ABB India_ AR_2002-03

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					India

ABB Limited

Annual Report 2003
     Contents
 1   Board of Directors and Other Information
 2   5 Year Highlights
 4   Welcome to ABB
11   Notice to Members
14   Directors’ Report
33   Management’s Discussion and Analysis
37   Auditors’ Report
40   Balance Sheet, Profit and Loss Account
     and Schedules
51   Notes to the Accounts
68   Cash Flow Statement
ABB Limited
(formerly Asea Brown Boveri Limited)




Board of Directors                                Solicitors

Dinesh Paliwal, Chairman                          Crawford Bayley & Co.
Ravi Uppal, Vice Chairman and Managing Director
Peter Smits
N S Raghavan
Nasser Munjee
Umesh Prasad Singh                                Auditors
Peter Leupp
BoonKiat Sim                                      Bharat S Raut & Co.
R N Bhardwaj


Company Secretary
                                                  Registered Office and Corporate Office
B Gururaj
                                                  2nd .loor, East Wing
                                                  Khanija Bhavan
Corporate Management Committee                    49, Race Course Road
                                                  Bangalore – 560 001
Ravi Uppal
I K Sadhu
Biplab Majumder
Amresh Dhawan
K Rajagopal                                       Registrar & Share Transfer Agent
V Swamy
Bazmi Husain                                      Tata Consultancy Services
P C Rajiv                                         Park West II
Shyam Karmarkar                                   Raheja Estate , Kulupwadi Road
P P Gomes                                         Borivli (East)
                                                  Mumbai – 400 066

Bankers

ICICI Bank Limited
Canara Bank
Union Bank of India
Industrial Development Bank of India
HD.C Bank Limited
Hongkong & Shanghai Banking Corporation Limited
Standard Chartered Bank




ABB Limited, India, Annual Report 2003                                                     1
5 Year Highlights




                                                                                                                                    (Rs in Millions)
Description                                                  2003                  2002           2001              2000                1999


Sources of Funds
Share Capital                                                  423.8                423.8         498.8              414.2               414.2
Reserves                                                     5,461.6              4,539.2       3,805.4            3,478.4              3,192.2
Net Worth                                                    5,885.4              4,963.0       4,304.2            3,892.6              3,606.4
Borrowings                                                     101.0                123.7         108.0              165.6               416.3
.unds Employed                                               5,986.4              5,086.7       4,412.2            4,058.2              4,022.7


Income and Profits
Sales & Other Income                                        15,030.6             12,005.7      10,557.6            8,068.5              7,933.5
Operating Profit Before
Interest and Depreciation                                    1,722.8              1,418.9       1,105.9              911.8               751.2
Profit Before Tax                                            1,528.9              1,229.7         850.8              705.1               532.0
Tax                                                            520.0                416.2         197.5              165.0               160.0
Profit After Tax                                             1,008.9                813.5         653.3              540.1               372.0
Dividend / Dividend Tax                                        319.5                259.1         228.2              253.9               231.9
Retained Earnings                                              689.4                554.4         425.1              286.2               140.1


Other Data
Gross .ixed Assets                                           3,037.9              2,707.0       2,747.9            2,442.3              2,253.5
Debt Equity Ratio                                             0.02:1                0.02:1        0.03:1            0.04:1               0.12:1
Net Worth Per Equity Share - Rs                                138.9                117.1           99.8              94.0                 87.1
Earnings Per Equity Share - Rs                                  23.8                  19.1          15.5              13.0                  9.0
Dividend Per Equity Share - Rs                                   6.0                   6.0           5.0                5.0                 5.0
Profit After Taxes as %
to Average Net Worth                                            18.6                  17.6          15.9              14.4                  9.2



Notes :
1)       Excludes revaluation of fixed assets, revaluation reserve and extraordinary items.
2)       Above highlights include figures till 31 March, 1999, the date of demerger of Power Generation business and merger of four entities with the
         Company from 1 April, 2001.




     2                                                                                                        ABB Limited, India, Annual Report 2003
5 Year Highlights




            Revenues                              Rs. in Millions                 Profit After Tax                    Rs. in Millions




            Return On Capital Employed (%)                                        Employees & Productivity




Notes:
1) Excludes revaluation of fixed assets, revaluation reserve and extraordinary items.
2) Above highlights include figures till 31 March, 1999, the date of demerger of Power Generation business and merger of four entities
   with the Company from 1 April, 2001.




ABB Limited, India, Annual Report 2003                                                                                                   3
Welcome to ABB




ABB – a global leader                                                                                     120 years of Technology and Innovation
ABB (www.abb.com) is a global leader in power and                                                         The history of ABB goes back to the late nineteenth
automation technologies that enable utility and                                                           century and is an illustrious record of innovation and
industry customers to improve performance while                                                           technological leadership. ABB has been recognised
lowering environmental impact. The ABB Group of                                                           as a technology leader for over 120 years, since its
companies operates in around 100 countries.                                                               inception in 1883 and has a proud legacy of many
Working closely with customers, understanding their                                                       pioneering breakthroughs. ABB invests around one
business needs and local market conditions, ABB is                                                        billion USD annually in research and order related
committed to ensuring their success through                                                               development weaved into the fabric of the business
innovative products, systems, services and solutions,                                                     offering. The company has a high intensity of
combining world-class cutting-edge technologies                                                           innovation and on an average 75% of ABB’s current
and proven domain expertise with strong local                                                             business is based on products developed in the last
insight. By ensuring customer success, ABB in turn                                                        5 years, with 27% of total first filings being software
creates value for other stakeholders i.e. shareholders,                                                   related. IndustrialIT has been identified as the
employees and the communities in which it operates.                                                       common technology platform across the company.
                                                                                                          IndustrialIT enables real-time, seamless integration of
                                                                                                          plant operations and business processes across the
                                                                                                          entire value-chain based on an open architecture
                                                                                                          platform, thereby bringing greater efficiencies to
                                                                                                          customers’ operations and making them more
                                                                                                          competitive in an increasingly networked world.




120 years of Technology and Innovation
1883                                  1889                              1890                                1891                              1893                                 1901
Ludvig Fredholm establishes           Jonas Wenström invents the        Elektriska Aktiebolaget merges      Charles E.L. Brown and Walter     Asea builds the first three-phase    BBC builds the first steam
Elektriska Aktiebolaget in            three-phase system for            with Wenströms & Granströms         Boveri establish Brown Boveri &   transmission system                  turbine in Europe.
Stockholm as manufacturers of         generators, transformers and      Elektriska Kraftbolag to form       Cies in Baden, Switzerland –      in Sweden.
electrical lighting and generators.   motors.                           Allmänna Svenska Elektriska         shortly the first company to
                                                                        Aktiebolaget (ASEA)                 transmit high voltage AC power.




1960s                                 1963                              1969                                1971                              1974                                 1984
Asea builds the first nuclear         The first data transmission at    BBC develops the first gearless     BBC builds the most powerful      Asea invents one of the first        BBC generators for the
power plant in Sweden and goes        carrier frequency by BBC over a   cement drive in the world.          transformer in the world at       industrial robots. In 2002, ABB      world’s largest
on to build nine of the country’s     735-kV HV to a power station                                          1300MVA.                          becomes the first industrial         hydroelectric power station
12 reactors.                          control unit.                                                                                           supplier to deliver 100000 robots.   at Itaipu in South America.




  4                                                                                                                                             ABB Limited, India, Annual Report 2003
    A new simpler ABB
                                                                                                                      Power Technologies
    ABB has further simplified its organisational structure
    with the key objective of serving customers faster                                                                                        High-Voltage products
    and more efficiently across the value chain and
    building on its market leadership in power and
                                                                                                                                              Medium-Voltage products
    automation technologies. The Power Technologies
    division now comprises five business areas while the
    Automation Technologies division primarily has three                                                                                      Transformers
    business areas.
    ABB’s Power Technologies division serves industrial and                                                                                   Utility Automation Systems
    commercial customers, as well as electric, gas and
    water utilities, with a broad range of products, services                                                                                 Power Systems
    and solutions for power transmission and distribution.
    ABB’s Automation Technologies division offers                                                                     Automation Technologies
    products, systems and services ranging from complete
    process automation and optimisation solutions to                                                                                          Process Automation
    products like electrical machines, drives and power
    electronics, low-voltage products, instrumentation,                                                                                       Automation Products
    controls and robotics. The division serves the entire
    spectrum of process, manufacturing and consumer
    industries and is a market leader with unparalleled                                                                                       Manufacturing Automation
    domain expertise and global experience.


1932                                  1933                                1939                                1944                                   1952                                 1954
Asea builds the world’s first self-   BBC obtains a patent for turbine    BBC builds the first combustion     BBC develops the first high-           The first 400 kV transmission line   Asea supplies the first
cooling transformer and expands       rotors constructed of individual    gas turbine for generating          speed locomotive with driving          is built by Asea.                    HVDC transmission
its fan business by acquiring AB      steel disks that are welded         electricity.                        shafts fitted exclusively in bogies.                                        system in the world.
Svenska Fläktfabriken.                together.




1988                                  1990                                1997                                1999                                   2002                                 2003
Asea and BBC merge to form            Azipod is conceived to give ships   ABB sets out to create a single     ABB divests its nuclear power,         ABB is one of the first companies    ABB further simplifies its
Asea Brown Boveri Ltd – one of        more maneuverability with a         IndustrialIT architecture for       power generation and rail              to apply wireless technology for     divisional structure.
the largest electrical engineering    motor that is 360-degrees           seamless real-time integration of   businesses.                            industrial applications, enabling
companies in the world                steerable.                          business and manufacturing                                                 data to be transmitted via radio
                                                                          processes.                                                                 waves rather than a cable.




    ABB Limited, India, Annual Report 2003                                                                                                                                                                          5
Corporate Management Committee




    Sitting (L to R): Amresh Dhawan – Head-Power Technologies (Products), K Rajagopal – Chief Financial Officer, Ravi Uppal – Vice Chairman & MD,
                          Biplab Majumder – Head-Automation Technologies, Inder Sadhu – Head-Power Technologies (Systems)
                  Standing (L to R): V Swamy – Head-Building Systems, Bazmi Husain – Head-R&D Center, Peter Gomes – Head-Service,
                                         P C Rajiv – Head-Human Resources, Shyam Karmarkar – Head-Marketing.




6                                                                                                         ABB Limited, India, Annual Report 2003
ABB in India




ABB in India serves utility and industry customers
with the complete range of ABB’s global offerings.
The company has a vast installed base, extensive
local manufacturing across 8 units and a countrywide
marketing and service presence. ABB has also
developed a national network of around 400 channel         Bangalore facility                     Nashik facility
partners, to ensure deeper market penetration.
Besides catering to India’s domestic market, ABB
India is also playing an increasing role in the Group’s
regional and global operations and is today
recognised as one of ABB’s key growth engines.             Vadodara facility                      Vadodara – Transformers
ABB India’s state-of-the-art manufacturing facilities at
Vadodara and Nashik are global sourcing bases for
72.5 kV outdoor and indoor circuit breakers and
11 to 40.5 kV outdoor vacuum/SF6 circuit breakers
as well as magnetic actuators and indoor HPA SF6
breakers. Several other products and components            Faridabad – Instrumentation facility   Faridabad – Motors facility
manufactured in India are also increasingly being
exported across the world.
                                                                                                  n   3,200 Employees
The development of South Asian markets, being                                                     n   8 Manufacturing Units
driven from India, has also made good progress.                                                   n   26 Marketing Offices
ABB India is also working on projects in the West                                                 n   8 Service Centres
Asian region including Syria. In addition to product                                              n   3 Training Centres
exports and executing overseas projects, ABB India
is leveraging its ‘people competence’ and ‘domain
expertise’ to offer services like design, engineering,
commissioning etc. across geographical borders. In
fact, ABB India is recognised as the Asian centre of
excellence for the metals and cement business.




ABB Limited, India, Annual Report 2003                                                                                          7
Power Technologies




ABB’s Power Technologies division offers electric,
gas and water utilities as well as industrial and
commercial customers a wide range of products,
system and service solutions for power transmission
and distribution.
The offering encompasses a wide spectrum of
products across the entire voltage range, including
outdoor and indoor circuit breakers, air and gas
insulated switchgear, disconnectors, capacitor banks,
reactive power compensators, power and distribution
transformers as well as instrument transformers.
ABB provides cutting-edge solutions like High Voltage
Direct Current (HVDC) and Flexible AC Transmission
System (FACTS) that facilitate higher capacity
utilisation and efficient transmission of power while
minimising the risk of cascaded line tripping. ABB also
offers turnkey solutions for substations, distribution
automation and network management like Supervisory
Control & Data Acquisition (SCADA), Wide Area
Protection (WAP) and a host of technologies that
reduce T&D losses, increase uptime and improve the
overall reliability of the grid.
ABB has pioneered several technologies in India
including the introduction of self-blast SF6
technology, first High Voltage Direct Current (HVDC),
first Static Var Compensation (SVC), first 400 kV
switchyard, India’s first IPP, turnkey substation for the
first barge mounted IPP and many more. In 2003, the
company commissioned India’s first APDRP project
at Bijapur, Karnataka and also received its single
largest export order till date from PEEGT, Syria for the
design and supply of six substations. Another
pioneering breakthrough was an order for the first
FACTS project in the country for PGCIL’s Raipur-
Rourkela line. In addition to expansion of existing
capacities during the year, new world-class
manufacturing lines were established for 400 kV
power transformers, HV bushings, Ring Main Units
(RMUs) and medium voltage outdoor breakers.


 8                                                          ABB Limited, India, Annual Report 2003
Automation Technologies




The Automation Technologies division serves
customers across the industry spectrum be it
process, manufacturing or consumer industries and
even buildings & infrastructure. This includes metals
(ferrous & non-ferrous), pulp & paper, cement,
automotive, petroleum, chemicals & petrochemicals,
pharma & life sciences, marine, mining & minerals
and many more. ABB also offers a comprehensive
automation technology product portfolio
encompassing motors, drives, power electronics,
robotics, control, instrumentation & analytics and a
complete range of low voltage products. All the
above are supported by world-class service backup
and asset management solutions to help customers
gain higher efficiencies and maintain the highest
standards of competitiveness. Unparalleled domain
expertise backed by cutting-edge technologies and
global experience make ABB a clear market leader in
the automation arena.
Project successes during the year included large
projects for industry leaders across the spectrum. On
the products front ABB India increased both market
penetration and reach as part of its strategic thrust.
In addition to expanding the channel partner network
to around 400, the company led the way in terms of
expanding its e-commerce business. The range of
offering was expanded and several new products
were introduced during the year including MCBs,
ELCBs, Distribution Boards, other LV products and
the new generation of Drives and special application
motors. This range expansion is expected to
continue as ABB India aims to offer the complete
range of ABB's global product portfolio.




ABB Limited, India, Annual Report 2003                   9
Sustainability




As part of its triple bottom line approach, ABB strives       In addition to the ongoing improvements and the
to balance economic, environmental and social                 midday meal scheme at the Government Primary
objectives as an integral part of its business activities.    School at Peenya, Bangalore, ABB India has taken
These encompass initiatives comprising the                    on similar projects at Haliyal – a district in North
development of eco-efficient products and systems,            Karnataka, and Vizag in Andhra Pradesh, by
adherence to environmental laws and regulations and           adopting schools in these districts. The projects are
contribution to social development, to name a few.            aimed at improving the infrastructure of the schools.
This is translated into active participation in local and     MoUs have been signed with the governments and
regional initiatives to improve the quality of life for the   work towards infrastructure improvement has already
communities in which the company operates.                    begun at the school in Haliyal, where the existing
                                                              building is several decades old!
All manufacturing units in India maintained their ISO
14001 certification and a wide range of environmental         The ABB India Foundation® has been set up to
management projects are being implemented across              facilitate the implementation of the company’s
the country, ranging from recycling and conservation          social, community and environmental initiatives
of natural resources to greening initiatives. The             and ensure continuity of efforts, thereby giving
systems for the control and monitoring of pollutants          sustainability its distinct identity within the business
at our manufacturing locations meet all major                 framework.
environmental standards and legislation.
ABB is placing an increased focus on the
implementation of occupational health and safety
measures across its global operations. Company
policy clearly specifies the need for “a safe and
healthy working environment, with adequate steps
to prevent accidents by taking precautions and
minimising hazards”. ABB has emphasized that
there will be no compromise on health and safety at
work and a ‘zero tolerance’ policy will be followed.
The company crossed another milestone when its
Faridabad motors unit became the first Indian facility at
ABB to be certified under the Integrated Management
System (IMS). The IMS is a triple management system
under the ‘umbrella’ of Corporate Quality (ISO
9001:2000), Environmental (ISO 14001:1996) and
Occupational Health & Safety Management Systems
(AS 4801:2000). Few companies in the country have
received this stamp of quality - an endorsement of not
just product quality but also environmental and
occupational health and safety.



10                                                                                     ABB Limited, India, Annual Report 2003
Notice to Members




NOTICE is hereby given that the .I.TY-.OURTH ANNUAL GENERAL                       Mr. A Ramamurthy and who holds office up to the date of this
MEETING of the Members of ABB Limited will be held at Chowdiah                    Annual General Meeting, pursuant to Section 262 of the
Memorial Hall, G.D. Park Extension, Vyalikaval, Bangalore 560 003 on              Companies Act, 1956 and in respect of whom the Company has
Tuesday, the 27 April, 2004 at 3.00 p.m. (IST) to transact the following          received a notice in writing from a member proposing his
business :                                                                        candidature for the office of Director, be and is hereby appointed
                                                                                  as a Director of the Company, liable to retire by rotation.”
Ordinary Business


1.   To receive, consider and adopt the Balance Sheet as at                            By Order of the Board
     31 December, 2003 and the Profit and Loss Account for the year                    .or ABB Limited
     ended on that date and the Reports of the Directors and the
     Auditors thereon.                                                                 B Gururaj
                                                                                       Assistant Vice President &
                                                                                       Company Secretary
2.   To declare a dividend on equity shares.

                                                                                       Mumbai
3.   To appoint a Director in place of Mr. Peter Smits, who retires by
                                                                                       27 January, 2004
     rotation at this Annual General Meeting, and being eligible, offers
     himself for re-election.
                                                                                       Registered Office:
                                                                                       2nd .loor, East Wing,
4.   To appoint a Director in place of Mr. Nasser Munjee, who retires by
                                                                                       Khanija Bhavan,
     rotation at this Annual General Meeting, and being eligible, offers
                                                                                       49, Race Course Road,
     himself for re-election.
                                                                                       Bangalore – 560 001.

Special Business
                                                                             Notes :

5.   To consider and if thought fit, to pass with or without
                                                                             1.   The relative Explanatory Statement pursuant to Section 173(2) of
     modification(s), the following resolution as an Ordinary Resolution :        the Companies Act, 1956, setting out the material facts in respect
                                                                                  of business under items No. 5 & 6 is annexed hereto.
     “RESOLVED THAT M/s. S.R. Batliboi & Co., Chartered
     Accountants, be and are hereby appointed as the Auditors of the         2.   A MEMBER ENTITLED TO ATTEND AND VOTE AT THE
     Company who shall hold office from the conclusion of this Annual             MEETING IS ENTITLED TO APPOINT ONE OR MORE
     General Meeting until the conclusion of the next Annual General              PROXY(IES) TO ATTEND AND VOTE INSTEAD O. HIMSEL./
     Meeting of the Company on such remuneration as may be fixed                  HERSEL. AND A PROXY NEED NOT BE A MEMBER O. THE
     by the Board of Directors of the Company, in place of                        COMPANY. PROXIES IN ORDER TO BE E..ECTIVE MUST BE
                                                                                  RECEIVED AT THE COMPANY’S REGISTERED O..ICE NOT
     M/s. Bharat S Raut & Co., Chartered Accountants, the retiring
                                                                                  LATER THAN .ORTY–EIGHT HOURS BE.ORE THE
     Auditors, who have requested not to consider their
                                                                                  COMMENCEMENT O. THE MEETING.
     re-appointment.”

                                                                             3.   The members should bring the duly filled in attendance slips sent
6.   To consider and if thought fit, to pass with or without                      herewith for attending the meeting.
     modification(s), the following resolution as an Ordinary Resolution :
                                                                             4.   The result of the Postal Ballot to be conducted pursuant to Section
     “RESOLVED THAT Mr. R.N. Bhardwaj who was appointed as a                      192-A of the Companies Act, 1956, read with the Companies
     Director of the Company by the Board of Directors, pursuant to               (Passing of the Resolution by Postal Ballot) Rules 2001, seeking
     Article 151 of the Articles of Association of the Company to fill in         the consent of the members under Section 293 (1) (a) of the said
     the casual vacancy on the Board, caused due to the demise of                 Act will be announced at the meeting.




ABB Limited, India, Annual Report 2003                                                                                                             11
5.   The Register of Members and the Share Transfer Books of the                Education and Protection .und, established under Section 205-C
     Company will remain closed from Thursday, the 15 April, 2004               of the said Act. Members, who have not yet encashed the
     to Tuesday, the 27 April, 2004 (both days inclusive) for the               dividend warrant(s) are requested to forward their claims to the
                                                                                Company’s Registrar and Share Transfer Agents. It may be noted
     purpose of payment of dividend.
                                                                                that once the unclaimed dividend is transferred to the
                                                                                Investor Education and Protection Fund as above, no claim
6.   The dividend, as recommended by the Board, if declared at the              shall lie with the Company in respect of such amount.
     Annual General Meeting will be paid on or after Thursday, the
     29 April, 2004 to those members whose names stand registered         8.    Members are requested to intimate, indicating their folio number,
     on the Company’s Register of Members :                                     the changes, if any, of their registered addresses to the Company
                                                                                or its Registrar and Share Transfer Agent, viz. M/s. Tata
     a)   as Beneficial Owners as at the end of business on                     Consultancy Services (Unit : ABB Limited), Park West II,
                                                                                Raheja Estate, Kulupwadi Road, Borivli (East), Mumbai –
          Wednesday, the 14 April, 2004 as per the list to be furnished
                                                                                400 066 or to their respective Depository Participant (DP) in case
          by National Securities Depository Ltd. (NSDL) and Central
                                                                                the shares are held in demat form.
          Depository Services (India) Ltd. (CDSL) in respect of shares
          held in demat form.                                             9.    Members holding shares in physical form can avail of the
                                                                                nomination facility by filing .orm 2B (in duplicate) with the
     b)   as Members in the Register of Members of the Company
                                                                                Company or its Registrar & Share Transfer Agents which will be
          after giving effect to valid share transfers lodged with the
                                                                                made available on request and in case of shares held in demat
          Company, on or before Wednesday, the 14 April, 2004.                  form the nomination has to be lodged with their Depository
                                                                                Participant.
7.   Members are requested to note that dividends not encashed or
     claimed within seven years from the date of transfer to the          10.   The particulars of Directors retiring by rotation and/or eligible for re-
     Company’s Unpaid Dividend Account, will, as per Section 205-A              appointment are given in the Corporate Governance Section of
     of the Companies Act, 1956, be transferred to the Investor                 this Annual Report.




12                                                                                                           ABB Limited, India, Annual Report 2003
Annexure to Notice
Explanatory Statement under Section 173(2) of the Companies Act, 1956.




Item No. 5                                                                  General Meeting, Mr. R N Bhardwaj would also cease to hold office at
                                                                            this meeting, pursuant to Section 262 of the Companies Act, 1956.
M/s. Bharat S Raut & Co., Chartered Accountants are the current
auditors of the Company. Their term as auditors expire at the               The Company has received notice under Section 257 of the Companies
conclusion of the ensuing Annual General Meeting (AGM) and they             Act, 1956, alongwith the deposit of Rs. 500/- from a member, proposing
have requested not to consider re-appointment at the ensuing AGM of         the candidature of Mr. R N Bhardwaj for the office of Director.
the Company.
                                                                            The Board considers that his association as a Director will be beneficial
M/s. Ernst & Young are the auditors of ABB Group globally and hence, it     and in the interest of the Company.
would be beneficial to the Company if M/s. S R Batliboi & Co.,
Chartered Accountants, their Associates in India, are appointed as          The Directors recommend the ordinary resolution for your approval.
auditors of the Company.
                                                                            Except Mr. R N Bhardwaj, none of the other Directors is, in any way,
The Company has obtained a written certificate under the provisions of      concerned or interested in the said resolution.
Section 224(1-B) of the Companies Act, 1956, from M/s. S R Batliboi &
Co., Chartered Accountants stating that their appointment, if made,
would be in accordance with the limits prescribed by the said Section.          By Order of the Board
                                                                                .or ABB Limited
The said proposal has been considered by the Board of Directors and it
recommends the Ordinary Resolution for your approval.                           B Gururaj
                                                                                Assistant Vice President &
None of the Directors is, in any way, concerned or interested in the said       Company Secretary
resolution.
                                                                                Mumbai
Item No. 6                                                                      27 January, 2004.

Mr. R.N. Bhardwaj, was appointed as a Director by the Board in its              Registered Office:
meeting held on 27 January, 2004, pursuant to Article 151 of the Articles       2nd .loor, East Wing,
of Association of the Company, to fill in the casual vacancy caused on          Khanija Bhavan,
the board due to the demise of Mr. A Ramamurthy. Since                          49, Race Course Road,
Mr. A Ramamurthy was to retire by rotation at the ensuing Annual                Bangalore – 560 001




ABB Limited, India, Annual Report 2003                                                                                                             13
Directors’ Report




The Directors have pleasure in presenting their .ifty-fourth Annual Report and Audited Accounts for the year ended 31 December, 2003.


Financial Results

                                                                                                                             (Rs in Thousands)
                                                                                                            For the year             .or the year
                                                                                                              ended 31                 ended 31
                                                                                                         December, 2003        December, 2002


Profit Before Tax and Extraordinary Item                                                                        1,528,927               1,229,682

Extraordinary Item – Profit on sale of Undertaking                                                               233,008                 158,259

Profit Before Taxation                                                                                          1,761,935               1,387,941

Less: Provision for Tax

     - Current Tax                                                                                               524,000                 405,000

     - Deferred Tax                                                                                                (4,000)                11,200

Profit After Tax                                                                                                1,241,935                971,741

Less: Transfer to .oreign Projects Reserve Account                                                                  2,500                  1,000

Add : Reversal of Corporate Dividend Tax provided                                                                       –                 21,123

Balance Brought .orward from last year                                                                           258,391                 245,630

Amount available for Appropriation                                                                              1,497,826               1,237,494



Appropriations

General Reserve                                                                                                  900,000                 720,000

Dividend Paid – Preference Shares                                                                                       –                  4,813

Proposed Dividend – Equity Shares                                                                                254,290                 254,290

Corporate Dividend Tax                                                                                             32,581                      –

Corporate Dividend Tax - 2002                                                                                      32,581                      –

Balance Carried .orward                                                                                          278,374                 258,391

                                                                                                                1,497,826               1,237,494




14                                                                                                        ABB Limited, India, Annual Report 2003
Dividend                                                                     Transfer to the Investor Education and Protection Fund

The Directors recommend payment of a dividend at the rate of Rs 6.00         In terms of Section 205A and 205C of the Companies Act, 1956,
(Previous year Rs 6.00) per equity share for the year ended                  following amounts lying with the Company as unclaimed for a period of
31 December, 2003 on 42,381,675 equity shares of Rs 10 each.                 seven years from the date they became due for payment were
                                                                             transferred during the year to the Investor Education and Protection
Performance Review                                                           .und.

Total orders received during the year at Rs 17,054 million were 31%
                                                                             1.    Unclaimed .ixed Deposits                  Rs      50,000
higher compared to Rs 13,050 million in the previous year.
                                                                             2.    Interest on Cumulative
Order backlog at the end of 2003 increased to Rs 10,710 million
                                                                                   .ixed Deposits                            Rs       4,442
compared to Rs 8,794 million at the end of the previous year.
                                                                             3.    Unclaimed Dividends                       Rs    416,234
Sales and other income for the year was 25% higher at Rs 15,031
million compared to Rs 12,006 million in the previous year.                  Fixed Deposits


Profit before tax and extraordinary item was significantly higher at Rs      A fixed deposit of Rs 6,000 due for repayment before 31 December,
1,529 million compared to Rs 1,230 million in the previous year. Growth      2003 is not yet claimed by the depositor till the date of this report. The
in profit was mainly attributable to volume growth, higher interest income   Company has stopped accepting fixed deposits in 1998.
and focused control over overheads.
                                                                             Conservation of Energy, Technology Absorption, Foreign
Capital gain on sale of Metering business was Rs 233 million. Profit after   Exchange Earnings and Outgo
tax was 28% higher at Rs 1,242 million compared to Rs 972 million in
the previous year.                                                           The particulars as prescribed under sub-section (1)(e) of Section 217 of
                                                                             the Companies Act, 1956, read with the Companies (Disclosure of
.or detailed analysis of the performance, please refer to management’s       Particulars in the Report of Board of Directors) Rules, 1988, are given in
discussion and analysis section of the annual report.                        Annexure – A, forming part of this report.

Divestment of Business                                                       Environment Compliance and Safety

As approved by the shareholders earlier, the Company has divested its        The Company has in place a system for controlling and monitoring
Metering business to Elster Metering Private Limited on 1 April, 2003.       pollutants at all factories complying with environmental standards and
Capital gain of 233 million has been booked by the Company on gross          legislation. All the manufacturing units of the Company have received
proceed of Rs 407 million from the divestment. The Company has               certificates for ISO 14001 (EMS). The Company’s Electric Motor factory
invested Rs 310 million in specified assets as per the provisions of         at .aridabad has been awarded OHSAS 18001 certification for the
Section 54EC of the Income-tax Act, 1961 and accordingly no tax is           health and safety system. The Company has targeted to have all its
payable on this capital gain.                                                manufacturing units certified under OHSAS 18001 during the year 2004.

Change of Name and Registered Office of the Company
                                                                             Particulars of Employees

On receipt of the consent of the shareholders and on completion of           The statement under sub-section (2A) of Section 217 of the Companies
other formalities, the name of the Company has changed from Asea             Act, 1956, read with the Companies (Particulars of Employees) Rules,
Brown Boveri Limited to ABB Limited with effect from 16 April, 2003 and      1975, as amended, and forming part of this report is given in the
the Registered Office of the Company has shifted from Mumbai to              Annexure - B.
Bangalore with effect from 27 November, 2003.




ABB Limited, India, Annual Report 2003                                                                                                                    15
Directors’ Responsibility Statement                                             Mr. Peter Smits and Mr. Nasser Munjee, retire as director by rotation at
                                                                                the ensuing Annual General Meeting and being eligible, offers themselves
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the
                                                                                for re-appointment. The particulars of Directors retiring by rotation are
Directors to the best of their knowledge and belief confirm that :
                                                                                given in the Corporate Governance section of this report.
i.     in the preparation of the annual accounts, the applicable
                                                                                Reconstitution of Committees of the Board
       accounting standards have been followed by the Company;

ii.    appropriate accounting policies have been selected and applied           On demise of Mr. A Ramamurthy, Mr. N S Raghavan was appointed as a
       consistently and such judgments and estimates have been made             member of Audit Committee with effect from 6 March, 2003. Mr. Umesh
       that are reasonable and prudent so as to give a true and fair view       Prasad Singh was appointed as a Chairman of the Share Transfer and
       of the state of affairs of the Company as at 31 December, 2003           Investors’ Grievance Committee with effect from 10 April, 2003. Details
       and of the profit of the Company for the year ended on that date;        about the various Committees of the Board of Directors is provided in the
                                                                                Corporate Governance section of this report.
iii.   proper and sufficient care has been taken for the maintenance of
       adequate accounting records in accordance with the provisions of         Auditors
       the Companies Act, 1956, for safeguarding the assets of the
       Company and for preventing and detecting fraud and other                 The Company’s Auditors M/s. Bharat S Raut & Co., who hold office upto
       irregularities; and                                                      the conclusion of the ensuing Annual General Meeting, have requested
                                                                                the Company not to consider their re-appointment as Auditors at the
iv.    the annual accounts have been prepared on a going concern                ensuing Annual General Meeting.
       basis.
                                                                                M/s. Ernst & Young are the Auditors of the ABB group worldwide and
Corporate Governance
                                                                                M/s. S R Batliboi & Co., Chartered Accountants, are Member firm of
Pursuant to clause 49 of the listing agreement, a report on corporate           Ernst & Young Global in India. Your Directors consider it to be in the
governance and a certificate from the auditors of the Company is given in the   interest of the Company and recommend the appointment of M/s. S R
Annexure – C and Annexure – D respectively, which forms part of this report.    Batliboi & Co., as Auditors of the Company at the ensuing Annual
                                                                                General Meeting. The Company has received requisite certificate
Board of Directors                                                              pursuant to Section 224 (1B) of the Companies Act, 1956 from M/s. S R
                                                                                Batliboi & Co. regarding their eligibility for appointment as Auditors of the
Consequent to reorganisation of responsibilities at the ABB Group level,
                                                                                Company.
Mr. Peter Smits relinquished the Chairmanship of the Company effective
27 January, 2004. He has however agreed to continue as a Director of
the Company. The Board of Directors at its meeting held on 27 January,
                                                                                                                                       .or and on behalf of
2004 appointed Mr. Dinesh Paliwal , Director, as the Chairman of the
                                                                                                                                       the Board of Directors
Company in place of Mr. Peter Smits.

The Board at its meeting held on 27 January, 2004 appointed Mr. R N
Bhardwaj, as a Director of the Company in the vacancy caused due to
the demise of Mr. A Ramamurthy.                                                                                                        Dinesh Paliwal
                                                                                                                                       Chairman
Mr. Bhardwaj shall hold office up to the ensuing Annual General Meeting
and his directorship thereafter is subject to the approval of the                                                                      Mumbai
shareholders at the said Annual General Meeting.                                                                                       27 January, 2004




 16                                                                                                                 ABB Limited, India, Annual Report 2003
Annexure - A to Directors’ Report




Conservation of Energy, Technology Absorption, Foreign                                compensator-STATCON improvements and upgrades,
Exchange Earnings and Outgo - Companies (Disclosure of                                420 current transformer, transformer bushings, standalone version
particulars in the Report of Board of Directors) Rules, 1988.                         of NSK 5 V.T modem, fixed contact and earth switch for 72.5 kV
                                                                                      indoor circuit breaker, series capacitors in higher kVAR ratings,
(A)   Conservation of energy                                                          substation earthing design using finite element techniques,
                                                                                      substation location optimisation in distribution systems, 420 kV
(a)   Energy conservation measures taken during the year                              isolators and seismic design for isolator/circuit breaker using .EM
                                                                                      techniques.
      Area of work during the year included upgrade of old ovens with
      the new low power alternatives, installation of ambiator based air        (2)   Benefits derived as a result of the above R&D
      cooling plants and solar heating systems. Energy audit at Vadodara
      and Andheri factories was carried out. Training programmes were                 The benefits to the Company resulting from R&D activities is
      conducted to increase awareness on energy saving.                               manifold. The Company absorbed new and upcoming global
                                                                                      technologies, which resulted in increased technical base.
(b)   Proposals being implemented for reduction of
      consumption                                                                     Benefits have been reflected also in terms of

      Proposed areas of work include power factor improvement up to                   l    Improvement of product reliability
      0.99, selection of energy efficient tube lights and plants and
                                                                                      l    Reduction in material cost
      machinery, stoppage of air leakages, solar heating systems,
      reflow ovens, wave soldering machines, compressed air system                    l    Adaptation of imported design to suit local markets
      etc.
                                                                                      l    Lower cycle time for manufacturing

(c)   Impact of measures (a) and (b) above for reduction of
                                                                                (3)   Future plan of action
      energy consumption and consequent impact on cost of
      production of goods                                                             Efforts will be made by integrating R&D with business needs for
                                                                                      offering better value added products and services for our
      Total energy saving is estimated at around 184,000 kWH of
                                                                                      customers. The areas of efforts include:
      energy per annum. This saving, however, has no appreciable
      impact on cost of goods, as the Company’s production processes                  Motor protection relay SPAM150 variant with non-volatile memory,
      are not energy intensive.                                                       range extension of time lag relays for railways, super efficient
                                                                                      series of motors for textile industries, flame proof motors in new
(B)   Technology absorption
                                                                                      frames, high output series motors for compressor applications,
                                                                                      500 kW/4P M2BA400XL wind turbine generator, single phase
(a)   Research and Development (R&D)
                                                                                      VCB for railways, new 12 kV / 25 kA Indoor VCB, 12 kV / 50 kA

(1)   Specific areas in which R&D is carried out by the                               S.6 circuit breaker, 12 kV air break load switch, 66 and 132 kV

      Company                                                                         transformer bushings, dry type EMU for CVT, all ranges in grading
                                                                                      capacitor, 300-400 VA PT for EMU of CVT, filter for PLCC in
      R&D effort is carried out in almost all the products and processes,             HVDC application, speech multiplexer in PLCC, economic
      specifically, in the major areas of restricted earth fault relays, time         designs for HVDC capacitors, Thyristor Switched Capacitor
      lag relays for railways, trip circuit supervision relays, wind turbine          (TSC), dynamic reactive power compensator STATCON for
      generators, variable speed motors with tacho mounting for                       railways, higher rating STATCONs, improvements in LV distribution
      cranes, variable speed separately cooled motors for centrifuge,                 quality and efficiency, optimised network planning for overhead
      12kV pole mounted capacitor switch, 12kV ring main unit,                        and underground distribution systems, and dynamic stability
      switchgear cubicles, controller for PMCS, dynamic reactive power                studies of large power systems.




ABB Limited, India, Annual Report 2003                                                                                                                     17
(4)    Expenditure on R&D                                                    (iii)   Product development

                                                         Rs in Thousands             Important products developed were IMB 420 CT, wind turbine
                                                                                     generator 250/60 kW, increased safety motors fed through VSD
       i)     Capital                                                 165            in frame IM2BA355, time lag relays of type SSX-QTD 105/106,
                                                                                     SRX-Q48, trip circuit supervision relay TCS/RXTCS, 12 kV pole
       ii)    Revenue                                              43,420
                                                                                     mounted capacitor switch, 12 kV ring main unit, indoor VCB with
                                                                                     local switchgear cubicle and local vacuum interrupters, sequential
       iii)   Total                                                43,585
                                                                                     event recorder type 1425, PLCC version of EPAX.

       iv)    Total R&D expenditure as a
                                                                             (iv)    Import substitution
              percentage of turnover                                  0.29

(b)    Technology absorption, adaptation and innovation                              Import substitution was carried out for transformer components,
                                                                                     sequential event recorder system, motors for ESH mechanism,
(1)    Efforts made towards technology absorption, adaptation                        12 kV/25A vacuum interrupters, 12 kV/40 kA bushings,
       and innovation                                                                12 kV/40 kA tulip contacts.


       Extensive training and skill building exercises were conducted in-    (3)     Imported Technology (imported during last five years)
       house and at collaborators’ end to improve design, development,
       production, commissioning and servicing. Some of them are:            (i)     Technology imported

       IMB 420 CT, failure analysis and design review of PSU rocker                  ED. SK1 36 to 72.5kV                                          1999
       mechanism, type testing of relays as per IEC, indigenous
       component for relays, development of the components for high                  Switch fuses 200 Amps to
       and medium voltage circuit breakers, PLCC version of EPAX,                    800 Amps                                                      1999
       sequential event logger, introduction of BLK222 mechanism for
       145kV CB, 420kV CB for HVDC application, components for                       Magnetic actuator Type A2
       traction transformers, 400kV series and HVDC capacitors, low                  for circuit breakers up to 36kV                               2000
       voltage (CLMD) capacitors, and improvements in instrument
       transformer first pass yields.                                                Medium voltage air insulated
                                                                                     switchboard type UNISA.E                                      2000
(2)    Benefits derived as a result of above efforts
                                                                                     400kV Power Transformer                                       2002

(i)    Product improvement                                                           High voltage circuit breakers
                                                                                     (36kV to 420kV)                                               2003
       As a result of the above efforts, product quality, performance and
       reliability have improved.                                                    Instrument transformers
                                                                                     (36kV to 420kV all types)                                     2003
(ii)   Cost reduction
                                                                                     Miniature circuit breakers                                    2003
       Substantial cost reduction has been achieved through design
                                                                                     Power capacitor units and Banks                               2003
       changes, standardization of components, indigenisation of
       components and developments in motors, PLCC associated                        HT Motors                                                     2003
       equipments, transformers, relay and switchgear cubicle as well as
       high value components.                                                        LV Capacitors                                                 2003




 18                                                                                                               ABB Limited, India, Annual Report 2003
(ii)   Has technology been fully absorbed?                                         during the year. With continued thrust to export, it is expected that
                                                                                   exports volumes will further grow in coming years.
       Yes, except in the case of MCB, HT Motors and LV Capacitors.
                                                                             (b)   Total foreign exchange used and earned
(C)    Foreign exchange earnings and outgo
                                                                                                                                     (Rs in Thousands)
(a)    Activities related to Exports; initiative taken to increase
       exports; development of new export markets for products                     a)    .oreign Exchange earned
       and services; export plans                                                        (including deemed exports)                          3,657,133
       There had been significant growth in exports during the year.
                                                                                   b)    .oreign Exchange used                               4,005,922
       Orders received and revenues grew by 75% and 230%
       respectively. Composition of exports at 20% of the total revenues
       of the Company has also increased significantly. During the year
       Company received a single largest export order till date, valued at
       Rs 1,680 million from Public Establishment of Electricity for
       Generation & Transmission, Syria for design and supply for six                                                          .or and on behalf of the
       substations. Several orders were received for process automation                                                        Board of Directors
       solutions for steel and cement industries from China, Morocco,
       Turkey and Bangladesh. .or high voltage products orders were
       received from new countries like Morocco, Montenegro, Chile,                                                            Dinesh Paliwal
       Uganda, Portugal, Russia, Colombia and Guatemala. Good                                                                  Chairman
       responses have been received for medium voltage outdoor
       breakers exported to South Asia, South East Asia, China and
       Latin America. To increase exports in neighboring countries,                                                            Mumbai
       export liaison offices have been opened at Colombo and Dhaka                                                            27 January, 2004




ABB Limited, India, Annual Report 2003                                                                                                               19
Annexure - B to Directors’ Report




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 the Directors’
Report for the year ended 31 December, 2003

Name of the               Designation/                      Remuneration       Qualification            Expe-     Date of            Age
                                                                                                                                                                   Previous Employment
Employee                  Nature of Duties                     Received                                  rience   Commen-          (Years)
                                                                    (Rs)                                (Years)   cement of                         Name of the Company              Designation
                                                                                                                  Employment

Majumder Biplab           Sr. Vice President - Automation      2,926,553       M. Tech. (Chem.)           34      10/02/78           55             Chemical & Metallurgical         Process Engineer
                          Technology Division                                                                                                       Co. Pvt. Ltd.
Sadhu I.K.                Executive Director - Corporate       2,705,278       B. Sc. (Engg.)             39      01/02/70           59             B.H.E.L                          Commercial Engineer
                          Affairs and Power Technology -
                          System Division
Uppal Ravi                Vice Chairman and                    6,181,453       B. Tech. (Electrical &     29      01/10/01           51             Volvo India Pvt. Ltd.            Managing Director
                          Managing Director                                    Electronics), M.B.A.
Chande AG *               Workman                                610,349       SSC                        20      01/05/83           43             —                                —
Harijan M.J. *            Supervisory Staff                      341,540       10th Std                   38      02/12/65           57             —                                —
Ingle P.G. *              Workman                                530,482       10th Std                   35      05/09/67           56             —                                —
Nai C.A. *                Workman                                530,777       10th Std                   35      04/11/67           56             —                                —
Parmar A.M. *             Workman                                382,627       10th Std                   24      01/12/78           57             —                                —
Parmar S.B. *             Workman                                445,144       10th Std                   37      24/10/66           56             —                                —
Parvathy *                Staff                                  562,121       B.A.                       13      01/02/90           39             —                                —
Patanwadia T.B. *         Workman                                515,553       —                          28      09/09/74           55             —                                —
Patawadia M. *            Workman                                423,832       10th Std                   25      01/03/78           56             —                                —
Patel A.M. *              Workman                                535,413       10th Std                   33      06/08/70           56             —                                —
Patel V. I. *             Workman                                486,756       10th Std                   26      01/01/77           56             —                                —
Pathan Y.N. *             Workman                                520,814       10th Std                   35      11/04/68           56             —                                —
Prajapati D.G. *          Workman                                474,077       SSLC                       32      18/03/71           56             —                                —
Prajapati M.N. *          Workman                                538,137       10th Std                   30      13/06/73           56             —                                —
Rami M.T. *               Workman                                479,954       SSLC, NCVT-ITI             32      04/09/70           56             —                                —
Royal X *                 Supervisory Staff                      421,905       10th Std                   24      14/08/79           57             —                                —
Shaikh S.I. *             Workman                                549,080       10th Std                   26      01/01/77           56             —                                —
Shirke G.M. *             Workman                                452,847       10th Std                   35      04/11/67           56             —                                —
Solanki M.A. *            Workman                                294,496       10th Std                   24      03/08/78           57             —                                —
Yadav S.D. *              Workman                                341,994       10th Std                   32      16/08/71           57             —                                —


* Voluntary Retirement Cases


Notes :

(1)   Nature of employment is contractual for all employees. Other terms and conditions are as per Company’s Rules.

(2)   None of the above employee is related to any of the Directors of the Company.

(3)   Remuneration received includes Salary, Bonus, Performance Incentive, House Rent Allowance, Privilege Leave encashment, Personal Allowance, Overtime, Value of rent free accommodation, Contribution to
      Providend .und, Superannuation, Health Insurance Premium, Personal Accident Insurance, Voluntary Retirement Compensation, Leave Travel Assistance, Medical Assistance and Company’s Car perquisites
      evaluated in accordance with the Income-tax Rules as applicable.




                                                                                                                                                                    .or and on behalf of the Board of Directors



Mumbai                                                                                                                                                                                          Dinesh Paliwal
27 January, 2004                                                                                                                                                                                    Chairman




 20                                                                                                                                                   ABB Limited, India, Annual Report 2003
Annexure - C to Directors’ Report




Report on Corporate Governance

(A)   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 financial 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.

(B)   Board of Directors

      (i)    The composition of the Board of Directors as at 31 December, 2003 is as follows :


              Sr.                                                    Executive/                             No. of other
              No.       Name of Director                             Non-Executive
                                                                                                     Directorships       Committee
                                                                                                                        memberships
              1         Mr. Peter Smits (Chairman)                   Non-Executive                          NIL               NIL
              2         Mr. Ravi Uppal (Vice Chairman
                        & Managing Director)                         Executive                               5                NIL
              3         Mr. N S Raghavan                             Non-Executive & Independent            NIL               NIL
              4         Mr. Dinesh Paliwal                           Non-Executive                          NIL               NIL
              5         Mr. Nasser Munjee                            Non-Executive & Independent             13               NIL
              6         Mr. Umesh Prasad Singh                       Non-Executive & Independent             3                 1
              7         Mr. Peter Leupp                              Non-Executive                          NIL               NIL
              8         Mr. BoonKiat Sim                             Non-Executive                          NIL               NIL

             None of the non-executive and non independent Directors has any pecuniary relationship or transactions with ABB Group
             Companies except for holding Directorship and/or employment in ABB Group Companies.

             Mr. Peter Smits stepped down as Chairman of the Company and Mr. Dinesh Paliwal was elected as Chairman in the Board Meeting
             held on 27 January, 2004. The Board has appointed Mr. R N Bhardwaj as Director w.e.f. 27 January, 2004 in the casual vacancy
             caused due to the demise of Mr. A Ramamurthy.

      (ii)   Meetings held in financial year 2003 and Attendance of Directors

             The Board meets at least once in a quarter to consider amongst other business, the quarterly performance of the Company and
             financial results. The Board has held five meetings during the financial year 2003 on 07 January, 2003; 30 January, 2003;
             10 April, 2003; 22 July, 2003 and 30 October, 2003.




ABB Limited, India, Annual Report 2003                                                                                                     21
           The attendance of each Director at these meetings and at the last Annual General Meeting was as follows :

            Sr. No.                         Name of Director                                     No. of Board                    Attendance
                                                                                               Meetings attended                 at last AGM

            1          Mr. Peter Smits - Chairman                                                        3                         Present

            2          Mr. Ravi Uppal - Vice Chairman & Managing Director                                5                         Present

            3          Mr. N S Raghavan                                                                  4                         Present

            4          Mr. Dinesh Paliwal                                                                1                         Absent

            5          Mr. Nasser Munjee                                                                 3                         Present

            6          Mr. Umesh Prasad Singh                                                            5                         Present

            7          Mr. Peter Leupp                                                                   3                         Absent

            8          Mr. BoonKiat Sim                                                                  2                         Absent

            9          Mr. A Ramamurthy (upto 23.02.2003)                                                2                          N/A


(C) Committees of Directors

     (i)   Audit Committee

           The Audit Committee consists of three non-executive independent Directors. Mr. Nasser Munjee was appointed the Chairman of
           Audit Committee at its meeting held on 29 January, 2003. Consequent to the demise of Mr. A Ramamurthy on 23 .ebruary, 2003,
           Mr. N S Raghavan was appointed as Member of the Committee w.e.f. 06 March, 2003.

           .our Audit Committee Meetings were held during the financial year 2003 on 29 January 2003; 09 April, 2003; 21 July, 2003 and
           29 October, 2003. The Composition of the Audit Committee and the attendance of each Director at these meetings were as follows:

            Sr. No.       Members of Audit Committee                                                           No. of meetings attended

            1             Mr. A Ramamurthy (deceased on 23.02.2003)                                                          1

            2             Mr. Nasser Munjee (Chairman w.e.f. 29.01.2003)                                                     4

            3             Mr. Umesh Prasad Singh                                                                             4

            4             Mr. N S Raghavan (w.e.f. 06.03.2003)                                                               3


           The Audit Committee is responsible for overseeing the Company’s financial reporting process, reviewing with the management the
           financial statements and adequacy of internal audit function and to discuss significant internal audit findings. 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 significant observations/suggestions
           made by them. The Audit Committee also discussed major issues related to risk management and compliances.




22                                                                                                       ABB Limited, India, Annual Report 2003
     (ii)   Remuneration Committee

            The Remuneration Committee of the Board was re-constituted in the Board Meeting held on 27 January, 2004 comprising the
            following:

             Sr. No.      Members of Remuneration Committee                                                 No. of meetings attended

             1            Mr. N S Raghavan (Chairman)                                                                     1

             2            Mr. Dinesh Paliwal (w.e.f. 27.01.04)                                                           N/A

             3            Mr. Peter Smits                                                                                 1


            During the financial year 2003 the committee met once on 10 April, 2003.

            The Company does not have a scheme for stock options either for the Directors or its employees. The Vice Chairman and Managing
            Director shall be entitled to an annual performance related bonus based on comparing annual targets with the results achieved and
            determined by the Board of Directors. Under the best performance targets, the bonus amount shall not exceed the total annual
            salary for the year.

            The contract of service entered into by the Company with Mr. Ravi Uppal is valid for five years effective 1 October, 2001 and that the
            Company and Mr. Uppal shall be entitled to terminate the agreement by giving to the other party 180 days notice in writing.

     (iii) Remuneration paid to Directors for the financial year 2003

                                                                                                                               (Rs in Thousands)

             Sr. No.          Name                               Sitting Fees          Salary &             Commission                    Total
                                                                 (includes for          Perks
                                                                  Committee
                                                                   Meetings)

                 1     Mr. Ravi Uppal                                  Nil                4,814                  2,500                    7,314

                 2     Mr. A Ramamurthy                               15                  N.A.                      —                        15

                 3     Mr. N S Raghavan                               55                  N.A.                     300                      355

                 4     Mr. Nasser Munjee                              35                  N.A.                     300                      335

                 5     Mr. U P Singh                                  65                  N.A.                     300                      365


     (iv) Share Transfer and Investors’ Grievance Committee

            The Company’s Registrar & Share Transfer Agents, Tata Consultancy Services are fully equipped to carry out the transfers of shares
            and redress investor complaints. The Share Transfer and Investors’ Grievance Committee has been authorised to approve the
            transfer of shares. In order to expedite the process, the Board of Directors has also delegated the authority to approve the share
            transfers to the Vice Chairman & Managing Director (VCMD) and accordingly, the VCMD approves the transfer/transmission at a
            frequency of about thrice a month.




ABB Limited, India, Annual Report 2003                                                                                                            23
             .our meetings of Share Transfer and Investors’ Grievance Committee were held during the financial year 2003 on 10 March, 2003,
             26 May, 2003, 08 October, 2003 and 22 December, 2003. Mr. B Gururaj, Asst. Vice President & Company Secretary is the
             Compliance Officer of the Company.

             The composition of Share Transfer and Investors’ Grievance Committee and attendance of the Committee members at these
             meetings were as follows:

              Sr. No.                    Members of Transfer and                                                        No. of meetings
                                     Investors’ Grievance Committee                                                        attended

              1          Mr. Umesh Prasad Singh (Chairman w.e.f. 10.04.03)                                                       4

              2          Mr. Ravi Uppal                                                                                          4

              3          Mr. N S Raghavan                                                                                        4


                  No. of investor complaints                                      Pending at the end                 No. of pending
                  received in the year 2003                                          of the year                     share transfers

                                89                                                         NIL                             NIL

(D) (i)      Annual General Meetings

             The Annual General Meetings (AGMs) of the Company have been held at the following places in last three years

               For the                    Venue                                          Day & Date                                Time
               year

               2002        Rama Watumul Auditorium,                                      Wednesday,                              3.00 p.m.
                           Kishinchand Chellaram College,                                18 June, 2003                              (IST)
                           Dinshaw Wacha Road, Churchgate,
                           Mumbai 400 020.

               2001        Patkar Hall, SNDT Women’s University,                         Wednesday,                              3.00 p.m.
                           1, Nathibai Thackersey Road,                                  24 April, 2002                             (IST)
                           Mumbai 400 020.

               2000        Y.B. Chavan Centre                                            Wednesday,                              3.00 p.m.
                           General Jagannath Bhosale Marg,                               27 June, 2001                              (IST)
                           (Near Mantralaya)
                           Mumbai 400 021.


      (ii)   Postal Ballot

             During the year 2003 postal ballot in terms of Section 192A of the Companies Act, 1956 read with the Companies (Passing of
             Resolution by Postal Ballot) Rules, 2001 was conducted to seek the consent of the members for (a) the sale of metering business,
             (b) change of name of the Company from Asea Brown Boveri Limited to ABB Limited and (c) shifting of the Registered Office of the
             Company from the State of Maharashtra to the State of Karnataka. The members had approved the same with requisite majority.

(E)   Disclosures

      (i)    Disclosures on materially significant related party transactions

             There were no materially significant related party transactions during the year having conflict with the interests of the Company.




24                                                                                                          ABB Limited, India, Annual Report 2003
      (ii)   Details of Non-Compliance by the Company, penalties and strictures imposed on the Company by the Stock Exchange,
             SEBI or any Statutory Authorities or any matter related to capital markets

             The Company has complied with all the requirements of the Listing Agreement with the Stock Exchanges as well as regulations and
             guidelines of SEBI. The Company had received a show-cause notice from the SEBI regarding uploading of requisite information with
             the website of SEBI under EDI.AR for which the Company has responded that uploading could not be completed on time due to
             network / server problem which was purely technical in nature. No penalties have been levied or strictures have been passed by
             SEBI, Stock Exchanges or any other Statutory Authority on matters relating to capital markets in the last three years.

(F)   Means of Communication

      (i)    Financial Results

             The quarterly financial results were published in The Economic Times and the Maharashtra Times (Marathi) besides Business
             Standard, Times of India and Navbharat Times. The half-yearly report is however not posted to each household of shareholders. The
             results are also placed on the Company’s website as well as SEBI’s website.

      (ii)   Other Information

             The Company has its own website www.abb.com/in wherein other related information is available. The Company has a dedicated
             help desk with email ID: investor.helpdesk@in.abb.com in the Secretarial Department for providing necessary information to the
             investors. The Company also holds press meets/analysts meets to apprise and make public the information relating to the
             Company’s working and future outlook.

(G) Management’s Discussion & Analysis

      The Management’s Discussion & Analysis report forms part of the Annual Report.

(H)   General Shareholders’ Information

      (i)    Annual General Meeting

              Day, date and time        Tuesday, 27 April, 2004, 03.00 p.m. (IST)

              Venue                     Chowdiah Memorial Hall, G D Park Extension, Vyalikaval, Bangalore 560 003

              Agenda                    1     Adoption of Audited Accounts, Directors’ & Auditors’ Report

                                        2     Declaration of Dividend

                                        3     Re-appointment of Directors

                                        4     Appointment of M/s. S R Batliboi and Co., Chartered Accountants as Auditors in place of
                                              M/s. Bharat S Raut & Co., Chartered Accountants

                                        5     Appointment of Mr. R N Bhardwaj as Director.


      (ii)   The profile of Directors seeking re-appointment/appointment

             Mr. Peter Smits

             Mr. Peter Smits, 52, was educated at the University of Brussels, Belgium. He began his career in 1978 with KPMG, Brussels,
             Belgium. He joined Asea Brown Boveri, SA, Brussels, Belgium in 1994 as President and Country Manager and was appointed as
             Senior Vice President, Business Area Manager Distribution Transformers of ABB Transmission and Distribution Management Limited,
             Zurich, Switzerland. Currently, he is the Head of Power Technologies and Member of the Group Executive Committee of ABB Ltd.,
             Zurich, Switzerland.




ABB Limited, India, Annual Report 2003                                                                                                        25
         Mr. Nasser Munjee

         Mr. Nasser Munjee, 51, has done his post graduation in Economics from the The London School of Economics. He also studied at
         The University of Chicago. He began his career in 1978 as an Executive Director in Housing Development .inance Corporation
         Limited. In 1997, he joined Infrastructure Development .inance Company Limited as its Deputy Managing Director. At present he is
         the Managing Director and CEO of the aforesaid Company.

         Directorships in other Companies are :
         1         Ambit Corporate .inance Pvt. Limited
         2         Cummins India Limited
         3         Gujarat Ambuja Cements Limited
         4         HD.C Investments Limited
         5         HD.C Limited
         6         ID.C Asset Management Company Limited
         7         ID.C Trustee Company Limited
         8         KPIT Cummins Infosystems Limited
         9         Mahindra & Mahindra .inancial Services Limited
         10        Repro India Limited
         11        Skanska Cementation India Limited
         12        Unichem Laboratories Limited
         13        Voltas Limited

         Mr. R N Bhardwaj

         Mr. Raj Narain Bhardwaj, 53, holds Masters in Economics and Diploma in Industrial Relations and Personal Management. He is
         presently the Managing Director of Life Insurance Corporation of India. He also holds Directorships in the following Companies.

         1         I.CI Limited
         2         LIC Lanka Limited
         3         LIC Mutual .und Trustee Co. Pvt. Limited
         4         UTI Bank Limited
     (iii) Financial Calendar
         Indicative calendar of events for the year 2004 (January - December) excluding Extra Ordinary General Meeting(s), if any, is as under:

             .ourth Quarter .inancial Results (Year 2003)                               27 January, 2004
             .irst Quarter .inancial Results                                            April, 2004
             Annual General Meeting                                                     27 April, 2004
             Second Quarter .inancial Results                                           July, 2004
             Third Quarter .inancial Results                                            October, 2004

     (iv) Book Closure
         The Company’s Register of Members and Share Transfer Books will remain closed for the purpose of dividend from 15 April, 2004 to
         27 April, 2004 (both days inclusive).




26                                                                                                       ABB Limited, India, Annual Report 2003
     (v)   Dividend
           The dividend recommended by Directors, on approval by the members at ensuing Annual General Meeting will be paid to those
           shareholders whose names appear on the Company’s Register of Members as on 27 April, 2004.


     (vi) Listing on Stock Exchanges

           The Company’s equity shares are
           listed on the following Stock
           Exchanges located at :                               Addresses of the Stock Exchanges

                                                                The Stock Exchange, Mumbai (BSE)
           ●    Mumbai - (BSE and NSE)
                                                                Phiroze Jeejeebhoy Towers
           ●    Ahmedabad                                       Dalal Street
           ●    New Delhi                                       Mumbai 400 001.
           ●    Kolkata                                         The National Stock Exchange of India Ltd., (NSE)
                                                                Exchange Plaza, 5th .loor
           (The Company has paid, till date, the                Plot No. C/1, G Block
           listing fees of all the above Stock                  Bandra-Kurla Complex
           Exchanges)                                           Bandra (E)
                                                                Mumbai 400 051.
                                                                The Stock Exchange - Ahmedabad
                                                                Kamdhenu Complex
                                                                Near Polytechnic
                                                                Panjara Pole
                                                                Ahmedabad 380 015.
                                                                Delhi Stock Exchange Association Ltd.
                                                                DSE House, 3/1, Asaf Ali Road
                                                                New Delhi 110 002.
                                                                The Calcutta Stock Exchange Association Ltd.
                                                                7, Lyons Range
                                                                Kolkata-700 001.
           The Stock Code of the Company is                     BSE 500002
                                                                NSE ABB
           The ISIN Nos. for Company’s Equity                   INE 117A 01014
           Shares in Demat form
           Depository Connectivity                              NSDL and CDSL




ABB Limited, India, Annual Report 2003                                                                                                 27
     (vii) Market Price Data
         (1)   The market price and volume of the Company’s shares traded in the Stock Exchange, Mumbai and the National Stock
               Exchange during the year 2003 was as follows :

                                                 BSE                                  NSE                                    Volume

                Year 2003          High                 Low                   High            Low                     BSE                NSE
                Month              (Rs.)                (Rs.)                 (Rs.)           (Rs.)                 (Nos.)             (Nos.)

                January          282.00                247.05                291.90         244.50                 221,648            557,229

                .ebruary         330.00                271.00                333.50         279.00                 842,984        1,344,343

                March            322.00                276.00                324.00         280.00                 118,763            323,537

                April            331.00                290.00                335.00         286.50                 191,735            408,412

                May              351.00                307.80                353.70         303.00                 294,910            633,310

                June             395.00                334.00                394.20         335.00                 603,932        1,136,370

                July             401.00                357.00                400.00         320.00                 371,816            861,615

                August           496.00                374.00                506.00         364.50                 480,245        1,124,574

                September        520.00                455.00                522.70         445.00                 336,141            825,037

                October          555.00                477.00                555.00         477.00                 547,868        1,021,975

                November         552.00                500.00                555.00         451.00                 283,552            764,792

                December         676.95                528.25                675.50         522.05                 435,938            885,804


         (2)   The market capitalisation of the Company’s shares as on 31 December, 2003, was Rs 28,554 million on The Stock Exchange,
               Mumbai (BSE), and Rs 28,385 million on National Stock Exchange, Mumbai (NSE).

         (3)   Performance in comparison with Broad Indices



                        ABB SHARE PRICE MOVEMENT WITH RELATION TO BSE SENSEX
                                       JANUARY-DECEMBER 2003
                        300
                        250

                        200

                        150
                        100
                          50

                           0
                           Jan


                                 Feb

                                           Mar

                                                 Apr

                                                       May


                                                                June

                                                                       Jul


                                                                                Aug

                                                                                      Sep


                                                                                            Oct


                                                                                                      Nov

                                                                                                             Dec




28                                                                                                      ABB Limited, India, Annual Report 2003
     (viii) Shareholding Pattern
           Equity Shares of Rs.10 each.
                                                         As on 31.12.2003           As on 31.12.2002                     Variation
           Sr.       Shareholders                           No. of          %             No. of            %       No. of               %
           No.                                             shares                        shares                    shares
           1         ABB Asea Brown                    22,084,057       52.11     22,084,057           52.11             0             0.00
                     Boveri Ltd. Zurich &
                     ABB Technology
                     .LB AB, Sweden
           2         Non-Resident                         834,153        1.97            36,931         0.09       797,222             1.88
                     Individuals/OCBs
           3         Directors and their                         172     0.00               172         0.00             0             0.00
                     relatives
           4         LIC/UTI/Other                       7,533,244      17.77      9,735,146           22.97    (2,201,902)            (5.2)
                     Insurance Cos.
           5         Nationalised Banks/                   76,849        0.18            47,957         0.11        28,892             0.07
                     Other Banks
           6         Mutual .unds                        1,558,885       3.68      1,185,454            2.80       373,431             0.88
           7         .oreign Institutional               3,364,370       7.94      1,962,710            4.63     1,401,660             3.31
                     Investors
           8         General Public                      6,929,945      16.35      7,329,248           17.29     (399,303)            (0.94)
                     Total                             42,381,675      100.00     42,381,675          100.00          0.00             0.00


     (ix) Distribution of Shareholding (as on 31 December, 2003)

           No. of Equity                   No. of shareholders                  No. of shares held                    %age of equity
           shares held                      holding shares in                                                         capital held in

                                      Physical          Demat               Physical               Demat          Physical           Demat
                                        Form             Form                 Form                  Form            Form              Form

           1-1,000                         18,963       18,923              1,797,947        2,800,455                4.24             6.61

           1,001-5,000                       129           552               216,435         1,031,145                0.51             2.43

           5,001-10,000                         4           48                  24,586         377,700                0.06             0.89

           10,001-50,000                        1           43                  18,745       1,039,803                0.04             2.45

           50,001-100,000                       1           13                  97,216         971,174                0.23             2.29

           100,001-1,000,000                    0           29                       0       8,486,178                0.00            20.02

           1,000,001 and above                 6             1           21,120,738          4,360,921               49.83            10.29

           In Transit                           –          172                       –             38,632                –             0.11

           Total                           19,104       19,781           23,275,667         19,106,008               54.91            45.09

           Total                                        38,885                              42,381,675                               100%




ABB Limited, India, Annual Report 2003                                                                                                         29
     (x)   Share Transfer Process

           The Company’s shares being in compulsory demat list are transferable through the depository system. Shares in physical form are
           processed by the Registrar and Transfer Agent, Tata Consultancy Services (TCS) and approved by the Share Transfer and Investors’
           Grievance Committee. The share transfer process is reviewed by the said committee.

     (xi) Dematerialisation of Shares

           The Company has signed a tripartite agreement with National Securities Depository Limited (NSDL) on 5 November, 1997 and with
           Central Depository Services (India) Ltd., (CDSL) on 22 October, 1999 to provide trading of shares in dematerialised form.

           As per SEBI’s instructions, with effect from 15 .ebruary, 1999 trading of the Company’s shares for all investors is compulsorily
           carried out only in dematerialised form.

           As on 31 December, 2003, 19,106,008 shares have been dematerialised representing 45.09% of the total shares. (18,632,584
           shares were in dematerialised form representing 43.96% of the total shares as on 31 December, 2002).

     (xii) Outstanding GDR, ADR or Warrants

           There are no GDR, ADR or any Convertible Instruments pending conversion or any other instrument likely to impact the equity share
           capital of the Company.

     (xiii) Plant Locations

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

     (xiv) Address for Correspondence

           (1)   Registrar and Transfer Agent :
                 (For share transfer, dividend related queries)
                 Tata Consultancy Services
                 (Unit: ABB Limited)
                 Park West II, Raheja Estate, Kulupwadi Road,
                 Borivli (East), Mumbai – 400 066.
                 Phone : 022-5668 9898/2886 1180 .ax : 022-2887 1981
                 E-Mail : tcs_corpoffice@mumbai.tcs.co.in

           (2)   Company
                 (For any other matter, unresolved complaints)
                 ABB Limited
                 2nd .loor, East Wing, Khanija Bhavan,
                 49, Race Course Road,
                 Bangalore 560 001.
                 Phone: 080-22949150-54 .ax : 080-22949148
                 Corporate Secretarial E-mail ID: investor.helpdesk@in.abb.com
                 Corporate Website: www.abb.com/in




30                                                                                                       ABB Limited, India, Annual Report 2003
     (xv) Non-mandatory requirements

          (1)   The Company has a Remuneration Committee to determine the remuneration package of Executive Directors.

          (2)   The Company complied with the requirements of Postal Ballot in the past and will comply with the said requirement as and
                when such matters arise in future which would require the approval of the shareholders by such process.

          (3)   The Company uploads the financial results, shareholding pattern and other information on its website.


                                                                                                               .or and on behalf of the Board


                                                                                                               Dinesh Paliwal
                                                                                                               Chairman


                                                                                                               Mumbai
                                                                                                               27 January, 2004




ABB Limited, India, Annual Report 2003                                                                                                     31
Annexure - D to Directors’ Report
Auditors’ Certificate compliance of conditions of corporate governance per clause 49 of the Listing Agreement with the stock exchanges.




                                 To the Members of ABB Limited (formerly Asea Brown Boveri Limited)

We have examined the compliance of conditions of corporate governance by ABB Limited (formerly Asea Brown Boveri Limited) (“the
Company”) for the year ended on 31 December 2003 as stipulated in clause 49 of the Listing Agreement of the Company with the stock
exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and
implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an
audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with
the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.

We state that no investor grievance is pending for a period exceeding one month against the Company as per the records maintained by the
Transfer and Investors’ Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with
which the management has conducted the affairs of the Company.



.or Bharat S Raut & Co.
Chartered Accountants



Pradip Kanakia
Partner
Membership No.: 39985

Mumbai
27 January, 2004




32                                                                                                        ABB Limited, India, Annual Report 2003
Management’s Discussion and Analysis




Operating Results of the Company

During the year, the Company secured orders worth Rs 17,054 million, 31% higher in comparison to Rs 13,050 million in the previous year. All
businesses showed growth during the year. The Company’s strategic initiatives aimed at a more balanced portfolio yielded good results with the
products and services businesses being expanded substantially, in addition to growth in projects. The Company also added several new
countries to its export base, besides enhancing its regional and global presence within the Group. Power sector reforms as well as recovery in
the industrial sector supported to this growth as the Company’s order backlog was further augmented by 22% to Rs 10,710 million as
compared to Rs 8,794 million at the beginning of the year.

The Company posted a strong revenue growth with revenues of Rs 15,031 million for the year registering 25% growth over the year 2002.
Higher revenues resulted from the Company’s key strategic initiatives i.e. exports, standard products, services and value added projects.

Profit before tax and extraordinary items was Rs 1,529 million (as compared to Rs 1,230 million the previous year). Volume growth, operational
efficiencies, lower overheads and a higher interest income accounted for the improvement in profits. Capital gain on sale of the metering
business was Rs 233 million. An amount of Rs 407 million was realised from the divestment. The Company has invested Rs 310 million in
specified assets as per the provisions of Section 54EC of the Income-tax Act, 1961, and accordingly no capital gain tax is payable on this
amount.

Net profit after tax at Rs 1,242 million for the year was 28% higher than last year. Earnings per equity share were also significantly higher at
Rs 29.30 compared to Rs 22.81 in the previous year.

Outlook for the Company

The revival of the Indian economy, the pick up in the global economy, industrial revival, the passing of the Electricity Act 2003, the ongoing
Accelerated Power Development and Reforms Programmes (APDRP) being implemented by various states and growing opportunities for
exports are factors that augur well for the Company. The Company shall continue to build on the success of its strategic focus initiatives in
exports, value enhancing projects, standard products and service. Efforts towards higher operational efficiencies shall continue. In addition to
increasing market penetration and higher volumes, the Company is also expanding its range of offering and introducing new revenue streams.

Business Segment Analysis

ABB Group is a global leader in power and automation technologies. The Company’s business segments are organised around providing
products, solutions and services to utility and industry customers. The Company has organised its businesses under the Power Technologies
(PT) and Automation Technologies (AT) segments. The segment wise distribution of revenue is as under.

                                                                                                                   2003                     2002

Power Technologies                                                                                                 60 %                     58 %

Automation Technologies                                                                                            40 %                     42 %

Power Technologies (PT)

The summarised performance of the segment is as under.

                                                                                                                                  (Rs in Millions)

                                                                                                                   2003                     2002

Orders Received                                                                                                    9,831                   8,037

Order Backlog                                                                                                      7,825                   7,267

Revenues                                                                                                           9,273                   7,085

Result                                                                                                               783                     616




ABB Limited, India, Annual Report 2003                                                                                                               33
Power Technologies segment serves electric, gas and water utilities, as well as industrial and commercial customers, with a wide range of
products, services and solutions for power transmission, distribution and automation. PT offers turnkey solutions for substations, utility
automation, HVDC (High Voltage Direct Current) transmission and .ACTS (.lexible AC Transmission System). The segment’s product portfolio
includes transformers, switchgear, breakers, capacitors as well as high and medium voltage products.

Power sector reforms in T&D, the Accelerated Power Development and Reforms Programmes, increased use of IT based solutions,
transmission grid development and the increased export business accounted for the growth in the segment’s business during the year. Orders
grew by 22% and revenues showed an increase of 31%. The segment commissioned India’s first APDRP project at Bijapur, Karnataka and also
received its single largest export order till date, valued at Rs 1,680 million from PEEGT, Syria for the design and supply of six substations. Other
important orders received during the year included an order for a turnkey .lexible AC Transmission System (.ACTS) from Powergrid
Corporation of India Limited (PGCIL) – the first of its kind in the country, turnkey orders from PGCIL for setting up of 400 kV transmission sub-
stations at Vapi, Boisar and Narendra, several APDRP projects across many states as well as distribution system improvement projects for
Delhi. Owing to the country’s increased focus on power distribution, the PT’s medium voltage switchgear business also saw significant growth.
In addition to expansion of existing capacities at many of the plants, during the year, new world class manufacturing lines were established for
400 kV power transformers, HV bushings and medium voltage outdoor breakers.

Acceleration of power sector reforms, corporatisation and privatisation of SEBs, the Electricity Act 2003, the ongoing APDRP programme,
focus on reduction of T&D losses, the adoption of new IT based technologies and the development of the national transmission grid, continue
to offer good growth prospects and are also resulting in new business opportunities like system studies, diagnostic services, system
augmentation and asset management. A number of strategic initiatives are currently underway to expand the portfolio of offering as well as
enhance market presence . Moreover the segment continues to increase operational efficiencies and focus closely on the cost base. The
market outlook and prospects for the segment continue to be promising.

Automation Technologies (AT)

The summarised performance of the segment is as under :

                                                                                                                                  (Rs in Millions)

                                                                                                                   2003                      2002

Orders Received                                                                                                   7,558                    5,931

Order Backlog                                                                                                     3,698                    2,370

Revenues                                                                                                          6,123                    5,222

Result                                                                                                              625                      592

The Automation Technologies segment serves customers across the industry spectrum, be it process, manufacturing or consumer industries
and even buildings and infrastructure. This includes metals (ferrous & non-ferrous), pulp & paper, cement, automotive, petroleum, chemicals &
petrochemicals, pharma & life sciences, marine, mining & minerals and many more. AT also offers a comprehensive automation technology
product portfolio encompassing motors, drives, power electronics, robotics, controls, instrumentation & analytics and a complete range of low
voltage products. All the above are supported by world class service backup and asset management solutions to help customers gain higher
efficiencies and maintain the highest standards of competitiveness. Unparalleled domain expertise backed by cutting-edge technologies and
global experience make AT a market leader in the automation arena.




34                                                                                                         ABB Limited, India, Annual Report 2003
The positive impact of strategies initiated during the last couple of years has helped the segment achieve significant growth in orders and
revenues. During the year, growth in orders received was 27% and revenues grew by 17%. On the domestic front, market penetration, growth
in channel partners, increased focus on manufacturing efficiency and productivity supported by early signs of industrial revival played a key role
in this growth. .urther, the product range was extended in many businesses e.g. Motors, LV products, Drives etc.

The segment also made international forays and executed several overseas projects across Asia and beyond, including countries like China,
Malaysia, Indonesia and Taiwan. In order to leverage the technical competence and vast experience available, the Company has been
designated as the regional centre of excellence for metals and cement industry applications within ABB Group. The segment’s strategy to
increase market penetration, expand the number of channel partners, extend its range of offering and expand the scope of e-commerce has
helped increase the volume of standard products business significantly.

Major project orders booked during the year included turnkey orders for the 245,000 TPA expansion of aluminium smelters at Bharat Aluminium
Company Limited (BALCO) and for the 170,000 TPA expansion of the zinc smelter plant at Hindustan Zinc Limited. Automation solution
packages for Indian Oil Corporation’s (IOCL) Mathura and Panipat refineries are currently under execution. The automation and modernisation
of the LPG facility for ONGC at Uran was successfully commissioned during the year. The segment also received significant HVAC system
orders for BHEL Vindyachal, ONGC and several others besides establishing itself in the sphere of comfort cooling and electrification for
buildings.

Three service centres for standard products were set up at Mumbai, New Delhi and Kolkata in addition to a centre already present at
Bangalore, with a view to improve accessibility to the Company’s service offering across the country. Two additional service centres for
turbochargers are also being set up at New Delhi and Colombo (Sri Lanka).

The outlook for the segment continues to be promising. Several industrial sectors have shown signs of recovery - notably steel, copper, zinc,
cement, pharma and biotechnology and capacity augmentation investments are underway. Business development efforts have been intensified,
to build on the Company’s export successes in 2003. Another focus area is to further develop an extensive channel partner network throughout
the country and also to expand and extend market reach through the web. Thrust on standard products, greater market penetration, range
expansion, customer financing solutions, growth of services and the introduction of new products and technologies will continue to remain the
key focus areas helping the segment consolidate its position and grow further.

Exports

The summarised performance is as under.

                                                                                                                                 (Rs in Millions)

                                                                                                                  2003                     2002

Orders Received                                                                                                   2,901                   1,652

Revenues                                                                                                          2,933                     890

Based on the strategic focus adopted in last few years, the Company has seen significant growth in orders and revenues from exports. Export
successes include turnkey projects , supply of components and products as well as engineering and commissioning services to countries
across the globe. During the year, the Company received its single largest turnkey export order till date, valued at Rs 1, 680 million from for
Public Establishment of Electricity for Generation & Transmission, Syria, for the design and supply of six substations. On the products front,
Company has been designated as a global sourcing base for a range of HV circuit breakers from Vadodara as well as MV circuit breakers and
magnetic actuators from Nashik. Additionally, several other products manufactured at Company’s focused factories are also finding their way
internationally as the Company moves towards global optimisation.




ABB Limited, India, Annual Report 2003                                                                                                              35
Finance

The Company continued to focus on optimising its investment in working capital, which resulted in a further improvement in cash position. Net
cash position (cash and bank balances less loan fund) at the end of the year had significantly increased to Rs 3,429 million compared to
Rs 2,683 million at the end of the previous year. Throughout the year, the Company maintained a cash surplus. The cash surplus was deployed
in Government securities, tax-free bonds and short term fixed deposits with reputed banks ensuring security and liquidity of the fund. The entire
capital expenditure during the year, of Rs 434 million on fixed assets was financed from internal accruals. Net interest income during the year
was Rs 155 million compared to Rs 98 million in the previous year. During the year there had been significant increase in level of customer
financing. As a result of sound financial management and timely hedging of forex risk, the Company protected its margins in a volatile foreign
exchange environment, particularly during the early part of the year.

Human Resources

As the Company continues to grow, productivity and efficiency play a key role in maintaining a competitive business edge. The right
organisation culture, an enabling people environment, robust processes and effective change management are some of the key Human
Resource focus areas. Several initiatives have been taken in the Company to motivate and empower employees as the Company seizes
multiple opportunities across the business spectrum. This includes performance management systems, competency and skill enhancement
programmes, continuous human asset refreshal, leadership development and succession planning to name a few.

During the year the Company introduced ‘Employee Self Service’ and rolled out a unique initiative called Café HR (Complete Access .or
Employees) which has greatly helped the Company in automating transactional HR as employees are enabled to access all their personal data
directly. This has also freed up resources and HR personnel are able to devote more time to strategic issues. Quality and speed of recruitment
including web based activity, recruitment festivals, campus hiring etc. at multiple locations to support and sustain the Company’s fast-paced
growth, have helped in augmenting the talent pool as part of the Company’s human asset refreshal policy. As in the past, industrial relations
continued to remain cordial at all the locations of the Company. The Company had 3,205 employees at the end of 2003.

Internal Control System

The Company has an enhanced system of internal control to ensure optimal use and protection of resources. This is aimed at facilitating the
accurate and speedy compilation of accounts and management information reports while ensuring compliance with laws and regulations.
During the year, a number of new initiatives were taken to further strengthen the internal control system including the introduction and updation
of management instructions prescribing internal rules for proper governance, the release of an internal control manual, pre-audit procedures for
certain financial transactions, perpetual inventory etc. The Company has an exhaustive budgetary control system and the actual performance is
regularly reviewed by the management with reference to budgets and short-term forecasts. The Company has a well-defined organizational
structure, clear authority levels and internal guidelines and rules for conducting business transactions. The Company’s internal audit department
conducts regular audits to ensure adequacy of the control system, adherence to management instructions and compliance with laws and
regulations of the country and also suggests possible improvements where necessary. Moreover, the Audit Committee of the Board of Directors
periodically reviews audit plans, internal/external auditors’ observations and recommendations, significant risk area assessments and adequacy
of internal controls.




36                                                                                                       ABB Limited, India, Annual Report 2003
Auditors’ Report to the Members of ABB Limited
(formerly Asea Brown Boveri Limited)




We have audited the attached balance sheet of ABB Limited (formerly           (iv)   in our opinion, the balance sheet, profit and loss account and
Asea Brown Boveri Limited) (‘the Company’) as at 31 December 2003                    cash flow statement dealt with by this report comply with the
and also the Profit and Loss Account and the Cash .low Statement for                 Accounting Standards referred to in sub-section (3C) of Section
the year ended on that date annexed thereto. These financial                         211 of the Companies Act, 1956;
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements         (v)    on the basis of written representations received from the directors
based on our audit.                                                                  of the Company, as on 31 December 2003, and taken on record
                                                                                     by the Board of Directors, we report that none of the Directors is
We conducted our audit in accordance with Auditing Standards                         disqualified as on 31 December 2003 from being appointed as a
generally accepted in India. Those standards require that we plan and                Director in terms of clause (g) of sub-section (1) of Section 274 of
perform the audit to obtain reasonable assurance about whether the                   the Companies Act, 1956; and
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and               (vi)   In our opinion, to the best of our information and according to the
disclosures in the financial statements. An audit also includes assessing            explanations given to us, the said accounts give the information
the accounting principles used and significant estimates made by                     required by the Companies Act, 1956, in the manner so required
management, as well as evaluating the overall financial statement                    and give a true and fair view in conformity with the accounting
presentation. We believe that our audit provides a reasonable basis for              principles generally accepted in India:
our opinion.
                                                                                     a.   in the case of the balance sheet, of the state of affairs of the
As required by the Manufacturing and Other Companies (Auditor’s                           Company as at 31 December 2003;
Report) Order, 1988 issued by the Central Government of India in terms
of sub-section (4A) of section 227 of the Companies Act, 1956, we                    b.   in the case of the profit and loss account, of the profit of the
enclose in the Annexure a statement on the matters specified in                           Company for the year ended on that date; and
paragraphs 4 and 5 of the said Order.
                                                                                     c.   in the case of cash flow statement, of the cash flows for the
.urther to our comments in the Annexure referred to above, we report                      year ended on that date.
that:

(i)     we have obtained all the information and explanations, which to                                                         .or Bharat S Raut & Co.
        the best of our knowledge and belief were necessary for the                                                             Chartered Accountants
        purposes of our audit;

(ii)    in our opinion, proper books of account as required by law have                                                         Pradip Kanakia
        been kept by the Company so far as appears from our                                                                     Partner
        examination of those books;                                                                                             Membership No.: 39985

(iii)   the balance sheet, profit and loss account and cash flow
        statement dealt with by this report are in agreement with the books                                                     Mumbai
        of account;                                                                                                             27 January 2004




ABB Limited, India, Annual Report 2003                                                                                                                    37
Annexure to the Auditors’ Report - 31 December 2003




With reference to the Annexure referred to in paragraph 3 of the              8.    The parties to whom loans or advances in the nature of loans were
Auditors’ Report to the Members of ABB Limited (formerly Asea Brown                 given by the Company are regular in repaying the principal
Boveri Limited) (‘the Company’) on the financial statements for the year            amounts as stipulated and interest where applicable.
ended on 31 December 2003, we report the following:
                                                                              9.    In our opinion and according to the information and explanations
1.   The Company has maintained proper records of fixed assets                      given to us by Management, there are adequate internal control
     showing full particulars, including quantitative details and location.         procedures commensurate with the size of the Company and the
     The Company has a regular program of physical verification of                  nature of its business for the purchase of stores, spares, raw
     fixed assets which, in our opinion, is reasonable having regard to             materials including components, plant and machinery, equipment,
     the size of the Company and the nature of its assets. In                       other assets and for the sale of goods.
     accordance with this program, certain fixed assets were physically
     verified by Management during the year and we are informed by            10.   In our opinion, and according to the information and explanations
     Management that no material discrepancies were identified on                   given to us there are no transactions for the purchase of goods
     such verification.                                                             and materials and sale of goods, materials and services made in
                                                                                    pursuance of contracts or arrangements entered in the register
2.   None of the fixed assets have been revalued during the year.                   maintained under Section 301 of the Companies Act, 1956 and
                                                                                    aggregating during the year to Rs 50,000 or more in respect of
3.   The stocks of finished goods, stores and spares, components and                each party.
     raw materials have been physically verified by Management during
     the year. In respect of stocks lying with third parties, confirmation    11.   As explained to us by Management, the Company has a regular
     for most of the stocks held has been received. In our opinion, the             procedure for the determination of unserviceable or damaged
     frequency of such verification is reasonable.                                  stores, raw materials and finished goods and adequate provision in
                                                                                    this regard has been made in the accounts.
4.   In our opinion and according to information and explanations given
     to us, the procedures of physical verification of inventories are        12.   In our opinion and according to the information and explanations
     reasonable and adequate in relation to the size of the Company                 given to us, the Company has complied with the provisions of
     and the nature of its business.                                                Section 58A of the Companies Act, 1956 and the Companies
                                                                                    (Acceptance of deposits) Rules, 1975 with regard to the deposits
5.   The discrepancies identified on physical verification of inventories           accepted from the public.
     between the physical inventories and the book records were not
     material and have been properly dealt with in the books of               13.   In our opinion, reasonable records are maintained by the Company
     account.                                                                       for the sale and disposal of realisable scrap. The Company has no
                                                                                    realisable by-products.
6.   On the basis of our examination of inventory records, we are of the
     opinion that the valuation of inventories is fair and proper in          14.   The Company has an internal audit system commensurate with its
     accordance with normally accepted accounting principles and is                 size and nature of its business.
     on the same basis as in the previous year.
                                                                              15.   We have carried out a limited review of the books of accounts and
7.   According to the information and explanations given to us, the                 cost records maintained by the Company, pursuant to the Rules
     Company has not taken or given any loans, secured or unsecured                 made by the Central Government for the maintenance of cost
     from or to companies, firms or other parties listed in the register            records under section 209(1)(d) of the Companies Act, 1956, in
     maintained under Section 301 of the Companies Act, 1956, or                    respect of electronic goods, electrical motors and power
     companies under the same management as defined under                           transformers and are of the opinion that, prima facie, the
     Section 370(1B) of the Companies Act, 1956.                                    prescribed accounts and records have been maintained. We




38                                                                                                              ABB Limited, India, Annual Report 2003
      have, not, however, made a detailed examination of the said               (a)   recording receipts, issues and consumption of materials and
      records with a view to determine whether they are accurate or                   stores and allocating materials consumed to each project;
      complete.
                                                                                (b)   allocating man-hours utilised to each project; and
16.   According to the information and explanations given to us by
      Management and on the basis of the examination of the books of            (c)   authorisation and control over the issue of stores and
      account, the Company has been generally regular in remitting the                allocating stores and labour costs to each project.
      Provident .und and Employees’ State Insurance dues to the
      appropriate authorities.                                            21.   As explained to us by Management, the Company has a regular
                                                                                procedure for the determination of damaged traded goods (project
17.   According to the information and explanations given to us, there          items) and adequate provision in this regard has been made in the
      are no undisputed amounts payable in respect of income tax,               accounts.
      wealth tax, sales tax, customs duty and excise duty which are
      outstanding as at 31 December 2003 for a period of more than six    22.   The clauses mentioned in paragraph 4(D) of the aforesaid order
      months from the date they became payable.                                 are not applicable to the Company.


18.   According to the information and explanations given to us by
      Management and on the basis of the examination of the books of
      account carried out by us, no personal expenses of employees or
                                                                                                                           .or Bharat S Raut & Co.
      directors have been charged to the profit and loss account, other
                                                                                                                           Chartered Accountants
      than those payable under contractual obligations or in accordance
      with generally accepted business practices.

19.   The Company is not a sick industrial company within the meaning                                                      Pradip Kanakia
      of Section 3(1)(o) of the Sick Industrial Companies (Special                                                         Partner
      Provisions) Act, 1985.                                                                                               Membership No.: 39985


20.   In our opinion, for its service activities, the Company has,
      commensurate with its size and nature of its business, a                                                             Mumbai
      reasonable system of:                                                                                                27 January 2004




ABB Limited, India, Annual Report 2003                                                                                                            39
Balance Sheet




                                                                                                                        (Rs in Thousands)
As at 31 December 2003                                                  Schedule                                       2003          2002


Sources of Funds
Shareholders’ .unds
    Share Capital                                                          1                         423,817                        423,817
    Reserves and Surplus                                                   2                       5,617,718                      4,697,902
                                                                                                                  6,041,535       5,121,719

Loan .unds
    .inance Lease Obligations                                            16(9)                        29,632                             44,597
    Unsecured Loans                                                       3                           71,409                             79,101
                                                                                                                    101,041         123,698
                                                                                                                  6,142,576       5,245,417

Application of Funds
.ixed Assets                                                               4
     Gross Block                                                                                   3,136,554                      2,866,762
     Less: Depreciation                                                                            1,539,211                      1,428,247
     Net Block                                                                                     1,597,343                      1,438,515
     Capital Work in Progress and Advances on Capital Account                                        102,747                         41,353
                                                                                                                  1,700,090       1,479,868
Investments                                                                5                                        585,881         275,752

Current Assets, Loans and Advances
    Inventories                                                            6                       1,235,099                      1,117,990
    Sundry Debtors                                                         7                       5,436,216                      4,695,805
    Cash and Bank Balances                                                 8                       3,530,316                      2,806,621
    Loans and Advances                                                     9                       1,692,124                        871,982
                                                                                                  11,893,755                      9,492,398

Less: Current Liabilities and Provisions
    Current Liabilities                                                   10                       7,548,408                      5,548,643
    Provisions                                                            11                         342,471                        303,687
                                                                                                   7,890,879                      5,852,330

Net Current Assets                                                                                                4,002,876       3,640,068

Net Deferred Tax Liability                                               16(11)                                    (146,271)       (150,271)
                                                                                                                  6,142,576       5,245,417
Notes to the Accounts                                                     16

The schedules referred to above form an integral part of the accounts


Per our report attached                                                        .or and on behalf of the Board
.or Bharat S Raut & Co.
Chartered Accountants                                                          Dinesh Paliwal             Chairman
                                                                               Ravi Uppal                 Vice Chairman & Managing Director
                                                                               Nasser Munjee              Director
                                                                               Umesh Prasad Singh         Director
                                                                               Peter Leupp                Director
                                                                               R.N. Bharadwaj             Director
Pradip Kanakia                                                                 K. Rajagopal               Sr. Vice President - .inance
Partner
Membership Number : 39985                                                      B. Gururaj                 Company Secretary
Mumbai, 27 January, 2004                                                       Mumbai, 27 January, 2004




40                                                                                                    ABB Limited, India, Annual Report 2003
Profit and Loss Account




                                                                                                                              (Rs in Thousands)
For the year ended
31 December 2003                                                        Schedule                                          2003                2002


Income
Sales and Services                                                        12                                         14,683,575       11,757,576
Other Income                                                              13                                            346,994          248,153
                                                                                                                     15,030,569       12,005,729
Expenditure
Cost of Materials and Erection Services                                                          10,267,815                            7,715,038
Personnel Expenses                                                        14                      1,161,305                            1,207,895
Other Expenses                                                            15                      1,878,667                            1,663,918
Depreciation                                                                       187,017                                               186,104
Less: Transfer from Revaluation Reserve                                              2,667                                                 2,881
                                                                                                   184,350                               183,223
Interest                                                                                             9,505                                 5,973
                                                                                                                     13,501,642       10,776,047
Profit Before Tax and Extraordinary Item                                                                              1,528,927        1,229,682
Extraordinary Item -
Profit on Sale of Undertaking                                            16(2)                                         233,008           158,259
Profit Before Tax                                                                                                     1,761,935        1,387,941
Provision for Tax:
        Current Tax
        (after adjusting Rs 2,295 thousand for
        short provision, Previous Year - after adjusting
        Rs 1,103 thousand for excess provision)                                                                        524,000           405,000
        Deferred Tax                                                                                                    -4,000            11,200
Profit After Tax                                                                                                      1,241,935          971,741
Less:      Transfer to .oreign Projects Reserve Account                                                                  2,500             1,000
Add:       Balance Brought .orward                                                                                     258,391           245,630
           Reversal of Corporate Dividend Tax provided (2001)                                                               —             21,123
Amount available for appropriation                                                                                    1,497,826        1,237,494
Appropriations
General Reserve                                                                                                        900,000           720,000
Dividend Paid - Preference Shares                                                                                           —              4,813
Proposed Dividend - Equity Shares                                                                                      254,290           254,290
Corporate Dividend Tax                                                                                                  32,581                —
Corporate Dividend Tax - 2002                                                                                           32,581                —
Balance Carried .orward                                                                                                278,374           258,391
                                                                                                                      1,497,826        1,237,494

Basic and Diluted Earnings per
Equity Share (in Rs)                                                     16(3)                                            29.30               22.81
(Par value Rs 10 per share)
Basic and Diluted Earnings per
Equity Share excluding
Extraordinary Item (in Rs)                                               16(3)                                            23.81               19.08
(Par value Rs 10 per share)
Notes to the Accounts                                                     16
The schedules referred to above form an integral part of the accounts

Per our report attached                                                             .or and on behalf of the Board
.or Bharat S Raut & Co.
Chartered Accountants                                                               Dinesh Paliwal             Chairman
                                                                                    Ravi Uppal                 Vice Chairman & Managing Director
                                                                                    Nasser Munjee              Director
                                                                                    Umesh Prasad Singh         Director
                                                                                    Peter Leupp                Director
                                                                                    R.N. Bharadwaj             Director
Pradip Kanakia                                                                      K. Rajagopal               Sr. Vice President - .inance
Partner
Membership Number : 39985                                                           B. Gururaj                 Company Secretary
Mumbai, 27 January, 2004                                                            Mumbai, 27 January, 2004




ABB Limited, India, Annual Report 2003                                                                                                          41
                                                                                                                               (Rs in Thousands)
As at 31 December 2003                                                                                                         2003           2002

Schedule 1 - Share Capital

Authorised
     42,500,000       Equity Shares of Rs 10 each                                                                          425,000         425,000
           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
     42,381,675       Equity Shares of Rs 10 each                                                                          423,817         423,817


Notes:

Share Capital includes:

a)    Shares issued at par to the shareholders of the following erstwhile amalgamating companies:

      Company                                                                                                 Number of Shares         Year of Issue

      i)     Equity shares of Rs 10 each

             Asea Limited                                                                                             4,585,590               1989

             .lakt India Limited                                                                                      3,688,196               1994

             Introl (India) Limited                                                                                    234,000                2001

             ABB Instrumentation Limited                                                                               172,271                2001

             ABB Lenzohm Service Limited                                                                               249,356                2001

             ABB Analytical Limited                                                                                    307,692                2001

      ii)    Preference Shares of Rs 100 each
             ABB Instrumentation Limited                                                                               750,000                2001
             (redeemed during the year 2002)

b)    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
      Share Premium Account respectively.

c)    200,000 equity shares of Rs 10 each issued at a premium of Rs 10 each 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.

d)    19,575,991 equity shares are held by ABB Asea Brown Boveri Limited, Zurich, (Switzerland), the ultimate holding company and 2,508,066 equity
      shares are held by ABB Technology .LB AB, Sweden, a subsidiary of the holding company.




42                                                                                                          ABB Limited, India, Annual Report 2003
                                                                         (Rs in Thousands)
As at 31 December 2003                                                  2003          2002

Schedule 2 - Reserves and Surplus

Capital Reserve Account                                               10,971        10,971
Capital Redemption Reserve Account
    Per last Balance Sheet                                75,000                        —
    Transferred from General Reserve Account                  —                     75,000
                                                                      75,000        75,000
Revaluation Reserve Account
    Per last Balance Sheet                               158,747                   173,264
    Transferred to Profit and Loss Account                (2,667)                   (2,881)
    Adjustment on account of assets sold                      —                    (11,636)
                                                                     156,080       158,747
Share Premium Account                                                593,990       593,990
Foreign Projects Reserve Account
    Per last Balance Sheet                                76,500                    78,500
    Transferred from Profit and Loss Account               2,500                     1,000
    Transferred to General Reserve Account                  (600)                   (3,000)
                                                                      78,400        76,500
General Reserve Account
    Per last Balance Sheet                              3,524,303                2,876,303
    Transferred to Capital Redemption Reserve Account         —                    (75,000)
    Transferred from .oreign Projects Reserve Account        600                     3,000
    Transferred from Profit and Loss Account             900,000                   720,000
                                                                    4,424,903    3,524,303
Profit and Loss Account
    Balance Carried .orward                                          278,374       258,391
                                                                    5,617,718    4,697,902




Schedule 3 - Unsecured Loans
Sales tax deferral loans
(Due within one year Rs 11,826 thousand -
Previous Year Rs 8,147 thousand)                                      71,409        79,101




ABB Limited, India, Annual Report 2003                                                  43
As at 31 December 2003                                                                                                            (Rs in Thousands)

Schedule 4 - Fixed Assets
                                       Gross Block                                       Depreciation                             Net Block

Description             As at 1     Addi-    Deduc-      As at 31       As at 1    For the    Deduc-        As at 31      As at 31          As at 31
                        January     tions     tions     December       January        Year     tions       December      December          December
                           2003                             2003          2003                                 2003          2003              2002


.reehold Land           137,515         —          —       137,515            —          —          —              —        137,515          137,515

Leasehold Land            2,232         —          —         2,232          187           6         —             193         2,039            2,045

Leasehold
Improvements             36,198      4,487         —        40,685        4,925       6,090         —          11,015        29,670           31,273

.actory Buildings       303,338    51,300          —       354,638      104,667       9,735         —        114,402        240,236          198,671

Other Buildings          66,062      7,470      1,084       72,448       15,154       1,479        172         16,461        55,987           50,908

Residential
Quarters                 14,390         —          —        14,390        3,725        255          —           3,980        10,410           10,665

Plant and
Machinery              1,810,265 239,150      78,431     1,970,984      966,369    119,741     50,353       1,035,757       935,227          843,896

.urniture and
.ixtures                 96,834    21,692       9,051      109,475       63,413       4,481      7,353         60,541        48,934           33,421

Vehicles                 10,438       438         969        9,907        5,966        677         306          6,337         3,570            4,472

Technical Know-
how .ees                244,691    32,272      17,603      259,360      200,990     18,100     17,603        201,487         57,873           43,701

Capitalised Software     77,075    14,615          —        91,690       51,527     15,765          —          67,292        24,398           25,548

                       2,799,038 371,424     107,138     3,063,324    1,416,923    176,329     75,787       1,517,465     1,545,859        1,382,115

Assets Acquired Under Finance Lease

Plant and Machinery      52,891      5,301        173       58,019       10,842       9,264         22         20,084        37,935           42,049

Vehicles                 14,833      1,961      1,583       15,211          482       1,424        244          1,662        13,549           14,351

                       2,866,762 378,686     108,894     3,136,554    1,428,247    187,017     76,053       1,539,211     1,597,343        1,438,515

Previous Year          2,962,630 156,176     252,044     2,866,762    1,400,417    186,104    158,274       1,428,247

Capital Work in Progress and Advances on Capital Account                                                                    102,747           41,353

Total                                                                                                                     1,700,090        1,479,868

Notes :

1.   Certain freehold and leasehold land, factory and other buildings and residential quarters were revalued during 1985, 1986 and 1996.
2.   Residential Quarters include cost of shares in Lotus Court Private Limited Rs 56 thousand. (Previous Year Rs 56 thousand).
3.   Current year figures of Deductions in Gross Block and Depreciation include Rs 40,292 thousand and Rs 15,277 thousand respectively on
     account of sale of Metering business.
4.   Previous year figures of Deductions in Gross Block and Depreciation include Rs 137,803 thousand and Rs 93,627 thousand respectively on
     account of sale of Air Handling business.




44                                                                                                           ABB Limited, India, Annual Report 2003
                                                                                                                   (Rs in Thousands)
As at 31 December 2003                                                                                            2003          2002


Schedule 5 - 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 :
             6.5% Central Government Loan 2005                                                             —                     26
          Unquoted :
             12 Year National Savings Certificates                                                         6                     11
              12 Year National Defence Certificates                                                        2                      2
              7 Year National Savings Certificates                                                         —                      7
              5 1/2 Year Indira Vikas Patras                                                               —                     15
              8.7% 5 Year Cumulative Non-Convertible Redeemable Bonds of Rural
              Electrification Corporation Limited                                                      52,894                 52,894
              5.5% National Housing Bank - Capital Gains Bonds                                        210,000                     —
              5.5% Small Industries Development Bank of India - Capital Gains Bonds                   100,000                     —
              7.85% / 7.10% 5 Year Non-Cumulative Non-Convertible Redeemable
              Bonds of Rural Electrification Corporation Limited                                      215,000               215,000
                                                                                                                577,902     267,955
Others:
          Quoted:
             Nil (Previous Year - 496,320) units of Rs 10 each
             fully paid up in Unit Trust of India                                                          —                   6,678
              51,748 (Previous Year - Nil) 6.75% Tax .ree US64 bonds of Rs 100 each
              fully paid up in Unit Trust of India                                                      6,860                     —
          Unquoted:
             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
                                                                                                                  6,887        6,705
                                                                                                                587,594     277,465
Less:     Provision for diminution in the value of Investments                                                    1,713       1,713
                                                                                                                585,881     275,752
Notes :
          Quoted Investments aggregate                                                                            9,665        9,509
             (Market value Rs 17,807 thousand;
             Previous Year Rs 9,267 thousand)
          Unquoted Investments aggregate                                                                        577,929     267,956




ABB Limited, India, Annual Report 2003                                                                                           45
                                                                                                               (Rs in Thousands)
As at 31 December 2003                                                                                        2003          2002


Schedule 6 - Inventories

Stores and Spares                                                                                            6,348           5,713
Raw Materials                                                                                               33,110          31,741
Components                                                                                                 609,574         590,250
Goods in Transit                                                                                           205,965          16,927
.inished Goods                                                                                              88,536          84,061
Work and Contracts-in-progress                                                                             291,566         389,298
                                                                                                         1,235,099       1,117,990


Schedule 7 - Sundry Debtors

Unsecured :
Debts outstanding for a period exceeding six months :
       - Considered Good                                                                                 2,111,116       1,755,418
       - Considered Doubtful                                                                               184,954         171,952
                                                                                                         2,296,070       1,927,370
Other Debts - Considered Good                                                                            3,325,100       2,940,387
                                                                                                         5,621,170       4,867,757
Less: Provision for Doubtful Debts                                                                         184,954         171,952
                                                                                                         5,436,216       4,695,805


Schedule 8 - Cash and Bank Balances

Cash and Cheques on hand                                                                                      3,413         12,956
Balances with Scheduled Banks :
       - On Current Account                                                            1,434,195                         1,140,308
       - On Deposit Account                                                            2,091,820                         1,651,840
       - On Margin Account                                                                    82                             1,517
                                                                                                         3,526,097       2,793,665
With Other Banks - on Current Account                                                                          806              —
                                                                                                         3,530,316       2,806,621

Current Accounts with Other Banks includes

                                                                     As at 31     As at 31          Maximum              Maximum
                                                                   December     December               amount               amount
                                                                        2003         2002         outstanding          outstanding
                                                                                                   at any time          at any time
                                                                                                   during the            during the
                                                                                                          year        previous year

a)      Hongkong & Shanghai Banking Corporation Ltd., Sri Lanka          309           —                    872                 —
b)      Hongkong & Shanghai Banking Corporation Ltd., Bangladesh         497           —                  1,814                 —




46                                                                                           ABB Limited, India, Annual Report 2003
                                                                                        (Rs in Thousands)
As at 31 December 2003                                                                 2003          2002


Schedule 9 - Loans and Advances

Unsecured :
Loans, Considered Good                                                               13,664         1,692
Advances recoverable in cash or in kind or for value to be received:
       - Considered Good                                                953,891                  579,127
       - Considered Doubtful                                             11,640                   16,905
                                                                        965,531                  596,032
        Less: Provision for Doubtful Advances                            11,640                   16,905
                                                                                    953,891      579,127
Contract Revenue in Excess of Billing                                               390,757           —
Interest Accrued on Investments and .ixed Deposits                                   64,144       25,273
Advance Tax (net of provision)                                                      255,982      251,452
Balances with Customs, Port Trusts and Excise authorities                            13,686       14,438
                                                                                   1,692,124     871,982



Schedule 10 - Current Liabilities

Acceptances                                                                        1,766,124    1,634,175
Sundry Creditors :
       – Due to Small Scale Industrial Undertakings                       72,906                   65,955
       – Others                                                        4,551,090                3,351,982
                                                                                   4,623,996    3,417,937
Advance Payments from Customers                                                      976,164      491,189
Billing in Excess of Contract Revenue                                                176,366           —
Investor Protection and Education .und shall be
credited by the following amounts when due :
          – Unclaimed Dividends                                           5,752                     5,283
          – Unclaimed .ixed Deposits                                          6                        59
                                                                                      5,758         5,342
                                                                                   7,548,408    5,548,643



Schedule 11 - Provisions

Proposed Dividend                                                                   254,290      254,290
Corporate Dividend Tax                                                               32,581           —
Leave Encashment                                                                     55,600       49,397
                                                                                    342,471      303,687




ABB Limited, India, Annual Report 2003                                                                47
For the year ended 31 December 2003

Schedule 12 – Capacities, Production, Stock and Turnover (Refer Note 12 of Schedule 16)
(.igures in brackets are in respect of previous year)
                                          Annual             Opening Stock of     Production of         Closing Stock of         Turnover of
Class of goods                           Capacities           .inished Goods    .inished Goods          .inished Goods         .inished Goods
                                 Quant.                               Rupees in                                 Rupees in                Rupees in
                                 Denom.           Installed Quantity Thousands      Quantity          Quantity Thousands      Quantity Thousands
Motors/Alternators/             HP               750,000     47,723       35,301       726,141         56,339       52,106     715,942        530,718
Generators upto 20 MW                          (450,000)   (62,517)     (43,389)     (512,928)       (47,723)     (35,301)   (511,068)      (427,692)
Switchgear of all types         Nos.             866,999    10,216         6,605       672,925         17,379      10,072      440,992      4,096,830
                                               (642,333)   (10,216)      (3,852)     (576,179)        (10,216)     (6,605)   (423,223)    (3,134,594)
PLCC Equipment                  Nos                2,850        —            —           1,797             —           —         1,797        207,377
                                                 (2,850)       (—)          (—)        (1,055)            (—)         (—)      (1,054)      (216,482)
Measurand Convertors            Nos.              30,000        —            —          18,123             —           —        17,835         89,609
                                                (90,000)       (—)          (—)       (53,042)            (—)         (—)     (41,496)      (245,369)
Multiplexures                   Nos                  50         —            —               25            —           —           23          23,437
                                                    (50)       (—)          (—)            (12)           (—)         (—)         (12)       (16,478)
Telemetering Equipment          Nos                  150         —           —             102             —           —            7           2,433
                                                   (150)        (—)         (—)            (38)           (—)         (—)         (27)       (15,099)
Turbochargers                   Nos.                 150        —            —            115              —           —           115        119,681
                                                   (150)       (—)          (—)          (122)            (—)         (—)        (122)      (142,845)
Power Transformers              MVA                4,000        —            —           2,787             —           —         2,787        639,888
                                                 (4,000)       (—)          (—)        (2,243)            (—)         (—)      (2,243)      (466,261)
Traction Transformers           Nos.                 15         —            —               7             —           —            7          51,100
                                                    (15)       (—)          (—)             (5)           (—)         (—)          (5)       (47,254)
Electronic Control and          Nos.              30,000        —            —          26,822             —           —        26,758        786,757
Supply Units for                                (25,000)       (—)          (—)       (15,105)            (—)         (—)     (14,943)      (524,995)
Variable Speed Drives
and other applications
Mini Computer/                  Value Rs. in 900,000            —            —         941,683             —           —           —          941,683
Microprocessor                  Thousands (500,000)            (—)          (—)      (663,339)            (—)         (—)         (—)       (663,339)
based Systems
Non-Microprocessor              Value Rs. in      70,000        —            —         19,006              —           —           —          19,006
Based Electronics               Thousands       (70,000)       (—)          (—)        (9,500)            (—)         (—)         (—)         (9,500)
(Analog and Digital) for
Weighing, Batching and
.orce Measuring Systems
and Sub-Systems
Power Capacitors                MVAR               8,000        —            —           2,705             —           —         1,824        101,413
of all types                                     (2,700)       (—)          (—)        (2,216)            (—)         (—)      (1,987)      (121,078)
Pollution and                   Nos.                 —           —            —             —              —           —            —              —
Environment Control                                 (—)       (162)      (2,596)         (953)            (—)         (—)        (991)       (67,152)
Equipment
Robotics                        Nos.                 15         —            —               6             —           —            6         27,601
                                                    (15)       (—)          (—)            (—)            (—)         (—)         (—)            (—)
Control Valves                  Nos.               2,750         —           —            260              —           —           256         18,007
                                                 (2,750)        (—)         (—)          (275)            (—)         (—)        (241)       (27,049)
Gas Analysers                   Nos.                 300         —           —               64            —           —           57          28,573
and Systems                                        (300)        (—)         (—)            (78)           (—)         (—)         (67)       (85,001)
Process Control                 Nos.              24,975         —            —         14,492             —           —        14,492        310,298
Instruments                                     (24,975)      (450)      (6,085)      (14,477)            (—)         (—)     (14,496)      (266,744)
Others                                                                       —                                         —                      653,881
                                                                            (—)                                       (—)                   (660,879)
Project Items                                                            42,155                                     26,358                  5,093,052
                                                                         (9,127)                                  (42,155)                (3,727,866)
Erection and Other Services                                                                                                                   942,231
                                                                                                                                            (891,899)
                                                                          84,061                                    88,536                 14,683,575
                                                                        (65,049)                                  (84,061)               (11,757,576)

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




48                                                                                                           ABB Limited, India, Annual Report 2003
                                                                        (Rs in Thousands)
For the year ended 31 December 2003                                    2003          2002

Schedule 13 - Other Income
Income from Trade Investments
           Dividend                                                     224          281
           (Tax deducted at source Rs Nil,
           Previous Year Rs 29 thousand)

Income from Non-Trade Investments
           Dividend                                           —                        4
           Interest
           (Tax deducted at source Rs Nil,
           Previous Year Rs 867 thousand)                 41,388                   11,749
                                                                     41,388        11,753

Interest
           On Deposits with Banks
           (Tax deducted at source Rs 18,556 thousand,
           Previous Year Rs 9,679 thousand)              111,956                   54,820
           Others                                         10,800                   37,594
                                                                    122,756        92,414

Profit on Sale of .ixed Assets (net)                                     —          2,871
Profit on Sale of Investments                                         3,179            —
Miscellaneous Income                                                179,447      140,834
                                                                    346,994      248,153



Schedule 14 - Personnel Expenses
Salaries, Wages and Bonus                                           917,691      921,862
Contribution to Gratuity .und                                        27,050        50,191
Contribution to Provident and Other .unds                            66,404        67,981
Workmen and Staff Welfare Expenses                                  116,182      135,371
Other Personnel Expenses                                             33,978        32,490
                                                                   1,161,305    1,207,895




ABB Limited, India, Annual Report 2003                                                49
                                                                         (Rs in Thousands)
For the year ended 31 December 2003                                     2003          2002
Schedule 15 - Other Expenses
Tools and Stores                                                     166,818         149,360
Royalty                                                               22,580          15,591
.reight and .orwarding                                                75,769          44,217
Postage and Telephone                                                 60,020          65,525
Commission and Discount                                              173,098         122,060
Power, .uel and Water                                                 91,404          95,228
Travelling and Conveyance                                            282,482         257,503
Insurance                                                             72,561          50,266
Rates and Taxes                                                       25,873          33,843
Rent                                                                  69,339          79,218
Repairs : Buildings                                                   15,519          10,933
          Plant and Machinery                                         26,649          32,065
          Others                                                      18,482          12,948
Provision for Doubtful Debts and Advances                               9,295        (27,922)
Bad Debts/Advances Written Off                                        73,644         162,051
Provision for Diminution in the Value of Investments                       —          (2,600)
Investments Written Off                                                    —           2,600
Loss on Sale of .ixed Assets (net)                                      2,265             —
Printing and Stationery                                               27,732          28,418
Bank Charges                                                          43,321          52,969
Legal and Professional                                                38,299          31,685
Trade Mark .ees                                                       73,418          58,795
Miscellaneous                                                        510,099         389,165
                                                                   1,878,667       1,663,918




50                                                     ABB Limited, India, Annual Report 2003
Schedule 16 - Notes to the Accounts
1.   Significant Accounting Policies
     1.1   Basis of Preparation of .inancial Statements
           These financial statements have been prepared on the accrual basis of accounting, under the historical cost convention, except for
           revaluation of certain fixed assets, in accordance with the accounting principles generally accepted in India and comply with the
           mandatory accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the relevant provisions of
           the Companies Act, 1956.
     1.2   Use of Estimates
           The preparation of financial 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 financial 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.
     1.3   .ixed Assets
           .ixed assets are stated at the cost of acquisition, except for revaluation of certain Land and Building, less accumulated depreciation. Cost
           of fixed 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 fixed assets for the period up to the
           completion of their acquisition or construction are capitalised. Advances paid towards the acquisition of fixed assets outstanding at each
           balance sheet date and the cost of fixed 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
           significant future economic benefits. 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 significant additional
           benefits of lasting nature.
           Assets acquired under finance lease from 1 April 2001 are capitalised at the lower of their fair value and the present value of the minimum
           lease payments.
     1.4   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. 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 from the year in which they become payable.
           •    Capitalised software costs over a period of five years.
           •    Assets costing Rs 5,000 or less are depreciated fully in the year of purchase.
           Assets under finance lease are depreciated over the lower of the lease term or the useful life of the asset unless there is reasonable
           certainity that the Company will obtain ownership, wherein such assets are depreciated at the rates prescribed in Schedule XIV to the
           Companies Act, 1956.
     1.5   Investments
           Long term investments are valued at cost. Provision is made for any permanent diminution in the value of investments.
     1.6   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 weighted average method.
           •    Goods in Transit – at actual cost
           •    Work-in-progress and finished goods - at full absorption cost method based on annual average cost of production. Excise duty is
                included in the value of finished goods inventory.
           Packing materials, loose tools and consumables are charged off at the point of purchase.
           Provision for obsolescence is made wherever necessary.




ABB Limited, India, Annual Report 2003                                                                                                                     51
     1.7   Retirement Benefits
           Contributions to Provident .und/Superannuation .und are made at pre-determined rates to the recognised Provident .und Trust/
           Superannuation .und Trust and are charged to the profit and loss account.
           Contributions to the recognised Gratuity .und and provision for leave encashment are made on the basis of actuarial valuations and are
           charged to the profit and loss account.
     1.8   Revenue Recognition
           •    Sales of products and services are recognised when significant risks and rewards of ownership of products are passed on to
                customers or when the service has been provided. Sales are stated at contractual realisable values, net of excise duty, sales 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 reflected under “Loans and Advances” and billing in excess of contract revenue has been reflected under
                “Current Liabilities” in the balance sheet.
           •    .ull provision is made for any loss in the year in which it is first foreseen.
           •    Liquidated damages/penalties are provided for 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.
     1.9   Warranties
           Provision for the estimated liability in respect of warranty costs is made in the year in which the revenues are recognised, based on
           technical evaluation and past experience.
     1.10 Research and Development
           All revenue expenses pertaining to research and development are charged to the profit and loss account in the year in which they are
           incurred and expenditure of capital nature is capitalised as fixed assets, and depreciated as per the Company’s policy.
     1.11 .oreign Currency Transactions
           .oreign 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 profit and loss account for the year, other than exchange differences
           related to the liabilities for acquisition of fixed assets that are adjusted to the cost of the related fixed assets.
           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 profit and loss account for the year, other than exchange differences
           related to the liabilities for acquisition of fixed assets that are adjusted to the cost of fixed assets.
           The premium or discount on forward exchange contracts is recognised in the profit and loss account over the period of the contract.
     1.12 Taxation
           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 31 March 2004.
           The deferred tax for timing differences between the book and tax profits 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 temporary timing differences
           are recognised to the extent there is reasonable certainty that the assets can be realised in future.
2.   Sale of Undertakings
     2.1   Metering Business
           Pursuant to the ABB Group’s decision to sell its Metering business worldwide and as approved by the shareholders earlier, the Company
           has divested its Metering business to Elster Metering Private Limited on 1 April 2003. The divestment has resulted in a capital gain to the
           Company of Rs 233,008 thousand, reported as profit on sale of Undertaking in Profit and Loss Account as an extraordinary item. The
           Company has invested the capital gain in specified assets as per the provisions of Section 54EC of the Income-tax Act,1961. Accordingly
           no tax liability arises on this capital gain.
     2.2   Air Handling Business
           Company’s Air Handling business was divested to .lakt (India) Limited on 31 May 2002. The total consideration received for sale of Air
           Handling business was Rs 258,963 thousand resulting in a capital gain to the Company of Rs 158,259 thousand, reported as profit on
           sale of Undertaking in Profit and Loss Account as an extraordinary item.




52                                                                                                             ABB Limited, India, Annual Report 2003
                                                                                                                                2003             2002
3.   Earnings Per Share
     a)   Weighted Average number of Equity Shares of Rs 10 each
          outstanding during the year                                                                                     42,381,675      42,381,675
     b)   Net profit after tax and preference dividend, attributable to
          equity shareholders (Rs in thousand):
          Net Profit after tax                                                                             1,241,935                         971,741
          Less: Dividend on Preference Shares                                                                      —                            4,813
                                                                                                                           1,241,935         966,928
     c)   Basic and Diluted Earnings Per Share (in Rs)                                                                          29.30           22.81
     d)   Net profit after tax and preference dividend available for equity
          shareholders excluding Extraordinary Item (Rs in thousand)
          Net Profit after tax                                                                             1,241,935                         971,741
          Less: Dividend on Preference Shares                                                                      —                            4,813
          Less: Profit on Sale of Undertaking                                                                233,008                         158,259
                                                                                                                           1,008,927         808,669
     e)   Basic and Diluted Earnings Per Share excluding
          Extraordinary Item (in Rs)                                                                                            23.81           19.08

4.   Segment Reporting
     A)   Primary Segment Reporting (by Business Segments)
          i)     Composition of Business Segments
                 The Company’s business segments are organised around technologies it provides to its customers which include utilities, industries,
                 channel partners and original equipment manufacturers.
                 Power Technology (PT) Segment manufactures, engineers, supplies and provides solutions for power transmission, power
                 distribution and control and protection systems for power plants. The segment produces transformers, switchgears, breakers,
                 capacitors, power line carrier communication equipment, relay control panels, etc.
                 Automation Technology (AT) Segment provides products, systems, software and services for the automation and optimisation
                 of discrete, process and batch manufacturing operations plus related business aspects. Key technologies include measurement
                 control, instrumentation, process analysis, drives and motors, power electronics, robots and low-voltage products; all geared
                 towards one common Industrial IT architecture for real-time automation and information solutions across the business enterprise.
          ii)    The accounting policies used in the preparation of the financial statements of the Company are also applied for segment reporting.
          iii)   Segment revenues, expenses, assets and liabilities are those which are directly attributable to the segment or are allocated on an
                 appropriate basis. Corporate and other revenues, expenses, assets and liabilities to the extent not allocable to segments are
                 disclosed in the reconciliation of reportable segments with the financial statements.
          iv)    Inter Segment Transfer Pricing
                 Inter segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business risks,
                 within an overall optimisation objective for the Company.
          v)     .igures in brackets are in respect of the previous year.




ABB Limited, India, Annual Report 2003                                                                                                                53
     vi)    Segment Revenues, Results and Other Information

                                                                                                                           (Rs in Thousands)

                                                                                             Power            Automation              Total of
                                                                                         Technology           Technology           Reportable
                                                                                           Segment              Segment             Segments

            External Sales                                                                  9,029,717             5,623,810         14,653,527
                                                                                          (6,848,896)           (4,811,914)       (11,660,810)

            Inter Segment Sales                                                               118,960               477,352            596,312
                                                                                            (195,312)             (375,629)          (570,941)

            Other Income                                                                      123,897                 22,285           146,182
                                                                                              (40,955)              (34,550)           (75,505)

            Segment Revenues                                                                9,272,574             6,123,447         15,396,021
                                                                                          (7,085,163)           (5,222,093)       (12,307,256)

            Segment Results                                                                   782,817               624,566          1,407,383
                                                                                            (615,743)             (591,675)        (1,207,418) 

            Segment Assets                                                                  6,024,930             3,318,597          9,343,527
                                                                                          (4,558,187)           (2,879,039)        (7,437,226)

            Segment Liabilities                                                             4,515,644             2,572,460          7,088,104
                                                                                          (3,283,843)           (1,960,289)        (5,244,132)

            Capital Expenditure                                                               258,531                 72,710           331,241
                                                                                              (24,647)              (38,468)           (63,115)

            Depreciation/Amortisation                                                           71,208                47,694           118,902
                                                                                              (73,923)              (51,653)         (125,576)

     vii)   Reconciliation of Reportable Segments with the Financial Statements
                                                                                                                           (Rs in Thousands)
                                                                       Revenues             Results/                Assets          Liabilities
                                                                                           Net Profit

            Total of Reportable Segments                               15,396,021           1,407,383             9,343,527          7,088,104
                                                                     (12,307,256)         (1,207,418)           (7,437,226)        (5,244,132)
            Corporate - Unallocated/Others (net)                           230,860            131,049             4,836,199          1,050,087
                                                                         (291,195)            (28,237)          (3,810,792)          (882,167)
            Inter Segment Sales*                                          -596,312                 —                     —                  —
                                                                        (-592,722)                (—)                   (—)                (—)
            Interest Expense                                                   —                -9,505                   —                  —
                                                                              (—)             (-5,973)                  (—)                (—)
            Extraordinary Item – Profit on                                     —              233,008                    —                  —
            sale of Undertakings                                              (—)           (158,259)                   (—)                (—)
            Provision for tax                                                  —             -520,000                    —                  —
                                                                              (—)          (-416,200)                   (—)                (—)

            As per Financial Statements                                15,030,569           1,241,935            14,179,726          8,138,191
                                                                     (12,005,729)           (971,741)          (11,248,018)        (6,126,299)

            * Includes inter segment sales to non reportable segment of Rs Nil (previous year Rs 21,781 thousand)




54                                                                                                       ABB Limited, India, Annual Report 2003
     B)     Secondary Segment Reporting (by Geographical Segments)
            Secondary segment disclosures are reported on the basis of geographical location of customers.
                                                                                                                             (Rs in Thousands)
                                                                                                           Domestic      Exports          Total

            Revenues                                                                                      12,060,626    2,969,943    15,030,569
                                                                                                         (11,043,564)   (962,165)   (12,005,729)

            Total Assets                                                                                  14,179,726          —      14,179,726
                                                                                                         (11,248,018)        (—)    (11,248,018)

            Capital Expenditure                                                                              378,686          —         378,686
                                                                                                            (156,176)        (—)       (156,176)

                                                                                                                             (Rs in Thousands)

As at 31 December 2003                                                                                                      2003           2002

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

     a)     Sundry Debtors
            - ABB Industrial IT Development Center Limited                                                                    —              10

     b)     Loans and Advances
            - Universal ABB Power Cables Limited
              (Maximum amount due during the year Rs 500 thousand, previous year Rs 7,371 thousand)                           —              —
            - ABB Industrial IT Development Center Limited
              (Maximum amount due during the year Rs 6,436 thousand, previous year Rs 332 thousand)                          728             —
            - ABB Holdings (South Asia) Limited
              (Maximum amount due during the year Rs 233 thousand, previous year Rs 280 thousand)                             —              —

6.   Sundry creditors include amounts due to Small Scale Industrial Undertakings (SSI’s). Names of the
     SSI’s to whom the Company owes any sum, which is outstanding for more than 30 days as at
     31 December 2003 are as per attached Annexure.                                                                       72,906         65,955

7.   Contingent Liabilities
     i)     Claims against the Company not acknowledged as debts in respect of sales tax, excise and other matters       309,508        323,592
     ii)    Bills discounted                                                                                             173,772        167,938
            The above excludes bills co-accepted by the customers’ bankers/guaranteed by the State Governments
            Rs 533,069 thousand (Previous Year Rs 956,484 thousand)
     iii)   Income tax matters in dispute                                                                                238,380        141,522

8.   Estimated amount of contracts remaining to be executed on capital account and
     not provided for (net of advances)                                                                                  166,647        119,926




ABB Limited, India, Annual Report 2003                                                                                                       55
As at 31 December 2003                                                                                                                 (Rs in Thousands)
9.    Finance Lease Obligations
      The Company normally acquires computers and vehicles under finance lease with the respective underlying assets as security. Minimum lease
      payments outstanding as of 31 December 2003 in respect of these assets are as follows (.igures in brackets are in respect of the previous
      year):



      Due                                                                                  Total Minimum             Interest Not         Present Value of
                                                                                     Payments outstanding as             Due              Minimum Lease
                                                                                       on 31 December 2003                                    Payments

      Within one year                                                                          19,791                   2,497                   17,294
                                                                                              (23,849)                  (3,909)                (19,940)
      Later than one year and not later than five years                                        14,110                   1,772                   12,338
                                                                                              (28,051)                  (3,394)                (24,657)

                                                                                               33,901                   4,269                   29,632
                                                                                              (51,900)                  (7,303)                (44,597)


10.   The Company has non-cancelable operating lease obligations of Rs 4,059 thousand (previous year Rs 6,631 thousand) payable within one
      year and Rs Nil (previous year Rs 11,768 thousand) payable later than one year but not later than five years as on 31 December 2003. Rental
      expenses towards cancelable and non-cancelable operating leases charged to the profit and loss account amounts to Rs 69,339 thousand
      (previous year Rs 79,218 thousand).

11.   Deferred Tax
      i)       The break up of net deferred tax liability as at 31 December 2003 is as follows (.igures 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                                                                                 260,275
               under the Income-tax Act, 1961                                                                                                       (268,476)
               Expenditure under Section 43B of the Income-tax Act, 1961                                                    16,562
                                                                                                                           (16,966)
               Lease .inance                                                                                                10,630
                                                                                                                           (16,389)
               Provisions for doubtful debts and advances                                                                   70,528
                                                                                                                           (69,405)
               Others                                                                                                       16,284
                                                                                                                           (15,445)

                                                                                                                           114,004                   260,275
                                                                                                                          (118,205)                 (268,476)

               Net Deferred Tax Liability                                                                                                            146,271
                                                                                                                                                    (150,271)




56                                                                                                                  ABB Limited, India, Annual Report 2003
12.   Capacities, Production, Stock and Turnover (Refer Schedule 12)
      12.1    Capacities
              a) Installed capacities are as certified by the Managing Director, but not verified by the Auditors, being a technical matter.
      12.2    Production
              a) Production of finished goods is inclusive of production for captive use.
              b) “Others” represent internally manufactured components, sold during the year. The Company considers these ‘meant for sale’ when
                  actually sold. Since the quantitative denominations of these items are dissimilar, it is impracticable to disclose the quantitative
                  information in respect of production and turnover.
      12.3    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 4,067,237 thousand (Previous Year Rs 3,049,925 thousand).
      12.4    Work and Contracts-in-Progress
              The work and contracts-in-progress at the beginning of the year amounted to Rs 389,298 thousand (Previous Year Rs 462,858
              thousand).

                                                                                                                                       (Rs in Thousands)
For the year ended 31 December 2003                                                                                                   2003               2002
13.   Earnings in Foreign Exchange
      (on accrual basis)
      i)     Export of Goods
             - Direct on .OB basis                                                                                               2,780,013          756,805
             - Deemed Exports                                                                                                      588,932          302,442
      ii)    Goods supplied/services rendered locally against foreign exchange remittances                                          90,433              76,781
      iii)   Erection and other services                                                                                           102,307              79,160
      iv)    Other Income:
             a.   Commission                                                                                                        50,704              54,927
             b.   Others                                                                                                            44,744               8,735

                                                                                                                                 3,657,133        1,278,850




ABB Limited, India, Annual Report 2003                                                                                                                     57
For the year ended 31 December 2003                                                                               2003                               2002
14.   Consumption of Raw Materials and Components
                                                                                     Quantity       Rs in Thousands        Quantity      Rs in Thousands

      .errous Metals                                      MT                             2,848                 160,001        2,810               153,968
      Non-.errous Metals                                  MT                             1,392                 217,879        1,273               199,468
      Components                                                                              *              4,494,311             *             3,323,709
      Others                                                                                                   406,950                            248,387

                                                                                                             5,279,141                           3,925,532

                                                                                            %                                     %

      Imported                                                                           56.93               3,005,180        48.37              1,898,864
      Indigenously acquired                                                              43.07               2,273,961        51.63              2,026,668

                                                                                        100.00               5,279,141       100.00              3,925,532


      .or 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 finally 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)
15.   Value of imports on CIF basis                                                                                                2003              2002
      (on accrual basis)
      Raw Materials and Components                                                                                            2,585,410          1,559,338
      .inished Goods                                                                                                            291,382           217,793
      Maintenance Spare Parts                                                                                                          611             —
      Capital Goods including Technical Know-how                                                                                 99,108            13,391
      Software                                                                                                                   14,913            15,728
      Project items                                                                                                             607,899           519,550

                                                                                                                              3,599,323          2,325,800

16.   Expenditure in foreign currency
      (on accrual basis)
      Royalty                                                                                                                    22,580            15,591
      Trade mark and Technical Know-how .ees                                                                                     73,418            93,293
      Erection Services                                                                                                                 —           1,582
      Commission                                                                                                                  1,218             1,395
      Professional/Consultancy fees                                                                                              29,616            13,637
      Others                                                                                                                    147,262            55,248

                                                                                                                                274,094           180,746




58                                                                                                              ABB Limited, India, Annual Report 2003
For the year ended 31 December 2003                                                                                       (Rs in Thousands)
17.   Amount remitted during the year in foreign currency,                                                        2003                   2002
      on account of dividend
      i)     Number of shareholders                                                                                  3                      3
      ii)    Number of equity shares held by them on which dividend was paid                                22,084,198             21,120,879
      iii)   Year ended to which the dividend related                                              31 December 2002        31 December 2001
      iv)    Net amount remitted (tax deducted at source Rs Nil,
             previous year Rs 10,560 thousand)                                                                 132,505                 95,044


18.   Managerial Remuneration
      a)     i)    Directors’ fee                                                                                  170                    160
             ii)   Other remuneration
                   Salary                                                                         2,500                                 1,980
                   Commission to Managing Director                                                2,500                                 1,700
                   Commission to Non Executive Directors                                            900                                 1,500
                   Contribution to Provident and other funds                                        799                                   617
                   Other perquisites                                                              1,515                                 1,495

                                                                                                                 8,214                  7,292

                                                                                                                 8,384                  7,452

      b)     Computation of Net Profit as per Section 349 of the Companies Act, 1956
             Profit Before Tax as per Profit and Loss Account                                                1,761,935              1,387,941
             Add: Managerial Remuneration                                                         8,384                                 7,452
                   Loss on Sale of .ixed Assets                                                   4,715                                11,534

                                                                                                                13,099                 18,986

                                                                                                             1,775,034              1,406,927
             Less: Extraordinary Item – Profit on Sale of Undertaking                           233,008                               158,259
                   Profit on Sale of .ixed Assets                                                    75                                17,820

                                                                                                               233,083                176,079
             Net Profit as per Section 349 of the Companies Act, 1956                                        1,541,951              1,230,848

             Commission to Managing Director                                                                     2,500                  1,700
             Commission to Non Executive Directors                                                                 900                  1,500

                                                                                                                 3,400                  3,200


      Commission to Managing Director is subject to further recommendation and approval of Remuneration Committee and the Board. .or the year
      ended 31 December 2002, Rs 1,472 thousand was paid as commission to Managing Director based on recommendation and approval of
      Remuneration Committee and the Board.




ABB Limited, India, Annual Report 2003                                                                                                     59
For the year ended 31 December 2003                                                                                             (Rs in Thousands)
                                                                                                                               2003            2002

19.   Auditors’ Remuneration
      (excluding service tax)

      i     Audit .ee                                                                                                          3,350           3,350

      ii    Tax Audit .ee                                                                                                      1,975           1,975

      iii   Other Services (includes fees for quarterly and half yearly reviews)                                               3,366           3,270

      iv    Reimbursement of out of pocket expenses                                                                              948             885

20.   Interest charge for the year includes Rs 5,989 thousand (Previous Year Rs 3,894 thousand) being interest on .ixed period loans.

21.   .oreign exchange gain of Rs 144,623 thousand (Previous Year Rs 37,966 thousand) and foreign exchange loss of Rs 102,404 (Previous Year
      Rs 67,618 thousand) has been accounted for in the profit and loss account.

22.   Research and development expenditure of Rs 43,420 thousand (Previous Year Rs 23,139 thousand) on revenue account has been incurred
      during the year.

23.   With effect from 1 January 2003, the Company has adopted the revised Accounting Standard 7 – Construction Contracts for all the
      construction contracts on hand. This has resulted in reversal of sales and profits of Rs 89,816 thousand and Rs 7,222 thousand respectively as
      on 1 January 2003.

                                                                                                                                (Rs in Thousands)

      Contract revenue recognised as revenue for the year ended 31 December 2003                                                          5,509,360

      Aggregate amount of contract costs incurred and recognised profits (less recognised losses) up to
      31 December 2003 for all the contracts in progress                                                                                  9,126,115

      The amount of customer advances outstanding for contracts in progress as at 31 December 2003                                          516,728

      The amount of retentions due from customers for contracts in progress as at 31 December 2003                                          830,889




60                                                                                                           ABB Limited, India, Annual Report 2003
24.   Related Party Disclosures
      a)   List of Related Parties
           Parties 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 (Asea Brown Boveri) S.A., Amadora, Portugal                 ABB Hefei Transformer Co. Ltd., Hefei, China
           ABB (China) Ltd., Beijing, China                                ABB High Voltage Co. S.A.E., Heliopolis/Cairo, Egypt
           ABB (Hong Kong) Ltd., Hong Kong                                 ABB Holding A.S., Istanbul, Turkey
           ABB (P.J.S.C.), Teheran                                         ABB Holding AS, Billingstad
           ABB A/S, Skovlunde, Denmark                                     ABB Holdings (Pty) Ltd., Sunninghill, South Africa
           ABB AB, Västerås, Sweden                                        ABB Holdings (South Asia) Ltd., Bangalore, India
           ABB Agencies Pte. Ltd., Singapore, Singapore                    ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia
           ABB AP Trading & Engineering AG, Zurich, Switzerland            ABB Inc., Raleigh, NC
           ABB Arab S.A.E., Cairo, Egypt                                   ABB Inc., St. Laurent, Quebec, Canada
           ABB Asia Pacific Ltd., Hong Kong                                ABB Industri og Offshore AS, Billingstad, Norway
           ABB Asia Pacific Services Ltd., Hong Kong                       ABB Industria S.p.A. Milan, Italy
           ABB Australia Pty Limited, Sydney, Australia                    ABB Industrial IT Development Center Limited, Bangalore, India
           ABB Automation E.C., Bahrain                                    ABB Industries (L.L.C), Dubai, United Arab Emirates
           ABB Automation Ltd., Stevenage, United Kingdom                  ABB Industries AB, Vasteras
           ABB Automation Products GmbH, Eschborn, Germany                 ABB Industry Pte. Ltd., Singapore
           ABB Automation Products S.A., Barcelona                         ABB Information Systems Ltd., Zurich, Switzerland
           ABB Automation SAS, Massy, .rance                               ABB Instrumentation Ltd., St. Neots, United Kingdom
           ABB Automation Technology Products AB, Västerås, Sweden         ABB Instrumentation S.p.A., Milan, Italy
           ABB BV, Rotterdam, Netherlands                                  ABB Instrumentation, Massy, .rance
           ABB Calor Emag Mittelspannung GmbH, Ratingen, Germany           ABB International Marketing Ltd., Zurich, Switzerland
           ABB Chongqing Transformer Company Ltd., Chongqing City, China   ABB K.K., Tokyo, Japan
           ABB Control Ltd., Exhall, Coventry, United Kingdom              ABB Karebo Manufacturers (Pty), Midrand, South Africa
           ABB Electrical Industries Ltd., Riyadh, Saudi Arabia            ABB Limited, Auckland, New Zealand
           ABB Energy Automation S.p.A., Abu Dhabi, United Arab Emirates   ABB Limited, Bangkok, Thailand
           ABB Energy Engineering AG, Zurich, Switzerland                  ABB LLC, Al Hamriya, Oman
           ABB Engg. Technologies Co. (KSCC), Safat, Kuwait                ABB Logistics Center Europe GmbH, Menden, Germany
           ABB Engineering (Shanghai) Ltd., Shanghai, China                ABB Ltd, Dublin, Ireland
           ABB Engineering Trading and Service Ltd., Budapest, Hungary     ABB Ltd, Zurich, Switzerland
           ABB .lexible Automation Ltd., Milton Keynes, United Kingdom     ABB Ltd., Kampala, Uganda
           ABB Group Process Center S.A.E., Cairo, Egypt                   ABB Ltd., Kiev, Ukraine
           ABB Group Services Center GmbH, Mannheim, Germany               ABB Ltd., London, United Kingdom




ABB Limited, India, Annual Report 2003                                                                                                61
     ABB Ltd., Lusaka, Zambia                                       ABB Solutions S.p.A., Milano, Italy
     ABB Ltd., Seoul, Korea                                         ABB South Africa (Pty) Ltd., Sunninghill, South Africa
     ABB Ltd., Taipei, Taiwan                                       ABB Sp. zo.o., Warsaw, Poland
     ABB Ltda., Osasco, Brazil                                      ABB Stotz-Kontakt GmbH, Mannheim, Germany
     ABB Lummus Heat Transfer B.V., The Hague, Netherlands          ABB Strömberg DO 27 Oy, Helsinki, .inland
     ABB LV Installation Materials Co. Ltd., Beijing,China          ABB Technologies Ltd., Tirat Carmel, Israel
     ABB Malaysia Sdn Bhd, Subang Jaya, Malaysia                    ABB Technology .LB AB, Stockholm
     ABB Manufacturing & Consumer Industries AB, Västerås, Sweden   ABB Technology Ltd., Zurich, Switzerland
     ABB MC, St Ouen l’Aumone, .rance                               ABB Transformatoren GmbH, Bad Honnef, Germany
     ABB MEA Participation Ltd., Zurich, Switzerland                ABB Transmission and Distribution Sdn. Bhd., Subang Jaya, Malaysia
     ABB Mexico S.A. de C.V., Tlalnepantla, Mexico                  ABB Trasmissione & Distribuzione S.p.A., Milan, Italy
     ABB Oy, Helsinki, .inland                                      ABB Turbo-Systems AG, Baden, Switzerland
     ABB Payment Services B.V., Amstelveen                          ABB Utilities AB, Västerås
     ABB Power Technologies Management Ltd., Zurich, Switzerland    ABB Utilities GmbH, Mannheim, Germany
     ABB Power Technology Products AB, Ludvika                      ABB Vetco Gray U.K. Ltd., Aberdeen
     ABB Power Technology S.A., Zaragoza, Spain                     ABB Xiamen Electrical Controlgear Co. Ltd., .ujian Province, China
     ABB Process Analytics Ltd., St. Neots, United Kingdom          ABB Xiamen Switchgear Co. Ltd., Xiamen, China
     ABB Process and Automation, Sunninghill, South Africa
                                                                    ABB Zhongshan Transformer Company Ltd., Zhongshan City, China
     ABB Process Industries GmbH, Eschborn, Germany
                                                                    Asea Brown Boveri Inc., Norwalk, CT, United States
     ABB Progetto S.p.A., Bergamo, Italy
                                                                    Asea Brown Boveri Inc., Paranaque, Metro Manila, Philippines
     ABB S.A., Buenos Aires, Argentina
                                                                    Asea Brown Boveri Jumet S.A., Jumet, Belgium
     ABB S.A., Panama, Panama
                                                                    Asea Brown Boveri Ltd., Nairobi, Kenya
     ABB S.A., Paris La Défense
                                                                    Asea Brown Boveri Ltda., Bogotá, Colombia
     ABB S.p.A., Milan, Italy
                                                                    Asea Brown Boveri S.A., Brussels, Belgium
     ABB s.r.o., Prague
                                                                    Asea Brown Boveri S.A., Caracas, Venezuela
     ABB SACE S.p.A., Sesto S. Giovanni (MI), Italy
                                                                    Asea Brown Boveri S.A., Lima, Peru
     ABB SAE S.p.A, Milan, Italy
                                                                    Asea Brown Boveri S.A., Metamorphossis Attica, Greece
     ABB Schaltanlagentechnik GmbH, Ladenburg, Germany
                                                                    Asea Brown Boveri S.A., Santiago, Chile
     ABB Schweiz AG Baden, Sweden
                                                                    Electrical Materials Center, Riyadh, Saudi Arabia
     ABB Secheron S.A., Satigny, Switzerland
     ABB Service AB, Vasteras, Sweden                               Modulec S.A., San Luis, Argentina

     ABB Service Co. Ltd., Al Khobar, Saudi Arabia                  PT ABB Transmission and Distribution, Jakarta, Indonesia

     ABB Servomotors S.r.l., Milan, Italy                           Universal ABB Power Cables Ltd., Satna, India

     Associates:                                                    Integra Hindustan Control Limited
                                                                    National Switchgears Limited
     Directors:                                                     Mr. Peter Smits
                                                                    Mr. Ravi Uppal
                                                                    Mr. N S Raghavan
                                                                    Mr. Dinesh Paliwal
                                                                    Mr. Nasser Munjee
                                                                    Mr. Umesh Prasad Singh
                                                                    Mr. Peter Leupp
                                                                    Mr. BoonKiat Sim
                                                                    Mr. A Ramamurthy (expired on 23.02.2003)




62                                                                                               ABB Limited, India, Annual Report 2003
                                                                                                (Rs in Thousands)

                                                                                               2003         2002
     b)   Transactions with related parties

          i)      Sales, Services and other income
                  .ellow Subsidiaries                                                       989,188       742,413
                  Associates                                                                  3,448         8,005

          ii)     Purchases of Raw Materials, Components and Project items
                  .ellow Subsidiaries                                                      2,755,071    1,698,983

          iii)    Expenditure on Royalty, Trade-mark, Technical and Consultancy Services
                  Holding Company                                                            79,982        93,293
                  .ellow Subsidiaries                                                       178,820        15,591

          iv)     Expenditure on Other Services
                  Holding Company                                                               654            —
                  .ellow Subsidiaries                                                        52,832        15,601

          v)      Capital expenditure for Technical Know-how
                  .ellow Subsidiaries                                                        35,929        11,740

          vi)     Capital expenditure
                  .ellow Subsidiaries                                                        15,178         1,824

          vii)    Outstanding balances as at 31 December 2003
                  Debtors and Advances
                  Holding Company                                                                —             —
                  .ellow Subsidiaries                                                       499,653       246,368
                  Associates                                                                    262         2,220
                  Creditors
                  Holding Company                                                             57,582       41,662
                  .ellow Subsidiaries                                                      1,136,015      506,918

          viii)   Provision for doubtful debts
                  .ellow Subsidiaries                                                           479            —

          ix)     Provision for doubtful advance written back
                  Associates                                                                     —          9,934

          x)      Provision for Investment written back
                  Associates                                                                     —          2,500

          xi)     Investment written off during the year
                  Associates (Previous Year net of Rs 2,500 thousand written back)               —             —




ABB Limited, India, Annual Report 2003                                                                        63
                                                                                                                                  (Rs in Thousands)

                                                                                                                                 2003             2002
           xii)    Dividend Paid during the year
                   Holding Company                                                                                            117,456            93,063
                   .ellow Subsidiaries                                                                                         15,048            17,353

           xiii)   Redemption of Preference Shares
                   .ellow Subsidiary                                                                                                —            75,000

           xiv)    Part consideration received for sale of
                   Air Handling business
                   Holding company                                                                                                  —           171,164

           xv)     Managerial Remuneration                                                                                      8,384             7,452

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

                                                                                     Signature to Schedules 1 to 16

                                                                                     .or and on behalf of the Board
                                                                                     Dinesh Paliwal               Chairman
                                                                                     Ravi Uppal                   Vice Chairman & Managing Director
                                                                                     Nasser Munjee                Director
                                                                                     Umesh Prasad Singh           Director
                                                                                     Peter Leupp                  Director
                                                                                     R.N. Bharadwaj               Director
                                                                                     K. Rajagopal                 Sr. Vice President - .inance

                                                                                     B. Gururaj                   Company Secretary

                                                                                     Mumbai, 27 January, 2004




64                                                                                                            ABB Limited, India, Annual Report 2003
Annexure to note 6 of Schedule 16 - Notes to the Account

Names of the Small Scale Industrial Undertakings to whom the Company owes any sum which is outstanding for more than 30 days as at
31 December 2003.

A.K.Industries                                                          D.V. Enterprise

Abhay Engineering Industries                                            Dalal Auto Cast

Advance Engineering .ab. Industries                                     Dee Bee Enterprise

Advanced Electronic Systems                                             Deepak Engineering Works

Agate Electroinsulants Private Limited                                  Dhaval Electricals

Agro Auto .orging (Baroda) Private Limited                              Diakem Products Bombay Private Limited

Alfeco                                                                  Dolf Industries

Amba Industries                                                         Eeco Switch

Amey Innovatives                                                        Electronic Relays (India)

Amit .orging Works                                                      Engineers India Industries

Ani Stamping & Lamination                                               Enterprising Engineers

Anil Metal Industries                                                   Exalt Engineering Industries

Aress High Duty .orgings Private Limited                                Excel Graphics Private Limited

Aress Trading Company Private Limited                                   Excel Process Private Limited

Ashutosh Engineering                                                    Expert Engineers

Ashwin N. Desai & Company                                               ..S.Engineers

AVN Tools & Instruments Private Limited                                 .ibertek Communications Private Limited

B.B. Electrotechnic                                                     .illicon Electronics Private Limited

B.V.S. Electromech Industries                                           .intex Industries

Bajaj Insulation                                                        .luo-Lite Private Limited

Bajaj Nylon & Plastics                                                  .luoro Plast Private Limited

Bankim & Company                                                        Garda Tools

Baroda Bushings & Insulators                                            Global Weighing India Private Limited

BGL Engineering                                                         Globe Scott Motors Private Limited

Bumper India Private Limited                                            Goa Resistors Private Limited

Capso Engineers                                                         H.B. Engineers Private Limited

Chemicals & Lacquers                                                    Halcyon .riends Enterprise

Chetna Engineering Company                                              Hi Tech Insulators Private Limited

Control Dynamics                                                        Hindustan Polythene & Plastic Works

Crystal India                                                           Insta Controls




ABB Limited, India, Annual Report 2003                                                                                               65
Intricast Private Limited                  Mita .asteners Private Limited

J. Khushaldas & Company                    Monal Equipment Engineers Private Limited

J.M. Engineering Works                     Monarch Industries

J.S. Auto Engineering Works                MPP Technologies Private Limited

Jyoti Pattern Works                        Multi Range Engineers

K.S. Engineering Works                     Multifab Gujrat Private Limited

Kalpana Engineering Works                  Multimetal Industries

Kamal Engineering Works                    Nandi Powertronics

Kanksha Glass Industries                   Narkhede Udyog

Kartikeya Engineering Works                Nootan Enginering Industries

KEL Tools                                  Okay Tools Private Limited

Khanna Traders & Engineers                 P.R. Engineering Works

Khoday Control System Private Limited      Panchal Engineers

Kombyne Transpack Private Limited          Panetronics Corporation

Light Industries                           Parveen Wood & Stone Traders

Lotus International                        Phenoplast Corporation

LPS Bossard Private Limited                Power Technologies

M.G. Marketing                             Prajapati Electro Industries

M.N. Chatterjee & Company                  Prajapati Engineering Works

Mahesh Vidyut Udyog                        Prathoma Switchgears Private Limited

Mahindra Engineering & Chemical Products   Precision Spring Works

Maruti Engineers                           Precision Tools Maker

Maruti Technical Services                  Press-N-.orge

Mathur Corr-Tech Private Limited           Press-O-Parts Industries

Mathura Switchgears Private Limted         Priyam Switchgears

Meck Industries                            Protecta-Controls

Metal Craft Engineering                    Pulse Magnetic & Power Electronics

Metalcraft Engineering & Spring            Quality Castings

Metlok Company                             R.J. Industrial Corporation

Microsign Sales & Services                 Raj Deep Automation Private Limited

Milind Engineering Works                   Rajendra Industries

Minal Electrical & Engineering             Raju Convertors Private Limited




66                                                                           ABB Limited, India, Annual Report 2003
Raman Thermostats                                 Swambe Chemicals

Ramson Instruments                                Swastik Industrial Works

Recherche Industries                              Switron Devices

Reliable Electronics Components Private Limited   Systronics

Resistors Manufacturing Company                   T & . Insulation Private Limited

S D Enterprises                                   Tas .oundries Private Limited

Sagon Energy Equipments Private Limited           Team Engineers

Sai International                                 Techno Electronics

Sameer Linkages Private Limited                   Techno Rubber & Plastics

Sameer Paints                                     Tee-Vee Tools & Engineering Industries

Sankla Castings                                   Thermoplastic Surgical & Scientific

Sara Enterprises                                  Tirupati Rubber Products

Saymadri Rolls Private Limited                    Transformers & Rectifiers Private Limited

Shah Electrical Engineers                         Trinity Electrical Industries

Shanmugha Precision .orgings                      Tushar Industry

Shinograph                                        Tushar Metals Private Limited

Shiv Shakti Industries                            Uma Enterprises

Shivam Engineering                                Unique Enterprises

Shivam Polymers                                   United Heat Transfer Private Limited

Shree Durga Industries                            Vaibhav Engineers Private Limited

Shree Sai Engineering Works                       Varsha Cables Private Limited

Somesh .orge Private Limited                      Varun Udyog

Soni Enterprises                                  Vee Vee Controls Private Limited

Specialised Components Private Limited            Vinmech Industries

Sri Ganesh Switchgears Private Limited            Vinod Industries

Star Plating Industries                           Viru Electronics

Stardrive Busducts Private Limited                Volco Industries

Sungrace Electrticals Private Limited             Wezmann Engineering

Super Auto Electricals Private Limited            Win Tech Engineers

Surindra Malleables Private Limited               Yasho Electric Works




ABB Limited, India, Annual Report 2003                                                        67
Cash .low Statement




                                                                                            (Rs in Thousands)
For the year ended 31 December 2003                                                        2003            2002
A.   Cash Flow from Operating Activities
     Net Profit Before Tax and Extraordinary Items                                    1,528,927       1,229,682
     Extraordinary Item - Profit on Sale of Undertaking                                 233,008         158,259
                                                                                      1,761,935       1,387,941
     Adjustments for
     Depreciation                                                                       184,350         183,223
     Unrealised Gains on Restatement of Monetary Assets                                   (7,487)        (2,923)
     Unrealised Losses on Restatement of Monetary Liabilities                             16,999           9,064
     Loss / (Profit) on Sale of .ixed Assets, net                                          2,265         (2,871)
     Profit on Sale of Investments                                                        (3,179)             —
     Interest Income                                                                   (164,144)      (104,163)
     Dividend Income                                                                        (224)          (285)
     Interest Expense                                                                      9,505           5,973
     Provision for Diminution in the value of Investments                                      —         (2,600)
     Investments Written Off                                                                   —           2,600
     Extraordinary Item - Profit on Sale of Undertaking                                (233,008)      (158,259)
     Operating Profit before Working Capital Changes                                  1,567,012       1,317,700
     Movement in Working Capital
     Decrease/(Increase) in Sundry Debtors                                             (732,924)       (485,322)
     Decrease/(Increase) in Inventories                                                (117,109)           86,468
     Decrease/(Increase) in Loans and Advances                                         (776,741)         112,407
     Increase/(Decrease) in Current Liabilities and Provisions                        1,928,500       1,093,970
     Working Capital Items Transferred on Sale of Air Handling business                       —          (49,980)
     Working Capital Items Transferred on Sale of Metering business                     (89,075)               —
     Cash Generated from Operations                                                   1,779,663       2,075,243
     Direct Taxes Paid (net of refunds)                                                (528,530)       (468,138)
     Net cash generated from Operating Activities                                     1,251,133       1,607,105


B.   Cash Flow from Investing Activities
     Purchase of .ixed Assets                                                          (440,080)      (192,353)
     Proceeds from sale of .ixed Assets                                                   5,212          40,729
     Purchase of Investments                                                           (607,026)      (215,000)
     Sale/Maturity of Investments                                                       300,076          67,026
     Interest Received                                                                  125,273          91,102
     Dividends Received                                                                      224            285
     Consideration Received from Sale of Undertaking                                    407,447         258,963
     Net cash (used in) / generated from Investing Activities                          (208,874)         50,752




68                                                                        ABB Limited, India, Annual Report 2003
                                                                                                                                  (Rs in Thousands)
For the year ended 31 December 2003                                                                                              2003              2002
C. Cash Flow from Financing Activities
     Proceeds from new Borrowings                                                                                                7,838            38,892
     Repayment of Borrowings                                                                                                  (30,495)          (23,161)
     Redemption of Preference Shares                                                                                                —           (75,000)
     Interest Paid                                                                                                             (9,505)            (5,973)
     Dividend paid                                                                                                          (286,402)         (211,149)
    Net Cash used in Financing Activities                                                                                   (318,564)         (276,391)

Net Increase in Cash and Cash Equivalents (A+B+C)                                                                             723,695         1,381,466

Cash and Cash Equivalents (Opening Balance)                                                                                 2,806,621         1,425,155

Cash and Cash Equivalents (Closing Balance)                                                                                 3,530,316         2,806,621

Components of Cash and Cash Equivalents as at 31 December                                                                        2003              2002

Cash and Cheques on Hand                                                                                                        3,413           12,956

Balances With Banks - on Current Account                                                                                    1,435,001         1,140,308
                      - on Deposit Account                                                                                  2,091,820         1,651,840
                      - on Margin Account                                                                                           82            1,517
                                                                                                                            3,530,316         2,806,621

Note:   The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the classification of the current year.


Per our report attached                                                            .or and on behalf of the Board
.or Bharat S Raut & Co.
Chartered Accountants                                                              Dinesh Paliwal              Chairman
                                                                                   Ravi Uppal                  Vice Chairman & Managing Director
                                                                                   Nasser Munjee               Director
                                                                                   Umesh Prasad Singh          Director
                                                                                   Peter Leupp                 Director
                                                                                   R.N. Bharadwaj              Director
                                                                                   K. Rajagopal                Sr. Vice President - .inance
Pradip Kanakia
Partner                                                                            B. Gururaj                  Company Secretary
Membership Number : 39985
Mumbai, 27 January, 2004                                                           Mumbai, 27 January, 2004




ABB Limited, India, Annual Report 2003                                                                                                                69
Balance Sheet Abstract and Company’s General Business Profile




I        Registration Details
         Registration No.                      032923                                                  State Code                    0 8
         Balance Sheet Date                31      12      03
                                          Date Month       Year

II       Capital Raised during the year (Rs in Thousands)
         Public Issue                                                                                  Rights Issue
                                          —                                                                                           —
         Bonus Issue                                                                                   Private Placement
                                          —                                                                                           —


III      Position of Mobilisation and Deployment of Funds (Rs in Thousands)
         Total Liabilities                                                                             Total Assets
                               6 1 4 2 5 7 6                                                                            6 1 4 2 5 7 6
         Sources of Funds
         Paid-up Capital                                                                               Reserves and Surplus
                                 4 2 3 8 1 7                                                                            5 6 1 7 7 1 8
         Secured Loans                                                                                 Unsecured Loans
                                   2 9 6 3 2                                                                                 7 1 4 0 9
         Application of Funds
         Net .ixed Assets                                                                              Investments
                               1 7 0 0 0 9 0                                                                               5 8 5 8 8 1
         Net Current Assets *                                                                          Misc. Expenditure
                               3 8 5 6 6 0 5                                                                                          —
         Accumulated Losses
                                          —
         * Net of deferred tax liability of Rs 146,271 thousand

IV       Performance of the Company (Rs in Thousands)
         Turnover                                                                                      Total Expenditure
                             1 5 0 3 0 5 6 9                                                                          1 3 5 0 1 6 4 2
         +/- Profit/Loss Before Tax                                                                    +/- Profit/Loss After Tax
                             +1 7 6 1 9 3 5                                                                           + 1 2 4 1 9 3 5
         Earnings per Share in Rs                                                                      Dividend Rate %
                                   2 9 . 3 0                                                                                        6 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

         Item Code No. (ITC Code)                                                         84.71
         Product Description                                                              Mini Computers/Microprocessor based system

         Item Code No. (ITC Code)                                                         85.04
         Product Description                                                              Electronic Control and Supply Units for Variable
                                                                                          Speed Drives and other applications




    70                                                                                              ABB Limited, India, Annual Report 2003
ABB Limited, India, Annual Report 2003   71
72   ABB Limited, India, Annual Report 2003
2003 Key Highlights




       First APDRP project in India               First FACTS project in India            Several overseas projects including
           – Bijapur, Karnataka                         – Raipur-Rourkela               the largest export order (PEEGT, Syria)




       Capacity / Range expansion               Power transfomer capacity and                   New line at Nashik for
          – Motors, Faridabad                range expansion to 400 kV, Vadodara           globally sourced MV Switchgear




   New products – RMUs, MCBs, DBs,             Several Building Systems projects          Café-HR – Real-time system for
   RCDs, AC Drives, Flame Proof Motors                                                   employees’ HR-related transactions




       Mid-day meal programme,                        Asia Money Award for                       Widespread media
      Govt. Primary School, Peenya       ‘Best Small Cap (500 MUSD) Company in India’            acknowledgement
                                       GF-CC/AR03/Mar/39K




Registered Office & Corporate Office
ABB Limited
2nd Floor, East Wing, Khanija Bhavan
No. 49, Race Course Road
Bangalore – 560 001
Phone: +91 80 22949150–54
Fax: +91 80 22949148
www.abb.com/in

				
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Abhimanyu Sukhwal Abhimanyu Sukhwal Associate Consultant
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