|The Directors have pleasure in presenting their Sixty Sixth Annual
Report and Audited Accounts for the year ended December 31, 2015.
1. Financial Results
(Rs, in Crores)
Particulars For the year ended
December 31, 2015 December 31, 2014
Profit Before Taxation 474.59 355.21
Less: Provision for Tax
- Current Tax 203.71 114.00
- Deferred Tax (29.00) 12.70
Profit after Tax 299.88 228.51
Forward from last year 103.90 89.48
Amount available for
Appropriation 403.78 317.99
General Reserve 150.00 120.00
Debenture Redemption Reserve 50.00 -
Proposed Dividend 78.41 78.41
Corporate Dividend Tax 15.96 15.68
Balance Carried Forward 109.41 103.90
Your Directors recommend payment of a dividend at the rate of Rs, 3.70
(Rupees three and paise seventy only) per share for the year ended
December 31, 2015 on 211,908,375 equity shares of Rs, 2/- each.
3. Performance Review:
The Company secured orders valued Rs, 8,100 crore in 2015 as against
Rs, 7,908 crore in the previous year. Base orders from wider spectrum
of customers formed a large portion with few large projects. Service
led sales resulted in more comprehensive customer engagement. The order
backlog at the end of the year stood at Rs, 7,946 crore providing
visibility to the future revenue streams. The revenue from operations
for the Company for the year 2015 stood at Rs, 8,140 crore as against
Rs, 7,733 crore in the previous year, reflecting stability of
operations in an uncertain market. Profit before tax was up by 34% at
Rs, 475 crore in 2015 as compared to Rs, 355 crore in the previous year
mainly due to efforts towards internal operational excellence, entering
new market, lower material cost and extensively participating in the
shift to renewable energy. Net profit after tax was up by 31% at Rs,
300 crore for the current year as compared to Rs, 229 crore in the
previous year. Consequently the earnings per share for the year 2015
stood at Rs, 14.15 per share as compared to Rs, 10.78 per share in the
For detailed analysis of the performance, please refer to the
Management's Discussion and Analysis given in Annexure - A, forming
part of this Report.
4. Extract of Annual Return:
As per provisions of Section 92 (3) of the Companies Act, 2013 (the
Act) read with Rule 12 of the Companies (Management and Administration)
Rules, 2014, the extract of the Annual Return in the Form MGT-9 is
given in Annexure - B, forming part of this report.
5. Board Meetings held during the year:
During the year, 8 meetings of the Board of Directors were held, which
includes a meeting of Independent Directors as required under the Act
and Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (the Listing Regulations).
The details of the meetings are furnished in the Corporate Governance
6. Issue of Debentures:
As approved by the Members through Postal Ballot during August 2015,
the Company has issued 600 unsecured, rated, listed, redeemable,
non-convertible debentures having face value of Rs, 1,00,00,000/-
(Rupees One Crore only) aggregating to Rs, 600 Crore on private
placement basis under Foreign Portfolio Investment route to an
identified investor, which are listed with BSE Limited. The proceeds of
these debentures were used for refinancing the Company's debt.
7. Compliance on criteria of Independence by the Independent Directors:
All Independent Directors of the Company have given declarations to the
Company under Section 149 (7) of the Act that, they meet the criteria
of independence as provided in Sub-Section 6 of Section 149 of the Act
and also under the Listing Regulations.
8. Remuneration Policy of the Company:
The Remuneration Policy of the Company for appointment and remuneration
of the Directors, Key Managerial Personnel and Senior Executives of the
Company along with other related matters have been provided in the
Corporate Governance Report.
As and when need arises to appoint Director, the Nomination and
Remuneration Committee (NRC) of the Company will determine the criteria
based on the specific requirements. NRC while recommending candidature
to the Board, will take into consideration the qualification,
attributes, experience and Independence of the Candidate. Director(s)
appointment and remuneration will be as per NRC Policy of the Company.
A Statement of Disclosure of Remuneration pursuant to Section 197 of
the Act read with Rule 5(1) of Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, is given in Annexure - C, forming
part of this report.
9. Particulars of loans, guarantees or investments under Section 186 of
During the year under review, your Company has not granted any Loan,
Guarantees or made Investments within the meaning of Section 186 of the
10. Amount, if any, proposed to be transferred to Reserves:
The Company transferred a sum of Rs, 150 Crore towards General Reserve
and Rs, 50 Crore towards Debenture Redemption Reserve during the
Financial Year 2015.
11. Material changes and commitment, if any, affecting financial
position of the Company from the end of Financial Year and till the
date of this Report
There has been no material change and commitment, affecting the
financial performance of the Company occurred between the end of the
Financial Year of the Company to which the Financial Statements relate
and the date of this Report.
12. Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo:
The particulars as prescribed under Section 134 of the Act read with
Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo are given in Annexure - D, forming part of this
13. Listing Agreements:
Your Company has entered into new Listing Agreements with BSE Limited
and National Stock Exchange of India Limited, in compliance with
Regulation 109 of Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2009 as amended by
14. Risk Management Policy:
The Board of Directors has adopted a Risk Management Policy and
constituted a Risk Management Committee. The Committee oversees the
Risk Management process including risk identification, impact
assessment, effective implementation of the mitigation plans and risk
reporting. The purpose of the Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities with regard to
enterprise risk management.
The details and the process of Risk Management as implemented in the
Company are provided as part of Management's Discussion and Analysis
which forms part of this Report.
15. Corporate Social Responsibility (CSR) initiatives:
In accordance with the provisions of Section 135 of the Act and Rules
framed there under your Company has adopted a policy for CSR and the
Board has constituted a Committee for implementing the CSR activities.
Composition of the Committee and other details are provided in
Corporate Governance Report. Education, Access to Electricity, Health
Care, Environment, skills enhancement for creating employable
opportunities for the differently baled personnel, etc., are the focal
area under the CSR Policy.
The Company has implemented various CSR projects directly and / or
through implementing partners and the projects undertaken by the
Company are in accordance with Schedule VII of the Act. The report on
CSR activities as required under the Companies (Corporate Social
Responsibility Policy) Rules, 2014 is given in Annexure - E, forming
part of this report.
16. Annual evaluation of Board, its Committees and Individual
The Board of Directors has carried out an annual evaluation of its own
performance, its Committees and individual Directors pursuant to the
requirements of the Act and the Listing Regulations.
Further, the Independent Directors, at their exclusive meeting held
during the year reviewed the performance of the Board, its Chairman and
Non-Executive Directors and other items as stipulated under the Listing
17. Audit Committee:
The details pertaining to composition of the Audit Committee and terms
of reference are included in the Corporate Governance Report, which
forms part of this Report.
18. Related Party Transactions:
The Board of Directors has adopted a policy on Related Party
Transactions. The objective is to ensure proper approval, disclosure
and reporting of transactions as applicable, between the Company and
any of its related parties. All contracts or arrangements with related
parties, entered into or modified during the financial year were at
arm's length basis and in the ordinary course of the Company's
business. All such contracts or arrangements were entered into only
with prior approval of the Audit Committee, except transactions which
qualified under Omnibus approval as permitted under law. No material
contract or arrangement with related parties were entered into during
the year under review. Therefore, there is no requirement to report any
transaction in Form No. AOC-2 in terms of Section 134 of the Act read
with Rule 8 of the Companies (Accounts) Rules, 2014. Transactions with
related parties, as per requirements of Accounting Standard 18 are
disclosed in the notes to accounts annexed to the financial statements.
Your Company's Policy on Related Party Transactions, as adopted by your
Board, can be accessed on the Company's website at www.abb.co.in.
19. Reporting of frauds:
There was no instance of fraud during the year under review, which
required the Statutory Auditors to report to the Audit Committee and
/or Board under Section 143(12) of the Act and Rules framed there
20. Transfer to Investor Education and Protection Fund:
As required under Section 205C of the Companies Act, 1956, the
unclaimed dividend amount aggregating to Rs, 18.09 lakh lying with the
Company for a period of seven years pertaining to year ended on
December 31, 2007, was transferred during the year 2015, to the
Investor Education and Protection Fund established by the Central
21. Particulars of Employees:
The statement under Rule 5 (2) and Rule 5 (3) of The Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 and
particulars required under Section 197 (12) of the Act are given in
Annexure - F, forming part of this report.
The said Annexure shall be provided to Members on a specific request
made in writing to the Company. The said information is available for
inspection by the Members at the Registered Office of the Company on
any working day of the Company up to the date of the 66th Annual
22. Directors' Responsibility Statement:
To the best of our knowledge and belief and according to the
information and explanations obtained by us, your Directors make the
following statements in terms of Section 134(3) (c) and 134 (5) of the
a) in the preparation of the annual financial statements for the year
ended December 31, 2015, the applicable Accounting Standards have been
followed along with proper explanation relating to material departures
b) for the financial year ended December 31, 2015, such accounting
policies as mentioned in the Notes to the financial statements have
been applied consistently and judgments and estimates that are
reasonable and prudent have been made so as to give a true and fair
view of the state of affairs of the Company and of the Profit and Loss
of the Company for the year ended December 31, 2015;
c) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d) the annual financial statements have been prepared on a going
e) proper internal financial controls are in place and such internal
financial controls are adequate and were operating effectively;
f) proper systems have been devised to ensure compliance with the
provisions of all applicable laws and are adequate and operating
23. Corporate Governance Report and Certificate:
As required under Regulation 34 (3) read with Schedule V (C) of the
Listing Regulations a report on Corporate Governance and the
certificate as required under Schedule V (E) of the Listing Regulations
from Messrs V. Sreedharan & Associates, Practicing Company Secretaries,
regarding compliance of conditions of Corporate Governance are given in
Annexure - G and Annexure - H respectively, forming part of this
24. Secretarial Audit:
Pursuant to provisions of Section 204 of the Act read with Rule 9 of
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 and amendments thereto, your Company engaged the services
of Messrs HBP & Co., Company Secretaries, Bengaluru, to conduct the
Secretarial Audit of the Company for the financial year ended December
31, 2015. The Secretarial Audit Report in Form MR-3 is given in
Annexure - I, forming part of this report.
25. Business Responsibility Report:
As required under Regulation 34 of the Listing Regulations, the
Business Responsibility Report forms part of the Annual Report.
26. Whistle Blower Policy:
The Company has a Vigil Mechanism for Directors and Employees to report
their concerns about unethical behavior, actual or suspected fraud or
violation of the Company's Code of conduct. The mechanism provides for
adequate safeguards against victimization of Director(s) and
Employee(s) who avail of the mechanism.
The Whistle Blower Policy is available on Company's website.
27. Directors and Key Managerial Personnel:
Mr. Bazmi R. Husain (DIN: 00965992) resigned as Director and the
Managing Director of the Company on September 2, 2015 and as per the
Company's policy, he has been relieved from the services of the Company
effective close of office hours on December 31, 2015. Your Directors
place on record their appreciation of the valuable service rendered by
Mr. Husain during his tenure as the Managing Director of the Company.
Further your Directors at their meeting held on December 11, 2015,
appointed, Mr. Sanjeev Sharma (DIN: 07362344) as Director and Managing
Director of the Company effective January 1, 2016.
The Board at its meeting held on October 28, 2014 appointed Mr. Frank
Duggan (DIN: 02937233) as a Director in the casual vacancy caused due
to the resignation of Mr. Gary Steel (DIN: 02500073). Since Mr. Gary
Steel was to retire by rotation at the ensuing Annual General Meeting,
Mr. Frank Duggan would also cease to hold the office of Director at
ensuing Annual General Meeting, pursuant to Section 161(4) of the Act,
and is eligible for reappointment as Director.
Pursuant to the Act, and Regulation 25 of the Listing Regulations, all
the three Independent Directors, viz., Mr. Nasser Munjee, Mr. Darius E
Udwadia and Mrs. Renu Sud Karnad were appointed at the 65th Annual
General Meeting held on May 6, 2015 for a period of 5 years effective
conclusion of the said meeting. Hence none of the Independent Directors
is liable to retire by rotation.
Necessary resolutions relating to Directors who are seeking appointment
/ reappointment are included in the Notice of Annual General Meeting.
The relevant details of the said Directors are given in the annexure to
the Notice of the Annual General Meeting.
During the year, Mr. Amlan Datta Majumdar resigned as Chief Financial
Officer of the Company and was relieved from the services effective
close of office hours on March 10, 2015. Mr. T. K. Sridhar, was
appointed as Chief Financial Officer of the Company effective July 23,
As on date, Mr. Sanjeev Sharma, Managing Director, Mr. B. Gururaj,
Company Secretary and Mr. T.K. Sridhar, Chief Financial Officer, are
the Key Managerial Personnel of the Company.
During the year under review, your Company did not accept any deposit
within the meaning of the provisions of Chapter V - Acceptance of
Deposits by Companies read with the Companies (Acceptance of Deposits)
29. Financial Year:
The Act requires every company to have the period April to March as its
Financial Year mandatorily. Exception is however permitted to have a
different period as financial year provided the Company obtains
permission from the Ministry of Corporate Affairs.
Your Company is one of the key subsidiaries of ABB Group, which follows
calendar year as its financial year. To support consolidation of group
financial statements and audit thereof as per overall group process and
timeline, it was necessary for the Company to follow the financial year
as January - December. Therefore your Company intended to continue the
calendar year i.e., January - December as its financial year and made
an application to the Hon'ble Company Law Board, Southern Region Bench,
Chennai, to retain its current financial year period instead of
changing it to April - March period. The Hon'ble Company Law Board
allowed the Company's application and permitted the Company to continue
to have calendar year, i.e., January - December as its financial year.
30. Significant and Material Orders Passed by the Regulators or Courts
or Tribunals impacting the Going Concern status of the Company:
There has been no significant and material order passed by the
regulators or courts or tribunals impacting the going concern status
and Company's operations. All orders received by the Company during the
year are of routine in nature which have no significant / material
31. Internal Control Systems and their adequacy:
The details on Internal Control Systems and their adequacy are provided
in the Management's Discussion and Analysis which forms part of this
32. Disclosure as per the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013:
The Company has zero tolerance towards sexual harassment at the
workplace and has adopted a policy on prevention, prohibition and
redressal of sexual harassment at workplace in line with the provisions
of the Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013 and the Rules there under. As required under
law, an Internal Compliance Committee has been constituted for
reporting and conducting inquiry in to the complaints made by the
victim on the harassments at the work place. During the year 2015, the
Company has received one complaint of sexual harassment, and the same
has been duly inquired and concluded by taking appropriate action.
33. Statutory Auditors:
Pursuant to provisions of Section 139 of the Act read with the
Companies (Audit and Auditors) Rules, 2014, Messrs S R BATLIBOI &
ASSOCIATES LLP, Chartered Accountants (Firm Registration No. 101049W),
were appointed as Statutory Auditors of the Company for a term of 2
years, to hold office from the conclusion of 65th Annual General
Meeting held on May 6, 2015 until the conclusion of 67th Annual General
Meeting, subject to ratification of their appointment at every
subsequent Annual General Meeting.
Consent and certificate from them has been received to the effect that
their appointment as Statutory Auditors of the Company, if ratified at
ensuing Annual General Meeting, would be according to the terms and
conditions prescribed under Section 139 of the Act and Rules framed
A resolution seeking ratification of their appointment forms part of
the notice convening the 66th Annual General Meeting and the same is
recommended for your consideration and approval.
34. Cost Auditor:
In terms of the provisions of Section 148 of the Act read with the
Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of
Directors, on the recommendation of the Audit Committee, have appointed
Messrs Ashwin Solanki & Associates, Cost Accountant (Registration No:
100392) as Cost Auditor of the Company, for the financial year ending
December 31, 2016, on a remuneration as mentioned in the Notice
convening the 66th Annual General Meeting for conducting the audit of
the cost records maintained by the Company.
A Certificate from Messrs Ashwin Solanki & Associates, Cost Accountant
has been received to the effect that their appointment as Cost Auditor
of the Company, if made, would be in accordance with the limits
specified under Section 141 of the Act and Rules framed there under.
A resolution seeking Member's ratification for the remuneration payable
to Cost Auditor forms part of the Notice of the 66th Annual General
Meeting of the Company and same is recommended for your consideration
Cost Audit and Compliance report for the year 2014 were filed on May
27, 2015, which is within the time limit as prescribed in Companies
(Cost Audit Report) Rules, 2011.
The Board of Directors take this opportunity to thank the Company's
parent company, customers, members, suppliers, bankers, associates,
Central and State Governments and employees at all levels for their
support and co-operation extended to the Company during the year.
For and on behalf of the Board
Place : Bengaluru
Date : February 4, 2016