DEPOSITED AT THE COMPANY’S REGISTERED OFFICE NOT LATER THAN FORTY–EIGHT HOURS BEFORE THE COMMENCEMENT OF THE MEETING. PROXIES SUBMITTED ON BEHALF OF LIMITED COMPANIES, SOCIETIES, PARTNERSHIP FIRMS, ETC., MUST BE SUPPORTED BY APPROPRIATE RESOLUTION / AUTHORITY AS APPLICABLE, ISSUED ON BEHALF OF THE APPOINTING ORGANISATION.

3. Members should bring the duly fi lled in attendance slip sent herewith for attending the meeting.

4. The Register of Members and the Share Transfer Books of the Company will remain closed from May 28, 2008 to June 3, 2008 (both days inclusive) for the purpose of payment of dividend.

5. The dividend, as recommended by the Board of Directors of the Company, if declared at the Annual General Meeting, will be paid on or after June 6, 2008, to those Members whose names stand registered on the Company’s Register of Members:-

a) as Benefi cial Owners as at the end of business hours on May 27, 2008 as per the list to be furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) in respect of shares held in dematerialized form.

b) as Members in the Register of Members of the Company after giving effect to valid share transfers lodged with the Company, on or before May 27, 2008.

6. Members are requested to note that dividends not encashed or remaining unclaimed for a period of seven (7) years from the date of transfer to the Company’s Unpaid Dividend Account, shall be transferred, under Section 205-A of the Companies Act, 1956, to the Investor Education and Protection Fund, established under Section 205C of the said Act. Members who have not yet encashed the dividend warrant(s) from the fi nancial year ended 31st December 2000 onwards are requested to forward their claims to the Company’s Registrar and Share Transfer Agents. It may be noted that once the unclaimed dividend is transferred to the Investor Education and Protection Fund as above, no claim shall lie with the Company in respect of such amount. It may also be noted that the unclaimed dividend amounts which were lying with the company upto the year ended on December 31, 1999, have been transferred to the Investor Education and Protection Fund.

7. Members are requested to intimate, indicating their folio number, the changes, if any, in their registered addresses, either to the Company or to its Registrar and Share Transfer Agent, viz. Karvy Computershare Private Limited, Unit: ABB Limited, 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081, or to their respective Depository Participant (“DP”) in case the shares are held in dematerialised form.

8. Members holding shares in physical form can avail of the nomination facility by fi ling Form 2B (in duplicate) with the Company or its Registrar & Share Transfer Agent which will be made available on request and in case of shares held in dematerialised form, the nomination has to be lodged with their DP.

9. As required under clause 49 (IV) (G) of the Listing Agreement of the stock exchanges, the relevant details of persons seeking appointment / re-appointment as directors are furnished in the Corporate Governance Section of this Annual Report.



Annexure to Notice

Explanatory Statement under Section 173(2) of the Companies Act, 1956

Item No. 6

The Board of Directors at its meeting held on April 26, 2007, appointed Mr. Arun Kanti Dasgupta as a Director pursuant to Article 151 of the Articles of Association of the Company, to fi ll in the casual vacancy caused on the Board by the resignation of Mr. K. Sridhar. Since Mr. K. Sridhar was to retire by rotation at the ensuing Annual General Meeting, Mr. Arun Kanti Dasgupta would also cease to hold the offi ce of Director at the ensuing Annual General Meeting, pursuant to Section 262 of the Companies Act, 1956.

The Members may note that Mr. Arun Kanti Dasgupta is the Managing Director of Life Insurance Corporation of India.

The Company has received a notice under Section 257 of the Companies Act, 1956, along with the deposit of Rs.500/- from a member, proposing the candidature of Mr. Arun Kanti Dasgupta for the offi ce of Director.

The Board considers that the association of Mr. Arun Kanti Dasgupta as a Director of the Company will be benefi cial and in the interest of the Company

The Directors recommend the passing of the resolution set out at Item No.6 of the accompanying Notice.

Except Mr. Arun Kanti Dasgupta, none of the other Directors is, in any way, concerned or interested in the said resolution.

Item No. 7 & 8

The Board of Directors of the Company at its meeting held on July 26, 2007, appointed Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala as Additional Directors on the Board effective that date. At the same meeting, the Board appointed Mr. Ravi Uppal as the Chairman of the Company. In terms of Section 260 of the Companies Act, 1956 and Article 152 of the Articles of Association of the Company, Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala hold offi ce as Directors upto the date of the ensuing Annual General Meeting of the Company and are eligible for re-appointment as Directors.

The Company has received notices under Section 257 of the Companies Act, 1956, along with the deposit of Rs 500/- from members proposing the candidature of Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala, for the offi ce of Director.

The Board considers that their association as Directors will be benefi cial and in the interest of the Company.

The Directors recommend the passing of resolutions set out at Item Nos.7 and 8, respectively, of the accompanying Notice.

Except Mr. Ravi Uppal and Mr. Veli-Matti Reinikkala, none of the other Directors is, in any way, concerned or interested in the said resolution.

Item No.9

At its meeting held on July 26, 2007, the Board of Directors had, subject to the approval of members in general meeting, appointed Mr. Biplab Majumder (hereinafter referred to as “Mr. Majumder”) as the Managing Director of the Company for a period of 3 years from July 26, 2007 to July 25, 2010 (both days inclusive). At the said meeting, the Board had also fi xed a total remuneration of Rs.12,500,000/- per annum, payable toMr. Majumder, for the period from July 26, 2007 to February 29, 2008, subject to annual revision by the Board of Directors every year during the entire tenure of his appointment.

Accordingly, the remuneration fi xed earlier fell due for revision effective March 1, 2008. Therefore, the Board at its meeting held on April 25,

2008 reviewed the current remuneration of Mr Majumder fi xed earlier and approved an increase in the total remuneration payable to him fromRs. 12,500,000/- to Rs.15,625,000/- per annum effective March 1, 2008. The break-up of the total increased remuneration of Rs. 15,625,000/- and other terms & conditions of appointment as approved by the Board are set out in the draft agreement, a copy whereof duly initialed by the Chairman is placed in the meeting for the purpose of identifi cation and is subject to the approval of the Members of the Company, as required under Section 269 read with Schedule XIII to the Companies Act, 1956.

The principal terms and conditions as contained in the draft agreement are as under:

1. Tenure of appointment

The appointment is for a period of three years from July 26, 2007 to July 25, 2010. Mr. Majumder whilst holding the offi ce of Managing Director of the Company is not subject to retirement by rotation.

2. Subject to such orders and directions as may from time to time be given to him by the Board of Directors of the Company (hereinafter referred to “the Board”), Mr. Majumder shall promptly and faithfully obey, observe and comply with in all respects and subject also to such restrictions as the Board may in its sole and uncontrolled discretion from time to time impose on him, Mr. Majumder shall have the management of the whole of the affairs of the Company with power to appoint and dismiss employees of the Company, to enter into contracts on behalf of the Company in the ordinary course of business and to do and perform all other acts and things, which, in the ordinary course of business, he may consider necessary or proper or in the interest of the Company.

3. During the period of his employment, Mr. Majumder shall whenever required by the Company, undertake such travelling in India and abroad as the Board may from time to time direct in connection with or in relation to the business of the Company.

4. Remuneration and Perquisites

Mr. Majumder shall be entitled to the following remuneration and perquisites:

(a) Salary

Rs.7,030,800/- per annum

(b) Commission

Mr. Majumder shall be entitled to an annual performance related commission based on the results achieved against the targets fi xed and determined by the ABB Group and the Board of Directors. Under the best performance targets, the commission amount shall not exceed Rs.3,516,000/- per annum at 100% achievement level of the performance target.

(c) Perquisites

Mr. Majumder shall be entitled to perquisites like furnished accommodation or house rent allowance in lieu thereof, re-imbursement of medical expenses incurred in India or abroad for self and family, leave travel concession, contribution to Provident Fund, Superannuation Fund and Gratuity Fund, and other amenities and all other payments in the nature of perquisites and allowances as agreed to between Mr. Majumder and the Board of Directors, from time to time, subject however, that the aggregate monetary value of all perquisites of whatsoever nature, in any fi nancial year shall not exceed Rs.5,078,200/- per annum.

3187-1_ABB AR 2k7_Text.indd.indd13 133187-1_ABB AR 2k7_Text.indd.indd13 13 4/26/2008 9:46:02 AM4/26/2008 9:46:02 AM


In addition to the above, Mr. Majumder is also eligible for Company’s car(s) with chauffeur, membership / subscription fee for two clubs, personal accident insurance coverage, telephone / telefax and other suitable communication facilities at residence.

(d) Leave

Leave with full pay or encashment as per rules of the Company.

(e) Overall Remuneration

The aggregate of salary, commission and perquisites in any fi nancial year shall not exceed the limits prescribed from time to time under Section 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act, as may for the time being be in force.

(f) Minimum Remuneration

In case of loss or inadequacy of profi ts in any fi nancial year during the currency of tenure of his service, the payment of salary, commission and perquisites shall be governed by the limits prescribed under Section II of Part II of Schedule XIII to the Companies Act, 1956.

(g) Revision in Remuneration

The remuneration payable to the Managing Director shall be subject to revision, from time to time (annually and / or otherwise), by the Board of Directors of the Company at their discretion and that the next revision in remuneration shall fall due on March 1, 2009.

(h) Mr. Majumder shall be entitled to:

(i) the reimbursement of entertainment expenses actually and properly incurred by him in the course of the legitimate business of the Company in accordance with the rules and regulations of the Company in force from time to time or as may be approved by the Board of Directors; and

(ii) the reimbursement of travelling, hotel and other expenses incurred by him in India and abroad exclusively on the business of the Company in accordance with the rules and regulations of the Company in force from time to time or as approved by the Board of Directors.

5. Mr. Majumder shall not, during the term of this Agreement with the Company, engage himself, either directly or indirectly or be interested in any capacity whatsoever or render assistance to any fi rm, company or persons whatsoever whether a manufacturer, dealer or trader in goods or products which are of the same or similar kind and nature as those of the Company.

6. Notwithstanding anything to the contrary contained in the Agreement, either party shall be entitled to terminate the Agreement at anytime by giving to the other party 180 days’ notice in writing in that behalf without the necessity of showing any cause and on the expiry of the period of such notice, this Agreement shall stand determined and in view thereof and as a consequence of such termination by notice, Mr. Majumder shall cease to be a Director of the Company.

7. The terms and conditions in the draft Agreement may be altered or varied or modifi ed, from time to time, by the Board, as may be

permissible and if deem fi t, with liberty to the Board for review of remuneration annually and / or otherwise, so as not to exceed the limits specifi ed in the Act or any amendments made thereto.

This explanatory statement together with the accompanying notice is to be regarded as an abstract of terms of the agreement and memorandum of concern or interest under the provisions of Section 302 of the Companies Act, 1956.

The Agreement referred to in the resolution at Item No.9 of the accompanying notice is open for inspection by the Members at the Registered Offi ce of the Company during offi ce hours on any working day of the Company, upto the date of the Annual General Meeting.

Mr. Majumder is interested in the said resolution since it relates to his appointment as the Managing Director of the Company and to the remuneration payable to him as such.

A notice pursuant to Section 257 of the Act along with a deposit of Rs.500/- has been received from a member in writing, proposing the candidature of Mr. Majumder as the Managing Director of the Company.


Item No.10

At its meeting held on February 19, 2008, the Board of Directors had, subject to the approval of members in general meeting, appointedMr. K Rajagopal (hereinafter referred to as “Mr. Rajagopal”) as theWhole-time Director of the Company for a period of 3 years fromFebruary 19, 2008 to February 18, 2011 (both days inclusive). At the said meeting, the Board had also fi xed a total remuneration of Rs. 8,000,000/- per annum, payable to Mr. Rajagopal, for the period from February 19, 2008 to February 29, 2008, subject to annual revision by the Board of Directors every year during the entire tenure of his appointment.

Accordingly, the remuneration fi xed earlier fell due for revision effective March 1, 2008. Therefore, the Board at its meeting held on April 25, 2008 reviewed the current remuneration of Mr Rajagopal fi xed earlier and approved an increase in the total remuneration payable to him fromRs. 8,000,000/- to Rs.10,000,000/- per annum effective March 1, 2008. The break-up of the total increased remuneration of Rs 10,000,000/- and other terms & conditions of appointment as approved by the Board are set out in the draft agreement, a copy whereof duly initialed by the Chairman is placed in the meeting for the purpose of identifi cation and is subject to the approval of the Members of the Company, as required under Section 269 read with Schedule XIII to the Companies Act, 1956. The principal terms and conditions as contained in the draft agreement are as under:

1. Tenure of appointment

The appointment is for a period of three years from February 19, 2008 to February 18, 2011. Mr. Rajagopal whilst holding the offi ce of Whole-time Director of the Company is not subject to retirement by rotation.

2. During the period of his employment, Mr. Rajagopal shall whenever required by the Company, undertake such travelling in India and abroad as the Board may from time to time direct in connection with or in relation to the business of the Company.

3. Remuneration and Perquisites

Mr. Rajagopal shall be entitled to the following remuneration and perquisites:

(a) Salary

Rs.2,700,000/- per annum



(b) Annual Variable Pay (performance related)

Mr. Rajagopal shall be entitled to an annual performance related variable pay based on the results achieved against the targets fi xed and determined by the Board of Directors. Under the best performance targets, the commission amount shall not exceed Rs.2,000,000/- per annum at 100% achievement level of the performance target.

(c) Perquisites

Mr. Rajagopal shall be entitled to perquisites like furnished accommodation or house rent allowance in lieu thereof, re-imbursement of medical expenses incurred in India or abroad for self and family, leave travel concession, contribution to Provident Fund, Superannuation Fund and Gratuity Fund and other amenities viz., Company’s car with chauffeur etc., and all other payments in the nature of perquisites and allowances as agreed to between Mr. Rajagopal and the Board of Directors, from time to time, subject however, that the aggregate monetary value of all perquisites of whatsoever nature including Retiral benefi ts, in any fi nancial year shall not exceed Rs.5,300,000/- per annum.

In addition to the above, Mr. Rajagopal is also eligible for membership / subscription fee for two clubs, personal accident insurance coverage, telephone / telefax and other suitable communication facilities at residence.

(d) Leave

Leave with full pay or encashment as per rules of the Company.

(e) Overall Remuneration

The aggregate of salary, commission and perquisites in any fi nancial year shall not exceed the limits prescribed from time to time under Section 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act, as may for the time being be in force.

(f) Minimum Remuneration

In case of loss or inadequacy of profi ts in any fi nancial year during the currency of tenure of his service, the payment of salary, commission and perquisites shall be governed by the limits prescribed under Section II of Part II of Schedule XIII to the Companies Act, 1956.

(g) Revision in Remuneration

The remuneration payable to the Whole-time Director shall be subject to revision, from time to time (annually and / or otherwise), by the Board of Directors of the Company at their discretion and that the next revision in remuneration shall fall due on March 1, 2009.

(h) Mr. Rajagopal shall be entitled to:

(i) the reimbursement of entertainment expenses actually and properly incurred by him in the course of the legitimate

business of the Company in accordance with the rules and regulations of the Company in force from time to time or as may be approved by the Board of Directors; and

(ii) the reimbursement of travelling, hotel and other expenses incurred by him in India and abroad exclusively on the business of the Company in accordance with the rules and regulations of the Company in force from time to time or as approved by the Board of Directors.

4. Mr. Rajagopal shall not, during the term of this Agreement with the Company, engage himself, either directly or indirectly or be interested in any capacity whatsoever or render assistance to any fi rm, company or persons whatsoever whether a manufacturer, dealer or trader in goods or products which are of the same or similar kind and nature as those of the Company.

5. Notwithstanding anything to the contrary contained in the Agreement, either party shall be entitled to terminate the Agreement at anytime by giving to the other party 180 days’ notice in writing in that behalf without the necessity of showing any cause and on the expiry of the period of such notice, this Agreement shall stand determined and in view thereof and as a consequence of such termination by notice, Mr. Rajagopal shall cease to be a Director of the Company.

6. The terms and conditions in the draft Agreement may be altered or varied or modifi ed, from time to time, by the Board, as may be permissible and if deem fi t, with liberty to the Board for review of remuneration annually and / or otherwise, so as not to exceed the limits specifi ed in the Act or any amendments made thereto.

This explanatory statement together with the accompanying notice is to be regarded as an abstract of terms of the agreement and memorandum of concern or interest under the provisions of Section 302 of the Companies Act, 1956.

The Agreement referred to in the resolution at Item No.10 of the accompanying notice is open for inspection by the Members at the Registered Offi ce of the Company during offi ce hours on any working day of the Company, upto the date of the Annual General Meeting.

Mr. Rajagopal is interested in the said resolution since it relates to his appointment as the Whole-time Director of the Company and to the remuneration payable to him as such.

A notice pursuant to Section 257 of the Companies Act, 1956, along with a deposit of Rs.500/- has been received from a member in writing, proposing the candidature of Mr. Rajagopal as a Whole-time Director.


By Order of the Board For ABB Limited

B. Gururaj Senior Vice President - Place: Vadodara Legal & Compliance andDate: April 25, 2008 Company Secretary

Registered Offi ce:2nd Floor, East Wing,Khanija Bhavan,49, Race Course Road,Bangalore – 560 001



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

Financial Results

(Rs in Thousands)

For the year ended December 31, 2007


Profi t Before Taxation 7,564,569 5,232,062

Less: Provision for Tax

- Current Tax 2,563,879 1,671,000

- Deferred Tax (11,000) 81,000

- Fringe Benefi t Tax 95,000 77,000

Profi t After Tax 4,916,690 3,403,062

Balance Brought Forward from last year 519,255 349,450

Amount available for Appropriation 5,435,945 3,752,512

Appropriations

General Reserve 4,250,000 2,750,000

Proposed Dividend 466,198 423,817

Corporate Dividend Tax 79,230 59,440

Corporate Dividend Tax – 2006 12,587 -

Balance Carried Forward 627,930 519,255

5,435,945 3,752,512

Directors’ Report

Dividend

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

Sub-division of the Face Value of Equity Shares

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

Performance Review

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

Sales and other income for the year were higher by 38% at Rs 60,014 million compared to Rs 43,477 million in the previous year. Profi t before tax was signifi cantly higher at Rs 7,565 million compared to Rs 5,232 million in the previous year. Growth in profi t was mainly attributable to volume growth and operational effi ciencies.

Profi t after tax at Rs 4,917 million for the year has improved by 44% compared to Rs 3,403 million in the previous year. Earning per equity share of face value of Rs 2 correspondingly improved to Rs 23.20 compared to Rs 16.06 in the previous year.

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

Transfer to Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs.825,720/- lying with the Company for a period of seven years pertaining to year ended on December 31, 1999, was transferred during the year 2007, to the Investor Education and Protection Fund established by the Central Government.

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

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

Environment, Health and Safety

The Company has in place a system for controlling and monitoring pollutants at all factories complying with environmental standards and legislation. All the manufacturing units of the Company have received certifi cates for ISO 14001 (EMS). Environment, health and safety are given high priority. All the units of the Company have been awarded OHSAS18001 certifi cation for the health and safety system. Several environmental management projects are underway across the locations. Some of these include energy conservation, waste management, rain water harvesting and greening initiatives.



Delisting of Equity Shares

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

Particulars of Employees

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

Directors’ Responsibility Statement

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

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

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

iii. proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

Corporate Governance

As required under Clause 49 of the listing agreement of stock exchanges, a report on corporate governance and a certifi cate from M/s D. R. Shressha & Associates, Practicing Company Secretaries, confi rming compliance with the requirements of corporate governance are given in Annexure – C and Annexure – D respectively, which forms part of this report.

Board of Directors

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

Mr. Dinesh Paliwal resigned as the Chairman and Director of the Company effective May 25, 2007.

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

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

The Board of Directors at its meeting held on February 19, 2008, appointed Mr. K. Rajagopal as an Additional Director and also as Whole-time Director of the Company for a period of three years with effect therefrom.

Your Directors place on record their appreciation of the valuable services rendered by Mr. K. Sridhar, Mr. Dinesh Paliwal and Mr. Tom Eric Sjoekvist, during their tenure as Directors of the Company.

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

Auditors

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

For and on behalf of the Board

New Delhi Ravi UppalFebruary 19, 2008 Chairman



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

1. Conservation of energy

The operations of the Company are not energy intensive. However, energy conservation is priority area for the Company. Energy conservation measures taken during the year included,

• Usage of optimise thermic fl uid system, air cooling plant and air conditioning system.

• Adopting servo controlled voltage stabilizer for lighting.

• Replacement of HPMV lamps with Metal Halide Lamps and use of CFLs.

Various training programmes were also conducted across the organisation to increase the awareness for reduction in energy consumption.

2. Technology absorption, adaptation and innovation

2.1 Technical Development

New Products Developed:

• Numeric relays for over current - earth fault protection - NI40/41, REF601 and REJ601.

• Self powered Numeric relay - REJ603.

• LV motors for hazardous area suitable for an ambient temperature 50 degree Celsius.

• 250/60 kW, 4/6P wind generator.

• Energy effi cient cast iron motors in frame 71 to 132 for EFF1 & EFF2 level.

• 25 kVA Natural Cooled under slung auxiliary inverter for Railways.

Product Improvements:

• Increase in voltage range of capacitor unit - 21 kV capacitor unit is developed.

• Development of fuse-less capacitor units. Increase of kVAR rating of capacitor unit - 1000 kVAR capacitor unit is developed.

• Higher kVAR and improved design for the presently available dynamic reactive power compensator -150 kVAR STATCON.

• Instrument transformer design and processes.

• Higher voltage – 1380 V dc for an Aluminium smelter.

2.2 Benefi ts derived as a result of the R&D efforts

Multifold benefi ts were accrued as a result of R & D activities. Apart from strengthening of technical base, benefi ts have also

Annexure - A to Directors’ Report

been refl ected in terms of improvement of product reliability and quality, standardization of design of assemblies/ sub-assemblies/ components among various products, cost reduction and increased acceptability of products in global markets.

2.3 Expenditure on Research & Development

(Rs in Thousands) i) Capital 7,005 ii) Revenue 43,761 iii) Total 50,766

iv) Total R & D expenditure as a percentage of turnover 0.09

3 Imported Technology (imported during last fi ve years)

3.1 Technology imported

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

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

Miniature circuit breakers 2003

Power capacitor units and Banks 2003

HT Motors 2003

LV Capacitors 2003

Transformer Bushings 2004

3100 HP Supercharger 2004

INDACTIC 1425 telemetering equipment 2004

Air circuit breakers 2004

‘A’ range contactors up to 40A 2005

Residual current circuit breakers 2005

PR521 and PR512 relays 2005

SPAD 346C relays 2005

Operating mechanism- BLK222 245 kV CB 2005

ACS 550 Drives 2005

Residual Current Device (RCD) 2007

Localisation of TMAX/EMAX MCCBs 2007

TA 25 Relays 2007

HT Motors M3BM 2007

Three phase LV induction Motors up to 7.5 KW 2007

Above technologies have been fully absorbed except for three phase LV induction Motors up to 7.5 KW.



3.2 Foreign exchange earnings and outgo

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

Revenues from exports during the year were Rs 3,630 million. Power products segment consolidated its position in the export market with coverage of over 90 countries. Signifi cant growth in export of Disconnectors and 72 kV circuit breakers was achieved. Few large value orders were booked during the year from Vietnam and Philippines for circuit breakers, disconnectors and instrument transformers. Introduction of new range of indoor panel type unigear for primary and secondary distribution helped in doubling the exports of indoor panels. Markets have been developed for cougar relays; ring main units and compact secondary substations, which will help in increasing exports in South Asian countries and other parts of the world from 2008. Strategic thrust and several sales promotional activities helped in increasing export of automation products. Development of channel partners, sales and after sales service support in Sri Lanka, Bangladesh and Mauritius helped in increasing exports. Signifi cant orders were received from China for low voltage drives for wind generator project, from Abu Dhabi for service of motors, from South Africa for generator upgrade and static excitation system. Exports for process automation system grew over 100%. Signifi cant orders for metals, minerals, turbo charging, cement and analytical products were received from Indonesia, Malaysia, Singapore, Sri Lanka, Bangladesh and Middle East. A large order for Rs 933 million was received for turnkey electrics and automation solution for 5,000 tonnes per day for a cement plant in Jordan. With management focus, strategies and increasing sourcing of components, products and services from India by the ABB Group companies, prospects for growth in export volumes in coming years are very high.

(b) Total foreign exchange used and earned

(Rs in Millions)

a) Foreign Exchange earned (including deemed exports) 4,664

b) Foreign Exchange used 15,474





Report on Corporate Governance

1. Corporate Governance Philosophy

The Company is committed to good Corporate Governance. The Company fully realises the rights of its shareholders to information on the performance of the Company and considers itself a trustee of its shareholders. The Company provides detailed information on various issues concerning the Company’s business and fi nancial performance, to its shareholders. The basic philosophy of Corporate Governance in the Company is to achieve business excellence and dedicate itself for increasing long-term shareholder value, keeping in view the needs and interests of all its stakeholders. The Company is committed to transparency in all its dealings and places emphasis on business ethics.

2. Board of Directors

(i) Composition/ Category of Directors/ Attendance at Meetings/ Directorships & Committee Memberships in Other Companies as on December 31, 2007

AttendanceDirectorships/Mandatory

Committee Memberships in Other Companies

Name Category of Director

No

. of

Bo

ard

M

eetin

gs

held

d

urin

g 2

007

No

. of

Bo

ard

M

eetin

gs

atte

nded

Last

AG

M

atte

ndan

ce

Dire

cto

rshi

p in

P

ublic

Co

mp

anie

s

Dire

cto

rshi

p

in P

riva

te

Co

mp

anie

s

Co

mm

ittee

M

emb

ersh

ips

Co

mm

ittee

C

hair

man

ship

s

Mr. Ravi Uppal (*)(Chairman)

Non-executive 4 4 YES 5 2 - 1

Mr. Biplab Majumder (**)(Managing Director)

Executive 4 4 YES 2 - - 2

Mr. N. S. Raghavan Non-executive & Independent 4 4 YES 1 6 1 -

Mr. Nasser Munjee Non-executive & Independent 4 2 NO 14 - 5 4

Mr. D. E. Udwadia Non-executive & Independent 4 3 NO 14 8 8 -

Mr. Bernhard Jucker Non-executive 4 2 NO 1 - - -

Mr. A .K. Dasgupta (***) Non-executive & Independent 4 3 YES 3 - 1 -

Mr. Peter Leupp (@) Non-executive 4 1 NO 1 - - -

Mr. Veli-Matti Reinikkala (#) Non-executive 4 - NO 1 - - -

Mr. Dinesh Paliwal ($) Non-executive 4 1 NO NA NA NA NA

Mr. Tom Eric Sjoekvist (&) Non-executive 4 - NO NA NA NA NA

(*) Mr. Ravi Uppal resigned as the Vice Chairman & Managing Director of the Company on July 26, 2007. The Board of Directors, however, at its meeting held on July 26, 2007, appointed Mr. Ravi Uppal as an Additional Director and also as Chairman of the Company, with effect therefrom.

(**) Mr. Biplab Majumder, Executive Director, was appointed as the Managing Director of the Company with effect from July 26, 2007.

(***) Mr. A. K. Dasgupta was appointed as a Director of the Company, with effect from April 26, 2007, in the casual vacancy caused by the resignation of Mr. K. Sridhar on June 23, 2006.

(@) Mr. Peter Leupp was appointed as a Director of the Company, with effect from July 26, 2007, in the casual vacancy caused by the resignation of Mr. Tom Eric Sjoekvist on July 5, 2007.

(#) Mr. Veli-Matti Reinikkala was appointed as an Additional Director of the Company with effect from July 26, 2007.

($) Mr. Dinesh Paliwal resigned as the Chairman and Director of the Company on May 25, 2007.

(&) Mr. Tom Eric Sjoekvist resigned as a Director of the Company on July 5, 2007.

None of the Non-executive Directors has any pecuniary relationship or transactions with the Company except Mr. D. E. Udwadia, where the Company has paid Rs 49,100/- to the law Firm of Udwadia & Udeshi as fees for professional services that were provided by the fi rm to the Company on specifi c legal matters entrusted by the Company to it for legal advice. Mr. D.E. Udwadia, a Director of the Company, is a Partner of the above Firm. The Board does not consider the law Firm’s association with the Company to be of a material nature so as to affect independence of judgement of Mr. Udwadia as a Director of the Company.

Annexure – C to Directors’ Report



(ii) No. of Board Meetings held in the Financial Year 2007 and dates on which held

The Board meets at least once in a quarter to consider amongst other business, the quarterly performance of the Company and the fi nancial results. The Board has held four meetings during the fi nancial year 2007 i.e., on February 16, April 26, July 26 and October 25, 2007.

3. Audit Committee

(i) Terms of Reference

The Audit Committee is responsible for overseeing the Company’s fi nancial reporting process, reviewing the quarterly/half-yearly/annual fi nancial statements, reviewing with the management on the fi nancial statements and adequacy of internal audit function, recommending the appointment/re-appointment of statutory auditors and fi xation of audit fees, reviewing the signifi cant internal audit fi ndings/related party transactions, reviewing the Management Discussion and Analysis of fi nancial condition and result of operations and also statutory compliance issues. The Committee acts as a link between the management, external and internal auditors and the Board of Directors of the Company.

The Committee discussed with the external auditors their audit methodology, audit planning and signifi cant observations/suggestions made by them. The Committee also discussed major issues related to risk management and compliances.

In addition, the Committee has discharged such other role/function as envisaged under Clause 49 of the Listing Agreement of the Stock Exchange and the provisions of Section 292A of the Companies Act, 1956.

(ii) Composition, name of members & Chairperson, meetings held during the year and attendance at meetings

The Company has complied with the requirements of Clause 49 of the Listing Agreement of the Stock Exchange and Section 292A of the Companies Act, 1956, as regards composition of Audit Committee.

The Audit Committee presently consists of four Non-executive Independent Directors. The Committee has held four meetings during the fi nancial year 2007 i.e. on February 15, April 26, July 25 and October 25, 2007. The Composition of the Audit Committee as on December 31, 2007 and the attendance of members at the meetings of the Audit Committee held during the fi nancial year 2007 were as follows:

Members of Audit Committee No. of meetings attended

Mr. Nasser Munjee (Chairman) 3

Mr. N. S. Raghavan 4

Mr. D. E. Udwadia 3

Mr. A. K. Dasgupta (*) 1

(*) Mr. A. K. Dasgupta was appointed as a Member of the Committee with effect from July 26, 2007.

4. Remuneration Committee

(i) Terms of Reference

The role of the Remuneration Committee is to recommend to the Board, the remuneration package for the Managing/Executive Directors.

(ii) Composition, name of members & Chairperson, meetings held during the year and attendance at meetings

The Remuneration Committee presently consists of 3 Non-executive Directors, the Chairman being Non-executive and Independent. No meeting of the Committee was held during the fi nancial year 2007. The Composition of the Remuneration Committee as on December 31, 2007 is as under:

Members of Remuneration Committee

Mr. N. S. Raghavan (Chairman)

Mr. Ravi Uppal

Mr. A. K. Dasgupta

(iii) Remuneration Policy/Criteria of payments to Non-executive Directors

The Company has a credible and transparent policy in determining and accounting for the remuneration of the Executive/Non-executive Directors. Their remuneration is governed by the external competitive environment, track record, potential, individual performance and performance of the Company as well as industry standards. The remuneration determined for the Executive/Non-executive Directors is subject to the approval of the Remuneration Committee of the Board of Directors and the Members.



The Non-executive Independent Directors are compensated by way of a commission and the criteria being their attendance in the Board/Committee Meetings.

As a policy, the Non-Independent Directors are neither paid sitting fee nor paid any commission.

(iv) Details of remuneration to all the Directors during the fi nancial year 2007

(Rs in Thousands)

Name Sitting FeesSalary &

PerquisitesCommission (*) Stock Option Pension Total

Mr. Ravi Uppal Nil 11,467 3,033 Nil Nil 14,500

Mr. Biplab Majumder Nil 7,254 2,080 Nil Nil 9,334

Mr. N.S. Raghavan 110 NA 300 Nil Nil 410

Mr. Nasser Munjee 50 NA 300 Nil Nil 350

Mr. D. E. Udwadia 85 NA 300 Nil Nil 385

Mr. A. K. Dasgupta 40 NA 300 Nil Nil 340

(*) subject to the approval of the Board.

Fixed Component/ Performance Linked Incentive/ Criteria

The Managing Director is entitled to an annual performance related commission based on the results achieved against the targets fi xed and determined by the Board. Under the best performance targets, the commission amount payable to the Managing Director for the year 2007 is not to exceed Rs.2,812,500/- per annum at 100% achievement level of the performance target.

Service Contract/ Notice Period/ Severance Fees

a) The Contract of Service entered into by the Company with Mr. Biplab Majumder, Managing Director, provides that the Company and Mr. Biplab Majumder shall be entitled to terminate the agreement by giving 180 days notice in writing to the other.

b) No severance fee is payable by the Company on termination of the agreement.

5. Shareholders’ Committee

The Board of Directors of the Company had set up an Investors’ Grievance Committee which has been authorised to approve the transfer/transmission/ transposition of shares.

In order to expedite the process, the Board of Directors has also delegated the authority to the Managing Director (MD) and the Company Secretary to approve the share transfers and accordingly, the MD or the Company Secretary approves the transfer/transmission of shares at a frequency of about twice a month.

Six meetings of Investors’ Grievance Committee were held during the fi nancial year 2007 i.e., on January 5, February 16, April 26, July 26, October 25 and December 24, 2007.

Mr. B. Gururaj, Vice President – Legal & Company Secretary is the Compliance Offi cer of the Company.

The composition of Investors’ Grievance Committee as at December 31, 2007 and attendance of the Committee members at these meetings were as follows:

Members of Investors’ Grievance Committee No. of meetings attended

Mr. D. E. Udwadia (Chairman) 5

Mr. N. S. Raghavan 6

Mr. Biplab Majumder 2

The details of investors’ complaints received and resolved during the fi nancial year 2007 is as under:

No. of investors’ complaintsreceived during 2007

No. of investors’ complaints resolved during 2007

Investors’ complaints pendingat the end of 2007

433 433 NIL



6. General Body Meetings

(i) Location and time where last three Annual General Meetings (AGMs) held

For the Year Venue Day & Date Time

2006 The Atria Hotel, “Chancery”, No.1, Palace Road, Bangalore – 560 001

Friday, May 25, 2007

3.00 p.m. (IST)

2005 ITC Hotel Windsor Sheraton & Towers, “Regency”,No.25, Golf Course Road, Bangalore – 560 052

Friday,May 26, 2006

3.00 p.m. (IST)

2004 ITC Hotel Windsor Sheraton & Towers, “Windsor Square”, No.25, Golf Course Road, Bangalore – 560 052

Tuesday,May 24, 2005

3.00 p.m. (IST)

(ii) Special Resolution passed in the previous three Annual General Meetings

Two Special Resolutions were passed in the last Annual General Meeting of the Company held on May 25, 2007, wherein the approval of the members was obtained for (a) amendment to Articles of Association of the Company and (b) payment of Commission to Non-executive Directors.

A Special Resolution had been passed in the Annual General Meeting of the Company held on May 26, 2006, wherein approval of the members was obtained for voluntary delisting of equity shares of the Company from Ahmedabad Stock Exchange Limited, Delhi Stock Exchange Association Limited and Calcutta Stock Exchange Association Limited.

A Special Resolution had been passed in the Annual General Meeting of the Company held on May 24, 2005, for keeping the register of members, index of members, register & index of debenture holders, records relating to annual returns of allotment from time to time, copies of annual returns etc., at the Offi ce of Karvy Computershare Private Limited, the Registrar and Share Transfer Agents of the Company, situated at #51/2, TKN Complex, Vanivilas Road, Opp. National College, Basavanagudi, Bangalore – 560 004, instead of being kept at the Registered Offi ce of the Company.

(iii) Postal Ballot

No postal ballot was conducted in the year 2007. As on date, the Company does not have any proposal to pass any special resolution by way of postal ballot.

7. Disclosures

(i) Disclosures on materially signifi cant related party transactions.

There was no materially signifi cant related party transaction during the year having potential confl ict with the interests of the Company.

(ii) Details of non-compliance by the Company, penalties and strictures imposed on the Company by the Stock Exchange or SEBI or any statutory authorities or any matter related to capital markets during the last three years.

The Company has complied with all the requirements of the Listing Agreement of the Stock Exchanges as well as regulations and guidelines of SEBI. Neither any penalty nor any stricture has been passed by SEBI, Stock Exchanges or any other Statutory Authority on matters relating to capital markets, in the last three years.

(iii) Whistle Blower Policy and affi rmation that no personnel have been denied access to the audit committee.

The Company has adopted Whistle Blower Policy of ABB Group. The employees of the Company have access to approach the Management on any issues relating to Code of Conduct/Business Ethics.

(iv) Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of this clause.

The Company has fully complied with the mandatory requirements of Clause 49 of the Listing Agreement of the Stock Exchange. Further, the Company has adopted two non-mandatory requirements of clause 49 of the listing agreement, viz. Remuneration Committee of the Board which has been constituted to determine the remuneration package of the Executive Directors and maintenance of Offi ce of Non-executive Chairman.

8. Means of Communication

(i) Quarterly Financial Results

The quarterly/ half-yearly/ annual fi nancial results are published in The Economic Times/ Business Standard/ Financial Express (English Daily) and Samyukta Karnataka (Kannada Daily). The fi nancial results and the offi cial news releases are also placed on the Company’s website www.abb.com/in. The Company has a dedicated help desk with e-mail ID: [email protected] in the Secretarial Department for providing necessary information to the investors.



(ii) Offi cial News Releases

The Company holds press analyst meets and makes necessary presentation, to apprise and make public the information relating to the Company’s working and future outlook.

9. General Shareholder Information

(i) Annual General Meeting

Day, Date, Time and Venue :

The Company will be holding its 58th Annual General Meeting on Tuesday, June 3, 2008 at 11.00 a.m. (IST) at The Atria Hotel, “Chancery”, No.1, Palace Road, Bangalore – 560 001.

Agenda:

a) Adoption of Audited Accounts, Directors’ and Auditors’ Report

b) Declaration of Dividend

c) Re-election of Directors retiring by rotation

d) Re-appointment of M/s. S. R. Batliboi and Co., Chartered Accountants, as Auditors

e) Appointment of Directors

f) Consent of Members for appointment and payment of remuneration to the Managing Director

g) Consent of Members for appointment and payment of remuneration to the Whole-time Director

(ii) Profi le of Directors seeking re-appointment/appointment

The profi le of Directors who are seeking re-appointment/appointment at the Annual General Meeting is furnished below:

Brief resume of Directors and nature of their expertise in functional areas

Directorships/CommitteeMemberships in other companies

Shareholding in ABB Limited

Mr. Bernhard Jucker

Mr Bernhard Jucker, aged 53, holds Degree in Electrical Engineering from Swiss Federal Institute of Technology (ETH) Zurich, Switzerland.

He has been with the ABB Group since 1980 and has held several key positions in various capacities. Currently, he is the Head of Power Products Division and Member of the Group Executive Committee of ABB Limited, Zurich - Switzerland.

1. ABB Global Services Limited NIL

Mr. Arun Kanti Dasgupta

Mr. Arun Kanti Dasgupta, aged 56, holds Degree in Science from Dibrugarh University and also holds Post Graduate Diploma in Business Management from Punjab University.

Currently, he is the Managing Director of Life Insurance Corporation of India (LIC). Previously, he had held various important positions in LIC.

1. Life Insurance Corporation of India (Managing Director)2. LIC (Nepal) Ltd.3. LIC (Mauritius) Offshore Ltd.4. LIC Pension Fund Ltd.

Committee MembershipsA) Audit Committee:1. LIC (Nepal) Ltd.

NIL






Mr. D. E. Udwadia

Mr. Udwadia, aged 68, has obtained Post Graduate Degree from the University of Mumbai. He has nearly 48 years of active law practice and has acquired invaluable knowledge, experience and expertise in various matters viz., corporate laws, mergers/acquisitions & takeovers, corporate restructuring, foreign collaboration, joint ventures etc.

He is a solicitor by profession and is a senior partner of a law fi rm ‘Udwadia & Udeshi’, which is one of the leading law-fi rms in Mumbai. He is also the Chairman of AstraZeneca Pharma India Limited and Vice Chairman of Macmillan India Limited.

He is also on the boards of several reputed public as well as private companies.

1. ADF Foods Ltd.2. AstraZeneca Pharma India Ltd.3. Bombay Burmah Trading Corp. Ltd.4. Coromandel Fertilisers Ltd.5. Development Credit Bank Ltd.6. Eureka Forbes Ltd.7. ITD Cementation India Ltd.8. JM Financial Limited9. Macmillan India Ltd.10. Mechanalysis (India) Ltd.11. MPS Technologies Ltd.12. Sundaram-Clayton Ltd.13. Wyeth Ltd.14. Avesta Nordic Research Pvt Ltd15. Avesthagen Limited16. Habasit Lakoka Pvt. Ltd.17. JM Financial & Inv. Consultancy Services Pvt. Ltd.18. JM Financial Trustee Co. Pvt. Ltd.19. JM Financial Consultants Pvt. Ltd.20. Nitesh Estates Private Ltd.21. Quantum Advisors Pvt. Ltd.22. Rossi Gearmotors (India) Pvt. Ltd.

Committee MembershipsA) Audit Committee:1. AstraZeneca Pharma India Ltd.2. Bombay Burmah Trading Corp Ltd.3. Coromandel Fertilisers Ltd.4. Development Credit Bank Ltd.5. ITD Cementation India Ltd.6. Macmillan India Ltd.7. Sundaram-Clayton Ltd.8. Wyeth Ltd.

2,250 shares

Mr. Ravi Uppal

Mr. Ravi Uppal, aged 55, is a B-Tech from Indian Institute of Technology (IIT), Delhi and did his Post Graduation Diploma in Business Administration from Indian Institute of Management (IIM), Ahmedabad. He started his career with BHEL in 1975. He joined Asea Limited in 1980. In the merged entity Asea Brown Boveri Limited, he held the position of Vice President (Power Projects) and then of (Industrial Electronics and Systems Segment). After serving 16 years in ABB Group, in 1996, he took the assignment as the Managing Director of Volvo India Private Limited.

During September 2001, he joined ABB Limited as its Managing Director and held the position of Vice Chairman and Managing Director of the Company till he resigned on July 26, 2007, consequent to taking global assignment as Head of Global Marketing.

He is also a Member of the Group Executive Committee of ABB Asea Brown Boveri Limited, Switzerland.

Currently, he holds the position of the Non-executive Chairman of the Company.

1. ABB Global Services Ltd. (Chairman)2. ST-CMS Electric Co. Pvt. Ltd.3. Page Industries Limited4. Asea Brown Boveri Limited, Mauritius5. ABB (Pvt.) Limited, Pakistan6. ABB Lummus Global Inc7. Raman Boards Limited

Committee Chairmanships:1. Page Industries Limited (Audit Committee)

1,525 shares






Mr. Veli-Matti Reinikkala

Mr. Veli-Matti Reinikkala, aged 50, holds Diploma in Accounting and has completed Masters of Business Administration from Helsinki School of Economics, Finland.

Currently, he is Head of Process Automation Division and Member of the Group Executive Committee of ABB Limited, Switzerland.

1. ABB Global Services Limited NIL

Mr. Biplab Majumder

Mr. Biplab Majumder, aged 59, holds Bachelor’s Degree in Chemical Engineering from Jadvapur University and also holds Master’s Degree in Chemical Technology, from Regional Engineering College, Durgapur.He has been with the ABB Group since 1978 and has held several key positions in various capacities, including that of Local Division Manager – Automation Technologies Division and Executive Director.Currently, he is the Managing Director of ABB Limited and ABB Holdings (South Asia) Limited.

1. ABB Global Services Ltd.

2. ABB Holdings (South Asia) Ltd.

(Managing Director)

Committee Chairmanships:1. ABB Holdings (South Asia) Ltd. (Audit Committee)

2. ABB Global Services Ltd. (Audit Committee)

NIL

Mr. K. Rajagopal

Mr K. Rajagopal, aged 51, holds a Commerce Degree and is an Associate Member of the Institute of Chartered Accountants of India. He has over 24 years of experience in the fi eld of fi nance, most of which has been spent with ABB.Mr Rajagopal began his career at ABB India (February 1991) as a Business Unit Controller and has since served in various capacities including Divisional Finance Controller and Head of Corporate Finance. Since September 2001 he is functioning as Chief Financial Offi cer of ABB India and since 2005 he is having additional responsibilities as Regional Finance Manager of ABB Group companies in South Asia Region.Currently, he is the Whole-time Director of the Company.

1. ABB Global Services Limited

2. ABB Holdings (South Asia) Limited

3. Raman Boards Limited

4. Integra Hindustan Controls Limited

5. Asea Brown Boveri Limited, Mauritius

6. ABB Inc. Philippines

200

(iii) Financial Year

Indicative calendar of events for the year 2008 (January - December) excluding Extra Ordinary General Meeting(s), if any, is as under:

Fourth Quarter Financial Results (Year 2007) February 2008

First Quarter Financial Results April 2008

Annual General Meeting June 2008

Second Quarter Financial Results July 2008

Third Quarter Financial Results October 2008

(iv) Date of Book Closure

The Company’s Register of Members and Share Transfer Books will remain closed for the purpose of payment of dividend from May 28, 2008 to June 3, 2008 (both days inclusive).

(v) Dividend Payment Date

The dividend, as recommended by the Board of Directors, if declared at the ensuing Annual General Meeting will be paid on or after June 6, 2008, to those shareholders whose names appear on the Company’s Register of Members as on May 27, 2008.

(vi) Listing on Stock Exchanges

The equity shares of the Company are currently listed at National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Company has paid till date, appropriate listing fee to both the stock exchanges where the Company’s equity shares are listed.

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



(vii) Stock Code

National Stock Exchange Mumbai Stock Exchange

ABB 500002

(viii) Market Price Data

The market price data and volume of the Company’s shares traded in the Mumbai Stock Exchange and the National Stock Exchange, during the year 2007 was as follows

Period 2007BSE (Rs.)

BSE Sensex Index

NSE (Rs.)NSE Nifty

Index

High Low High Low High Low High Low

January 3776.00 3440.00 14325.92 13303.22 3779.00 3420.00 4167.15 3833.60

February 4000.00 3455.00 14723.88 12800.91 3999.00 3500.00 4245.30 3674.85

March 3685.00 3190.00 13386.95 12316.10 3689.90 3190.25 3901.75 3554.50

April 4160.00 3381.00 14383.72 12425.52 3479.95 3381.00 4217.90 3617.00

May 4630.00 4080.00 14576.37 13554.34 4631.05 4082.15 4306.75 3981.15

June 4845.00 955.00 14683.36 13946.99 4841.00 950.05 4362.95 4100.80

July 1175.00 1046.10 15868.85 14638.88 1174.80 1046.00 4647.95 4304.00

August 1158.00 981.00 15542.40 13779.88 1160.00 981.50 4532.90 4002.20

September 1345.00 1131.00 17361.47 15323.05 1330.00 1105.65 5055.80 4445.55

October 1625.00 1215.50 20238.16 17144.58 1624.00 1290.00 5976.00 5000.95

November 1670.00 1453.00 20204.21 18182.83 1744.00 1456.60 6011.95 5394.35

December 1649.90 1435.00 20498.11 18886.40 1649.90 1445.00 6185.40 5676.70

Note: Effective July 6, 2007, each equity share of the face value of Rs.10/- each was sub-divided into 5 equity shares of the face value of Rs.2/- each. Hence, the share price statistics provided above for the period July – December 2007 is with respect to sub-divided equity share of the face value of Rs.2/- each.

(ix) Performance in comparison to broad-based indices viz., BSE Sensex and NSE Nifty

0

5000

10000

15000

20000

DecNovOctSepAugJulJunMayAprMarFebJan

14325.92

3776.00

4000.00

3685.00

4160.00

4630.00

4845.00

1175.001158.00 1345.00 1625.00 1670.00

1649.00

14723.88

13386.95

14383.72

14576.37

14683.36

15868.85

15542.4017361.47

20238.16

20204.21

20498.11

BSE Sensex ABB

ABB SHARE PRICE MOVEMENT VS BSE SENSEXJANUARY - DECEMBER 2007

Market price of ABB’s scrip for the period July – December 2007 is based on face value of Rs 2/- each per share.



Market price of ABB’s scrip for the period July – December 2007 is based on face value of Rs 2/- each per share.

(x) Registrar and Transfer Agents Karvy Computershare Private Limited, (Unit: ABB Limited) 17-24, Vittal Rao Nagar Madhapur Hyderabad - 560 081 E-mail: [email protected]

(xi) Share Transfer System

The Company’s shares being in compulsory demat list, are transferable through the depository system. However, shares in the physical form are processed by the Registrar & Transfer Agent, and approved by the Investors’ Grievance Committee. In order to expedite the process, the Board of Directors has also delegated the authority to the Managing Director (MD) and the Company Secretary to approve the share transfers and accordingly, the MD or the Company Secretary approve the transfer/transmission of shares at a frequency of about twice a month. The share transfer process is reviewed by the said Committee.

(xii) Shareholding Pattern

As on 31.12.2007 As on 31.12.2006

Shareholders No. of sharesof Rs. 2/- each

% No. of sharesof Rs. 10/- each

%

ABB Asea Brown Boveri Ltd. Zurich &ABB Norden Holdings AB, Sweden

110420285 52.11 22084057 52.11

Non-Resident Individuals/OCBs 370777 0.17 63064 0.15

Directors and their relatives 4525 0.00 755 0.00

LIC/UTI/ Other Insurance Cos. 26489003 12.50 6412915 15.13

Nationalised Banks/Other Banks 410482 0.19 89299 0.21

Mutual Funds 7942000 3.75 1323096 3.12

Foreign Institutional Investors 36759908 17.35 7305329 17.24

Bodies Corporate/Trust 4609999 2.18 590667 1.39

General Public 24901396 11.75 4512493 10.65

Total 211908375 100.00 42381675 100.00

0

1000

2000

3000

4000

5000

6000

7000

DecNovOctSepAugJulJunMayAprMarFebJan

3779.00

4167.15 4245.303901.75

4217.90

4306.754362.95

4647.95

4532.90 5055.80

5976.00

6011.95

6185.40

3999.003689.90

4631.054841.00

3479.95

1174.801160.00

1330.001624.00

1744.00

1649.90

NSE S&P CNX Nifty Index

ABB SHARE PRICE MOVEMENT VS NSE S&P CNX NIFTY INDEXJANUARY - DECEMBER 2007

ABB



(xiii) Distribution of Shareholding as on December 31, 2007

Category No. of Shareholders No. of Shares held %age of equity capital

1 – 5000 92309 19126377 9.03

5001 – 10000 413 2896430 1.37

10001 – 50000 262 5492964 2.55

50001 – 100000 49 3642755 1.75

100001 and above 116 180749849 85.30

Total 93149 211908375 100.00

(xiv) Dematerialisation of Shares and liquidity

The equity shares of the Company are available under dematerialised form with National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd., (CDSL). The Company’s equity shares are compulsorily traded in the dematerialised form. Consequent to sub-division of the face value of equity share of the Company, the Company has been allotted with new ISIN i.e., INE117A01022.

As on December 31, 2007, 101071275 equity shares of the Company have been dematerialised representing 47.70% of the total shares. (19818770 equity shares were in dematerialised form representing 46.76% of the total shares as on December 31, 2006).

(xv) Outstanding GDRs/ ADRs/ Warrants or any Convertible Instruments, conversion date and likely impact on equity

As on date, the Company has not issued GDRs, ADRs or any other Convertible Instruments and as such, there is no impact on the equity share capital of the Company.

(xvi) Code of Conduct

The Company has in place a Code of Conduct applicable to the Board Members as well as the Senior Management and that the same has been hosted on the Company’s website. All the Board Members and the Senior Management Personnel have affi rmed compliance with the Code of Conduct, as on December 31, 2007.

(xvii) Plant Locations

The Company’s plants are located at Bangalore, Faridabad, Haridwar, Mumbai, Nashik and Vadodara.

(xviii) Address for Correspondence ABB Limited 2nd Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bangalore - 560 001. Phone: 080-22949150 to 22949154 Fax: 080-22949148 Corporate Secretarial E-mail ID: [email protected] Corporate Website: www.abb.com/in

(xix) Non-Mandatory Requirements

– Remuneration Committee of the Board to determine the remuneration package for the Executive Directors. – Maintenance of the Offi ce of Non-executive Chairman.





Annexure - D to Directors’ ReportCorporate Governance Compliance Certifi cate

To,

The Members of ABB Limited

We have examined all relevant records of ABB Limited (the Company) for the purpose of certifying compliance of the conditions of Corporate Governance under Clause 49 of the Listing Agreement with National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) for the fi nancial year ended December 31, 2007.

We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of certifi cation.

The compliance of the conditions of Corporte Governance is the responsibility of the management. Our examination was limited to the procedure and implementation thereof. This certifi cate is neither an assurance as to the future viability of the Company nor the effi cacy or effectiveness with which the management has conducted the affairs of the Company.

On the basis of our examination of the records produced, explanations and information furnished, we certify that the Company has complied with:

(a) all the mandatory requirements of the said Clause 49 of the Listing Agreement.

(b) the following non-mandatory requirement of the said Clause 49 – “Constitution of Remuneration Committee”

For D. R. Shressha & Associates

Company Secretaries

D. R. Shressha

Place: Bangalore Proprietor

Date: February 19, 2008 C.P. No. 6119



Operating Results of the Company

During the year 2007, the Company secured orders worth Rs 76,682 million, 36 percent higher than the previous year’s orders of Rs 56,236 million. There had been signifi cant growth in orders across all the segments of the Company. Higher GDP growth, focussed infrastructure development action taken by the Government and capacity built up in various industries has given overall favourable economic environment in the country to operate. This coupled with strategic initiatives on market and product portfolio front adopted by the Company helped to realise this exceptional growth. New business/product lines introduced during last few years have also contributed signifi cantly towards overall business growth. As a result of healthy order intake, the Company’s order backlog was further augmented by 49 per cent to Rs 50,260 million as compared to Rs 33,723 million at the beginning of the year.

The Company also achieved a signifi cant growth in revenues at Rs 60,014 million for the year, registering a growth of 38 per cent over the previous year. Volume growth and operational effi ciencies have resulted in healthy profi t improvement. Profi t before tax was Rs 7,565 million as compared to Rs 5,232 million in the previous year.

Net profi t after tax at Rs 4,917 million for the year was 44 percent higher than last year. Earnings per equity share (face value Rs 2) was also signifi cantly higher at Rs 23.20 compared to Rs 16.06 in the previous year.

The Company has carried out and also currently executing signifi cant manufacturing capacities expansion projects and continued to expand its range of offering, introducing several new products during the year. In addition to capacity and range expansion, the Company also upgraded and modernised many of its manufacturing, offi ce and employee welfare facilities in order to enhance effi ciency and productivity. During the year, the Company has upgraded its ERP system from SAP 4.7 to mySAP Business Suite and has implemented several new modules such as Business Intelligence Warehouse, Customer Relations Management, Employee Health Services and Governance Risk and Compliance.

Outlook for the Company

India’s current state of economy and expectation of GDP growth remaining around 9%, continued investment in power and other infrastructure sector and booming globalising industrial sector offers an excellent opportunity to the Company to operate. Several strategies towards market penetration, product and range expansion, manufacturing and engineering capacity augmentation, operational excellence, focused organisation structure, IT and other system development, human resource development and retention actions are expected to further strengthen Company’s position. Moreover, the ABB Group remains committed to increasingly leverage the Indian operations for projects, products and services within the region and globally. In line with this strategy, the Company will continue to grow its core businesses, expand its portfolio and augment manufacturing and engineering capacities as required. The Company remains resolute in its objective to pursue the path of profi table and sustainable growth, maximising operational effi ciencies and striving to attain the highest standards of quality, safety and productivity. The overall outlook for the Company continues to be positive and the management remains optimistic with regards to continued profi table growth.

Business Segment Analysis

Please refer to note 4, Schedule 16, for detailed description of the Company’s business segments. The relative distribution of revenues amongst the segments is as under, which has broadly remained static.

2007 2006

Power Systems (PS) 36% 37%

Power Products (PP) 26% 27%

Process Automation (PA) 17% 16%

Automation Products (AP) 21% 20%

Power Systems Segment (PS)

The summarised performance of the segment is as under.

(Rs in Millions)

2007 2006

Orders Received 30,029 22,057

Order Backlog 23,366 15,851

Revenues 22,514 16,919

Result 2,323 1,762

The Government’s increased focus on power sector growth and introduction of the National Electricity Policy over the past few years is refl ected in increased investments in this sector. The Government of India’s 11th plan envisages addition of 78,000 MW power generation capacity, formation of a strong national power grid as well as continued focus on modernisation and up-gradation of urban and rural power networks.

Management’s Discussion and Analysis



With capacity additions in existing power plants, setting up of new power plants, realisation of the ultra mega power projects, development of transmission networks and power distribution improvements and reforms on domestic front have resulted in strong orders and revenue growth during the year. Orders received grew by 36% and revenues were higher by 33%. The growing domestic market and additional overseas market opportunities have shown positive signs in most areas of the segment’s operations and the future outlook of the business continuous to remain promising.

With signifi cant orders in the domestic market and orders from exports for the transmission and distribution substations business saw robust growth. Major orders included the 400 kV GIS substation at Chamera and 400 kV substation in Bihar from PGCIL, 220 kV substation orders from KPTCL as well as several orders from GETCO and private customers such as Adani Power; a major railway electrifi cation order was received from DMRC and power distribution orders from BESCOM, HESCOM & GESCOM under Rural Load Management Schemes (RLMS). Newly established business EBoP (Electricals for Balance-of-Plant) has established well for providing solution at power generation end with order booking for 1,905 MW of generating capacity including Tata Projects Kota and Zawar thermal power projects, JSW Energy Limited 8 x 135 MW power plants and Endure’s Suratgarh power plant. Several substation automation systems were supplied and installed based on the latest IEC 61850 protocols, where the segment has a technology edge, as well as various services and retrofi t orders were executed. With the setting up of a regional focused factory for numerical IEDs and a global focused feeder factory in the Group for combifl ex relays, the substation automation products business is set to play a greater role globally. With a major order for SCADA systems from KPTCL and responsibility for the South Asia region the network management business is also poised for signifi cant growth.

Major projects commissioned during the year include 400 kV GIS substations at Maharani Bagh for PGCIL and the 66 kV GIS substation for DMRC. The segment supplied and commissioned a number of distribution substations and APDRP projects for BESCOM, GEB, DVVNL, and JVVNL. Newly developed substation automation system based on REX 670 platform with IEC 61850 protocols were supplied to PGCIL for a number of 400 kV substations.

Strategic actions were initiated and implemented to improve operational effi ciencies and excellence in project management. This helped in improving profi tability of the business. However, areas of concern remain rising prices of raw materials such as structural steel, copper and aluminum. Additionally, the distribution business faced operating cash-fl ow problems as funding for various RGGVY Projects from REC had been delayed.

Power Products Segment (PP)


(Rs in Millions)

2007 2006



Revenues 16,326 12,130

Result 2,121 1,382

Buoyancy in the transmission and distribution sector continued during the year with higher level of investment in this sector. Ordering for ultra mega power generation projects has started and it has given a boost to demand for power products manufacture by the segment. Capacity addition in industries and services sector continued at a fast pace and rural electrifi cation is a focus area of the Central and the State Governments leading to broad based demand for the products offered by the segment. Overall environment for the segment during the year was very good.

To foster investments in power generation, transmission and distribution segments, Central Government has provided several policy frame work. Demand for improving power quality and energy effi cient technologies is also on increase. A very high target has been set at 78,000 MW of power generation in the XIth fi ve year plan (2007-12) of the country. Power generation capacity addition of 86,500 MW is expected in XIIth plan period. This will have corresponding demand for power transmission and distribution systems. Increase in inter-regional capacity from 9,000 MW to 30,000 MW is planned in XIth plan period. New opportunities are on offer in the fi eld of 765 kV switchgear and transformer products as well as large volume low end products. Growing partnership with local contractors for global projects is expected to contribute to the overall growth in exports. Market trends are very bullish for power transformers, high and medium voltage switchgears and GIS in metros and large industries.

Overall performance of the segment during the year 2007 was satisfactory. Orders and revenues grew by 34% with signifi cant improvement in the profi tability and operating cash fl ows. This improved performance was across all its product lines i.e. transformers; HV switchgears and MV switchgears. Major orders received during the year included 3 x 355 MVA, 420/20 kV generator transformers, 2 x 315 MVA, 400/220/33 kV auto transformers and 3x 50 MVA, 220/6.9 kV station transformers for JSW Energy Limited, 218 units of EMUs for MRVC project, 2 x 315 MVA, 400 /220 kV auto transformers and 3 x 105 MVA, 400/220 kV auto transformers from PGCIL, a large order for HV capacitors from NALCO , for 498 MV panels from NTPC for Dadri, Korba and Farakka projects, for 353 MV panels from DMRC and from IRCON a/c KSEB for 1,474 outdoor RMUs. Power products exports consolidated its position in the export markets with exports to over 90 countries with order booking of Rs 2,242 million during the year 2007 compared to Rs 1, 545 million in the previous year. A state of the art factory for manufacturing a complete range of distribution relays including static numerical and electro-mechanical relays was inaugurated in December, 2007 at Vadodara plant. This is also a global focused feeder factory for cougar series of relays and will give strategic advantages in the domestic as well as global markets. Currently several power products capacity expansion projects are under implementation at Vadodara and Nashik plants. Segment also has plans to commence manufacturing of 765 kV circuit breakers and CVTs in the year 2008.



Domestic demand for power products is expected to continue on the ascent. The surge in global demand for power products will continue to support exports. The focus on enhancing power capacity and expanding grid networks will continue to feed the demand for power products. Segment will also tap the growing demand for new technologies with introduction of new products in all businesses. Focus area for further growth for the segment will remain capacity expansion, product range expansion, operational excellence, cost reduction and on time deliveries. Promotion of GIS, GCB and PASS in the Indian market, will cater to the growing demand for modular solutions and new technologies. A new group has been established to develop cable accessories business. Outlook for the segment continues to be positive.

Demand for HT capacitors continues to remain low. That remains an area of concern. Focussed efforts are being made to secure new projects for SVC, HVDC and TCSR in the coming years to grow this business. Shortages of components including insulators for HV switchgears and tanks and bushings for transformers are constraints on increasing capacities and providing faster deliveries. New competition from the domestic and the Chinese manufacturers has effected in short run price realisation of MV switchgears.

Process Automation Segment (PA)


(Rs in Millions)

2007 2006



Revenues 10,666 7,317

Result 1,330 852

Industrial climate in country remained buoyant with strong growth across all most all the industries. With current low capita consumption of several metals, paper and other industrial products and demand from infrastructure development gives excellent growth opportunities to industries. Most industries have announced investment plans for augmentation of capacities and effi ciency improvement. This environment augurs well for the Process Automation Segment. Growth in orders and revenues during the year was 28% and 46% respectively. Operating profi ts during the year improved signifi cantly. Investments are taking place for manufacture of all types of steels in both public and private sectors. Global steel majors like POSCO and Mittals have also announced plans for setting up Greenfi eld steel projects in India. Construction boom in Middle East has lead to investments in profi le mills. With growth in real estate and infrastructure development across the country, demand for cement has gone up leading to several investments in green and brown fi eld projects. Paper industry is investing in new machines to meet the growing demand for tissue and other types of papers. Several investments are announced also in material handling, oil and gas and marine sectors.

Segment has received several large orders for electricals and automation solutions during the year. This includes in metals sectors from Jindal Stainless Limited, JSW Limited, Jindal Tubes Limited, Salem and Vizag Steel plants, Tata Steel Limited and Essar Group. In cement and mineral sectors important orders booked includes from Grasim Industries Limited from OEMs L&T and Sandvik. In pulp and paper sector major orders booked during the year includes from Ballarpur Industries Limited, ITC Limited and HEC Limited. Major projects commissioned during the year includes cold roll mill for JSW Limited, upgrade of NET90 system for Durgapur Steel plant, AC drive solution for Tata Steel Limited, fi rst phase of SCADA system for Oil and Natural Gas Corporation, 800XA installation and safety system for Essar Group.

Exports for process automation system grew over 100%. Signifi cant orders for metals, minerals, turbo charging, cement and analytical products were received from Indonesia, Malaysia, Singapore, Sri Lanka, Bangladesh and Middle East. A large order for Rs 933 million was received for turnkey electrics and automation solution for 5,000 tonnes per day for a cement plant in Jordan. During the year a turbocharger service station was established at Bangladesh.

With large number of prospects emerging in the country, several local and international players have become active. OEMs are also consolidating their offerings with electrical solution to give a complete package to the end customers. With large order backlog, segment has challenge in timely execution of orders, particularly from steel and cement sectors. Segment will continue to remain customer focused to sustain its competitive advantage through constant innovation and technology solutions. It will also focus on employee training, strengthening of project management processes and safety. The overall business outlook for the segment remains positive.



Automation Products Segment (AP)

The summarised performance of the segment is as under:

(Rs in Millions)

2007 2006



Revenues 13,332 9,179

Result 1,784 1,145

With signifi cant investments taking place in industrial sector capacity augmentation and effi ciency improvement, segment witnessed surge in demand for automation products during the year. A positive market environment coupled with a strategic thrust on product range and capacity expansion, formation of business verticals and market penetration helped in registering 55% growth in orders and 45% growth in revenues during the year.

During the year several orders for automation products were received from steel, cement, paper, telecom, food and beverages, water and waste water and oil and gas industries and OEMs. During the year the segment was able to sustain and consolidate its market position for all its product ranges. There was focus on all major OEM segments including HVAC, pumps and compressor, boiler machinery manufacturers, food and beverages and wind sector. Segment has received several large orders during the year from all sectors of the industry. This includes orders from Tata Steel Limited for their Kalinganagar project, JSW Steel Ltd. for their capacity expansion at Bellary and Bhusan Steel Limited for their blast furnace project in the steel sector. An order for high current rectifi ers was received from Vedanta Aluminum Limited for 2 x 250,000 TPA Greenfi eld aluminum smelter plant. Major orders received from cement industries included Jayaprakash Industries Limited. The segment also received increased orders from building electrical sector from telecom, IT and SEZ parks and other infrastructure projects which resulted in over 100% growth from this sector.

Execution and commissioning of large orders during the year included high current rectifi ers at Hindustan Zinc Limited, LD shop converter and sinter plant at Tata Steel Limited. A 10 MW, 40 pole compressor motor for SAIL, Bokaro was rewound and commissioned during the year.

Major capacity expansion projects under execution include LT motors and instrumentation at Faridabad and machine service facility at Navi Mumbai. Expansion and renovation of HV machines at Vadodara plant was completed during the year and plant is operating at rated capacity of 100 machines per month. Other capacity augmentation plans includes global factory for LV breakers, LV systems, LV and MV drives and power electronics at Nelamangala, Bangalore and wind generator motors factory at Vadodara. Product range expansion during the year included manufacturing of R4 range of ACS 550 drives, testing and offering of new series of EFF1 and EFF2 motors in small frames, for both domestic and export markets. During the year 5 million MCB poles per annum capacity factory was commissioned and operating at rated capacity at Haridwar.

The channel partner network was further expanded to over 775 during the year which contributed to revenues of Rs 10 billion. ‘E-initiatives’ continued to yield good results with the B2B transactions crossing the Rs 4 billion mark setting an industry benchmark. To ensure off the shelf deliveries and to be nearer to the customers, during the year two new warehouses were established at Faridabad and Pune.

Concern areas for the segment include increase in competition, with several competitors building new capacities, and increase in commodity prices. The industrial scenario continues to look buoyant with several new Greenfi eld and brown fi eld capacity expansions planned in several sectors. The increased thrust on marketing efforts in newer areas of railways, wind, water and waste water, SEZ, ports and harbours coupled with continued addition in capacity and range expansion is expected to support business growth momentum of the segment. The overall outlook for the segment remains positive.

Finance

During the year there was higher requirement of fi nance due to business growth and delay in collection from customers, particularly relating to power system segment, coupled with fi nancing needs for large fi xed assets investment programme. This required sporadic short-term borrowings from the banks during the year. However collection from customers improved in later part of the year which resulted in a further improvement in the cash position. Net cash position (cash and bank balances less loan fund) at the end of the year had further increased to Rs 6,423 million compared to Rs 5,449 million at the end of the previous year. Surplus funds, not committed in operation, were deployed in short-term fi xed deposits with reputed banks, ensuring security and liquidity of the fund. The Company continued to hedge all its foreign currency exposures for imports and exports to protect contact stage margins. As in the past, Company has maintained excellent relationship with major banks operating in India and was able to negotiate favourable terms for various banking facilities used.

Human Resources

Attracting and retaining high performing talent continued to remain the prime focus of the HR function. While assimilating the new entrants quickly into the ABB way of working has been a challenge on one hand and on the other, developing, motivating, engaging and retaining dedicated and skilled employees has become a specialised domain in HR. To meet these needs, the HR organisation has been re-structured, wherein the transactional and volume related activities such as recruitment, pay-roll, employee induction, employee information management have been clustered into a HR service centre and the role of Business HR has been redefi ned. The ratio of HR professionals to the employee strength was also increased to around one for every 100 employees. The industrial relations function has been brought under a separate country IR head thereby providing the required focus on blue-collar employee productivity and standardisation of practices across the organisation. The corporate HR staff provides support to the different wings of the HR



organisation by facilitating embedding of bench-marked world-class processes down to the grass root level. Leadership development programmes at different levels has been in full swing covering all business and functional roles.

As in the past, industrial relation continued to remain cordial at all the locations of the Company. The Company had 5,535 employees at the end of 2007.

Internal Control Systems

The Company has in place effective systems of internal control ensuring accurate, reliable and speedy compilation of fi nancial information, safeguarding the assets and interests of the Company and ensuring compliance with laws and regulations.

The Company has an exhaustive budgetary control system and the management regularly reviews actual performance. The Company has also put in place a well-defi ned organisation structure, clear authority levels and detailed internal guidelines for conducting business transactions. The Company has an internal audit department that conducts regular audits to ensure adequacy of the control system, adherence to management instructions and legal compliance. The Audit committee of the Board of Directors periodically reviews the audit plans, observations and recommendations of the internal and external auditors with reference to signifi cant risk areas and adequacy of internal controls.

As per the requirements of Sarbanes Oxley Act, 2002 and clause 49 of the listing agreement with the stock exchanges, the management has established adequate internal control procedures over fi nancial reporting. Based on detailed review and testing of various processes and transactions effecting fi nancial reporting, the managements has concluded that internal control over fi nancial reporting as effective as at December 31, 2007. During the year, the Company has upgraded its ERP system from SAP 4.7 to mySAP Business Suite and has implemented several new modules including the Governance Risk and Compliance (GRC) module to help the Company to strengthen internal control environment.

During the year, fi nancial accounting processes such as journal entries, handling Income-tax deductions at source and additional fi nancial closing processes were centralised at the shared accounting service center. The processes of vendor bill booking, vendor payment, costing, capital expenditure management and travel management continued to be centrally managed at this centre. The master maintenance of general ledger accounts, customers and vendors, role based authorisation for SAP system access remained centrally controlled based on well defi ned rules.



ToThe Board of DirectorsABB Limited

We certify that;

1. We have reviewed the fi nancial statements and cash fl ow statement of ABB Limited for the year ended December 31, 2007 and to the best of our knowledge and belief;

(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

2. To the best of our knowledge and belief, there are, no transactions entered into by the Company during the year, which are fraudulent, illegal or violating the Company’s code of conduct.

3. We accept responsibility for establishing and maintaining internal controls over fi nancial reporting and we have evaluated the effectiveness of internal control systems of the company over fi nancial reporting and we have disclosed to the auditors and the audit committee, defi ciencies in the design or operation of internal controls over fi nancial reporting, if any, of which we are aware and the steps we have taken, propose to take to rectify these defi ciencies. In our opinion, there are adequate internal controls over fi nancial reporting.

4. We have indicated to the auditors and the audit committee that there are:

(i) signifi cant improvement in internal controls over fi nancial reporting during the year;

(ii) signifi cant changes in accounting policies made during the year as have been disclosed in the notes to the fi nancial statements.

(iii) no instances of fraud of which we have become aware and the involvement there in, if any, of the management or an employee having a signifi cant role in the Company’s internal control system on fi nancial reporting.

Biplab Majumder K. RajagopalNew Delhi Chief Executive Offi cer Chief Financial Offi cerFebruary 19, 2008 Managing Director Whole-time Director

CEO/CFO Certifi cation



1. We have audited the attached balance sheet of ABB Limited as at December 31, 2007 and also the profi t and loss account and the cash fl ow statement for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. 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;

iii. The balance sheet, profi t and loss account and cash fl ow statement dealt with by this report are in agreement with the books of account;

Auditors’ Report To The Members of ABB Limited

iv. In our opinion, the balance sheet, profi t and loss account and cash fl ow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v. On the basis of the written representations received from the directors, as on December 31, 2007, and taken on record by the Board of Directors, we report that none of the directors is disqualifi ed as on December 31, 2007 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at December 31, 2007;

b) in the case of the profi t and loss account, of the profi t for the year ended on that date; and

c) in the case of cash fl ow statement, of the cash fl ows for the year ended on that date.

For S.R. BATLIBOI & CO. Chartered Accountants

per Sunil Bhumralkar Partner Membership No.: 35141

New Delhi, India February 19, 2008



(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.

(b) The Company has a regular programme of physical verifi cation of fi xed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain fi xed assets were physically verifi ed by the management during the year and we are informed that no material discrepancies were noticed on such verifi cation.

(c) There was no substantial disposal of fi xed assets during the year.

(ii) (a) The management has conducted physical verifi cation of inventory at reasonable intervals during the year. In respect of stocks lying with the third parties, confi rmation for most of the stocks has been received.

(b) The procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.

(iii) (a) As informed to us, the Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) As informed to us, the Company has not taken any loans, secured or unsecured from companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fi xed assets and for the sale of goods and services. During the course of our audit, no major weakness

has been noticed in the internal control system in respect of these areas.

(v) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered. None of the transactions made in pursuance of such contracts or arrangements exceed the value of Rupees fi ve lakh in respect of any one such party in the fi nancial year.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income tax, sales-tax, excise duty, wealth-tax, service tax, customs duty and cess with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Annexure referred to in paragraph 3 of our report of even dateRe: ABB Limited



Name of the statute Nature of dues Amount *(Rs in

Thousands)

Period to which the amount relates

Forum where dispute is pending

Excise Act Freight charges for valuation 589 1997-98 Central Excise and Service Tax Appellate Tribunal

Service Tax Service tax on freight charges and erection services

2,403 1997-06 Central Excise and Service Tax Appellate Tribunal

Sales Tax Act Works contract tax charged

Differential tax chargedSubmission of Statutory Forms

13,92911,74013,526

108,39155,461

900

1996-021992-012003-041996-052002-041994-95

Deputy Commissioner (Appeals)Sales Tax Appellate TribunalDeputy CommissionerDeputy Commissioner (Appeals)Joint Commissioner (Appeals)High Court

Faridabad Development Act [Octroi]

Product classifi cation 30,400 1986-94 High Court

* - Net of Rs 67,042 thousand, paid under protest.

(x) The Company has no accumulated losses at the end of the fi nancial year and it has not incurred cash losses in the current and immediately preceding fi nancial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a fi nancial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefi t fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or fi nancial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet and cash fl ow statement of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fi nancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S.R. BATLIBOI & CO. Chartered Accountants

per Sunil Bhumralkar Partner Membership No.: 35141

New Delhi, India February 19, 2008



(Rs in Thousands)

As at December 31, 2007 Schedule 2007 2006

Sources of Funds

Shareholders’ Funds

Share Capital 1 423,817 423,817

Reserves and Surplus 2 15,839,626 11,534,601

16,263,443 11,958,418Loan Funds

Finance Lease Obligations 16(9) 5,660 15,457

Deferred Tax Liability (net) 16(10) 128,034 165,271

16,397,137 12,139,146

Application of Funds

Fixed Assets 3

Gross Block 5,769,125 5,145,167

Less: Depreciation and Amortisation 2,249,827 2,073,446

Net Block 3,519,298 3,071,721

Capital Work in Progress including Capital Advances 1,059,418 246,217

4,578,716 3,317,938

Investments 4 704,546 773,546

Current Assets, Loans and Advances

Inventories 5 4,887,102 3,546,995

Sundry Debtors 6 24,235,625 15,702,677

Cash and Bank Balances 7 6,428,636 5,464,424

Other Current Assets 8 2,753,603 1,474,409

Loans and Advances 9 2,802,023 1,778,220

41,106,989 27,966,725

Less: Current Liabilities and Provisions

Current Liabilities 10 29,314,878 19,363,315

Provisions 11 678,236 555,748

29,993,114 19,919,063

Net Current Assets 11,113,875 8,047,662

16,397,137 12,139,146

Notes to Accounts 16

Balance Sheet

The Schedules referred to above form an integral part of the accounts.

As per our report of even date

For S.R. BATLIBOI & CO.


per Sunil Bhumralkar

Partner

Membership No. 35141

New Delhi, February 19, 2008


Ravi Uppal Chairman

Biplab Majumder Managing Director

K Rajagopal Whole-time Director & Chief Financial Offi cer

Peter Leupp Director

Nasser Munjee Director

N S Raghavan Director

A K Dasgupta Director

D E Udwadia Director

Veli-Matti Reinikkala Director

B Gururaj Company Secretary




(Rs in Thousands)

For the year ended December 31, 2007 Schedule 2007 2006

IncomeSales and Services 63,832,682 46,045,615 Less: Excise Duty 4,529,568 3,305,522 Sales and Services (Net) 12 59,303,114 42,740,093Other Income 13 710,454 736,929 60,013,568 43,477,022ExpenditureCost of Materials and Erection Services 42,920,333 31,445,493Personnel Expenses 14 3,060,684 2,414,186Other Expenses 15 6,075,802 4,113,353Depreciation/ Amortisation 326,752 267,341Less: Transfer from Revaluation Reserve 2,695 2,666 324,057 264,675Interest Expenses 68,123 7,253 52,448,999 38,244,960Profi t Before Tax 7,564,569 5,232,062Provision for Tax: Current Tax 2,563,879 1,671,000 Deferred Tax (11,000) 81,000 Fringe Benefi ts Tax 95,000 77,000 Profi t After Tax 4,916,690 3,403,062Add: Balance brought forward 519,255 349,450 Profi t available for appropriation 5,435,945 3,752,512AppropriationsGeneral Reserve 4,250,000 2,750,000 Proposed Dividend 466,198 423,817 Corporate Dividend Tax 79,230 59,440 Corporate Dividend Tax - 2006 12,587 -Balance carried forward 627,930 519,255 5,435,945 3,752,512

Basic and Diluted Earnings per Equity Share (in Rs) 16(3) 23.20 16.06 (Face value Rs 2/- per share)Notes to Accounts 16

Profi t and Loss Account

The Schedules referred to above form an integral part of the accounts.





Partner




Ravi Uppal Chairman













(Rs in Thousands)

As at December 31, 2007 2007 2006

Schedule 1 - Share Capital

Authorised

212,500,000 Equity Shares of Rs 2 each * 425,000 425,000

(Previous Year - 42,500,000 equity shares of Rs 10 each)

750,000 11% Redeemable 10 year, Cumulative Preference Shares of Rs 100 each 75,000 75,000

500,000 500,000

Issued, Subscribed and Paid Up

211,908,375 Equity Shares of Rs 2 each * 423,817 423,817

(Previous Year - 42,381,675 equity shares of Rs 10 each)

Notes:

Share Capital includes:

a) 46,185,525 equity shares of Rs 2 each (Previous Year - 9,237,105 equity shares of Rs 10 each) allotted as fully paid up at par, pursuant to

contracts for consideration other than cash.

b) 1,000,000 equity shares of Rs 2 each (Previous Year - 200,000 equity shares of Rs 10 each) issued to the holders of 40,000 - 8.57%

cumulative preference shares of Rs 100 each on cancellation of the preference shares in terms of a Scheme of Compromise between the

Company and its preference/equity shareholders in 1988.

c) 42,219,465 and 51,772,945 equity shares of Rs 2 each (Previous Year - 8,443,893 and 10,354,589 equity shares of Rs 10 each) issued as

fully paid up bonus shares by capitalisation of the General Reserve Account and Securities Premium Account respectively.

d) 97,879,955 equity shares of Rs 2 each (Previous Year - 19,575,991 equity shares of Rs 10 each) are held by ABB Asea Brown Boveri Limited,

Zurich, Switzerland, the ultimate holding company and 12,540,330 equity shares of Rs 2 each (Previous Year - 2,508,066 equity shares of

Rs 10 each) are held by ABB Norden Holdings AB, Sweden, a subsidiary of the ultimate holding company.

* During the year face value of each equity shares of Rs 10 each was sub-divided (stock split) into 5 equity shares of face value of Rs 2 each.



(Rs in Thousands)

As at December 31, 2007 2007 2006

Schedule 2 - Reserves and Surplus

Capital Reserve Account 10,971 10,971

Capital Redemption Reserve Account 75,000 75,000

Revaluation Reserve Account

As per last Balance Sheet 148,082 150,748

Transferred to Profi t and Loss Account (2,695) (2,666)

145,387 148,082

Securities Premium Account 593,990 593,990

Foreign Projects Reserve Account

As per last Balance Sheet 7,500 12,500

Transferred to General Reserve Account (1,000) (5,000)

6,500 7,500

General Reserve Account

As per last Balance Sheet 10,179,803 7,424,803

Transferred from Foreign Projects Reserve Account 1,000 5,000

Less: Charge on account of transitional provisions

under Accounting Standard (AS) 15 (revised 2005)

- Provident Fund (27,602) -

(Net of tax Rs 14,212 thousand)

- Other long term benefi ts - Leave (23,353) -

(Net of tax Rs 12,025 thousand)

Transferred from Profi t and Loss Account 4,250,000 2,750,000

14,379,848 10,179,803

Profi t and Loss Account

Balance carried forward 627,930 519,255

15,839,626 11,534,601



As at December 31, 2007 (Rs in Thousands)

Schedule 3 - Fixed Assets

Gross Block Depreciation/ Amortisation Net Block

Description As at Additions Deductions As at As at For the Deductions As at As at As at January 1, December 31, January 1, Year December 31, December 31, December 31, 2007 2007 2007 2007 2007 2006

A. Tangible Assets

1. Own Assets

Freehold Land 137,515 - - 137,515 - - - - 137,515 137,515

Leasehold Land 9,826 - - 9,826 297 90 - 387 9,439 9,529

Leasehold Improvements 63,194 92,021 - 155,215 30,712 10,522 - 41,234 113,981 32,482

Factory Buildings 618,190 111,832 3,490 726,532 152,265 21,218 1,570 171,913 554,619 465,925

Other Buildings 296,325 30,440 538 326,227 20,899 4,982 225 25,656 300,571 275,426

Residential Quarters 14,390 - 190 14,200 4,745 233 22 4,956 9,244 9,645

Plant and Machinery 3,123,630 475,170 164,430 3,434,370 1,360,223 208,170 147,072 1,421,321 2,013,049 1,763,407

Furniture and Fixtures 268,545 36,442 1,360 303,627 78,522 15,606 1,083 93,045 210,582 190,023

Vehicles 19,618 1,760 399 20,979 7,220 5,121 399 11,942 9,037 12,398

4,551,233 747,665 170,407 5,128,491 1,654,883 265,942 150,371 1,770,454 3,358,037 2,896,350

2. Leased Assets

Plant and Machinery 83,141 - - 83,141 55,005 11,249 - 66,254 16,887 28,136

Vehicles 11,068 - - 11,068 3,427 499 - 3,926 7,142 7,641

94,209 - - 94,209 58,432 11,748 - 70,180 24,029 35,777

Total Tangible Assets 4,645,442 747,665 170,407 5,222,700 1,713,315 277,690 150,371 1,840,634 3,382,066 2,932,127

B. Intangible Assets

Technical Know-how Fees 350,798 23,943 - 374,741 256,673 29,138 - 285,811 88,930 94,125

Capitalised Software 148,927 22,757 - 171,684 103,458 19,924 - 123,382 48,302 45,469

Total Intangible Assets 499,725 46,700 - 546,425 360,131 49,062 - 409,193 137,232 139,594

5,145,167 794,365 170,407 5,769,125 2,073,446 326,752 150,371 2,249,827 3,519,298 3,071,721

Previous Year 4,141,636 1,098,468 94,937 5,145,167 1,875,025 267,341 68,920 2,073,446

Capital Work in Progress including Capital Advances 1,059,418 246,217

Grand Total 4,578,716 3,317,938

Notes:

1. Certain freehold and leasehold land, factory and other buildings and residential quarters were revalued during 1985, 1986 and 1996 respectively.

2. Residential Quarters include cost of shares in Lotus Court Private Limited Rs 56 thousand (Previous Year - Rs 56 thousand).



(Rs in Thousands)As at December 31, 2007 2007 2006

Schedule 4 - Investments

Long-term (At Cost):

Trade:

Quoted :

280,500 Equity Shares of Rs 10 each fully paid up in

Integra Hindustan Control Limited 2,805 2,805

Non Trade:

Government Securities -

Quoted:

6.25% Government of India Bonds 159,600 159,600

Others -

Quoted:

853,064 6.75% Tax Free US64 Bonds of Rs 100 90,497 90,497

each fully paid up in Unit Trust of India

200 5.25% 10 Year Tax Free Nuclear Power Corporation Limited

Infrastructure Bond of Rs 1,000,000 each fully paid up 200,000 200,000

2,386,496 6.60% Tax Free Bonds 2009 of

Rs 100 each fully paid up in Unit Trust of India 241,617 241,617

532,114 532,114

Unquoted:

5.15% 5 Year Non - Cumulative Non-Convertible Redeemable

Bonds of Rural Electrifi cation Corporation Limited - 69,000

5.95% 15 Year Non-Cumulative Bonds of Karnataka Water &

Sanitation Pooled Fund Trust 10,000 10,000

1,000 Shares of Rs 25 each fully paid up in

Co-operative Bank of Baroda 25 25

6.5% Non-Redeemable Debentures of Bengal

Chamber of Commerce and Industry 2 2

10,027 79,027

704,546 773,546

Notes:

Quoted Investments aggregate 694,519 694,519

(Market value - Rs 764,464 thousand;

Previous Year - Rs 714,776 thousand)

Unquoted Investments aggregate 10,027 79,027



(Rs in Thousands)As at December 31, 2007 2007 2006

Schedule 5 - Inventories

Stores and Spares 3,360 6,283

Raw Materials and Components 2,704,332 2,012,756

Goods in Transit - Raw Materials and Components 434,622 303,898

Finished Goods 482,730 341,227

Work-in-progress 1,262,058 882,831

4,887,102 3,546,995

Schedule 6 - Sundry Debtors

Unsecured :

Debts outstanding for a period exceeding six months

- Considered Good 6,928,634 4,167,006

- Considered Doubtful 588,589 332,821

7,517,223 4,499,827

Other Debts - Considered Good 17,306,991 11,535,671

24,824,214 16,035,498

Less: Provision for Doubtful Debts 588,589 332,821

24,235,625 15,702,677

Schedule 7 - Cash and Bank Balances

Cash and Cheques on hand 2,315 2,409

Balances with Scheduled Banks

- On Current Account 4,398,307 2,843,587

- On Deposit Account 2,005,460 2,605,341

- On Margin Account 10,134 -

6,413,901 5,448,928

With Non-Scheduled Banks - On Current Account 12,420 13,087

6,428,636 5,464,424

Current Accounts with Non-Scheduled Banks include

As at As at Maximum Maximum

December 31, December 31, amount amount

2007 2006 outstanding outstanding

at any time at any time

during the during the

year previous year

a) Hongkong & Shanghai Banking Corporation Ltd., Sri Lanka. 1,902 3,359 3,359 4,616

b) Hongkong & Shanghai Banking Corporation Ltd., Bangladesh. 10,518 9,728 17,155 14,570



(Rs in Thousands)

As at December 31, 2007 2007 2006

Schedule 8 - Other Current Assets

Contract Revenue in Excess of Billing and Unbilled Revenue 2,602,067 1,338,530

Interest Accrued on Investments and Fixed Deposits 151,536 135,879

2,753,603 1,474,409

Schedule 9 - Loans and Advances

Unsecured :

Loans, Considered Good 2,286 11,841

Advances recoverable in cash or in kind or for value to be received:

- Considered Good 2,080,595 1,441,978

- Considered Doubtful 39,711 43,472

2,120,306 1,485,450

Less: Provision for Doubtful Advances 39,711 43,472

2,080,595 1,441,978

Advance Tax (net of provision) 394,324 298,695

Balances with Customs, Port Trusts and Excise authorities 324,818 25,706

2,802,023 1,778,220

Schedule 10 - Current Liabilities

Acceptances 7,009,498 5,026,789

Sundry Creditors

- Dues to Micro and Small Enterprises 64,341 -

- Others 15,628,714 10,705,826

15,693,055 10,705,826

Advance Payment from Customers 5,016,479 2,887,537

Billing in Excess of Contract Revenue 1,586,993 735,482

Investor Protection and Education Fund shall be credited for unclaimed

dividends amount when due 8,853 7,681

29,314,878 19,363,315

Schedule 11 - Provisions

Proposed Dividend 466,198 423,817

Corporate Dividend Tax 79,230 59,440

Fringe Benefi ts Tax (net of advance tax) 20,277 24,678

Provident Fund 44,157 -

Other long-term benefi ts - Leave 68,374 47,813

678,236 555,748




Schedule 12 - Capacities, Production, Stock and Turnover (Refer Note 11 of schedule 16 )(Figures in brackets are in respect of previous year)

Annual Opening Stock of Production of Closing Stock of Turnover ofClass of goods Capacities Finished Goods Finished Goods Finished Goods Finished Goods Quant. Rupees in Rupees in Rupees in Denom. Installed Quantity Thousands Quantity Quantity Thousands Quantity Thousands

Motors and Other Machines HP 3,124,484 66,565 80,622 2,992,875 96,403 144,836 2,912,452 3,657,535 (2,527,433) (46,480) (35,590) (2,068,611) (66,565) (80,622) (1,977,871) (2,243,891)

Switchgear of all types Nos. 15,277,350 462,107 197,561 10,188,676 234,740 304,184 9,658,423 10,947,263 (10,180,350) (189,885) (38,012) (5,541,175) (462,107) (197,561) (3,692,105) (9,215,265)

PLCC Equipment Nos. 2,850 - - 1,857 - - 1,857 229,151 (2,850) (-) (-) (1,443) (-) (-) (1,311) (214,401)

Multiplexures Nos. 100 - - 7 - - 7 7,165 (100) (-) (-) (38) (-) (-) (38) (19,572)

Telemetering Equipment Nos. 150 - - 20 - - 5 8,249 (150) (-) (-) (15) (-) (-) (6) (5,220)

Turbochargers Nos. 200 - - 208 9 8,539 199 517,157 (200) (-) (-) (189) (-) (-) (189) (481,356)

Transformers MVA 12,000 - - 8,944 - - 7,501 3,738,371 (12,000) (-) (-) (8,127) (-) (-) (7,050) (2,703,177)

Electronic Control and Supply Units Nos. 100,000 - - 82,416 - 18,277 81,890 3,252,367 for Variable Speed Drives and other (100,000) (-) (-) (78,271) (-) (-) (77,285) (2,223,434)applications

Mini Computer/Microprocessor Value Rs in 2,300,000 - - 1,717,970 - - - 1,717,970 based Systems Thousands (2,300,000) (-) (-) (2,259,133) (-) (-) (-) (2,259,133)

Non-Microprocessor Based Electronics Value Rs in 70,000 - - - - - - -(Analog and Digital) for Weighing, Thousands (70,000) (-) (-) (9,823) (-) (-) (-) (9,823)Batching and Force Measuring Systems and Sub-Systems

Power Capacitors of all types MVAR 3,700 - - 3,724 - - 3,687 399,485 (3,700) (-) (-) (2,579) (-) (-) (2,507) (323,825)

Robotics Nos. 30 - - 30 - - 30 217,067 (15) (-) (-) (5) (-) (-) (5) (90,893)

Gas Analysers and Systems Nos. 300 - - 246 - - 246 378,787 (300) (-) (-) (202) (-) (-) (202) (229,685)

Process Control Instruments Nos. 30,225 - - 29,227 - - 28,538 641,845 (30,225) (-) (-) (28,139) (-) (-) (27,220) (549,315)

Others - 6,894 635,821 (-) (-) (630,781)

Project Items 63,046 - 29,464,924 (69,656) (63,046) (19,408,228)

Erection and Other Services 3,489,957 (2,132,094)

341,229 482,730 59,303,114 (143,258) (341,229) (42,740,093)

Note: The Company’s products are exempt from licensing requirement under the industrial policy by virtue of notifi cation No. 477 (E) of 25.07.91.



(Rs in Thousands)

For the year ended December 31, 2007 2007 2008

Schedule 13 - Other Income

Dividend

Long-term Investments - Trade 281 421

Long-term Investments - Others - 8

281 429

Interest

Long-term Investment 44,996 44,472

Deposit with Banks 191,051 165,808

(Tax deducted at source Rs 40,189 thousand;

Previous Year Rs 36,409 thousand)

Others (net) 40,967 6,405

277,014 216,685

Profi t on Sale of Fixed Assets (net) - 7,134

Scrap Sales 99,876 85,228

Commission Income 81,474 88,085

Miscellaneous Income 251,809 339,368

710,454 736,929

Schedule 14 - Personnel Expenses

Salaries, Wages and Bonus 2,584,049 2,014,446

Gratuity 45,667 58,859

Provident Fund 66,279 54,287

Contribution to Superannuation and other Funds 98,502 87,569

Workmen and Staff Welfare Expenses 158,906 123,731

Other Personnel Expenses 107,281 75,294

3,060,684 2,414,186



(Rs in Thousands)


Schedule 15 - Other Expenses

Tools and Stores 349,636 320,467

Royalty 101,221 60,852

Freight and Forwarding (net) 488,875 472,785

Postage and Telephone 111,908 96,009

Commission 227,978 142,985

Discount 29,733 21,377

Power, Fuel and Water 223,333 190,068

Travelling and Conveyance 726,506 551,037

Insurance 170,306 173,596

Rates and Taxes 77,773 41,508

Rent 131,652 90,941

Repairs: Buildings 35,976 32,816

Plant and Machinery 84,404 63,985

Others 22,562 30,710

Provision for Doubtful Debts and Advances 252,007 (47,470)

Bad Debts/Advances Written Off 31,014 129,163

Loss on Sale of Fixed Assets (net) 207 -

Printing and Stationery 60,970 52,721

Bank Charges 102,142 93,703

Legal and Professional 114,150 77,658

Trade Mark Fees 296,516 213,700

Technology Fees 508,786 363,063

Exchange Rate Difference - Loss 550,801 49,992

Miscellaneous 1,377,346 891,687

6,075,802 4,113,353



Schedule 16 - Notes to the Accounts

1. Nature of Operations

ABB Limited (‘the Company’) has served utility and industry customers for over 50 years with the complete range of engineering, products, solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in the global market.

2. Signifi cant Accounting Policies

2.1. Basis of Preparation of Financial Statements

The fi nancial statements have been prepared to comply in all material respects with the notifi ed accounting standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The fi nancial statements have been prepared under the historical cost convention on an accrual basis except for revaluation of certain fi xed assets, in accordance with the accounting principles generally accepted in India. The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.

2.2. Change in Accounting Policies

The Company has changed its accounting policy for revenue recognition for large transformers from recognition on dispatch basis to recognition on achievement of contractual milestone basis, with effect from January 1, 2007. This has resulted in additional revenue recognition and higher profi t before tax of Rs 434,030 thousand and Rs 60,002 thousand respectively with corresponding increase in ‘Unbilled Revenue’ during the year ended December 31, 2007.

In current year, the Company has adopted Accounting Standard (AS) 15 (revised 2005), “Employee Benefi ts”. Pursuant to the adoption, the transitional obligations as at January 1, 2007, for Provident Fund and Other long term benefi ts – Leave, amounting to Rs 50,955 thousand (net of tax) have been adjusted against the opening balance of General Reserves. This change is not having material impact on the profi t for the current year.

2.3. Use of Estimates

The preparation of fi nancial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the fi nancial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.4. Fixed Assets

Fixed assets are stated at the cost of acquisition, except for revaluation of certain land and building, less accumulated depreciation and impairment losses, if any. Cost of fi xed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the asset to its working condition for the intended use. Borrowing costs related to the acquisition or construction of the qualifying fi xed assets for the period up to the completion of their acquisition or construction are capitalised. Advances paid towards the acquisition of fi xed assets outstanding at each balance sheet date and the cost of fi xed assets not ready for their intended use before such date are disclosed under capital work in progress.

Capitalised software includes costs on Enterprise Resource Planning (ERP) Project and other costs relating to software, which provide signifi cant future economic benefi ts. ERP Project costs comprise licence fees and cost of system integration services. All costs relating to upgradations/enhancements are generally charged off as revenue expenditure unless they bring signifi cant additional benefi ts of lasting nature.

Assets acquired under fi nance lease from April 1, 2001 are capitalised at the lower of their fair value and the present value of the minimum lease payments.

The carrying amounts are reviewed at each balance sheet date when required to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount. The recoverable amount is the greater of the assets’ net selling price and value in use.

2.5. Depreciation/Amortisation

Depreciation on assets (except those described below) is provided on the straight-line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, which management considers as being representative of the useful economic lives of such assets. Depreciation is provided from the date of capitalisation till the date of sale of assets.



The following assets are depreciated/amortised on the straight line method over a period of their estimated useful lives:

• Leasehold land and leasehold improvements over the primary period of the lease.

• Technical know-how fees over a period of six years.

• Capitalised software costs over a period of fi ve years.

Assets individually costing Rs 5,000 or less are depreciated fully in the year of purchase.

Assets under fi nance lease are depreciated over the lower of the lease term or the useful life of the asset unless there is reasonable certainty that the Company will obtain ownership, wherein such assets are depreciated on the straight-line method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

2.6. Investments

Investments that are readily realisable and intended to be held for not more than a year are classifi ed as current investments. All other investments are classifi ed as long-term investments. Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

2.7. Inventories

Inventories are stated at the lower of cost and net realisable value. The cost of various categories of inventories is arrived at as follows:

• Stores, spares, raw materials and components - at rates determined on the moving weighted average method.

• Goods in Transit – at actual cost.

• Work-in-progress and fi nished goods - at full absorption cost method based on annual average cost of production. Excise duty is included in the value of fi nished goods inventory.

Provision for obsolescence is made wherever necessary.

2.8. Employee Benefi ts

Contribution to Superannuation Fund, a defi ned contribution scheme, is made at pre-determined rates to the Superannuation Fund Trust and is charged to the profi t and loss account. There are no other obligations other than the contribution payable to the Superannuation Fund Trust.

Contributions to the recognised Provident Fund/ Gratuity Fund and provision for other long term employee benefi ts - leave, defi ned benefi t schemes, are made on the basis of actuarial valuations made at the end of each fi nancial year and are charged to the profi t and loss account during the year.

Actuarial gains and losses are recognised immediately in the profi t & loss account.

2.9. Revenue Recognition

• Sales of products and services are recognised when signifi cant risks and rewards of ownership of products are passed on to customers or when the service has been provided. In case of large transformers, revenue is recognised on achievement of contractual milestone. Sales are stated at contractual realisable values, net of excise duty, sales tax, service tax, value added tax and trade discounts.

• Revenues from long-term contracts are recognised on the percentage of completion method, in proportion that the contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs. Contract revenue earned in excess of billing has been refl ected under “Other Current Assets” and billing in excess of contract revenue has been refl ected under “Current Liabilities” in the balance sheet.

• Full provision is made for any loss in the year in which it is fi rst foreseen.

• Liquidated damages/penalties are provided for as per the contract terms wherever there is a delayed delivery attributable to the Company.

• Commission income is recognised as per contracts/receipt of credit note.

• Dividend income is recognised when the right to receive dividend is established.

• Interest income is recognised on the time proportion method.



2.10. Provisions

A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outfl ow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made based on technical evaluation and past experience. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refl ect the current management estimates.

2.11. Research and Development

All revenue expenses pertaining to research and development are charged to the profi t and loss account in the year in which they are incurred and expenditure of capital nature is capitalised as fi xed assets, and depreciated as per the Company’s policy.

2.12. Foreign Currency Transactions

Foreign currency transactions are recorded by applying the respective monthly average rates. Exchange differences arising on foreign currency transactions settled during the year are recognised in the profi t and loss account for the year.

All foreign currency denominated monetary assets and liabilities are translated at the exchange rates prevailing on the balance sheet date. The resultant exchange differences are recognised in the profi t and loss account for the year.

The Company uses derivative fi nancial instruments such as forward exchange contracts to hedge its risks associated with foreign currency fl uctuations. The premium or discount on forward exchange contracts is recognised in the profi t and loss account over the period of the contract.

Gain or loss on restatement of forward exchange contracts for hedging purposes are recognised in the profi t and loss account for the year in which it occurs.

2.13. Taxation

Tax expense comprises current tax, deferred tax and fringe benefi ts tax.

The current charge for income tax and fringe benefi ts tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Provision for current income tax is made on the basis of the results of the year although the actual liability will be computed and paid on the basis of the results for the year ending March 31, 2008.

The deferred tax for timing differences between the book and tax profi ts for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is reasonable certainty that the assets can be realised in future.

2.14. Operating Leases

Leases, where the lessor effectively retains substantially all the risks and benefi ts of ownership of the leased item, are classifi ed as operating leases. Operating lease payments are recognised as an expense in the profi t and loss account on a straight-line basis over the lease term.

For the year ended 31 December, 2007 2006

3. Earnings Per Share

a) Weighted Average number of Equity Shares of Rs 2 each outstanding during the year * 211,908,375 211,908,375

b) Net profi t after tax attributable to equity shareholders (Rs in thousand): 4,916,690 3,403,062

c) Basic and Diluted Earnings Per Share (in Rs) 23.20 16.06

* During the year face value of each equity shares of Rs 10 each was sub-divided (stock split) into 5 equity shares of face value of Rs 2 each. Accordingly, previous year fi gures have been restated.

4. Segment Reporting

A) Primary Segment Reporting (by Business Segments)

i) Composition of Business Segments The Company’s business segments are organized around products and system solutions provided to its customers, which include

utilities, industries, channel partners and original equipment manufacturers.



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

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

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

Automation Products Segment (AP) provides products to improve customers’ productivity with high effi ciency motors, variable speed drives, low voltage products, instrumentation and power electronics.

Others Segment consist of robotics systems.

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

iii) Segment revenues, expenses, assets and liabilities are those, which are directly attributable to the segment or are allocated on an appropriate basis. Corporate and other revenues, expenses, assets and liabilities to the extent not allocable to segments are disclosed in the reconciliation of reportable segments with the fi nancial statements. During the year revenues, expenses, assets and liabilities relating to heating, ventilation and air conditioning systems (HVAC) business has been reclassifi ed from Process Automation to Power Systems segment.

iv) Inter Segment Transfer Pricing

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

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

vi) Segment Revenues, Results and Other Information

(Rs in Thousands)

Power Systems

Power Products

Process Automation

Automation Products

Others Segment

Total

External Sales (net of Excise Duty) 22,175,534 14,137,876 10,319,976 12,263,391 338,952 59,235,729

(16,594,192) (10,549,064) (7,065,139) (8,387,140) (144,555) (42,740,090)

Inter Segment Sales 162,429 2,072,697 262,389 1,032,545 1,850 3,531,910

(172,473) (1,351,951) (210,380) (753,344) (118) (2,488,266)

Other Income 176,434 115,259 83,468 36,117 3,142 414,420

(152,831) (229,325) (41,609) (38,446) (2,118) (464,329)

Segment Revenues 22,514,397 16,325,832 10,665,833 13,332,053 343,944 63,182,059

(16,919,496) (12,130,340) (7,317,128) (9,178,930) (146,791) (45,692,685)

Segment Results 2,323,407 2,121,026 1,329,863 1,784,258 12,441 7,570,995

(1,761,646) (1,381,555) (851,869) (1,145,178) (9,398) (5,149,646)

Segment Assets 15,042,240 9,570,546 5,435,317 7,354,926 106,161 37,509,190

(8,990,068) (7,033,875) (3,784,203) (4,640,672) (89,299) (24,538,117)

Segment Liabilities 10,859,313 7,052,381 4,725,900 5,672,447 184,219 28,494,260

(7,178,917) (4,830,711) (3,154,999) (3,539,119) (92,402) (18,796,148)

Capital Expenditure 33,145 604,578 45,408 602,275 8,441 1,293,847

(87,431) (221,574) (15,369) (526,584) (1,873) (852,831)

Depreciation / Amortisation 10,156 119,893 24,392 88,234 863 243,538

(10,080) (107,942) (17,903) (58,927) (299) (195,151)



(Rs in Thousands)

vii) Reconciliation of Reportable Segments with the Financial Statements

Revenues Results/Net Profi t Assets Liabilities

Total of Segments 63,182,059(45,692,685)

7,570,995(5,149,646)

37,509,190 (24,538,117)

28,494,260(18,796,148)

Corporate - Unallocated (net) 363,419 (272,603)

61,697 (89,669)

8,881,061 (7,520,092)

1,632,548 (1,303,643)

Inter Segment Sales -3,531,910 (-2,488,266)

-(-)

-(-)

-(-)

Interest Expense -(-)

-68,123 (-7,253)

-(-)

-(-)

Provision for tax -(-)

-2,647,879(-1,829,000)

-(-)

-(-)

As per Financial Statements 60,013,568 (43,477,022)

4,916,690 (3,403,062)

46,390,251(32,058,209)

30,126,808 (20,099,791)

B) Secondary Segment Reporting (by Geographical Segments) Secondary segment disclosures are reported on the basis of geographical location of customers.

India Rest of World Total

Revenues 56,310,304(39,106,997)

3,703,264(4,370,025)

60,013,568(43,477,022)

Total Assets 45,495,315(31,164,637)

894,936(893,572)

46,390,251(32,058,209)

Capital Expenditure 1,597,922(960,072)

9,644(374)

1,607,566(960,446)

(Rs in Thousands)

As at 31 December, 2007 2006

5. Amounts due from companies under the same management as defi ned in sub-section (1-B) of Section 370 of the Companies Act, 1956, are as under:

a) Sundry Debtors

- ABB Global Services Limited 72,171 13,751 - Raman Boards Limited 3,891 -

b) Loans and Advances

- ABB Global Services Limited (Maximum amount due during the year Rs. 75,129 thousand, Previous Year Rs. 48,934 thousand) 62,583 48,934

- ABB Holdings (South Asia) Limited (Maximum amount due during the year Rs. 5,330 thousand, Previous Year Rs. 5,330 thousand) - 5,330

- Raman Boards Limited (Maximum amount due during the year Rs 10,998 thousand, Previous Year Rs Nil) 6,537 -



(Rs in Thousands)

As at 31 December, 2007 2006

6. Contingent Liabilities

i) Claims against the Company not acknowledged as debts in respect of sales tax, excise and other matters 314,914 299,699

ii) Bills discounted 719 9,486 The above excludes bills co-accepted by the customers’ bankers/guaranteed by the State Governments Rs 51,927 thousand (Previous Year Rs 143,491 thousand)

iii) Income tax matters in dispute 272,981 371,803

7. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 742,336 274,710

8. The Company has no non-cancelable operating lease obligations as on December 31, 2007. Rental expenses towards cancelable and non-cancelable operating leases charges to the profi t and loss account amounts to Rs 131,652 thousand (Previous Year Rs 90,941 thousand).

9. Finance Lease Obligations

The Company normally acquires computers and vehicles under fi nance lease with the respective underlying assets as security. Minimum lease payments outstanding as of December 31, 2007 in respect of these assets are as follows: (Figures in brackets are in respect of the previous year):

(Rs in Thousands)

Due Total Minimum Lease Payments outstanding as

on December 31, 2007

Interest Not Due

Present Value of Minimum Lease

Payments

Within one year 5,713(11,296)

310(1,555)

5,403(9,741)

Later than one year and not later than fi ve years 267(6,036)

10(320)

257(5,716)

5,980 (17,332)

320(1,875)

5,660(15,457)

10. Deferred Tax

The break up of net deferred tax liability as at December 31, 2007 is as follows: (Figures in brackets are in respect of the previous year):

Deferred Tax Asset Deferred Tax Liability Timing differences on account of: Difference between book depreciation and depreciation under the Income-tax Act, 1961 389,081 (330,977) Expenditure under Section 43B of the Income-tax Act, 1961 12,177 (17,813) Lease Finance 1,924 (5,203) Provisions for doubtful debts and advances 213,559 (126,660)

Others 7,150 (16,030) Transitional Provision under revised AS 15 26,237 (-)

261,047 389,081 (165,706) (330,977)

Net Deferred Tax Liability 128,034 (165,271)



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

11.1 Capacities

a) Installed capacities are as certifi ed by the Managing Director, but not verifi ed by the Auditors, being a technical matter.

11.2 Production

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

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

11.3 Project items

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

b) Purchases of these items during the year aggregated to Rs 23,813,414 thousand (Previous Year Rs 16,673,924 thousand).

11.4 Work -in-Progress

The Work-in-progress at the beginning of the year amounted to Rs 882,831 thousand (Previous Year Rs 550,636 thousand).

(Rs in Thousands)


12. Earnings in Foreign Exchange (on accrual basis)

i) Export of Goods - Direct on FOB basis 3,163,454 3,879,123 - Deemed Exports 911,505 265,329 ii) Goods supplied/services rendered locally against foreign exchange remittances 48,950 293,247

iii) Erection and other services 385,322 364,241

iv) Other Income: a. Commission 81,474 87,418 b. Others 73,014 39,243

4,663,719 4,928,60113. Consumption of Raw Materials and Components

(Rs in Thousands)

2007 2006 Quantity Amount Quantity Amount Ferrous Metals MT 338 29,495 333 36,096 Non-Ferrous Metals MT 2,131 664,178 1,766 552,546 Components * 12,148,557 * 9,692,829 Others 2,928,615 2,373,479

15,770,845 12,654,950 % % Imported 38.26 6,034,652 40.51 5,126,274 Indigenously acquired 61.74 9,736,193 59.49 7,528,676

100.00 15,770,845 100.00 12,654,950

For the purpose of para 4D (c) of Part II of Schedule VI to the Companies Act, 1956, components and spare parts are assumed to mean those incorporated in the product fi nally sold and not those used as spares for the repairs and maintenance of Plant and Machinery.

* Since the quantity denominations and the type of components are dissimilar in nature, it is impracticable to disclose the quantitative information in respect thereof.



(Rs in Thousands)


14. Value of imports on CIF basis (on accrual basis)

Raw Materials and Components including Spares 7,767,616 6,060,330 Finished Goods 2,325,306 1,425,545 Capital Goods including Technical Know-how 232,352 76,393 Software 433 55,664 Project items 3,557,963 3,429,398

13,883,670 11,047,330

15. Expenditure in foreign currency (on accrual basis)

Royalty 101,059 60,852 Trade Mark Fees 296,516 213,700 Commission and Discount 1,329 5,322 Professional / Project Consultancy 11,461 100,782 Others 959,258 884,492

1,369,623 1,265,148

16. Amount remitted during the year in foreign currency, on account of dividend

i) Number of non resident shareholders 3 3 ii) Number of equity shares held by them on which dividend was paid 22,084,198 22,084,198 iii) Year ended to which the dividend related December, 2006 December, 2005 iv) Amount remitted 220,842 176,674

17. Managerial Remuneration

a) i) Directors’ fee 285 290 ii) Other remuneration Salary 8,875 11,129 Commission to Managing Director and Executive Director 5,113 6,118 Commission to Non-executive Directors 1,200 1,200 Contribution to Provident and other funds 2,396 3,005 Other perquisites 7,450 7,117

25,034 28,569

25,319 28,859



(Rs in Thousands)


b) Computation of Net Profi t as per Section 349 of the Companies Act, 1956

Profi t Before Tax as per profi t and loss account 7,564,569 5,232,062 Add: Managerial Remuneration 25,319 28,859 Loss on Sale of Fixed Assets 14,453 3,359 Provision for doubtful debts and advances 252,007 (47,470)

291,779 (15,252)

7,856,348 5,216,810

Less: Profi t on sale of Fixed Assets 14,246 10,493

14,246 10,493

Net Profi t as per Section 349 of the Companies Act, 1956 7,842,102 5,206,317

Commission to Managing Director 4,258 4,950 Commission to Executive Director 855 1,168 Commission to Non-executive Directors 1,200 1,200

6,313 7,318

Commission to Managing Director and Executive Director is subject to further recommendation and approval of Remuneration Committee and the Board. For the year ended December 31, 2006, Rs. 4,767 thousand was paid as commission to Managing Director and Rs 1,149 thousand was paid as commission to Executive Director based on recommendation and approval of Remuneration Committee and the Board.

18. Auditors’ Remuneration (excluding service tax)

(i) Audit Fee 4,300 4,300 (ii) Tax Audit Fee 2,475 1,975 (iii) Other Services - SOX Fee 7,800 7,800 - Quarterly Limited Review Fee 2,625 2,625 - Others 1,600 1,600 (iv) Reimbursement of out of pocket expenses 1,174 2,251

19,974 20,551

19. Interest charge for the year includes Rs 1,555 thousand (Previous Year Rs 2,923 thousand) being interest on fi xed period loans.

20. Research and development expenditure of Rs 43,761 thousand (Previous Year Rs 38,299 thousand) on revenue account has been incurred during the year.

21. Construction Contracts

(Rs in Thousands)

2007 2006

Contract revenue recognised as revenue for the year ended December 31, 2007 27,872,978 19,295,977

Aggregate amount of contract costs incurred and recognised profi ts (less recognised losses) up to December 31, 2007 for all the contracts in progress 45,496,552 28,997,716

The amount of customer advances outstanding for contracts in progress as at December 31, 2007 1,829,492 1,352,747

The amount of retentions due from customers for contracts in progress as at December 31, 2007 5,189,507 2,915,207



22. Related Party Disclosures

a) List of Related Parties

Party where control exists:

ABB Asea Brown Boveri Limited, Zurich (Holding Company)

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

Fellow subsidiaries:

ABB (China) Ltd., Beijing, ChinaABB (Hong Kong) Ltd., Hong KongABB (P.J.S.C.), Teheran, IranABB (Pty) Ltd., Gaborone, BotswanaABB (Pvt.) Limited, Lahore, PakistanABB A/S, Skovlunde, DenmarkABB AB, Västerås, SwedenABB AG, Mannheim, GermanyABB AG, Vienna, AustriaABB Agencies Pte. Ltd., SingaporeABB Arab S.A.E., Cairo, EgyptABB AS Billingstad, NorwayABB Australia Pty Limited, Sydney, AustraliaABB Automation GmbH, Mannheim, GermanyABB Automation L.L.C., Abu Dhabi, U.A.EABB Automation Products GmbH, Ladenburg, GermanyABB Avangard AD, Sevlievo, BulgariaABB Bailley Beijing Controls Co. Ltd., Beijing, ChinaABB Beijing Drive Systems Co. Ltd., Beijing, ChinaABB Bomem Inc., Quebec, CanadaABB BV, Rotterdam, HollandABB Capital, B.V., Amsterdam, HollandABB Chongqing Transformer Company Ltd.,Chongqing City, ChinaABB CL Logistic S.A., Montevideo, UruguayABB Contracting Co. Ltd., Riyadh, Saudi ArabiaABB d.o.o., Belgrade, SerbiaABB Electrica SGPS, Lda., Luanda, AngolaABB Electrical Machines Ltd., Shanghai, ChinaABB Electroengineering Ltd., Moscow, RussiaABB Elektrik Sanayi A.S., Istanbul, TurkeyABB Elektro s.r.o., Bratislava, SlovakiaABB Energy Automation S.p.A., Milan, ItalyABB Engineering (Shanghai) Ltd., Shanghai, ChinaABB Engineering Trading and Service Ltd., Budapest, HungaryABB France SAS, Rueil Malmaison cedex, FranceABB Global Services Limited, India ABB Heifei Transformer Co. Ltd., Hefei, ChinaABB Holding A.S., Istanbul, TurkeyABB Holding AS, Billingstad, NorwayABB Holdings (Pty) Ltd., Sunninghill, South AfricaABB Holdings (South Asia) Limited, Bangalore, IndiaABB Holdings Inc., Norwalk, CT, United StatesABB Holdings Sdn. Bhd., Subang Jaya, MalaysiaABB Huadian High Voltage Switchgear (Xiamen) Co. Ltd., Xiamen, ChinaABB Inc., St. Laurent, Quebec, CanadaABB Industries (L.L.C.),Dubai, U.A.EABB Industry Pte. Ltd., SingaporeABB Information Systems Ltd., Zurich, SwitzerlandABB International Marketing Ltd., Zurich, SwitzerlandABB K.K., Tokyo, JapanABB Jiangjin Turbo Systems Company Limited, Chongqing, ChinaABB LV Installation Materials Co. Ltd., Beijing, ChinaABB Logistics Center Europe GmbH, Menden, GermanyABB Malaysia Sdn Bhd, Subang Jaya, MalaysiaABB Management Services Ltd., Zurich, SwitzerlandABB Mexico S.A. de C.V., Tlalnepantla, Mexico

ABB N.V., Zaventem, BelgiumABB Near East Trading Ltd., Amman, JordanABB Norden Holding AB, Stockholm, SwedenABB Oy, Helsinki , FinlandABB Power Technologies SpA, Hydra, AlgeriaABB Process Solutions & Services SPA, Milan, ItalyABB Participation AB, Västerås, SwedenABB Power Systems and Automation Technology S.A.E, Cairo, EgyptABB Power Technologies S.p.A., Milano, ItalyABB Qatar LLC., Doha, QatarABB S.A., Buenos Aires, ArgentinaABB S.A., Panama, PanamaABB S.A., Rueil-Malmaison, FranceABB S.A., Santiago, ChileABB s.r.o., Prague, Czech RepublicABB SACE S.p.A., Sesto S. Giovanni (MI), ItalyABB Sanghai Motors Co. Ltd., Shanghai, ChinaABB Schweiz AG, Baden, SwitzerlandABB Sécheron S.A., Satigny, SwitzerlandABB Service Co. Ltd., Al Khobar, Saudi ArabiaABB South Africa (Pty) Ltd., Sunninghill, South AfricaABB Sp. zo.o., Warsaw, PolandABB Stotz-Kontakt GmbH, Heidelberg, GermanyABB Turbo-Systems AG, Baden, SwitzerlandABB Turbo Systems (Hong Kong) Limited, Hong KongABB Technology AB, Västeras, SwedenABB Technologies W.L.L., BahrainABB Technology Ltd., Zurich, SwitzerlandABB Training Center GmbH & Co. KG, Mannheim, GermanyABB Transmission & Distribuition Automation Equipment (Xiamen)Co. Ltd.,ChinaABB Trasmissione & Distribuzione S.p.A., Milan, ItalyABB Turbocharger Servicios, S.A., Amatitlan, GuatemalaABB Xiamen Electrical Controlgear Co. Ltd., Fujian Province, ChinaABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen, ChinaABB Xiamen Switchgear Co. Ltd., Xiamen, ChinaABB Xinhui Low Voltage Switchgear Co. Ltd., Xinhui, ChinaABB Ltd., Seoul, South KoreaABB Ltd., Taipei, TaiwanABB Ltd., Warrington, United KingdomABB Ltd., Zagreb, CroatiaABB Ltd., Zurich, SwitzerlandABB Ltda., Osasco, BrazilABB Limited, Auckland, New ZealandABB Limited, Bangkok, ThailandABB Limited, Dar Es Salaam, TanzaniaABB LLC, Al Hamriya, OmanABB Ltd., Dublin, IrelandABB Ltd., Hanoi, VietnamABB Ltd., Jordan, AmmanABB Ltd., Kiev, UkraineABB Ltd., Lusaka, ZambiaABBNG Limited, Abuja, NigeriaAsea Brown Boveri Holding Ltd., Bangkok, ThailandAsea Brown Boveri Ltda., Bogotá, ColombiaAsea Brown Boveri Ltda., La Paz, Bolivia



Associate: Integra Hindustan Control Limited

Managing Director: Mr. Ravi Uppal Mr. Biplab Majumder

Executive Director: Mr. Biplab MajumderChief Financial Offi cer: Mr. K. Rajagopal

(Rs in Thousands)

2007 2006b) Transactions with related parties

i) Sales, Services and Other income

Fellow Subsidiaries - Asea Brown Boveri Inc., Norwalk, CT, United States 531,099 602,367 - Other fellow subsidiaries 1,976,036 1,650,076

2,507,135 2,252,443 Integra Hindustan Control Limited (an associate) 20,667 4,697 ii) Purchases of Raw Materials, Components and Project items

Fellow Subsidiaries - ABB AB, Vasteras, Sweden 1,981,709 1,518,656 - ABB Oy, Helsinki, Finland 1,786,465 1,430,981 - ABB SACE S.p.A., Sesto S. Giovanni (MI), Italy 1,124,005 916,775 - Other fellow subsidiaries 4,886,716 3,989,756

9,778,895 7,856,168 Integra Hindustan Control Limited (an associate) 12,411 - iii) Expenditure on Royalty, Trade-mark, Technical and Consultancy Services

Holding Company 296,516 213,700 Fellow Subsidiaries - ABB Power Technologies AB, Ludvika, Sweden - 76,378 - ABB Oy, Helsinki, Finland 39,183 32,049 - ABB AG, Mannheim, Germany - 21,489 - ABB Information Systems Ltd., Switzerland 25,414 - - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy 23,755 14,654 - Other fellow subsidiaries (14,654) (8,547)

112,957 153,117

Asea Brown Boveri Ltd., Nairobi, KenyaAsea Brown Boveri Ltd., Port Louis, MauritiusAsea Brown Boveri S.A., Caracas, VenezuelaAsea Brown Boveri S.A., Casablanca, MoroccoAsea Brown Boveri S.A., Lima,PeruAsea Brown Boveri Inc., Norwalk, CT, United StatesAsea Brown Boveri Inc., Paranaque, Metro Manila, PhilippinesAsea Brown Boveri S.A., Madrid, SpainAsea Brown Boveri S.A., Metamorphossis Attica, GreeceAsea Brown Boveri S.A., Quito, EcuadorAsea Brown Boveri S.A.E., Cairo, EgyptBusch-Jaeger Elektro GmbH, Mannheim, Germany

Electrical Materials Center, Riyadh, Saudi ArabiaEntrelec Développement SAS, Rueil Malmaison, FranceIntegra Hindustan Control Ltd., Vadodara, IndiaLighting for Staffordshire Holdings Ltd., StaffordshireOy Merinova AB, VaasaPT ABB Installation Materials, Jakarta, IndonesiaPT ABB Jasa Indonesia, Jakarta, IndonesiaPT ABB Batam, Batam, IndonesiaPT ABB Sakti Industri, Jakarta, IndonesiaPT ABB Transmission and Distribution, Jakarta, IndonesiaPucaro Elektro-Isolierstoffe GmbH, Roigheim, GermanyRaman Boards Ltd., Mysore, India



(Rs in Thousands) 2007 2006 iv) Expenditure on Other Services

Holding Company 7,322 17,678

Fellow Subsidiaries - ABB Information Systems Ltd., Zurich, Switzerland 185,152 82,135 - ABB Technology Ltd., Zurich, Switzerland 508,786 346,555 - Asea Brown Boveri S.A., Madrid, Spain - 116,086 - ABB Global Services Limited, India 162,120 - - Other fellow subsidiaries 178,950 88,784

1,035,008 633,560 v) Capital expenditure for Technical Know how

Fellow Subsidiaries - ABB Oy, Helsinki, Finland 10,628 1,937 - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy 6,325 5,185 - ABB Entrelec SAS, Villeurbanne, France - 12,396 - Other fellow subsidiaries 4,690 -

21,643 19,518

vi) Capital expenditure

Fellow Subsidiaries - ABB AB, Vasteras, Sweden 28,875 167 - ABB AS Billingstad, Norway - 4,950 - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy 9,633 15,888 - ABB Automation Products GmbH, Ladenburg,Germany 5,235 - - Other fellow subsidiaries 2,822 1,097

46,565 22,102 vii) Outstanding balances

Debtors and Advances

Holding Company 2,144 -

Fellow Subsidiaries - Asea Brown Boveri Inc., Norwalk, CT, United States 33,943 93,590 - ABB Global Services Limited, Bangalore 134,754 62,686 - ABB Oy, Helsinki, Finland 114,168 12,091 - Other fellow subsidiaries 595,521 474,214

878,386 642,581 Integra Hindustan Control Limited (an associate) 10,850 3,678 Creditors


Fellow Subsidiaries - ABB Oy, Helsinki, Finland 586,108 542,157 - ABB, Västerås, Sweden 763,894 662,165 - ABB SACE S.p.A., Sesto S.Giovanni (MI), Italy 403,673 268,419 - Other fellow subsidiaries 1,936,106 1,511,802

3,689,781 2,984,543 Integra Hindustan Control Limited (an associate) 10,329 -



(Rs in Thousands) 2007 2006 viii) Dividend Paid during the year


Fellow Subsidiaries 25,081 20,065

ix) Remuneration to Managing Director* 19,486 21,795 x) Remuneration to Executive Director * 4,348 5,574 xi) Remuneration to Chief Financial Offi cer * 6,396 4,565 xii) Dividend received from Associate 281 421

* The above does not include Provision for Leave Encashment and Gratuity as it is provided in the books on the basis of actuarial valuation for the Company as a whole and hence individual fi gures cannot be identifi ed. The remuneration to Managing Director for 2007 comprises of Rs 14,500 thousand paid to Mr. Ravi Uppal and Rs 4,986 paid to Mr. Biplab Majumder, since the date of his appointment as Managing Director w.e.f July 26, 2007. The remuneration to Executive Director Mr. Biplab Majumder for the year ended December 31, 2007 is for the period upto July 25, 2007.

23. The pro rata difference between the forward contract rate and the exchange rate on the date of transaction to be charged to profi t and loss account is Rs 70,942 thousand (Previous Year Rs 62,824 thousand).

24. Provisions:

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

(Rs in Thousands)

Class of provisionsAs at

January 1, 2007

Additions Amounts used

Unused Amounts reversed

As at December 31,

2007

Product Warranties 400,333(196,904)

297,733(494,891)

110,205(291,462)

-(-)

587,861(400,333)

Sales Tax 46,860(16,813)

49,333(36,921)

31,587(6,874)

6,527(-)

58,079(46,860)

Litigations 62,160(57,092)

-(5,068)

4,284(-)

716(-)

57,160(62,160)

Restructuring 66,697(68,281)

-(-)

324(1,584)

-(-)

66,373(66,697)

b) Nature of provisions:

a. Product Warranties: The Company provides warranties for its products and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31, 2007 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. Part of the provision as at December 31, 2007 is towards preventive replacement of certain product components.

b. Provision for Sales Tax represents mainly the differential sales tax liability on account of non–collection of declaration forms.

c. Provision for litigation represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation.

d. Provision for restructuring represents the liability that is expected to materialise in respect of units hived off in past.

25. The employees of the Company are entitled to purchase shares of ABB Ltd, Zurich (the ultimate holding company) on the settlement date, at a price fi xed based on the fair market price on the grant date under “ABB Employee Share Acquisition Plan”. Guidance Note on “Accounting for Employee Share-based Payments” permits as an alternative the intrinsic value method of accounting with fair value disclosures. There is no discount on the intrinsic value and any settlement obligations as of date. Further, the scheme detailed above is assessed, managed and administered by the ultimate holding company, accordingly, the Company has not accounted/disclosed for the above plans as per the said Guidance Note.



26. Derivative Instruments

i) Forward cover for export debtors outstanding as of balance sheet date is Rs 867,250 thousand (Previous Year Rs 801,358 thousand).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs 3,057,714 thousand (Previous Year Rs 350,199 thousand).

iii) Forward cover for import creditors outstanding as of balance sheet date is Rs 4,382,756 thousand (Previous Year Rs 3,623,557 thousand).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs 5,437,218 thousand (Previous Year Rs 2,981,428 thousand).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is Rs 116,173 thousand (Previous Year Rs 345,187 thousand).

27. The Company has amounts due to Micro and Small Enterprises under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at December 31, 2007.

(Rs in Thousands)

2007 i) The principal amount and the interest due thereon remaining unpaid to any supplier as at December 31, 2007. Principal Amount : 64,341 Interest : Nil ii) The amount of interest paid by the Company along with the amounts of the payment made to the supplier beyond the appointed day for the year ending December 31, 2007. Nil iii) The amount of interest due and payable for the period of delay in making payment (beyond the appointed day during the year) Nil iv) The amount of interest accrued and remaining unpaid for the year ending December 31, 2007. Nil v) The amount of further interest remaining due and payable for the earlier years. Nil

Note: The information has been given in respect of such suppliers to the extent they could be identifi ed as “Micro and Small” enterprises on the basis of information available with the Company.

As at December 31, 2006 there were no suppliers who were registered under The Micro, Small and Medium Enterprises Development Act, 2006 based on the information available with the Company.

28. In accordance with ASI 14 (Revised) on ‘Disclosure of Revenue from Sales Transactions’ issued by Institute of Chartered Accountants of India, excise duty on sales amounting to Rs 4,529,568 thousand (Previous Year Rs 3,305,522 thousand) has been reduced from sales in profi t and loss account and excise duty on increase in inventory of fi nished goods amounting to Rs 2,985 thousand (Previous Year Rs 27,279 thousand) has been accounted in the profi t and loss account under the head ‘Cost of Materials and Erection Services’.

29. The Company has defi ned benefi t gratuity plan and provident fund plan managed by trusts. The following table summarises the component of net benefi t expenses recognised in the profi t and loss account and the funded status and amounts recognised in the balance sheet.

(Rs in Thousands)

Gratuity Provident Fund i) Change in benefi t obligations Projected benefi t obligations at beginning of the period 394,151 1,279,270 Current Service Cost 33,953 67,833 Contribution by plan participants ** - 202,054 Interest cost 31,532 108,738 Benefi ts paid (38,810) (125,512) Actuarial (gain / loss) 9,824 (5,230)

Projected benefi t obligations (PBO) at the end of the period 430,650 1,527,153 ii) Change in plan assets Plans assets at the beginning of the period at fair value 364,958 1,237,456 Contributions 56,462 265,990 Expected return on plan assets 31,088 105,234 Actuarial gain / (loss) (1,446) (172) Benefi ts paid (38,810) (125,512)

Plans assets at the end of the period, at fair value 412,252 1,482,996



(Rs in Thousands)

Gratuity Provident Fund iii) Actual return on plan assets Expected Return on plan assets 31,088 105,234 Actuarial gain / (loss) on plan assets (1,446) (172)

Actual return on plan assets 29,642 105,062 iv) Present value of the defi ned benefi t obligation 430,650 1,527,153 Plan assets at the end of the period, at fair value 412,252 1,482,996

Liability recognised in the balance sheet 18,398* 44,157 v) Cost for the period Current Service cost 33,953 67,833 Interest cost 31,532 108,738 Expected return on plan assets (31,088) (105,234) Actuarial (gain) / loss 11,270 (5,058)

Expense recognised in the statement of profi t & loss 45,667 66,279 vi) Investment Details (% invested) GOI Securities 38.1 33.9 State Government Securities 2.7 12.3 PSU Securities 27.6 22.2 Special Deposit Scheme 22.8 21.1 Others (including bank balances) 8.8 10.5

100.0 100.0 vii) Assumptions Interest rate for discount 8.00% p.a. 8.00% p.a. Estimated rate of return on plan assets 8.00% p.a. 8.00% p.a.

* since paid

** Employees’ contribution.

Notes :

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

ii) The Company expects to contribute Rs 49,091 thousand to Gratuity Fund and Rs 79,535 thousand in 2008. This being the fi rst year of implementation, previous year fi gures have not been given.

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

30. The fi gures of the previous year have been regrouped / reclassifi ed, where necessary, to conform with the current year’s classifi cations.





Partner




Ravi Uppal Chairman













(Rs in Thousands)


A. Cash Flow from Operating Activities

Net Profi t Before Tax 7,564,569 5,232,062

Adjustments for

Depreciation/Amortisation 324,057 264,675

Unrealised Losses/(Gains) on Restatement of Monetary Assets (net) (100) 5,757

Unrealised Losses/(Gains) on Restatement of Monetary Liabilities (net) (279) (1,973)

Loss/(Profi t) on Sale of Fixed Assets, (net) 207 (7,134)

Interest Income (277,014) (216,685)

Dividend Income (281) (429)

Interest Expense 68,123 7,253

Operating Profi t before Working Capital Changes 7,679,282 5,283,526

Movement in Working Capital

Decrease/(Increase) in Sundry Debtors (8,532,708) (5,415,973)

Decrease/(Increase) in Inventories (1,340,107) (1,531,192)

Decrease/(Increase) in Other Current Assets (1,263,537) 812,716

Decrease/(Increase) in Loans and Advances (928,314) (400,337)

Increase/(Decrease) in Current Liabilities and Provisions 9,820,037 5,550,542

Cash Generated from Operations 5,434,653 4,299,282

Direct Taxes Paid (net of refunds) (2,758,909) (1,846,257)

Net cash generated from Operating Activities 2,675,744 2,453,025

B. Cash Flow from Investing Activities

Purchase of Fixed Assets (1,489,407) (933,178)

Proceeds from sale of Fixed Assets 19,829 33,151

Purchase of Investments - (227,051)

Sale/Maturity of Investments 69,000 325,008

Interest Received 261,357 207,888

Dividends Received 281 429

Net cash used in Investing Activities (1,138,940) (593,753)

Cash Flow Statement



(Rs in Thousands)


C. Cash Flow from Financing Activities

Proceeds from new Borrowings 5,150,000 2,100,500

Repayment of Borrowings (5,159,797) (2,112,310)

Interest Paid (68,123) (7,253)

Dividend paid (494,672) (385,439)

Net cash used in Financing Activities (572,592) (404,502)

Net Increase/ (Decrease) in Cash and Cash Equivalents (A+B+C) 964,212 1,454,770

Cash and Cash Equivalents (Opening Balance) 5,464,424 4,009,654

Cash and Cash Equivalents (Closing Balance) 6,428,636 5,464,424

Components of Cash and Cash Equivalents as at December 31, 2007 2006

Cash and Cheques on Hand 2,315 2,409

Balances With Banks - On Current Account 4,410,727 2,856,674

- On Deposit Account 2,005,460 2,605,341

- On Margin Account 10,134 -

6,428,636 5,464,424

Notes: 1) Cash and cash equivalents at the end of the year represent cash at bank and in hand and deposits with bank.

2) The fi gures of the previous year have been regrouped/reclassifi ed, where necessary, to conform with the classifi cation of the current year.





Partner




Ravi Uppal Chairman













I. Registration Details

Registration No. L32202KA1949PLC032923 State Code 0 8

Balance Sheet Date 31 12 07

Date Month Year

II. Capital Raised during the year (Rs in Thousands)

Public Issue Rights Issue

NIL NIL

Bonus Issue Private Placement

NIL NIL

III. Position of Mobilisation and Deployment of Funds (Rs in Thousands)

Total Liabilities Total Assets

1 6 3 9 7 1 3 7 1 6 3 9 7 1 3 7

Sources of Funds

Paid-up Capital Reserves and Surplus

4 2 3 8 1 7 1 5 8 3 9 6 2 6

Secured Loans Unsecured Loans

5 6 6 0 -

Deferred Tax Liability

1 2 8 0 3 4

Application of Funds

Net Fixed Assets Investments

4 5 7 8 7 1 6 7 0 4 5 4 6

Net Current Assets Misc. Expenditure

1 1 1 1 3 8 7 5 N I L

Accumulated Losses

N I L

IV. Performance of the Company (Rs in Thousands)

Turnover Total Expenditure

6 0 0 1 3 5 6 8 5 2 4 4 8 9 9 9

+/- Profi t/Loss Before Tax +/- Profi t/Loss After Tax

+ 7 5 6 4 5 6 9 + 4 9 1 6 6 9 0

Earnings per Share in Rs Dividend Rate %

2 3 . 2 0 1 1 0

V. Generic Names of Three Principal products/Services of Company (as per monetary terms)

Item Code No. (ITC Code) 85.35

Product Description Switchgears of all types


Product Description Transformers


Product Description Motors and other machines

Balance Sheet Abstract and Company’s General Business Profi le


Contents

1 Board of Directors and Other Information

2 5 Year Highlights

4 Corporate Management Committee

5 Welcome to ABB

11 Notice to Members

16 Directors’ Report

31 Management’s Discussion and Analysis

36 CEO/CFO Certifi cation

37 Auditors’ Report

40 Balance Sheet, Profi t & Loss Account and Schedules

51 Notes to Accounts

66 Cash Flow Statement

68 Balance Sheet Abstract and Company’s General Business Profi le


Energy effi ciency for a connected worldABB Limited - Annual Report 2007India

ABB Limited2nd Floor, East Wing, Khanija Bhavan49, Race Course RoadBangalore - 560001Phone: +91-80-22949150 - 54Fax: +91-80-22949148

www.abb.co.in

© C

opyright 2008 AB

B. A

ll rights reserved.

P

rinted at Repro


Energy efﬁ ciency for a connected world ABB Limited ...file/Annual+Report+2007.pdf · 4 ABB...

Documents

Transcript of Energy efﬁ ciency for a connected world ABB Limited ...file/Annual+Report+2007.pdf · 4 ABB...