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ABB INDIA LTD.

09 December 2016 | 09:34

Industry >> Electric Equipment - General

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ISIN No INE117A01022 52Week High 1434 Book Value (Rs.) 141.97 Face Value 2.00
Bookclosure 26/04/2016 52Week Low 931 EPS 14.15 P/E 74.56
Market Cap. 22357.39 Cr. P/BV 7.43 Div Yield (%) 0.35 Market Lot 1.00

DIRECTOR'S REPORT

You can view full text of the latest Director's Report for the company.
Year End :2015-12 
The Directors have pleasure in presenting their Sixty Sixth Annual Report and Audited Accounts for the year ended December 31, 2015.

1. Financial Results

                                            (Rs, in Crores)

Particulars                         For the year ended

                           December 31, 2015       December 31, 2014

Profit Before Taxation                474.59                  355.21 
Less: Provision for Tax

- Current Tax                         203.71                  114.00

- Deferred Tax                        (29.00)                  12.70

Profit after Tax                      299.88                  228.51

Balance Brought 
Forward from last year                103.90                   89.48

Amount available for 
Appropriation                         403.78                  317.99 
Appropriations:

General Reserve                       150.00                  120.00

Debenture Redemption Reserve           50.00                     -

Proposed Dividend                      78.41                   78.41

Corporate Dividend Tax                 15.96                   15.68

Balance Carried Forward               109.41                  103.90

                                      403.78                  317.99
2. Dividend:

Your Directors recommend payment of a dividend at the rate of Rs, 3.70 (Rupees three and paise seventy only) per share for the year ended December 31, 2015 on 211,908,375 equity shares of Rs, 2/- each.

3. Performance Review:

The Company secured orders valued Rs, 8,100 crore in 2015 as against Rs, 7,908 crore in the previous year. Base orders from wider spectrum of customers formed a large portion with few large projects. Service led sales resulted in more comprehensive customer engagement. The order backlog at the end of the year stood at Rs, 7,946 crore providing visibility to the future revenue streams. The revenue from operations for the Company for the year 2015 stood at Rs, 8,140 crore as against Rs, 7,733 crore in the previous year, reflecting stability of operations in an uncertain market. Profit before tax was up by 34% at Rs, 475 crore in 2015 as compared to Rs, 355 crore in the previous year mainly due to efforts towards internal operational excellence, entering new market, lower material cost and extensively participating in the shift to renewable energy. Net profit after tax was up by 31% at Rs, 300 crore for the current year as compared to Rs, 229 crore in the previous year. Consequently the earnings per share for the year 2015 stood at Rs, 14.15 per share as compared to Rs, 10.78 per share in the year 2014.

For detailed analysis of the performance, please refer to the Management's Discussion and Analysis given in Annexure - A, forming part of this Report.

4. Extract of Annual Return:

As per provisions of Section 92 (3) of the Companies Act, 2013 (the Act) read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in the Form MGT-9 is given in Annexure - B, forming part of this report.

5. Board Meetings held during the year:

During the year, 8 meetings of the Board of Directors were held, which includes a meeting of Independent Directors as required under the Act and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations). The details of the meetings are furnished in the Corporate Governance Report.

6. Issue of Debentures:

As approved by the Members through Postal Ballot during August 2015, the Company has issued 600 unsecured, rated, listed, redeemable, non-convertible debentures having face value of Rs, 1,00,00,000/- (Rupees One Crore only) aggregating to Rs, 600 Crore on private placement basis under Foreign Portfolio Investment route to an identified investor, which are listed with BSE Limited. The proceeds of these debentures were used for refinancing the Company's debt.

7. Compliance on criteria of Independence by the Independent Directors:

All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that, they meet the criteria of independence as provided in Sub-Section 6 of Section 149 of the Act and also under the Listing Regulations.

8. Remuneration Policy of the Company:

The Remuneration Policy of the Company for appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company along with other related matters have been provided in the Corporate Governance Report.

As and when need arises to appoint Director, the Nomination and Remuneration Committee (NRC) of the Company will determine the criteria based on the specific requirements. NRC while recommending candidature to the Board, will take into consideration the qualification, attributes, experience and Independence of the Candidate. Director(s) appointment and remuneration will be as per NRC Policy of the Company.

A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in Annexure - C, forming part of this report.

9. Particulars of loans, guarantees or investments under Section 186 of the Act:

During the year under review, your Company has not granted any Loan, Guarantees or made Investments within the meaning of Section 186 of the Act.

10. Amount, if any, proposed to be transferred to Reserves:

The Company transferred a sum of Rs, 150 Crore towards General Reserve and Rs, 50 Crore towards Debenture Redemption Reserve during the Financial Year 2015.

11. Material changes and commitment, if any, affecting financial position of the Company from the end of Financial Year and till the date of this Report

There has been no material change and commitment, affecting the financial performance of the Company occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

12. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The particulars as prescribed under Section 134 of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are given in Annexure - D, forming part of this report.

13. Listing Agreements:

Your Company has entered into new Listing Agreements with BSE Limited and National Stock Exchange of India Limited, in compliance with Regulation 109 of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended by SEBI.

14. Risk Management Policy:

The Board of Directors has adopted a Risk Management Policy and constituted a Risk Management Committee. The Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to enterprise risk management.

The details and the process of Risk Management as implemented in the Company are provided as part of Management's Discussion and Analysis which forms part of this Report.

15. Corporate Social Responsibility (CSR) initiatives:

In accordance with the provisions of Section 135 of the Act and Rules framed there under your Company has adopted a policy for CSR and the Board has constituted a Committee for implementing the CSR activities. Composition of the Committee and other details are provided in Corporate Governance Report. Education, Access to Electricity, Health Care, Environment, skills enhancement for creating employable opportunities for the differently baled personnel, etc., are the focal area under the CSR Policy.

The Company has implemented various CSR projects directly and / or through implementing partners and the projects undertaken by the Company are in accordance with Schedule VII of the Act. The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure - E, forming part of this report.

16. Annual evaluation of Board, its Committees and Individual Directors:

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors pursuant to the requirements of the Act and the Listing Regulations.

Further, the Independent Directors, at their exclusive meeting held during the year reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations.

17. Audit Committee:

The details pertaining to composition of the Audit Committee and terms of reference are included in the Corporate Governance Report, which forms part of this Report.

18. Related Party Transactions:

The Board of Directors has adopted a policy on Related Party Transactions. The objective is to ensure proper approval, disclosure and reporting of transactions as applicable, between the Company and any of its related parties. All contracts or arrangements with related parties, entered into or modified during the financial year were at arm's length basis and in the ordinary course of the Company's business. All such contracts or arrangements were entered into only with prior approval of the Audit Committee, except transactions which qualified under Omnibus approval as permitted under law. No material contract or arrangement with related parties were entered into during the year under review. Therefore, there is no requirement to report any transaction in Form No. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. Transactions with related parties, as per requirements of Accounting Standard 18 are disclosed in the notes to accounts annexed to the financial statements. Your Company's Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Company's website at www.abb.co.in.

19. Reporting of frauds:

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and /or Board under Section 143(12) of the Act and Rules framed there under.

20. Transfer to Investor Education and Protection Fund:

As required under Section 205C of the Companies Act, 1956, the unclaimed dividend amount aggregating to Rs, 18.09 lakh lying with the Company for a period of seven years pertaining to year ended on December 31, 2007, was transferred during the year 2015, to the Investor Education and Protection Fund established by the Central Government.

21. Particulars of Employees:

The statement under Rule 5 (2) and Rule 5 (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and particulars required under Section 197 (12) of the Act are given in Annexure - F, forming part of this report.

The said Annexure shall be provided to Members on a specific request made in writing to the Company. The said information is available for inspection by the Members at the Registered Office of the Company on any working day of the Company up to the date of the 66th Annual General Meeting.

22. Directors' Responsibility Statement:

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3) (c) and 134 (5) of the Act, that:

a) in the preparation of the annual financial statements for the year ended December 31, 2015, the applicable Accounting Standards have been followed along with proper explanation relating to material departures if applicable;

b) for the financial year ended December 31, 2015, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit and Loss of the Company for the year ended December 31, 2015;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) proper internal financial controls are in place and such internal financial controls are adequate and were operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and are adequate and operating effectively.

23. Corporate Governance Report and Certificate:

As required under Regulation 34 (3) read with Schedule V (C) of the Listing Regulations a report on Corporate Governance and the certificate as required under Schedule V (E) of the Listing Regulations from Messrs V. Sreedharan & Associates, Practicing Company Secretaries, regarding compliance of conditions of Corporate Governance are given in Annexure - G and Annexure - H respectively, forming part of this report.

24. Secretarial Audit:

Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments thereto, your Company engaged the services of Messrs HBP & Co., Company Secretaries, Bengaluru, to conduct the Secretarial Audit of the Company for the financial year ended December 31, 2015. The Secretarial Audit Report in Form MR-3 is given in Annexure - I, forming part of this report.

25. Business Responsibility Report:

As required under Regulation 34 of the Listing Regulations, the Business Responsibility Report forms part of the Annual Report.

26. Whistle Blower Policy:

The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of conduct. The mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail of the mechanism.

The Whistle Blower Policy is available on Company's website.

27. Directors and Key Managerial Personnel:

Mr. Bazmi R. Husain (DIN: 00965992) resigned as Director and the Managing Director of the Company on September 2, 2015 and as per the Company's policy, he has been relieved from the services of the Company effective close of office hours on December 31, 2015. Your Directors place on record their appreciation of the valuable service rendered by Mr. Husain during his tenure as the Managing Director of the Company.

Further your Directors at their meeting held on December 11, 2015, appointed, Mr. Sanjeev Sharma (DIN: 07362344) as Director and Managing Director of the Company effective January 1, 2016.

The Board at its meeting held on October 28, 2014 appointed Mr. Frank Duggan (DIN: 02937233) as a Director in the casual vacancy caused due to the resignation of Mr. Gary Steel (DIN: 02500073). Since Mr. Gary Steel was to retire by rotation at the ensuing Annual General Meeting, Mr. Frank Duggan would also cease to hold the office of Director at ensuing Annual General Meeting, pursuant to Section 161(4) of the Act, and is eligible for reappointment as Director.

Pursuant to the Act, and Regulation 25 of the Listing Regulations, all the three Independent Directors, viz., Mr. Nasser Munjee, Mr. Darius E Udwadia and Mrs. Renu Sud Karnad were appointed at the 65th Annual General Meeting held on May 6, 2015 for a period of 5 years effective conclusion of the said meeting. Hence none of the Independent Directors is liable to retire by rotation.

Necessary resolutions relating to Directors who are seeking appointment / reappointment are included in the Notice of Annual General Meeting. The relevant details of the said Directors are given in the annexure to the Notice of the Annual General Meeting.

During the year, Mr. Amlan Datta Majumdar resigned as Chief Financial Officer of the Company and was relieved from the services effective close of office hours on March 10, 2015. Mr. T. K. Sridhar, was appointed as Chief Financial Officer of the Company effective July 23, 2015.

As on date, Mr. Sanjeev Sharma, Managing Director, Mr. B. Gururaj, Company Secretary and Mr. T.K. Sridhar, Chief Financial Officer, are the Key Managerial Personnel of the Company.

28. Deposits:

During the year under review, your Company did not accept any deposit within the meaning of the provisions of Chapter V - Acceptance of Deposits by Companies read with the Companies (Acceptance of Deposits) Rules, 2014.

29. Financial Year:

The Act requires every company to have the period April to March as its Financial Year mandatorily. Exception is however permitted to have a different period as financial year provided the Company obtains permission from the Ministry of Corporate Affairs.

Your Company is one of the key subsidiaries of ABB Group, which follows calendar year as its financial year. To support consolidation of group financial statements and audit thereof as per overall group process and timeline, it was necessary for the Company to follow the financial year as January - December. Therefore your Company intended to continue the calendar year i.e., January - December as its financial year and made an application to the Hon'ble Company Law Board, Southern Region Bench, Chennai, to retain its current financial year period instead of changing it to April - March period. The Hon'ble Company Law Board allowed the Company's application and permitted the Company to continue to have calendar year, i.e., January - December as its financial year.

30. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the Going Concern status of the Company:

There has been no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company's operations. All orders received by the Company during the year are of routine in nature which have no significant / material impact.

31. Internal Control Systems and their adequacy:

The details on Internal Control Systems and their adequacy are provided in the Management's Discussion and Analysis which forms part of this Report.

32. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. As required under law, an Internal Compliance Committee has been constituted for reporting and conducting inquiry in to the complaints made by the victim on the harassments at the work place. During the year 2015, the Company has received one complaint of sexual harassment, and the same has been duly inquired and concluded by taking appropriate action.

33. Statutory Auditors:

Pursuant to provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, Messrs S R BATLIBOI & ASSOCIATES LLP, Chartered Accountants (Firm Registration No. 101049W), were appointed as Statutory Auditors of the Company for a term of 2 years, to hold office from the conclusion of 65th Annual General Meeting held on May 6, 2015 until the conclusion of 67th Annual General Meeting, subject to ratification of their appointment at every subsequent Annual General Meeting.

Consent and certificate from them has been received to the effect that their appointment as Statutory Auditors of the Company, if ratified at ensuing Annual General Meeting, would be according to the terms and conditions prescribed under Section 139 of the Act and Rules framed there under.

A resolution seeking ratification of their appointment forms part of the notice convening the 66th Annual General Meeting and the same is recommended for your consideration and approval.

34. Cost Auditor:

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors, on the recommendation of the Audit Committee, have appointed Messrs Ashwin Solanki & Associates, Cost Accountant (Registration No: 100392) as Cost Auditor of the Company, for the financial year ending December 31, 2016, on a remuneration as mentioned in the Notice convening the 66th Annual General Meeting for conducting the audit of the cost records maintained by the Company.

A Certificate from Messrs Ashwin Solanki & Associates, Cost Accountant has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed there under.

A resolution seeking Member's ratification for the remuneration payable to Cost Auditor forms part of the Notice of the 66th Annual General Meeting of the Company and same is recommended for your consideration and approval.

Cost Audit and Compliance report for the year 2014 were filed on May 27, 2015, which is within the time limit as prescribed in Companies (Cost Audit Report) Rules, 2011.

35. Acknowledgements:

The Board of Directors take this opportunity to thank the Company's parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels for their support and co-operation extended to the Company during the year.

                                     For and on behalf of the Board

                                     Frank Duggan  

                                     Chairman 

                                     DIN: 02937233
Place : Bengaluru

Date : February 4, 2016