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ABB India_ AR_2003-04

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					ABB Limited




Board of Directors                                Auditors

Dinesh Paliwal, Chairman                          S.R.Batliboi & Company
Ravi Uppal, Vice Chairman and Managing Director
Peter Smits
N.S.Raghavan
Nasser Munjee                                     Registered Office
Peter Leupp
Tom Eric Sjoekvist                                2nd Floor, East Wing
                                                  Khanija Bhavan
                                                  49, Race Course Road
                                                  Bangalore - 560 001
Company Secretary

B Gururaj
                                                  Registrar & Share Transfer Agents

                                                  Karvy Computershare Private Limited
Corporate Management Committee                    No. 51/2, T.K.N.Complex
                                                  Vanivilas Road
Ravi Uppal                                        Opp. National College
I K Sadhu                                         Basavanagudi
Biplab Majumder                                   Bangalore - 560 004
Amresh Dhawan
K Rajagopal
V Swamy
Bazmi Husain
P C Rajiv
Shyam Karmarkar
P P Gomes




Bankers

ICICI Bank Limited
Canara Bank
IDBI Bank Limited
HDFC Bank Limited
Hongkong & Shanghai Banking Corporation Limited
Union Bank of India
Standard Chartered Bank




ABB Limited, India, Annual Report 2004                                                  1
5 Year Highlights




                                                                                                                    (Rs in Millions)
Description                                     2004             2003             2002                2001               2000


Sources of Funds
Share Capital                                     423.8            423.8            423.8               498.8             414.2
Reserves                                        6,669.4          5,461.6          4,539.2             3,805.4            3,478.4
Net Worth                                       7,093.2          5,885.4          4,963.0             4,304.2            3,892.6
Borrowings                                         14.9            101.0            123.7               108.0             165.6
Funds Employed                                  7,108.1          5,986.4          5,086.7             4,412.2            4,058.2


Income and Profits
Sales & Other Income                          23,055.7          15,030.6        12,005.7             10,557.6            8,068.5
Operating Profit Before Interest
and Depreciation                                2,582.3          1,722.8          1,418.9             1,105.9             911.8
Profit Before Tax                               2,365.2          1,528.9          1,229.7               850.8             705.1
Tax                                               860.0            520.0            416.2               197.5             165.0
Profit After Tax                                1,505.2          1,008.9            813.5               653.3             540.1
Dividend / Dividend Tax                           335.4            319.5            259.1               228.2             253.9
Retained Earnings                               1,169.8            689.4            554.4               425.1             286.2


Other Data
Gross Fixed Assets                              3,428.1          3,037.9          2,707.0             2,747.9            2,442.3
Debt Equity Ratio                                0.01:1           0.02:1           0.02:1               0.03:1            0.04:1
Net Worth Per Equity Share - Rs                   167.4            138.9            117.1                 99.8              94.0
Earnings Per Equity Share - Rs                     35.5             23.8                19.1              15.5              13.0
Dividend Per Equity Share - Rs                      7.0              6.0                 6.0               5.0               5.0
Profit After Taxes as %
to Average Net Worth                               23.2             18.6                17.6              15.9              14.4



Note :
1)   Excludes revaluation of fixed assets, revaluation reserve and exceptional items.




2                                                                                              ABB Limited, India, Annual Report 2004
Notice to Members




NOTICE is hereby given that the FIFTY-FIFTH ANNUAL GENERAL                       RESOLVED FURTHER THAT the registers, indexes, returns,
MEETING of the Members of ABB Limited will be held at ITC Hotel                  books, certificates or copies of certificates and documents of
Windsor Sheraton & Towers, “Windsor Square”, 25, Golf Course Road,               the Company required to be maintained and kept for inspection
Bangalore - 560052, on Tuesday, the 24 May, 2005 at 3.00 PM (IST)
                                                                                 under the provisions of the Companies Act, 1956, be kept open
to transact the following business:
                                                                                 for such inspection, at the above mentioned place, for persons

Ordinary Business                                                                entitled thereto, to the extent and in the manner and on payment
                                                                                 of fees, if any, specified in the aforesaid Act or the Articles of
1.    To receive, consider and adopt the Balance Sheet as at                     Association of the Company, between 10.30 AM and 12.30 PM
      31 December, 2004 and the Profit and Loss Account for the                  on any working day (Monday to Friday) except when the
      year ended on that date and the Reports of the Directors and               registers and books are closed under the provisions of the said
      the Auditors thereon.
                                                                                 Act or the Articles of Association of the Company.’’

2.    To declare a dividend on equity shares.
                                                                                    By Order of the Board

3.    To appoint a Director in place of Mr. Dinesh Paliwal, who retires             For ABB Limited
      by rotation at this Annual General Meeting, and being eligible,
      offers himself for re-election.                                               B Gururaj
                                                                                    Assistant Vice President &
4.    To appoint a Director in place of Mr. N S Raghavan, who retires               Company Secretary
      by rotation at this Annual General Meeting, and being eligible,
                                                                                    Bangalore
      offers himself for re-election.
                                                                                    1 February, 2005

5.    To appoint M/s S.R. Batliboi & Co., Chartered Accountants, as
      Auditors of the Company to hold office from the conclusion of                 Registered Office:
      this Annual General Meeting until the conclusion of the next                  2nd Floor, East Wing,
      Annual General Meeting and to fix their remuneration.                         Khanija Bhavan, 49, Race Course Road,
                                                                                    Bangalore – 560 001

Special Business

                                                                           Notes:
6.    To consider and if thought fit, to pass with or without
      modification(s), the following resolution as a Special Resolution:
                                                                           1.   The relative Explanatory Statement pursuant to Section 173(2) of
                                                                                the Companies Act, 1956, setting out the material facts in respect
      “RESOLVED THAT in compliance with the provisions of Section
      163 and all other applicable provisions, if any, of the                   of business under item No. 6 is annexed hereto.
      Companies Act, 1956 (“the Act”) the consent of the Company
      be and is hereby accorded for keeping the register of                2.   A MEMBER ENTITLED TO ATTEND AND VOTE AT THE
      members, the index of members, register & index of debenture-             MEETING IS ENTITLED TO APPOINT ONE OR MORE
      holders if any, records relating to returns of allotment from time        PROXY(IES) TO ATTEND AND VOTE INSTEAD OF HIMSELF/
      to time, copies of annual returns prepared under Section 159 of           HERSELF AND A PROXY NEED NOT BE A MEMBER OF THE
      the Act together with copies of certificates and documents
                                                                                COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST
      required to be annexed thereto under Section 161 of the Act or
                                                                                BE RECEIVED AT THE COMPANY’S REGISTERED OFFICE
      any one or more of them, at the Office of Karvy Computershare
      Private Limited, the Registrar and Share Transfer Agents of the           NOT LATER THAN FORTY–EIGHT HOURS BEFORE THE
      Company, situated at #51/2, T.K.N. Complex, Vanivilas Road,               COMMENCEMENT OF THE MEETING.
      Opp. National College, Basavanagudi, Bangalore 560 004 with
      effect from 25 May, 2005 instead of being kept at the                3.   Members should bring the duly filled in attendance slips sent
      Registered Office of the Company.                                         herewith for attending the meeting.




10                                                                                                       ABB Limited, India, Annual Report 2004
                                                                          Annexure to Notice
                                                                          Explanatory Statement under Section 173(2)
                                                                          of the Companies Act, 1956.

4.   The Register of Members and the Share Transfer Books of the          Item No. 6
     Company will remain closed from Friday, the 13 May, 2005 to
     Tuesday, the 24 May, 2005 (both days inclusive) for the              The Board of Directors at its meeting held on 1st February, 2005
     purpose of payment of dividend.                                      has appointed Karvy Computershare Private Limited (hereinafter
                                                                          referred to as “Karvy”) as the Registrar and Share Transfer Agents
5.   The dividend, as recommended by the Board, if declared at the        of the Company in place of Tata Consultancy Services Limited who
     Annual General Meeting, will be paid on or after Thursday, the       have opted out of the registry services.
     26 May, 2005 to those members whose names stand registered
     on the Company’s Register of Members:-                               Karvy are SEBI registered Registrar and Transfer Agents. They are
                                                                          equipped with the required infrastructure facilities, including V-Sat
     a)   as Beneficial Owners as at the end of business hours on         connectivity with the National Securities Depository Limited (NSDL)
          Thursday, the 12 May, 2005 as per the list to be furnished      and the Central Depository Services (India) Limited (CDSL). Karvy
          by National Securities Depository Limited (NSDL) and            will act as common agency for share registry work in terms of both
          Central Depository Services (India) Limited (CDSL) in           physical and electronic connectivity. It is also proposed that the
          respect of shares held in demat form.                           statutory records like the Register of Members, Index of Members,
                                                                          Annual Returns etc be kept at the office of Karvy at Bangalore.
     b)   as Members in the Register of Members of the Company
          after giving effect to valid share transfers lodged with the    Section 163 of the Companies Act, 1956 provides that the register
          Company, on or before Thursday, the 12 May, 2005.               and index of members and debenture-holders, annual returns and
                                                                          other statutory records may, instead of being kept at the registered
6.   Members are requested to note that dividends not encashed or         office of the Company, be kept at any other place within the city, in
     remaining unclaimed within a period of seven years from the          which the registered office is situate, provided that the consent of
     date of transfer to the Company’s Unpaid Dividend Account, will,     the members is obtained by way of a Special Resolution. Hence, the
     be transferred, under Section 205-A of the Companies Act, 1956,      approval of the Members is sought by way of a Special Resolution
     to the Investor Education and Protection Fund, established under     pursuant to the provisions of Section 163 and other applicable
     Section 205C of the said Act. Members, who have not yet              provisions, if any, of the Companies Act, 1956.
     encashed the dividend warrant(s) are requested to forward their
     claims to the Company’s Registrar and Share Transfer Agents. It      The Directors recommend passing of the Special Resolution by the
     may be noted that once the unclaimed dividend is transferred to      Members at item No.6 of the accompanying notice.
     the Investor Education and Protection Fund as above, no claim
     shall lie with the Company in respect of such amount.
                                                                          None of the Directors is, in any way, concerned or interested in the
                                                                          said resolution.
7.   Members are requested either to intimate, indicating their folio
     number, the changes, if any, in their registered addresses, either
     to the Company or its Registrar and Share Transfer Agents, viz.        By Order of the Board
     Karvy Computershare Private Limited, #51/2, T.K.N. Complex,            For ABB Limited
     Vanivilas Road, Opp. National College, Basavanagudi,
     Bangalore 560 004, Karnataka or to their respective Depository         B Gururaj
     Participant (DP) in case the shares are held in demat form.            Assistant Vice President &
                                                                            Company Secretary
8.   Members holding shares in physical form can avail of the
     nomination facility by filing Form 2B (in duplicate) with the
                                                                            Bangalore
     Company or its Registrar & Share Transfer Agents which will be
                                                                            1 February, 2005
     made available on request and in case of shares held in demat
     form the nomination has to be lodged with their Depository
     Participant.                                                           Registered Office:
                                                                            2nd Floor, East Wing
9.   The particulars of Directors retiring by rotation are given in the     Khanija Bhavan, 49, Race Course Road
     Corporate Governance Section of this Annual Report.                    Bangalore – 560 001




ABB Limited, India, Annual Report 2004                                                                                                            11
Directors’ Report




The Directors have pleasure in presenting their Fifty-fifth Annual Report and Audited Accounts for the year ended 31 December, 2004.

Financial Results
                                                                                                                                  (Rs in Thousands)

                                                                                                                   For the year        For the year
                                                                                                                     ended 31            ended 31
                                                                                                                December, 2004      December, 2003


Profit Before Tax and Exceptional Item                                                                                2,365,200           1,528,927
Exceptional Item – Profit on Sale of Undertaking                                                                        37,991              233,008
Profit Before Taxation                                                                                                2,403,191           1,761,935
Less: Provision for Tax
      - Current Tax                                                                                                    874,000              524,000
      - Deferred Tax                                                                                                   (14,000)              (4,000)
Profit After Tax                                                                                                      1,543,191           1,241,935
Less: Transfer to Foreign Projects Reserve Account                                                                       4,000                    2,500
Balance Brought Forward from last year                                                                                 278,374              258,391
Amount available for Appropriation                                                                                    1,817,565           1,497,826
Appropriations
General Reserve                                                                                                       1,180,000             900,000
Proposed Dividend                                                                                                      296,672              254,290
Corporate Dividend Tax                                                                                                  38,771                32,581
Corporate Dividend Tax – 2002                                                                                               —                 32,581
Balance Carried Forward                                                                                                302,122              278,374
                                                                                                                      1,817,565           1,497,826



Dividend                                                                   Gain on sale of Control Valve business was Rs 38 million. In last year
                                                                           gain on sale of Metering business was significantly higher at Rs. 233
The Directors recommend payment of a dividend at the rate of Rs 7.00       million. Profit after tax was higher at Rs 1,543 million compared to
(Previous year Rs 6.00) per equity share for the year ended                Rs 1,242 million in the previous year.
31 December, 2004 on 42,381,675 equity shares of Rs 10 each.
                                                                           Operating performance of both the segments, power technology and
Performance Review
                                                                           the automation technology, was significantly better than previous year.
Total orders received during the year at Rs 25,878 million were 52%        For detailed analysis of the performance, please refer to management’s
higher compared to Rs 17,054 in the previous year.                         discussion and analysis section of the annual report.

Order backlog at the end of 2004 increased to Rs 13,356 million            Divestment of Business
compared to Rs 10,710 million at the end of the previous year.
                                                                           As approved by the shareholders earlier, the Company has divested its
Sales and other income for the year was 53% higher at Rs 23,056
                                                                           Control Valves business to Kent Introl Private Limited on 12 July, 2004.
million compared to Rs 15,031 million in the previous year.
                                                                           The gain on divestment was Rs 38 million reported as profit on sale of
Profit before tax and exceptional item was significantly higher at         undertaking in profit and loss account as an exceptional item. The
Rs 2,365 million compared to Rs 1,529 million in the previous year.        Company has invested the gain in specified assets as per the
Growth in profit was mainly attributable to volume growth and focused      provisions of Section 54EC of the Income Tax Act, 1961. Accordingly no
control over overheads.                                                    tax liability arises on this gain.




12                                                                                                         ABB Limited, India, Annual Report 2004
Change in Registrar and Transfer agents                                             31 December, 2004 and of the profit of the Company for the year
                                                                                    ended on that date;
The Board of Directors has appointed Karvy Computershare Private
Limited as Registrar and Share Transfer Agents of the Company in             iii.   proper and sufficient care has been taken for the maintenance of
place of Tata Consultancy Services Limited who have opted out of                    adequate accounting records in accordance with the provisions
Registry Services business.                                                         of the Companies Act, 1956, for safeguarding the assets of the
                                                                                    Company and for preventing and detecting fraud and other
Transfer to the Investor Education and Protection Fund                              irregularities; and

In terms of Section 205C of the Companies Act, 1956, the following           iv.    the annual accounts have been prepared on a going concern
amounts lying with the Company as unclaimed for a period of seven                   basis.
years from the date they became due for payment were transferred
                                                                             Corporate Governance
during the year to the Investor Education and Protection Fund.
                                                                             Pursuant to clause 49 of the listing agreement, a report on corporate
1.    Unclaimed Fixed Deposits                    Rs.     6,000
                                                                             governance and a certificate from the Auditors of the Company are
2.    Unclaimed Dividends                         Rs.   402,492
                                                                             given in Annexure – C and Annexure – D respectively, which forms part
Conservation of Energy, Technology Absorption, Foreign Exchange              of this report.
Earnings and Outgo
                                                                             Board of Directors
The particulars as prescribed under sub-section (1)(e) of Section 217 of
                                                                             Mr. BoonKiat Sim and Mr. R N Bhardwaj resigned as Directors of the
the Companies Act, 1956, read with the Companies (Disclosure of
                                                                             Company effective 5 March, 2004 and 13 December, 2004 respectively.
Particulars in the Report of Board of Directors) Rules, 1988, are given in
                                                                             Your Directors place on record their appreciation of the valuable
Annexure – A, forming part of this report.
                                                                             services rendered by Mr. BoonKiat Sim and Mr. R N Bhardwaj as
Environment, Health and Safety                                               Directors of the Company.

                                                                             The Board at its meeting held on 19 October, 2004 appointed Mr.Tom
The Company has in place a system for controlling and monitoring
                                                                             Eric Sjoekvist as a Director of the Company in the casual vacancy
pollutants at all factories complying with environmental standards and
                                                                             caused by the resignation of Mr. BoonKiat Sim.
legislation. All the manufacturing units of the Company had received
certificates for ISO 14001 (EMS). Health and safety are also Company’s       Mr. Dinesh Paliwal and Mr. N.S. Raghavan, Directors, retire by rotation at
focus areas. Most of the units of the Company had been awarded               the ensuing Annual General Meeting and being eligible, offer
OHSAS 18001 certification for the health and safety system.                  themselves for re-appointment. The particulars of the retiring Directors
                                                                             are given in the Corporate Governance section annexed to this report.
Particulars of Employees
                                                                             Auditors
The statement under sub-section (2A) of Section 217 of the Companies
Act, 1956, read with the Companies (Particulars of Employees) Rules,         The Company’s Auditors M/s S.R. Batliboi & Company, Chartered
1975, as amended, and forming part of this report is given                   Accountants, hold office upto the conclusion of the ensuing Annual
in Annexure – B.                                                             General Meeting. The Company has received a requisite certificate
                                                                             pursuant to Section 224(1B) of the Companies Act, 1956, regarding their
Directors’ Responsibility Statement                                          eligibility for re-appointment as Auditors of the Company.

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the                                                 For and on behalf of
Directors to the best of their knowledge and belief confirm that:                                             the Board of Directors
i.    in the preparation of the annual accounts, the applicable
                                                                                                              Dinesh Paliwal
      accounting standards have been followed by the Company;
                                                                                                              Chairman
ii.   appropriate accounting policies have been selected and applied
      consistently and such judgements and estimates have been                                                Bangalore
      made that are reasonable and prudent so as to give a true and                                           1 February, 2005
      fair view of the state of affairs of the Company as at




ABB Limited, India, Annual Report 2004                                                                                                               13
Annexure - A to Directors’ Report




Conservation of Energy, Technology Absorption, Foreign Ex-                    (2)   Benefits derived as a result of the above R&D
change Earnings and Outgo - Companies (Disclosure of particu-
                                                                                    Multifold benefits were accrued as a result of R&D activities.
lars in the Report of Board of Directors) Rules, 1988.
                                                                                    Apart from strengthening of technical base, benefits have also
(A) Conservation of energy                                                          been reflected in terms of

(a)   Energy conservation measures taken during the year                                   Improvement of product reliability
                                                                                           Introduction of new product ranges
      Main areas of work during the year included installation of VFD
                                                                                           Reduction in material cost
      on compressor, energy savers for lighting, felt belt for blowers
                                                                                           Adaptation of designs to suit local markets
      and continuous monitoring of electrical energy consumption.
                                                                                           Increased acceptability of products in global markets
      Energy audit was conducted at one factory of the Company.
      Training programmes were conducted to have increased                    (3)   Future plan of action
      awareness on energy conservation.
                                                                                    Continuous efforts are being made for integration of R&D
(b)   Proposals being implemented for reduction of consumption                      activities with business needs so as to offer better value
      Proposed areas of work include power factor improvement up to                 added products and services to our customers. The areas of
      0.999, installation of capacitor banks for power factor improve-              efforts include:
      ment. Selection of energy efficient plant and machinery,                      Universal speech interface and multiplexer for carrier communi-
      compressed air system along with manufacturing processes.                     cation equipment, development of new foil and film for power
      Installation of solar heating system, energy efficient plants for             capacitors, design improvements for SSX and VHXm relays, time
      air-cooling and air conditioning is also under consideration.                 lag relays for diesel locomotives, 12kV auto reclosure, 36kV air
(c)   Impact of measures (a) and (b) above for reduction of                         switch, forced cooling arrangement for VSD motors, oil
      energy consumption and consequent impact on cost of                           immersed type fuse and internal breaker for transformers, higher
      production of goods                                                           ratings of STATCONs, LTB 245 E1 breaker certification for
                                                                                    introduction in local markets, flame proof motors in frames
      Total energy saving is estimated at around 360,000 kWh of                     JHX90, JHX80 & JHX180, 2 pole ratings of frame M2BA400L,
      energy per annum. This savings, however, has no appreciable                   enhanced ratings of M3BP280 frame of M3000 series motors,
      impact on cost of goods, as the Company’s production                          improved 12kV switchgear cubicle, numeric relay platforms,
      processes are not energy intensive.                                           66kV and 132kV CTs with casted terminal blocks and 145kV and
(B)   Technology absorption                                                         72.5 kV GOB type transformer bushing with 500 BCT.

(a)   Research and Development (R&D)                                          (4)   Expenditure on R&D
                                                                                                                                     (Rs in Thousands)
(1)   Specific areas in which R&D is carried out by the
      Company                                                                       i)       Capital                                                 860

      R&D effort is carried out in almost all the products and pro-                 ii)      Revenue                                               17,909
      cesses, specifically, the major area includes standalone version
                                                                                    iii)     Total                                                 18,769
      of protection coupler type NSD 50, party line system, series
      capacitors, HVDC banks, special terminal connectors, tubular                  iv)      Total R&D expenditure as a
      conductors, corona rings, special clamps and insulators for HV                         percentage of turnover                                  0.08
      capacitors, STATCON with 1ph, 430V, 150kVAR rating, trip circuit
                                                                              (b)   Technology absorption, adaptation and innovation
      supervision relays, restricted earth fault relays, flag indicator for
      ring main units, low cost Numerical measuring relay, RMUs for           (1)   Efforts made towards technology absorption, adaptation and
      outdoor application, 12kV air switch, 27.5 kV single phase VCB                innovation
      for traction application of Indian Railways, 12kV, 1250A, 25kA
      Indoor VCB, motors with vibration monitoring system, enhance-                 Extensive training and skill building exercises were conducted
      ment of motors with different frames, 375kW/3000 RPM high                     in-house and at collaborators’ end to improve design,
      speed induction generator, disconnectors, 400kV auto                          development, production, commissioning and servicing. Some
      transformers, single phase generator transformer, 245kV circuit               of the products covered were:
      breaker, operating rods for 420kV circuit breakers, switch
                                                                                    Fiber optic equipments type FOX515X, FOX515T, digital
      cubicle body for ELF 245kV and 420kV breakers and pole
                                                                                    protection coupler, type testing of relays, substitution of obsolete
      mounted capacitor switch.




14                                                                                                          ABB Limited, India, Annual Report 2004
      components for FCX, UFX and PPX relays, MV switchgear                                    Instrument transformers
      solutions, HVDC transformers, 315MVA autotransformers with                               (36kV to 420kV all types)                       2003
      optimised material content, type testing of 245kV & 420kV                                Miniature circuit breakers                      2003
      breakers, BLK 222 mechanisms, components of 245kV circuit                                Power capacitor units and Banks                 2003
      breaker type LTB 245 E1, development of the components for                               HT Motors                                       2003
      medium voltage circuit breakers and type testing of 145kV and                            LV Capacitors                                   2003
      72.5kV transformer type GOB bushings.                                                    Transformer Bushings                            2004
                                                                                               3100 HP Supercharger                            2004
(2)   Benefits derived as a result of above efforts                                            INDACTIC 1425
      (i)     Product improvement                                                              telemetering equipment                          2004
                                                                                               Air circuit breakers                            2004
              As a result of the above efforts, product quality, perfor-
              mance and reliability have improved.                                 (ii)   Has technology been fully absorbed?
                                                                                          Yes except in the case of HT Motors
      (ii)    Cost reduction
              Substantial cost reduction has been achieved through de-       (C)   Foreign exchange earnings and outgo
              sign    changes,     standardization  of   components,
                                                                                   (a)    Activities related to exports; initiative taken to
              indigenisation of components and developments in HV
                                                                                          increase exports; development of new export markets
              and MV breakers, disconnectors, motors, PLCC compo-
                                                                                          for products and services; export plans
              nents and EPAX, transformers, relay and switchgear cu-
              bicles.                                                                     Export orders booked during the year at Rs 3,290 million
                                                                                          were 13% higher compared to previous year. This
      (iii)   Product development                                                         included a major turnkey substation project order valuing
              Important products developed were 145kV & 72.5kV                            Rs 1,350 million from Middle East. Revenues from
              transformer type GOB bushings, 245kV circuit breaker                        exports were Rs 2,382 million. High and medium voltage
              type LTB 245 E1, 375kW/3000RPM high speed induction                         product continued to be exported across the globe. New
              generator, 10P motors in frames M2BA315 and M2BA355,                        countries added by this product included Bolivia,
              retrofit product solution for 12kV & 36kV circuit breakers,                 Ecuador and Laos. During 2005 the Company is planning
              12kV air switch, 27.5 kV single phase VCB for traction                      to participate in large value tenders from France, Ireland,
              application of Indian Railways, 12kV, 1250A, 25kA Indoor                    Chile and Australia. Several orders from Malaysia, USA,
              VCB, non standard variants of UVT, VHXm relays, SPAM                        China, Japan and Dubai were secured by Company’s
              150 with non volatile memory, Single phase 430V, 150                        automation technologies segment for drives and process
              kVAR STATCON and standalone version of NSD50                                automation and engineering solutions for various
              protection coupler.                                                         industries. Overall growth prospects for exports continues
                                                                                          to be promising.
      (iv)    Import substitution
                                                                                   (b)    Total foreign exchange used and earned
              Import substitution was carried out for ring main unit
              components, which included coils, CTs, voltage indica-                                                              (Rs in Thousands)
              tors, mimic stickers, aluminum profiles and structure                       a)      Foreign Exchange earned
              assembly. Operating rods used in 420kV circuit breakers                             (including deemed exports)               3,184,556
              were also locally developed.                                                b)      Foreign Exchange used                    6,939,157

(3)   Imported Technology (imported during last five years)

      (i)     Technology imported                                                                                         For and on behalf of the
                 Magnetic actuator Type A2                                                                                Board of Directors
                 for circuit breakers up to 36kV                      2000
                 Medium voltage air insulated                                                                             Dinesh Paliwal
                 switchboard type UNISAFE                             2000                                                Chairman
                 400kV Power Transformer                              2002
                 High voltage circuit breakers
                                                                                                                          Bangalore
                 (36kV to 420kV)                                      2003
                                                                                                                          1 February, 2005




ABB Limited, India, Annual Report 2004                                                                                                            15
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, 2004

Name of the             Designation/Nature of Duties   Remuneration   Qualification            Experience   Date of         Age                    Previous Employment
Employee                                               Received                                (Years)      Commencement    (years)
                                                       (Rs.)                                                of Employment
                                                                                                                                      Name of the Company         Designation

Husain Bazmi            Sr. Vice President -           2,428,158      B.E. (Hons),             25           01/09/97        46        ABB Industrial Systems      Vice President -
                        Corporate Research                            E.E.M.S. (Physics)                                                                          Industry Segment
                                                                      Hons


Majumder Biplab         President - Automation         3,513,339      M. Tech. (Chem.)         35           10/02/78        56        Chemical & Metallurgical Co. Process Engineer
                        Technology Division                                                                                           Pvt. Ltd.

Rajagopal K             Sr. Vice President - Finance   2,601,226      B. Com., A.C.A.          24           07/02/91        48        Gujarat Communications &
                                                                                                                                      Electronics Ltd.            Dy. Manager

Sadhu I.K.              Executive Director - Corporate 2,996,276      B. Sc. (Engg.)           40           01/02/70        60        B.H.E.L                     Commercial     Engineer
                        Affairs and Power Technology
                        Systems Division

Uppal Ravi              Vice Chairman and              7,886,492      B. Tech. (Electrical &   30           01/10/01        52        Volvo India Pvt. Ltd.       Managing Director
                        Managing Director                             Electronics), M.B.A.

Bhalerao G.K.*          Supervisor                     648,997        SSC                      32           01/03/72        56        —                           —

Daraji H.M.*            Accounts Assistant             671,008        B.Com.                   32           02/04/82        56        Jyoti Ltd.                  Finance Assistant

Mali D.T.*              Workman                        560,103        —                        36           24/09/67        56        —                           —

Mistry D.M.*            Workman                        645,093        —                        25           04/09/78        56        —                           —

Nai S.B.*               Workman                        671,652        SSC                      26           01/02/78        56        —                           —

Pathan H.H.*            Workman                        615,621        —                        24           01/05/80        56        —                           —

Seshachala Meera*       Supervisor                     554,120        B.Sc.                    23           01/09/87        55        Dasprakash Paradise         Stenographer



* 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, House Rent Allowance, Privilege Leave encashment, Personal Allowance, Overtime, Value
         of rent free accommodation, Contribution to Provident Fund, Superannuation, Health Insurance Premium, Personal Accident Insurance,
         Voluntary Retirement Compensation, Leave Travel Assistance, Medical Assistance, Income-tax liabilities borne by the Company and
         Company’s Car perquisites evaluated in accordance with the Income-tax Rules as applicable.

                                                                                                                                 For and on behalf of the Board of Directors




Bangalore                                                                                                                                                             Dinesh Paliwal
1 February, 2005                                                                                                                                                           Chairman




16                                                                                                                               ABB Limited, India, Annual Report 2004
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, 2004 is as follows:



       Sr.                                                               Executive/                                 No. of other
                                Name of Director
       No.                                                              Non-Executive
                                                                                                       Directorships        Committee
                                                                                                                            memberships

       1)              Mr. Dinesh Paliwal
                       (Chairman)                                     Non-Executive                       NIL                      NIL


       2)              Mr.Ravi Uppal
                       (Vice Chairman & Managing Director)            Executive                           4                        1


       3)              Mr.N.S.Raghavan                                Non-Executive & independent         1                        NIL


       4)              Mr. Peter Smits                                Non-Executive                       1                        NIL


       5)              Mr.Nasser Munjee                               Non-Executive & independent         13                       6


       6)              Mr.Umesh Prasad Singh                          Non-Executive & independent         2                        NIL


       7)              Mr.Peter Leupp                                 Non-Executive                       NIL                      NIL


       8)              Mr.Tom Eric Sjoekvist                          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. BoonKiat Sim and Mr. R N Bhardwaj have resigned as Directors w.e.f 5 March, 2004 and 13 December, 2004 respectively. Mr. Tom Eric
            Sjoekvist has been appointed as Director w.e.f 19 October, 2004 in the casual vacancy caused due to the resignation of Mr. BoonKiat Sim.




ABB Limited, India, Annual Report 2004                                                                                                           17
      (ii)   Meetings held in financial year 2004 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 the
             financial results. The Board has held five meetings during the financial year 2004 on 27 January, 2004; 11 March, 2004; 27 April,
             2004; 20 July, 2004 and 19 October, 2004.

             The attendance of each Director at these meetings and at the last Annual General Meeting was as follows:



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


             1)    Mr. Dinesh Paliwal (Chairman)                                                    3                      Present


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


             3)    Mr.N.S.Raghavan                                                                  4                      Present


             4)    Mr. Peter Smits                                                                 NIL                     Absent


             5)    Mr.Nasser Munjee                                                                 5                      Present


             6)    Mr.Umesh Prasad Singh                                                            5                      Present


             7)    Mr.Peter Leupp                                                                   3                      Present


             8)    Mr.BoonKiat Sim (upto 05/03/04)                                                 NIL                       N/A


             9)    Mr.R N Bhardwaj (upto 13/12/04)                                                  4                      Present


             10)   Mr.Tom Eric Sjoekvist (wef 19/10/04)                                            NIL                       N/A



(C)   Committees of Directors

      (i)    Audit Committee

             The Audit Committee consists of three non-executive independent Directors.

             Four Audit Committee Meetings were held during the financial year 2004 on 27 January 2004; 26 April 2004; 20 July 2004 and
             19 October 2004. The Composition of the Audit Committee and the attendance of each Director at these meetings were as follows:


                   Members of Audit Committee                                                            No. of meetings attended

                   Mr.Nasser Munjee (Chairman)                                                                      4

                   Mr.Umesh Prasad Singh                                                                            4

                   Mr. N S Raghavan                                                                                 3




18                                                                                                        ABB Limited, India, Annual Report 2004
               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 and also statutory
               compliance issues. The Committee acts as a link between the management, external and internal auditors and the Board of
               Directors of the Company.

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

     (ii)      Remuneration Committee

               The Remuneration Committee of the Board comprises the following Directors:



                         Members of Remuneration Committee                                               No. of meetings attended

                         Mr. N S Raghavan (Chairman)                                                                   1

                         Mr. Dinesh Paliwal                                                                            1



               During the financial year 2004, the Committee met once on 26 April, 2004.

               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 Group. 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 2004
                                                                                                                                 (Rs in Thousands)



                      Name                                  Sitting Fees.                  Salary &        Commission*             Total
                                                            (includes for                   Perks
                                                             Committee
                                                             Meetings)

                      Mr.Ravi Uppal                              Nil                        5912                3000               8912

                      Mr.R N Bhardwaj                            20                          N.A                 300               320

                      Mr.N.S.Raghavan                            50                          N.A                 300               350

                      Mr.Nasser Munjee                           45                          N.A                 300                45

                      Mr.U.P.Singh                               60                          N.A                 300               360


     *       subject to the approval of the Board




ABB Limited, India, Annual Report 2004                                                                                                           19
(iv)   Share Transfer and Investors’ Grievance Committee

       The Board of Directors in its meeting held on 1 February, 2005 has appointed Karvy Computershare Private Limited (hereinafter referred to
       as “Karvy”) as the Registrar and Share Transfer Agents of the Company in place of Tata Consultancy Services Limited who have opted out
       of the registry services.

       Karvy are fully equipped to carry out the transfers of shares and redress investor complaints. The Transfer and Investors’ Grievance Com-
       mittee 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 of shares at a frequency of about thrice a month.

       Three meetings of Share Transfer and Investors’ Grievance Committee were held during the financial year 2004 on 3 June 2004, 26 August
       2004 and 15 December 2004. 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:


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

                   Mr.Umesh Prasad Singh (Chairman)                                                                         3

                   Mr.Ravi Uppal                                                                                             3

                   Mr.N.S.Raghavan                                                                                           3


                    No. of investor complaints                             Pending at the                              No. of pending
                    received in the year 2004                              end of the year                             share transfers


                                     91                                         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

                    2003           Chowdiah Memorial Hall, G.D. Park                           Tuesday,                          3.00 P.M.
                                   Extension, Vyalikaval, Bangalore 560 003                  27 April, 2004                        (IST)

                    2002           Rama Watumul Auditorium, Kishinchand                       Wednesday,                         3.00 P.M.
                                   Chellaram College, Dinshaw Wacha                          18 June, 2003                         (IST)
                                   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




20                                                                                                            ABB Limited, India, Annual Report 2004
      (ii)   Postal Ballot

             During the year 2004 consent of the shareholders was obtained by way of postal ballot in terms of Section 192A of the Companies
             Act, 1956 read with the Companies (Passing of Resolution by Postal Ballot) Rules, 2001 for the sale of Control Valves Business of
             the Company by way of Ordinary Resolution under Section 293(1)(a) of the Companies Act, 1956. Dr. S D Israni, Practising Company
             Secretary was appointed as the scrutinizer for the postal ballot. Notice of Postal Ballot along with the postal ballot forms and the
             prepaid business reply envelope were dispatched to the shareholders on 19 March, 2004. The last date fixed for the receipt of postal
             ballot forms duly completed was 23 April, 2004. The resolution was approved by the shareholders with requisite majority.

             The voting pattern was as under:
             Votes in favour 99.95% - 28,290,918 votes
             Votes against 0.05% - 13,182 votes
             Votes invalid 0.00% - 774 votes

             The result of the postal ballot was declared by the Chairman in the 54th Annual General Meeting held on 27 April, 2004.

(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.


      (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. 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.


             However, during the year 2003, the Company had received a show-cause notice from the SEBI regarding uploading of requisite
             information with the website of SEBI under EDIFAR for which the Company had responded that uploading could not be completed on
             time due to network / server problem which was purely technical in nature.


(F)   Means of Communication


      (i)    Financial Results
             The quarterly unaudited financial results, the half-yearly unaudited financial results with limited review and the annual audited
             financial results were published in The Economic Times (English) and the Kannada Prabha (Kannada). The half-yearly report is
             however not posted to household of each shareholder. 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.




ABB Limited, India, Annual Report 2004                                                                                                              21
(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, 24 May, 2005, 03-00 PM (IST)
             Venue : ITC Hotel Windsor Sheraton & Towers, “Windsor Square”, 25, Golf Course Road, Bangalore – 560052
             Agenda :
             1)   Adoption of Audited Accounts, Directors’ & Auditors’ Report
             2)   Declaration of Dividend
             3)   Re-appointment of Directors
             4)   Re-appointment of M/s S R Batliboi and Co., Chartered Accountants, as Auditors
             5)   Consent of the members under Section 163 of the Companies Act, 1956 to keep the register of members and other statutory
                  records at a premises other than the Registered Office.


      (ii)   The profile of Directors seeking re-appointment


      (a)    Mr. Dinesh Paliwal


             Mr. Dinesh Paliwal, 47, holds a master’s in paper science and engineering from Roorkee University and Masters Degree in applied
             Science and Engineering and Business Administration from Miami University, Ohio, USA. He is a Member of ABB’s Group Executive
             Committee and Head of Automation Technology Division worldwide.


             Mr. Paliwal has more than 27 years of experience in process industries. He began his career with Ballarpur Industries Limited and
             before heading ABB’s Pulp, Paper, Metals and Minerals business in 1998, he was Head of ABB’s multi-industry business, including
             several joint ventures in China. Mr. Paliwal has served in Australia, China, Singapore, Switzerland and United States in various
             engineering, marketing, sales and management functions of ABB.


             Mr. Paliwal does not hold any Directorship in any other Indian Company nor does he hold any equity shares in the Company.


      (b)    Mr. N S Raghavan


             Mr. N S Raghavan, 61, is a graduate in Electrical Engineering. He served in the Ministry of Defence, Govt. of India for 9 years
             handling various responsibilities in the Corps of Electrical and Mechanical Engineers.


             Mr. Raghavan worked as an Engineer in Andhra Pradesh State Electricity Board and as Head, Electrical Department in Kothari
             Sugars and Chemicals Limited, Trichy. He was the Joint Managing Director of Infosys Technologies Limited for 19 years.


             Mr. Raghavan is also a Director on the Board of IDFC Asset Management Company Limited. He does not hold any equity shares in
             the Company.




22                                                                                                       ABB Limited, India, Annual Report 2004
            (iii)   Financial Calendar
                    Indicative calendar of events for the year 2005 (January - December) excluding Extra Ordinary General Meeting(s), if any, is as under:

                     Fourth Quarter Financial Results (Year 2004)                                  01 February, 2005

                     First Quarter Financial Results                                               April, 2005

                     Annual General Meeting                                                        May, 2005

                     Second Quarter Financial Results                                              July, 2005

                     Third Quarter Financial Results                                               October, 2005


     (iv)   Book Closure

            The Company’s Register of Members and Share Transfer Books will remain closed for the purpose of dividend from 13 May, 2005
            to 24 May, 2005 (both days inclusive)

     (v)    Dividend
            The dividend recommended by Directors, on approval by the members at the ensuing Annual General Meeting will be paid to those
            shareholders whose names appear on the Company’s Register of Members as on 24 May, 2005.


     (vi)   Listing on Stock Exchanges


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

                    Mumbai - (BSE and NSE)                                       The Stock Exchange, Mumbai (BSE)
                    Ahmedabad                                                    Phiroze Jeejeebhoy Towers
                                                                                 Dalal Street
                    New Delhi
                                                                                 Mumbai 400 001.
                    Kolkata

              (The Company has paid, till date, the listing                      The National Stock Exchange of India Ltd., (NSE)
              fees of all the above Stock Exchanges)                             Exchange Plaza, 5th floor Plot No. C/1, G Block
                                                                                 Bandra-Kurla Complex
                                                                                 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.




ABB Limited, India, Annual Report 2004                                                                                                                  23
                                                                           BSE - 500002
                The Stock Code of the Company is                           NSE - ABB


                The ISIN Nos. for Company’s Equity                         INE 117A 01014
                Shares in Demat form


                Depository Connectivity:                                    NSDL and CDSL



(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 2004 was as follows:



                                             BSE                                 NSE                                Volume

        Year 2004                  High              Low               High               Low              BSE                NSE

        Month                      (Rs.)             (Rs.)             (Rs.)              (Rs.)           (Nos.)             (Nos.)

        January                     745.00           650.00            744.90             642.00          449978             1126797


        February                    703.00           614.00            706.00             634.00          174146              539419


        March                       820.00           678.80            818.00             680.00          318379             741002


        April                       835.00           775.20            850.00             762.00          352766              445793


        May                         806.00           561.00            815.00             491.00          141558              635535


        June                        697.00           610.00            749.00             565.30          284778              286183


        July                        770.00           663.00            780.00             650.00          159078              432232


        August                      777.00           691.10            774.50             680.10           75767             433949


        September                   802.00           751.00            803.00             671.00           63314             406691


        October                     792.00           700.00            794.95             700.00          203469             567935


        November                    974.00           760.05            975.00             756.15          195163              585682


        December                  1,000.00           866.00           1147.00             845.00          252453              642086




24                                                                                                   ABB Limited, India, Annual Report 2004
     (2)    The market capitalisation of the Company’s shares as on 31 December, 2004, was Rs.41,114 million on The Stock Exchange,
            Mumbai (BSE), and Rs.41,163 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 2004
                     INDEXED TO 100




                                                           PERIOD




(viii) Shareholding Pattern
     Equity Shares of Rs.10 each.
                                                       As on 31.12.2004          As on 31.12.2003               Variation

           Shareholders                                 No.of                   No.of                       No.of
                                                       shares          %       shares            %         shares              %

           ABB Asea Brown Boveri Ltd.
           Zurich & ABB Technology FLB AB,
           Sweden                                    22084057     52.11      22084057         52.11             0            0.00

           Non-Resident Individuals / OCBs            3758429        8.87      834153          1.97       2924276            6.90

           Directors and their relatives                   172       0.00          172         0.00           0.00           0.00

           LIC / UTI/ Other Insurance Cos.            7041003       16.62     7533244         17.77      (492241)           (1.15)

           Nationalised Banks / Other Banks             48203        0.10       76849          0.18       (28646)           (0.08)

           Mutual Funds                                775191        1.83     1558885          3.68      (783694)           (1.85)

           Foreign Institutional Investors            2833329        6.69     3364370          7.94      (531041)           (1.25)

           General Public                             5841291       13.78     6929945         16.35     (1088654)           (2.57)

           Total                                    42381675     100.00      42381675        100.00             0            0.00




ABB Limited, India, Annual Report 2004                                                                                                25
(ix)   Distribution of Shareholding (as on 31 December, 2004)


       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

       1-1000                                15829                17443                1449057         2477280                  3.42         5.85


       1001-5000                                 95                  488                160057          897395                  0.38         2.12


       5001-10000                                 3                   32                 18848          235754                  0.04         0.56


       10001-50000                                0                   50                      0        1191218                  0.00         2.81


       50001-100000                               1                   16                 97216         1100141                  0.23         2.60


       100001-1000000                             0                   27                      0        9188201                  0.00        21.68


       1000001 and above                          6                    1              21120738         4437563                49.83         10.47


       In Transit                                —                    94                     —             8207                   —          0.01


       Total                                 15934                18151               22845916        19535759                53.90         46.10


       Physical & Demat                                           34085                               42381675                              100%



       (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 Agents 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 equity shares of the Company are available under dematerialised form with National Securities Depository Limited (NSDL) and
               Central Depository Services (India) Ltd., (CDSL). Trading of the Company’s shares for all investors is compulsorily carried out only in
               dematerialised form.

               As on 31 December, 2004, 19,527,552 shares have been dematerialised representing 46.09 % of the total shares. ( 19,106,008 shares
               were in dematerialised form representing 45.09 % of the total shares as on 31 December, 2003).

       (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, Faridabad, Mumbai, Nashik and Vadodara.




26                                                                                                         ABB Limited, India, Annual Report 2004
     (xiv) Address for Correspondence


       (1) Registrar and Transfer Agents:                           (2)   Company
             (For share transfer, dividend related queries)               (For any other matter, unresolved complaints)


             Karvy Computershare Private Limited,                         ABB Limited
             (Unit: ABB Limited)                                          2nd Floor, East Wing, Khanija Bhavan,
             #51/2, T.K.N. Complex, Vanivilas Road,                       No. 49, Race Course Road,
             Opp. National College, Basavanagudi,                         Bangalore 560 001.
             Bangalore 560 004.                                           Phone: 080-22949150 to 22949154
             Phone: 080-26621192                                          Fax : 080-22949148
             Fax : 080-22621169                                           Corporate Secretarial E-mail ID: investor.helpdesk@in.abb.com
             Email: kannans@karvy.com                                     Corporate Website: www.abb.com/in




      (xv)   Non-mandatory requirements
             (1)     The Company has a Remuneration Committee to determine the remuneration package of Vice Chairman & Managing Director.
             (2)     The Company complied with the requirement 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.



                                                                               For and on behalf of the Board


                                                                               Dinesh Paliwal
                                                                               Chairman



                                                                               Bangalore
                                                                               01 February, 2005




ABB Limited, India, Annual Report 2004                                                                                                          27
Annexure - D to Directors’ Report
Auditor’s Certificate - Compliance of conditions of corporate governance per clause 49 of the Listing Agreement with the stock exchanges.




                                                      To The Members of ABB Limited

We have examined the compliance of conditions of corporate governance by ABB Limited, for the year ended on December 31,2004, as stipulated
in clause 49 of the Listing Agreement of the said Company with 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 Share
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.




For S. R. BATLIBOI & COMPANY
Chartered Accountants




per Sunil Bhumralkar
Partner
Membership No.: 35141



Bangalore
February 1, 2005




28                                                                                                        ABB Limited, India, Annual Report 2004
Management’s Discussion and Analysis




Operating Results of the Company
During the year, the Company secured orders worth Rs 25,878 million, 52 per cent higher in comparison to Rs 17,054 million in the previous
year. Both core business segments of the Company i.e., Power Technologies and Automation Technologies, posted significant growth during the
year. The Company’s strategic initiatives which aimed at a more balanced portfolio yielded good results with the products and services
businesses being expanded substantially, in addition to the absolute growth in projects business. Export performance was also encouraging.
The Company received significant overseas project orders and also added several new countries to its export base, besides enhancing its
regional and global presence within the ABB 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 25 per cent to Rs 13,356 million as compared to Rs 10,710 million at the beginning
of the year.

The Company posted a strong top-line performance with revenues of Rs 23,056 million for the year, registering a growth of 53 per cent over the
year 2003. Higher revenues resulted primarily from a strong order book as well as the Company’s key strategic initiatives e.g., standard products
thrust, range expansion, exports, services and value added projects.

Profit before tax and exceptional items was Rs 2,365 million as compared to Rs 1,529 million in the previous year. Volume growth, operational
efficiencies, lower overheads and a higher operating income resulted in the profit improvement. Capital gains on the sale of the ‘Control Valves’
business was Rs 38 million and Rs 128 million was realised from the divestment. The Company has invested the capital gains amount in
specified assets as per the provisions of Section 54EC of the Income-tax Act, 1961, and accordingly no capital gains tax is payable on this
amount.

Net profit after tax at Rs 1,543 million for the year was 24 per cent higher than last year. Earnings per equity share (face value Rs 10) was also
significantly higher at Rs 36.41 compared to Rs 29.30, the previous year.

Outlook for the Company
The overall growth of the Indian economy, higher industrial growth, infrastructure investment and power sector reforms auger well for the
Company’s power and automation technologies businesses. Expected build up of power generation capacity, development of the transmission
network, distribution sector reforms and improvements as well as ongoing initiatives like APDRP (Accelerated Power Development and Reforms
Programme) should continue to drive activity in the power sector. The industrial climate is also positive as Indian industry focuses on capacity
expansions, efficiency and productivity improvements as well as an enhanced role in the global economy. On its part the Company will continue
to maximise market opportunities and focus on its strategic initiatives related to high value-added projects, standard products, service and
exports. In addition to market penetration and higher volumes, the Company will continue with range expansion and leveraging of new revenue
streams. The quest for higher operational efficiencies will help maintain bottom-line focus as the Company builds on its vision of profitable and
sustainable growth. The overall outlook for the Company continues to be positive.

Business Segment Analysis
ABB is a global leader in power and automation technologies that enable utility and industry customers to improve performance while lowering
environmental impact. The Company’s portfolio includes products, systems and service solutions offered through its two core divisions or
segments i.e., Power Technologies (PT) and Automation Technologies (AT).The distribution of revenues is as under.

                                                                                                                  2004                      2003

  Power Technologies                                                                                               60 %                     60 %

  Automation Technologies                                                                                          40 %                     40 %



  Power Technologies (PT)

  The summarised performance of the segment is as under.                                                                         (Rs in Millions)

  Orders Received                                                                                                17,119                   10,022

  Order Backlog                                                                                                  10,523                     7,617

  Revenues                                                                                                       14,008                     9,604

  Result                                                                                                          1,377                      868


ABB Limited, India, Annual Report 2004                                                                                                              29
Capacity additions, development of the transmission network and power distribution improvements and reforms on the domestic front and increased
export thrust resulted in strong orders and revenues growth during the year. Orders received grew by 71 per cent and revenues were higher by 46
per cent. On the domestic front, major projects executed during the year included APDRP projects for BESCOM and HISCOM in Karnataka, the
Raipur-Rourkela FACTS (Flexible AC Transmission System) India’s first commercial TCSC solution (Thyristor Controlled Series Capacitors) for
Powergrid (PGCIL), HVDC (High Voltage Direct Current) project at Vishakapatnam for PGCIL electrification and automation solutions for the Delhi
Metro (DMRC) and distribution system improvements in Delhi and other cities. On the export front, the Company increased its volume of business
from product exports, adding several new destination countries. Key export projects included turnkey substation solutions for PEEGT, Syria.

On the order front, the segment continued with The Middle-East success . Other significant orders booked during the year include APDRP projects,
power distribution solutions for BESCOM, Reliance Energy Limited (REL) and Gujarat Electricity Board, turnkey substation solutions for 400kV and
132kV substations at Lucknow and Bihar, 400kV transmission substation at Kashipur from Uttaranchal Power Corporation Limited, Control and
Instrumentation solutions for National Thermal Power Corporation Limited (NTPC) plants at Kahalgaon and Sipat, electrification and control (SCADA)
solutions for Delhi Metro Rail Corporation Limited (DMRC), Distribution Management Solutions for Delhi from Reliance Energy Limited, 400 kV, 200
MVA GSUs from NTPC and significant distribution transformers and medium voltage technologies orders (including MV switchgear, Compact Sub
Stations, Ring Main Units etc.) from various public and private utilities.

Acceleration of power sector reforms, corporatisation and privatisation of State Electricity Boards, the Electricity Act 2003, the ongoing APDRP
programme, focus on reduction of T&D losses coupled with expected additional power generation capacity in the country continue to offer good
growth prospects, also resulting in new business opportunities like system studies, diagnostic services, system augmentation and asset
management. Other actions initiated include strengthening of the project execution process, setting up of a dedicated business group for power
plant solutions, augmentation of manufacturing capacities for products, setting up of a power transformers insulation kit manufacturing facility and a
continued focus on operational excellence, cost base optimization and exports. 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)

                                                                                                                     2004                      2003

  Orders Received                                                                                                   8,932                      6,947

  Order Backlog                                                                                                     2,903                      3,146

  Revenues                                                                                                          9,205                      5,531

  Result                                                                                                              957                       533


Improved industrial climate combined with strategic initiatives e.g., thrust on standard products helped the segment to achieve significant growth in
orders and revenues. The segment saw a 29 per cent growth in orders received and a 66 per cent increase in revenues over the previous year.
Amongst the major projects executed during the year were electrical and process automation solutions for key customers including Tata Steel,
smelters for Bharat Aluminium Company Limited (BALCO) and Hindustan Zinc Limited (HZL) and several projects for industrial sectors like
pharmaceuticals and biotech. The segment also booked orders from the oil refining and petrochemical segment, including automation systems for
paraxylene, analyser and blending automation systems for Indian Oil’s (IOCL) Panipat refinery expansion and automation systems for Reliance
Petrochemicals. Considering the prospects for robotics and manufacturing automation, a dedicated business unit has been set up for the same.

The Company also saw increased momentum in its building solutions business, driven by heightened activity in the infrastructure and construction
sector and executed several such projects for leading corporates in sectors like pharmaceuticals, hospitals, IT parks, Biotech parks, hotels etc.

There was a significant increase in the sale of standard products in line with the Company’s strategic thrust on market penetration and range
expansion and this contributed substantially to the strong growth in revenues. The Channel partner network crossed the 450 mark during the year .
Another success area was the increase in e-commerce business which crossed the Rs. one billion mark, setting an industry benchmark. Two
additional service centres for repair of turbochargers were established during the year at New Delhi and Colombo.




30                                                                                                          ABB Limited, India, Annual Report 2004
The industrial sector continues to look attractive and the market environment is positive though considerably competitive. With brownfield and
greenfield capacity expansions underway and investments taking place in core sectors like steel, aluminium, other non ferrous metals, cement,
paper, oil and gas, automobiles etc. the trend is expected to remain encouraging from an automation technologies perspective in the foresee-
able future. The construction sector also looks poised for continued growth with significant demand projection for housing, infrastructure
projects, buildings, hospitals, multiplexes, IT parks, Biotech parks, malls in the coming years.

In addition to industrial automation and turnkey projects from a growing industrial sector, the segment plans to continue with its product and
services thrust with ongoing initiatives planned for market penetration and range expansion. In addition to expanding its low voltage product
portfolio further, the Company also plans to enhance its strong presence in the Drives and Power Electronics business by bringing in several
advanced technologies and building up local manufacturing capabilities. Another key focus area for the segment would be to increase its
regional and global contribution to the ABB Group in the form of projects, products and services.

New Initiatives and Range Expansion
The Company upgraded and modernized many of its manufacturing and office facilities in order to enhance efficiency and productivity and
conform to global standards. Several marketing and communication initiatives were undertaken to facilitate business performance.

In addition to significant expansion of existing capacities during the year, the Company continued aggressively with its range expansion and
several new products were added during the year.

On the power technologies front, this included Compact Secondary Substations (CSS), Ring Main Units (RMUs), Railway Circuit Breakers, a
new model of 420 kV Current Transformers, Low Voltage Capacitors and 66 & 32 kV Condensor Bushings. Adding another feather to its cap,
ABB’s power transformer manufacturing facility at Vadodara, rolled out its first HVDC Converter Transformer as part of an order for six such
400kV, 200MVA, back-to-back HVDC converter transformers to be supplied to Powergrid. A state-of-the-art Distribution Transformer factory was
commissioned during the year, further strengthening the Company’s portfolio of power technologies offering.

On the Automation front, the Company added significantly to its range and several new products were brought in as new revenue streams. ABB
made the consumer connect by launching a range of distribution electricals completing the value chain of bringing power from the point of
generation all the way home ! This encompasses a wide range of Line Protection Devices (LPDs) and Electrical Wiring Accessories (EWAs) and
includes products like MCBs, ELCBs, RCDs, Distribution Boards (DBs) as well as switches, sockets and regulators. A state-of-the-art HT
Machines plant was commisioned at Vadodara and a new assembly line set up for Air Circuit Breakers (ACBs) at Bangalore. As part of the
Company’s market penetration initiative, the Channel Partner network was strengthened to over 450 and the Company’s web-based business
touched a new high with over one billion rupees worth of orders being booked through the E channel, setting a new benchmark in the industry.
ABB also launched its 800xA Extended Automation system, a significant technology for the pharmaceuticals and biotech sector and was
successful in winning orders from Biocon, Ranbaxy and other major pharmaceutical companies.

Finance
The Company continued to focus on optimising its working capital, which resulted in a further improvement in the cash position. Net cash
position (cash and bank balances less loan fund) at the end of the year had significantly increased to Rs 4,153 million compared to Rs 3,429
million at the end of the previous year. Throughout the year, the Company maintained a cash surplus position and the same was deployed in
Government securities, tax-free bonds and short term fixed deposits with reputed banks ensuring the security and liquidity of the fund. The
entire capital expenditure of Rs 505 million, during the year on fixed assets, was financed from internal accruals. Net interest income during the
year was Rs 143 million including income from certain interest arbitrage actions. During the year, the Company also booked profit of Rs 32
million from early retirement of interest free sales tax deferral loans. As a result of sound financial management and timely hedging of foreign
exchange risks, the Company protected its margins in a volatile foreign exchange environment.

Human Resources
The Company believes that its people are a key differentiator, especially in a knowledge-driven, competitive and globalised business
environment. Adapting work culture to suit the dynamic balancing of ‘people requirements’ and ‘employee needs’ is an ongoing process.
Fundamental HR processes which enable higher performance orientation, speed, skill and competency development, talent management and
human asset refreshal are corner-stones for the success of any organisation. The Company continues to pursue ‘plural leadership’ and a
non-hierarchical structure, to foster a transparent and performance-driven culture and encourage entrepreneurial spirit across the organization.




ABB Limited, India, Annual Report 2004                                                                                                           31
A Company-wide human resource development initiative titled “Leadership Challenge”, has been launched. Such workshops will cover the
entire organization in 2005. Leadership Development Assessment is another initiative which enables top talent to be continually tracked for
succession planning and competence gap filling. To further leverage the integrated ERP - SAP system from an HR perspective, the Performance
Management and Training Modules have been rolled out to facilitate planned competence development. Net-based recruitment and setting up
of a separate recruitment cell enabled faster intake of new employees and a structured orientation programme has been put in place for their
smooth induction. As in the past, industrial relations continued to remain cordial at all the locations of the Company. The Company had 3,439
employees at the end of 2004.

Internal Control System
The Company is committed to maintaining an effective system of internal control for facilitating the accurate, reliable and speedy compilation of
financial information, safeguarding the assets and interests of the Company and ensuring compliance with laws and regulations. During the
year, the Company set up a separate Internal Control department to monitor, review and update internal controls on an ongoing basis. Further,
the vendor payment process for large transactions has been highly automated and centralised to ensure process efficiency with improved
internal controls.

The Company has an exhaustive budgetary control system and the management regularly reviews actual performance. The Company has also
put in place a well defined organisation structure, clear authority levels and internal guidelines for conducting business transactions. The
Company has an internal audit department that conducts regular audits to ensure adequacy of the control system, adherence to management
instructions and compliance with law.

The Company is currently in the process of evaluating and designing effective internal control procedures to meet the standards expected as
per Section 404 of the Sarbanes Oxley Act, 2002. This is expected to further enhance the internal control environment in the Company.

Audit Committee of the Board of Directors periodically reviews audit plans, observations and recommendations of the internal auditors as well
as external auditors with reference to significant risk areas and adequacy of internal controls.




32                                                                                                      ABB Limited, India, Annual Report 2004
Auditors’ Report To The Members of ABB Limited




1.   We have audited the attached balance sheet of ABB Limited as        iv.   In our opinion, the balance sheet, profit and loss account and
     at December 31, 2004 and also the profit and loss account and             cash flow statement dealt with by this report comply with the
     the cash flow statement for the year ended on that date annexed           accounting standards referred to in sub-section (3C) of section
     thereto. These financial statements are the responsibility of the
                                                                               211 of the Companies Act, 1956;
     Company’s management. Our responsibility is to express an
     opinion on these financial statements based on our audit.
                                                                         v.    On the basis of the written representations received from the
                                                                               directors, as on December 31, 2004, and taken on record by the
2.   We conducted our audit in accordance with auditing standards
                                                                               Board of Directors, we report that none of the directors is
     generally accepted in India. Those Standards require that we
     plan and perform the audit to obtain reasonable assurance                 disqualified as on December 31, 2004 from being appointed as a
     about whether the financial statements are free of material               director in terms of clause (g) of sub-section (1) of section 274 of
     misstatement. An audit includes examining, on a test basis,               the Companies Act, 1956;
     evidence supporting the amounts and disclosures in the
     financial statements. An audit also includes assessing the          vi.   In our opinion and to the best of our information and according to
     accounting principles used and significant estimates made by              the explanations given to us, the said accounts give the
     management, as well as evaluating the overall financial                   information required by the Companies Act, 1956, in the manner
     statement presentation. We believe that our audit provides a              so required and give a true and fair view in conformity with the
     reasonable basis for our opinion.                                         accounting principles generally accepted in India;

3.   As required by the Companies (Auditor’s Report) Order, 2003 (as
                                                                               a.    in the case of the balance sheet, of the state of affairs of
     amended) issued by the Central Government of India in terms of
                                                                                     the Company as at December 31, 2004;
     sub-section (4A) of Section 227 of the Companies Act, 1956, we
     enclose in the Annexure a statement on the matters specified in
                                                                               b.    in the case of the profit and loss account, of the profit for
     paragraphs 4 and 5 of the said Order.
                                                                                     the year ended on that date; and

4.   Further to our comments in the Annexure referred to above, we
     report that:                                                              c.    in the case of cash flow statement, of the cash flows for
                                                                                     the year ended on that date.
     i.     We have obtained all the information and explanations,
            which to the best of our knowledge and belief were                                                For S. R. BATLIBOI & COMPANY
            necessary for the purposes of our audit;                                                          Chartered Accountants

     ii.    In our opinion, proper books of account as required by law                                        Sunil Bhumralkar
            have been kept by the Company so far as appears from                                              Partner
            our examination of those books;
                                                                                                              Membership No.: 35141

     iii.   The balance sheet, profit and loss account and cash flow
                                                                                                              Bangalore, India
            statement dealt with by this report are in agreement with
                                                                                                              February 01, 2005
            the books of account;




ABB Limited, India, Annual Report 2004                                                                                                          33
Annexure referred to in paragraph 3 of our report of even date




(i)     (a)   The Company has maintained proper records showing full         (vi)     In our opinion and according to the information and explanations
              particulars, including quantitative details and situation of            given to us, directives issued by the Reserve Bank of India and
              fixed assets.                                                           the provisions of sections 58A, 58AA         or any other relevant
                                                                                      provisions of the Companies Act, 1956 and the rules framed
        (b)   The Company has a regular programme of physical
                                                                                      there under, to the extent applicable, have been complied with.
              verification of fixed assets which, in our opinion, is
                                                                                      We are informed by the management that no order has been
              reasonable having regard to the size of the Company and
              the nature of its assets. In accordance with this                       passed by the Company Law Board, National Company Law
              programme, certain fixed assets were physically verified                Tribunal or Reserve Bank of India or any Court or any other
              by the management during the year and we are informed                   Tribunal under sections 58A and 58AA.
              that no material discrepancies were noticed on such
              verification.                                                  (vii)    In our opinion, the Company has an internal audit system
                                                                                      commensurate with the size and nature of its business.
        (c)   There was no substantial disposal of fixed assets during
              the year.                                                      (viii)   We have broadly reviewed the books of account maintained by
                                                                                      the Company pursuant to the rules made by the Central
(ii)    (a)   The management has conducted physical verification of
                                                                                      Government for the maintenance of cost records under section
              inventory at reasonable intervals during the year. In
                                                                                      209(1) (d) of the Companies Act, 1956, and are of the opinion that
              respect of stocks lying with third parties, confirmation for
              most of the stocks has been received.                                   prima facie, the prescribed accounts and records have been
                                                                                      made and maintained.
        (b)   The procedures of physical verification of inventory
              followed by the management are reasonable and                  (ix)     (a)   According to the records of the Company, the Company is
              adequate in relation to the size of the Company and the                       regular in depositing undisputed statutory dues including
              nature of its business.                                                       provident fund, investor education and protection fund,
                                                                                            employees’ state insurance, sales-tax, excise duty, wealth-
        (c)   The Company is maintaining proper records of inventory
                                                                                            tax, service tax, custom duty and cess with the
              and no material discrepancies were noticed on physical
                                                                                            appropriate    authorities.   Undisputed      statutory   dues
              verification.
                                                                                            towards    income-tax      have   generally   been    regularly
(iii)   As informed to us, the Company has neither granted nor taken                        deposited with the appropriate authorities.
        any loans, secured or unsecured to/from companies, firms or
        other parties covered in the register maintained under section                (b)   According to the information and explanations given to us,
        301 of the Companies Act, 1956.                                                     no undisputed amounts payable in respect of provident
                                                                                            fund, investor education and protection fund, employees’
(iv)    In our opinion and according to the information and explanations                    state insurance, income-tax, wealth-tax, service tax, sales-
        given to us, there is an adequate internal control system                           tax, customs duty, excise duty, cess and other undisputed
        commensurate with the size of the Company and the nature of its
                                                                                            statutory dues were outstanding, at the year end, for a
        business, for the purchase of inventory and fixed assets and for
                                                                                            period of more than six months from the date they became
        the sale of goods and services. During the course of our audit, no
                                                                                            payable.
        major weakness has been noticed in the internal control system
        in respect of these areas.
                                                                                      (c)   According to the records of the Company, the dues
(v)     According to the information and explanations given to us, there                    outstanding of income-tax, sales-tax, wealth-tax, service
        are no transactions that need to be entered in the register                         tax, custom duty, excise duty and cess on account of any
        maintained under section 301 of the Companies Act, 1956.                            dispute, are as follows:




34                                                                                                         ABB Limited, India, Annual Report 2004
      Name of the      Nature of dues                             Amount          Period to which                  Forum where dispute
      Statute                                                (Rs in Thousands)      the amount                         is pending
                                                                                       relates

      Excise Act       Freight charges for valuation                     92          1997 - 98       Central Excise and
                       Modvat availment                               2,648          1996 - 00       Service Tax Appellate
                       Product Classification                       10,294           1996 - 00       Tribunal

      Excise Act       Export obligation                            17,825           2003 - 04       Director General of
                                                                                                     Foreign Trade (Appeals)

      Sales Tax Act    Sales tax rate                                   407          1997 - 98       Sales Tax Appellate Tribunal
                       Works contract tax charged                   34,382           1992 - 97       Sales Tax Appellate Tribunal
                                                                      3,687          1998 - 02       Deputy Commissioner (Appeal)
                       Submission of Statutory Forms               169,868           1993 - 01       Appellate Assistant Commissioner
                                                                    31,510           1999 - 03       Additional Commissioner (Appeal)
                                                                     4,396           1997 - 98       Senior Assistant Commissioner of Sales Tax
                                                                     2,756           1997 - 01       Joint Excise & Taxation Commissioner (Appeal)
                                                                        900          1994 - 95       High Court
                                                                        458          1996 - 02       Deputy Commissioner of Sales Tax (Appeals)
                                                                        355          1993 - 98       State Appellate Tribunal

      Faridabad        Product classification                       30,400           1986 - 94       High Court
      Development
      Act [Octroi]

(x)      The Company has no accumulated losses at the end of the fi-              (xvii) According to the information and explanations given to us and
         nancial year and it has not incurred cash losses in the current                 on an overall examination of the balance sheet and cash flow
         and immediately preceding financial year.                                       statement of the Company, we report that no funds raised on
(xi)     Based on our audit procedures and as per the information and                    short-term basis have been used for long-term investment.
         explanations given by the management, we are of the opinion              (xviii) The Company has not made any preferential allotment of
         that the Company has not defaulted in repayment of dues to a fi-                 shares to parties or companies covered in the register main-
         nancial institution, bank or debenture holders.                                  tained under section 301 of the Companies Act, 1956.
(xii)    According to the information and explanations given to us and            (xix) The Company did not have any outstanding debentures during
         based on the documents and records produced to us, the Com-                    the year.
         pany has not granted loans and advances on the basis of secu-
                                                                                  (xx) The Company has not raised any money through a public issue
         rity by way of pledge of shares, debentures and other securities.
                                                                                       during the year.
(xiii)   In our opinion, the Company is not a chit fund or a nidhi / mutual
                                                                                  (xxi) Based upon the audit procedures performed for the purpose of
         benefit fund / society. Therefore, the provisions of clause 4(xiii) of
                                                                                        reporting the true and fair view of the financial statements and
         the Companies (Auditor’s Report) Order, 2003 (as amended) are
                                                                                        as per the information and explanations given by the manage-
         not applicable to the Company.
                                                                                        ment, we report that no fraud on or by the Company has been
(xiv) In our opinion, the Company is not dealing in or trading in                       noticed or reported during the course of our audit.
      shares, securities, debentures and other investments. Accord-
      ingly, the provisions of clause 4(xiv) of the Companies (Auditor’s                                             For S. R. BATLIBOI & COMPANY
      Report) Order, 2003 (as amended) are not applicable to the                                                     Chartered Accountants
      Company.
                                                                                                                     Sunil Bhumralkar
(xv)     According to the information and explanations given to us, the                                              Partner
         Company has not given any guarantee for loans taken by others                                               Membership No.: 35141
         from bank or financial institutions.
(xvi) The Company did not have any term loans outstanding during                                                     Bangalore, India
      the year.                                                                                                      February 01, 2005




ABB Limited, India, Annual Report 2004                                                                                                               35
Balance Sheet




                                                                                                                        (Rs in Thousands)
As at 31 December 2004                                                  Schedule                                        2004             2003

Sources of Funds
Shareholders' Funds
     Share Capital                                                         1                          423,817                         423,817
     Reserves and Surplus                                                  2                      6,822,800                          5,617,718
                                                                                                                   7,246,617         6,041,535
Loan Funds
     Finance Lease Obligations                                           17(10)                        14,312                          29,632
     Unsecured Loans                                                       3                              620                          71,409
                                                                                                                      14,932          101,041
Deferred Tax Liability (net)                                             17(12)                                      132,271          146,271
                                                                                                                   7,393,820         6,288,847
Application of Funds
Fixed Assets                                                               4
     Gross Block                                                                                  3,580,288                          3,136,554
     Less: Depreciation                                                                           1,680,241                          1,539,211
     Net Block                                                                                    1,900,047                          1,597,343
     Capital Work in Progress including Capital Advances                                               49,296                         102,747
                                                                                                                   1,949,343         1,700,090
Investments                                                                5                                       1,069,669          585,881
Current Assets, Loans and Advances
     Inventories                                                           6                      1,682,855                          1,235,099
     Sundry Debtors                                                        7                      6,263,322                          5,357,662
     Cash and Bank Balances                                                8                      4,167,509                          3,530,316
     Loans and Advances                                                    9                      1,063,106                          1,237,223
     Other Current Assets                                                 10                          887,033                         454,901
                                                                                                 14,063,825                      11,815,201
Less: Current Liabilities and Provisions
     Liabilities                                                          11                      9,279,280                          7,469,854
     Provisions                                                           12                          409,737                         342,471
                                                                                                  9,689,017                          7,812,325
Net Current Assets                                                                                                 4,374,808         4,002,876
                                                                                                                   7,393,820         6,288,847
Notes to Accounts                                                         17


The schedules referred to above form an integral part of the accounts
As per our report of even date                                          For and on behalf of the Board
For S. R. Batliboi & Company                                            Dinesh Paliwal                Chairman
                                                                        Ravi Uppal                    Vice Chairman & Managing Director
Chartered Accountants
                                                                        Nasser Munjee                 Director
                                                                        Umesh Prasad Singh            Director
                                                                        N.S. Raghavan                 Director
                                                                        Tom Eric Sjoekvist            Director
Sunil Bhumralkar                                                        K. Rajagopal                  Sr. Vice President - Finance
Partner
Membership No. 35141                                                    B. Gururaj                    Company Secretary
Bangalore, 1 February, 2005                                             Bangalore, 1 February, 2005




36                                                                                                ABB Limited, India, Annual Report 2004
Profit and Loss Account




                                                                                                                        (Rs in Thousands)
For the year ended
31 December 2004                                                        Schedule                                       2004           2003

Income
Sales and Services                                                                               24,457,977                     15,767,300
Less : Excise Duty                                                                                1,855,751                      1,083,725
Sales and Services (Net)                                                  13                                     22,602,226     14,683,575
Other Income                                                              14                                        453,490        346,994
                                                                                                                 23,055,716     15,030,569
Expenditure
Cost of Materials and Erection Services                                                          16,547,289                     10,267,815
Personnel Expenses                                                        15                      1,360,500                      1,161,305
Other Expenses                                                            16                      2,565,647                      1,878,667
Depreciation/ Amortisation                                                            206,263                                      187,017
Less: Transfer from Revaluation Reserve                                                 2,666                                        2,667
                                                                                                   203,597                         184,350
Interest   Expenses                                                                                 13,483                           9,505
                                                                                                                 20,690,516     13,501,642
Profit Before Tax and Exceptional Item                                                                            2,365,200      1,528,927
Exceptional Item - Profit on Sale of Undertaking                         17(3)                                       37,991        233,008
Profit Before Tax                                                                                                 2,403,191      1,761,935
Provision for Tax:
    Current Tax
    [including Rs Nil (Previous Year - Rs 2,295 thousand)
    towards short provision for earlier years]                                                                      874,000        524,000
    Deferred Tax                                                                                                    (14,000)        (4,000)
Profit After Tax                                                                                                  1,543,191      1,241,935
Less: Transfer to Foreign Projects Reserve Account                                                                     4,000          2,500
Add: Balance Brought Forward                                                                                        278,374        258,391
Profit available for appropriation                                                                                1,817,565      1,497,826
Appropriations
General Reserve                                                                                                   1,180,000        900,000
Proposed Dividend                                                                                                   296,672        254,290
Corporate Dividend Tax                                                                                               38,771         32,581
Corporate Dividend Tax - 2002                                                                                            —          32,581
Balance Carried Forward                                                                                             302,122        278,374
                                                                                                                  1,817,565      1,497,826
Basic and Diluted Earnings per Equity Share (in Rs)                      17(4)                                         36.41          29.30
(Face value Rs 10 per share)
Basic and Diluted Earnings per Equity Share excluding
Exceptional Item (in Rs)                                                 17(4)                                         35.52          23.81
(Face value Rs 10 per share)
Notes to Accounts                                                         17

The schedules referred to above form an integral part of the accounts
As per our report of even date                                           For and on behalf of the Board
For S. R. Batliboi & Company                                             Dinesh Paliwal                Chairman
                                                                         Ravi Uppal                    Vice Chairman & Managing Director
Chartered Accountants
                                                                         Nasser Munjee                 Director
                                                                         Umesh Prasad Singh            Director
                                                                         N.S. Raghavan                 Director
                                                                         Tom Eric Sjoekvist            Director
Sunil Bhumralkar                                                         K. Rajagopal                  Sr. Vice President - Finance
Partner
Membership No. 35141                                                     B. Gururaj                    Company Secretary
Bangalore, 1 February, 2005                                              Bangalore, 1 February, 2005




ABB Limited, India, Annual Report 2004                                                                                                  37
                                                                                                                      (Rs in Thousands)

As at 31 December 2004                                                                                                2004           2003

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)   9,237,105 equity shares of Rs 10 each allotted as fully paid up at par, pursuant to contracts for consideration other than cash.

b)   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.

c)   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.

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 FLB AB, Sweden, a subsidiary of the ultimate holding Company.




38                                                                                               ABB Limited, India, Annual Report 2004
                                                                          (Rs in Thousands)

As at 31 December 2004                                                   2004         2003

Schedule 2 - Reserves and Surplus

Capital Reserve Account                                                10,971        10,971

Capital Redemption Reserve Account                                     75,000        75,000

Revaluation Reserve Account

     As per last Balance Sheet                            156,080                   158,747

     Transferred to Profit and Loss Account                (2,666)                  (2,667)

                                                                      153,414       156,080

Share Premium Account                                                 593,990       593,990

Foreign Projects Reserve Account

     As per last Balance Sheet                             78,400                    76,500

     Transferred from Profit and Loss Account               4,000                     2,500

     Transferred to General Reserve Account                (3,000)                    (600)

                                                                       79,400        78,400

General Reserve Account

     As per last Balance Sheet                           4,424,903                3,524,303

     Transferred from Foreign Projects Reserve Account      3,000                      600

     Transferred from Profit and Loss Account            1,180,000                  900,000

                                                                     5,607,903    4,424,903

Profit and Loss Account

     Balance Carried Forward                                          302,122       278,374

                                                                     6,822,800    5,617,718




Schedule 3 - Unsecured Loans

Sales tax deferral loans
(Due within one year Rs 310 thousand -
Previous Year Rs 11,826 thousand)                                         620        71,409




ABB Limited, India, Annual Report 2004                                                  39
As at 31 December 2004                                                                                                                  (Rs in Thousands)

Schedule 4 - Fixed Assets

                                                 Gross Block                                   Depreciation/Amortisation                   Net Block
Description                        As at 1    Additions Deductions      As at 31    As at 1     For the Deductions     As at 31       As at 31    As at 31
                                   January                             December     January        Year               December       December    December
                                      2004                                 2004        2004                               2004           2004        2003


A. Tangible Assets

     1. Own Assets
        Freehold Land              137,515            —          —       137,515         —           —           —             —       137,515     137,515
        Leasehold Land               2,232            —         226        2,006        193           7          —            200        1,806         2,039
        Leasehold Improvements      40,685      24,253          941       63,997     11,015       8,312         941         18,386      45,611      29,670
        Factory Buildings          354,638      32,571      12,490       374,719    114,402      11,476       2,837        123,041     251,678     240,236
        Other Buildings             72,448      15,559           —        88,007     16,461       1,449          —          17,910      70,097      55,987
        Residential Quarters        14,390            —          —        14,390      3,980         255          —           4,235      10,155      10,410
        Plant and Machinery       1,970,984    368,587      81,679     2,257,892   1,035,757    136,279      52,076   1,119,960      1,137,932     935,227
        Furniture and Fixtures     109,475      48,497         4,393     153,579     60,541       6,005       3,054         63,492      90,087      48,934
        Vehicles                     9,907         481         2,642       7,746      6,337         622       1,416          5,543       2,203         3,570
                                  2,712,274    489,948     102,371     3,099,851   1,248,686    164,405      60,324   1,352,767      1,747,084   1,463,588
     2. Leased Assets
        Plant and Machinery         58,019            —          —        58,019     20,084       9,547          —          29,631      28,388      37,935
        Vehicles                    15,211       2,868         1,925      16,154      1,662       1,434         563          2,533      13,621      13,549
                                    73,230       2,868         1,925      74,173     21,746      10,981         563         32,164      42,009      51,484
        Total Tangible assets     2,785,504    492,816     104,296     3,174,024   1,270,432    175,386      60,887   1,384,931      1,789,093   1,515,072
B. Intangible Assets
        Technical Know-how Fees 259,360         44,548      10,120       293,788    201,487      19,769       4,346        216,910      76,878      57,873
        Capitalised Software        91,690      20,786           —       112,476     67,292      11,108          —          78,400      34,076      24,398
        Total Intangible assets    351,050      65,334      10,120       406,264    268,779      30,877       4,346        295,310     110,954      82,271
                                  3,136,554    558,150     114,416     3,580,288   1,539,211    206,263      65,233   1,680,241      1,900,047   1,597,343
        Previous Year             2,866,762    378,686     108,894     3,136,554   1,428,247    187,017      76,053   1,539,211
Capital Work in Progress including Capital Advances                                                                                     49,296     102,747
Grand Total                                                                                                                          1,949,343   1,700,090
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.
3.     Current year figures of Deductions in Gross Block and Depreciation include Rs 47,039 thousand and Rs 18,067 thousand respectively on
       account of sale of Control Valves business.
4.     Previous 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.




40                                                                                                           ABB Limited, India, Annual Report 2004
                                                                                                                 (Rs in Thousands)
As at 31 December 2004                                                                                           2004         2003

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:
           6.25% Government of India Bonds                                                         159,600                      —
      Unquoted:
           12 Year National Savings Certificates                                                        6                       6
            12 Year National Defence Certificates                                                       2                       2
                                                                                                              159,608           8
Others -
      Quoted :
           551,748 (Previous year 51,748) 6.75% Tax Free US64 bonds of                              60,335                   6,860
           Rs 100 each fully paid up in Unit Trust of India
            2,000,000 (Previous Year Nil) 5.25% 10 Year Tax Free Nuclear Power
            Corporation Limited Infrastructure Bond of Rs 100 each fully paid up                   200,000                      —
                                                                                                              260,335        6,860
      Unquoted :
           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                 210,000
            5.5% Small Industries Development Bank of India
            - Capital Gains Bonds                                                                  100,000                 100,000
            7.85% / 7.10% 5 Year Non- Cumulative Non-Convertible
            Redeemable Bonds of Rural Electrification Corporation Limited                          215,000                 215,000
            5.15% 5 Year Non- Cumulative Non- Convertible Redeemable
            Bonds of Rural Electrification Corporation Limited                                      69,000                      —
            1,000 Shares of Rs 25 each fully paid up in
            Co-operative Bank of Baroda                                                                25                      25
            6.5% Non-Redeemable Debentures of Bengal
            Chamber of Commerce and Industry                                                            2                        2
                                                                                                              646,921      577,921

                                                                                                             1,069,669     587,594
Less: Provision for diminution in the value of Investments                                                           -       1,713
                                                                                                             1,069,669     585,881
Notes :
     Quoted Investments aggregate                                                                             422,740        9,665
     (Market value Rs - 415,050 thousand;
      Previous Year - Rs 17,807 thousand)

      Unquoted Investments aggregate                                                                          646,929      577,929




ABB Limited, India, Annual Report 2004                                                                                         41
                                                                                               (Rs in Thousands)

As at 31 December 2004                                                                         2004          2003

Schedule 6 - Inventories

Stores and Spares                                                                             4,838         6,348
Raw Materials                                                                                42,537        33,110
Components                                                                                  873,903       609,574
Goods in Transit -Components                                                                145,662       205,965
Finished Goods                                                                               93,194        88,536
Work-in-progress                                                                            522,721       291,566
                                                                                          1,682,855     1,235,099



Schedule 7 - Sundry Debtors

Unsecured :
Debts outstanding for a period exceeding six months :
     - Considered Good                                                                    2,130,538     2,032,562
     - Considered Doubtful                                                                  276,856       263,508
                                                                                          2,407,394     2,296,070
Other Debts - Considered Good                                                             4,132,784     3,325,100
                                                                                          6,540,178     5,621,170
Less: Provision for Doubtful Debts                                                          276,856       263,508
                                                                                          6,263,322     5,357,662


Schedule 8 - Cash and Bank Balances

Cash and Cheques on hand                                                                      3,390         3,413
Balances with Scheduled Banks
     - On Current Account                                                   1,158,095                   1,434,195
     - On Deposit Account                                                   3,001,241                   2,091,820
     - On Margin Account                                                          112                          82
                                                                                          4,159,448     3,526,097

With Non Scheduled Banks - on Current Account                                                 4,671           806

                                                                                          4,167,509     3,530,316

Current Accounts with Non Scheduled Banks includes

                                                                 As at 31    As at 31     Maximum       Maximum
                                                                December    December        amount        amount
                                                                    2004        2003    outstanding   outstanding
                                                                                        at any time   at any time
                                                                                         during the    during the
                                                                                               year previous year

a)   Hongkong & Shanghai Banking Corporation Ltd., Sri Lanka        1,234         309         2,076           872


b)   Hongkong & Shanghai Banking Corporation Ltd., Bangladesh       3,437         497         3,977         1,814




42                                                                          ABB Limited, India, Annual Report 2004
                                                                                                               (Rs in Thousands)

As at 31 December 2004                                                                                        2004         2003

Schedule 9 - Loans and Advances

Unsecured :
Loans, Considered Good                                                                                      14,109        13,664
Advances recoverable in cash or in kind or for value to be received:
      - Considered Good                                                                        855,580                   953,891
      - Considered Doubtful                                                                     12,138                    11,640
                                                                                               867,718                   965,531
      Less: Provision for Doubtful Advances                                                     12,138                    11,640
                                                                                                           855,580       953,891
Advance Tax (net of provision)                                                                             171,213       255,982
Balances with Customs, Port Trusts and Excise authorities                                                    22,204       13,686
                                                                                                          1,063,106    1,237,223



Schedule 10 - Other Current Assets

Contract Revenue in Excess of Billing                                                                      834,991       390,757
Interest Accrued on Investments and Fixed Deposits                                                          52,042        64,144
                                                                                                           887,033       454,901




Schedule 11 - Liabilities

Acceptances                                                                                               2,262,862    1,766,124
Sundry Creditors
      - Due to Small Scale Industrial Undertakings                                              153,095                   72,906
      - Others                                                                                5,391,116                4,472,536
                                                                                                          5,544,211    4,545,442
Advance Payments from Customers                                                                           1,105,226      976,164
Billing in Excess of Contract Revenue                                                                       360,835      176,366
Investor Protection and Education Fund shall be credited by the following amounts when due:
      - Unclaimed Dividends                                                                      6,146                     5,752
      - Unclaimed Fixed Deposits                                                                    —                          6
                                                                                                             6,146         5,758
                                                                                                          9,279,280    7,469,854


Schedule 12 - Provisions

Proposed   Dividend                                                                                        296,672       254,290
Corporate Dividend Tax                                                                                      38,771        32,581
Leave Encashment                                                                                            74,294        55,600
                                                                                                           409,737       342,471




ABB Limited, India, Annual Report 2004                                                                                       43
For the year ended 31 December 2004

Schedule 13 - Capacities, Production, Stock and Turnover (Refer Note 13 of Schedule 17)
(Figures in brackets are in respect of previous year)

                                                  Annual                 Opening Stock of      Production of Closing Stock of              Turnover of
Class of goods                                  Capacities                Finished Goods      Finished Goods Finished Goods              Finished Goods
                                       Quant.                                    Rupees in                            Rupees in                     Rupees in
                                       Denom.            Installed     Quantity Thousands        Quantity   Quantity Thousands        Quantity     Thousands
Motors and Other Machines              HP              1,325,000         56,339      52,106    1,093,152      31,936      34,216     1,095,205        995,813
                                                       (750,000)       (47,723)    (35,301)    (726,141)    (56,339)    (52,106)     (715,942)      (530,718)
Switchgear of all types                Nos.            2,321,360         17,379     10,072     2,002,797      66,956      22,042     1,408,268      5,494,100
                                                       (866,999)       (10,216)     (6,605)    (672,925)    (17,379)    (10,072)     (440,992)    (4,096,830)
PLCC Equipment                         Nos                     2,850        —           —           1,530        —           —            1,512       270,108
                                                             (2,850)       (—)         (—)        (1,797)       (—)         (—)         (1,797)     (207,377)
Measurand Convertors                   Nos.                    —            —           —              —         —           —              —              —
                                                         (30,000)          (—)         (—)       (18,123)       (—)         (—)       (17,835)       (89,609)
Multiplexures                          Nos                        50        —           —              20        —           —               19         9,586
                                                                (50)       (—)         (—)           (25)       (—)         (—)            (23)      (23,437)
Telemetering Equipment                 Nos                      150         —           —              19        —           —                5          1,429
                                                              (150)        (—)         (—)          (102)       (—)         (—)             (7)        (2,433)
Turbochargers                          Nos.                     200         —           —             116        —           —             116        464,211
                                                              (150)        (—)         (—)          (115)       (—)         (—)          (115)      (119,681)
Transformers                           MVA                     8,000        —           —           5,383        —           —            5,383     1,788,600
                                                             (4,100)       (—)         (—)        (2,833)       (—)         (—)         (2,833)     (690,988)
Electronic Control and Supply Units    Nos.                70,000           —           —          65,039        —           —          64,832      1,520,460
for Variable Speed Drives and other                      (30,000)          (—)         (—)       (26,822)       (—)         (—)       (26,758)      (786,757)
applications
Mini Computer/Microprocessor based     Value Rs.in        900,000           —           —         590,259        —           —              —         590,259
Systems                                Thousands        (900,000)          (—)         (—)      (941,683)       (—)         (—)            (—)      (941,683)
Non-Microprocessor Based Electronics Value Rs.in           70,000           —           —          50,855        —           —              —          50,855
(Analog and Digital) for Weighing,   Thousands           (70,000)          (—)         (—)       (19,006)       (—)         (—)            (—)       (19,006)
Batching and Force Measuring Systems
and Sub-Systems
Power Capacitors of all types          MVAR                    3,700        —           —           2,399        —           —            1,290       105,715
                                                             (3,000)       (—)         (—)        (2,705)       (—)         (—)         (1,824)     (101,413)
Robotics                               Nos.                       15        —           —               5        —           —                5         6,552
                                                                (15)       (—)         (—)            (6)       (—)         (—)             (6)      (27,601)
Control Valves                         Nos.                    2,750        —           —             319        —           —             318         21,546
                                                             (2,750)       (—)         (—)          (260)       (—)         (—)          (256)       (18,007)
Gas Analysers and Systems              Nos.                     300         —           —            130         —           —             130       108,330
                                                              (300)        (—)         (—)           (64)       (—)         (—)            (57)      (28,573)
Process Control Instruments            Nos.                24,975           —           —          19,380        —           —          18,152        353,578
                                                         (24,975)          (—)         (—)       (14,492)       (—)         (—)       (14,492)      (310,298)
Others                                                                                  —                                    —                        372,428
                                                                                       (—)                                  (—)                     (653,881)
Project Items                                                                        26,358                               36,936                    9,291,452
                                                                                   (42,155)                             (26,358)                  (5,093,052)
Erection and Other Services                                                                                                                         1,157,204
                                                                                                                                                    (942,231)
                                                                                     88,536                               93,194                   22,602,226
                                                                                   (84,061)                             (88,536)                  (14,683,575)

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




44                                                                                                             ABB Limited, India, Annual Report 2004
                                                                    (Rs in Thousands)
For the year ended 31 December 2004                                2004         2003
Schedule 14 - Other Income

Dividend
    Long Term Investments - Trade                        337                     224
    Long Term Investments - Others                         3                      —
    Current Investments                               10,796                      —
                                                                 11,136          224
Interest
    Long Term Investment                              56,909                   33,131
    Current Investment                                 1,011                    8,080
    Deposit with Banks                                74,973                  111,956
    (Tax deducted at source Rs 13,338 thousand
    Previous Year Rs 18,556 thousand)
    Others                                            12,284                   10,977
                                                                145,177       164,144
Profit on Sale of Long Term Investments (net)                         —         3,179
Miscellaneous Income                                            297,177       179,447

                                                                453,490       346,994
Schedule 15 - Personnel Expenses

Salaries, Wages and Bonus                                      1,086,154      917,691
Contribution to Gratuity Fund                                     20,740       27,050
Contribution to Provident and Other Funds                         68,755       66,404
Workmen and Staff Welfare Expenses                               137,704      116,182
Other Personnel Expenses                                          47,147       33,978
                                                               1,360,500    1,161,305
Schedule 16 - Other Expenses

Tools and Stores                                                214,774       166,818
Royalty                                                          24,917        22,580
Freight and Forwarding                                          252,776        75,769
Postage and Telephone                                            64,566        60,020
Commission and Discount                                         175,668       173,098
Power, Fuel and Water                                           121,780        91,404
Travelling and Conveyance                                       338,357       282,482
Insurance                                                        95,779        72,561
Rates and Taxes                                                  31,309        25,873
Rent                                                             78,548        69,339
Repairs : Buildings                                              27,558        15,519
            Plant and Machinery                                  40,583        26,649
            Others                                               21,870        18,482
Provision for Doubtful Debts and Advances                        13,888         9,295
Bad Debts / Advances Written Off                                140,015        73,644
Provision for diminution in the value of Investment              (1,713)           —
Loss on Sale of Current Investment (net)                         15,544            —
Loss on Sale of Fixed Assets (net)                                 7,412        2,265
Printing and Stationery                                          33,482        27,732
Bank Charges                                                     56,552        43,321
Legal and Professional                                           26,731        38,299
Trade Mark Fees                                                 113,011        73,418
Miscellaneous                                                   672,240       510,099
                                                               2,565,647    1,878,667




ABB Limited, India, Annual Report 2004                                            45
Schedule 17 - Notes to the Accounts
1.   Nature of Operations
     ABB Limited (‘the Company’) has served utility and industry customers for over 50 years with the complete range of engineering, products,
     solutions and services in areas of Automation and Power technology. The Company has extensive installed base for manufacturing and a
     countrywide marketing and service presence. Besides catering to Indian domestic market, the Company is also playing an increasing role in
     the global market.
2.   Significant Accounting Policies
     2.1.   Basis of Preparation of Financial 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.
     2.2.   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.
     2.3.   Fixed Assets
            Fixed assets are stated at the cost of acquisition, except for revaluation of certain land and building, less accumulated depreciation and
            impairment losses, if any. Cost of 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.
     2.4.   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, which management considers as being representative of the useful economic lives of such
            assets. Depreciation is provided from the date of capitalisation till the date of sale of assets.
            The following assets are depreciated / amortised on the straight line method over a period of their estimated useful lives:
                  Leasehold land and leasehold improvements over the primary period of the lease.
                  Technical know-how fees over a period of six years 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
            certainty that the Company will obtain ownership, wherein such assets are depreciated at the rates prescribed in Schedule XIV to the
            Companies Act, 1956.
     2.5.   Investments
            Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other
            investments are classified as long-term investments. Current investments are carried at lower of cost and fair value. Long-term
            investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the
            value of the investments.




46                                                                                                          ABB Limited, India, Annual Report 2004
               2.6.   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 moving 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.
                      Provision for obsolescence is made wherever necessary.
               2.7.   Retirement Benefits
                      Contributions to Provident Fund/Superannuation Fund, defined contribution schemes, are made at pre-determined rates
                      to the recognised Provident Fund Trust/Superannuation Fund Trust and are charged to the profit and loss account.
                      Contributions to the recognised Gratuity Fund and provision for leave encashment, defined benefit schemes, are made
                      on the basis of actuarial valuations made at the end of each financial year and are charged to the profit and loss
                      account.
               2.8.   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 “Other Current Assets” and billing in excess
                            of contract revenue has been reflected under “Liabilities” in the balance sheet.
                            Full provision is made for any loss in the year in which it is first foreseen.
                            Liquidated damages/penalties are provided for as per the contract terms wherever there is a delayed delivery
                            attributable to the Company.
                            Commission income is recognised as per contracts/receipt of credit note.
                            Dividend income is recognised when the right to receive dividend is established.
                            Interest income is recognised on the time proportion method.
               2.9.   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.
               2.10. 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.
               2.11. Foreign Currency Transactions
                      Foreign currency transactions are recorded by applying the respective monthly average rates. Exchange differences
                      arising on foreign currency transactions settled during the year are recognised in the profit and loss account for the year,
                      other than exchange differences related to the liabilities for import 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 import 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.




ABB Limited, India, Annual Report 2004                                                                                                            47
     2.12. 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 2005.
            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 timing differences
            are recognised to the extent there is reasonable certainty that the assets can be realised in future.
     2.13. Operating Leases
            Operating Lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.
3.   Sale of undertakings
     3.1.   Control Valve Business
            Pursuant to the ABB Group’s decision to divest its upstream part of Oil, Gas and Petrochemical business and as approved by the
            shareholders, the Company has divested its Control Valve business to Kent Introl Private Limited on 12 July 2004. The total
            consideration received for sale of Control Valve business was Rs 128,102 thousand resulting in a gain to the Company of
            Rs 37,991 thousand, reported as profit on sale of undertaking in Profit and Loss Account as an exceptional item. The Company has
            invested the capital gain amount 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.
     3.2.   Metering Business
            Company’s Metering business was divested to Elster Metering Private Limited on 1 April 2003. The divestment has resulted in a
            gain to the Company of Rs 233,008 thousand, reported as profit on sale of undertaking in Profit and Loss Account as an
            exceptional item.
                                                                                                                              2004            2003
4.   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 attributable to equity shareholders (Rs in thousand):                                   1,543,191       1,241,935


     c)     Basic and Diluted Earnings Per Share (in Rs)                                                                     36.41           29.30

     d)     Net profit after tax available for equity shareholders
            excluding Exceptional Item (Rs in thousand)

            Net profit after tax                                                                         1,543,191                       1,241,935

            Less: Profit on Sale of Undertaking                                                             37,991                         233,008

                                                                                                                         1,505,200       1,008,927

     e) Basic and Diluted Earnings Per Share excluding Exceptional Item (in Rs)                                              35.52           23.81

5.   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.




48                                                                                                      ABB Limited, India, Annual Report 2004
                  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)     Figures in brackets are in respect of the previous year.

           vi)    Segment Revenues, Results and Other Information

                                                                                                                                (Rs in Thousands)

                                                                                                  Power         Automation               Total of
                                                                                             Technology         Technology            Reportable
                                                                                               Segment            Segment              Segments

           External Sales                                                                     13,626,478           8,964,900           22,591,378
                                                                                              (9,209,080)        (5,444,447)         (14,653,527)

           Inter Segment Sales                                                                    147,534            193,676              341,210
                                                                                                (267,007)            (67,988)           (334,995)

           Other Income                                                                           233,853              46,218             280,071
                                                                                                (128,261)            (18,632)           (146,893)

           Segment Revenues                                                                   14,007,865           9,204,794           23,212,659
                                                                                              (9,604,348)        (5,531,067)         (15,135,415)

           Segment Results                                                                     1,376,691             957,408            2,334,099
                                                                                               (867,729)           (532,804)          (1,400,533)

           Segment Assets                                                                       7,030,457          4,066,304          11,096,761
                                                                                              (6,122,647)        (3,143,003)          (9,265,650)

           Segment Liabilities                                                                  5,426,670          3,387,870            8,814,540
                                                                                              (4,557,792)        (2,455,358)          (7,013,150)

           Capital Expenditure                                                                    163,518            242,581              406,099
                                                                                                (261,535)            (69,706)           (331,241)

           Depreciation/Amortisation                                                               88,695              50,970             139,665
                                                                                                 (77,226)            (42,379)           (119,605)




ABB Limited, India, Annual Report 2004                                                                                                           49
     vii)   Reconciliation of Reportable Segments with the Financial Statements
                                                                                                                             (Rs in Thousands)
                                                                         Revenues            Results/              Assets           Liabilities
                                                                                            Net Profit
            Total of Reportable Segments                                23,212,659           2,334,099         11,096,761            8,814,540
                                                                       (15,135,415)        (1,400,533)         (9,265,650)         (7,013,150)
            Corporate - Unallocated/ Others (net)                          184,267              44,584          5,986,076             686,237
                                                                          (230,149)          (137,899)         (4,835,522)         (1,046,487)
            Inter Segment Sales                                            -341,210                 —                  —                    —
                                                                         (-334,995)                (—)                (—)                  (—)
            Interest Expense                                                     —             -13,483                 —                    —
                                                                                (—)            (-9,505)               (—)                  (—)
            Exceptional Item – Profit on sale of Undertakings                    —              37,991                 —                    —
                                                                                (—)          (233,008)                (—)                  (—)
            Provision for tax                                                    —            -860,000                 —                    —
                                                                                (—)         (-520,000)                (—)                  (—)
            As per Financial Statement                                   23,055,716          1,543,191         17,082,837            9,500,777
                                                                       (15,030,569)        (1,241,935)        (14,101,172)         (8,059,637)



     B)     Secondary Segment Reporting (by Geographical Segments)
            Secondary segment disclosures are reported on the basis of geographical location of customers.
                                                                                                                             (Rs in Thousands)
                                                                                                 India       Rest of World               Total
            Revenues                                                                       20,668,994           2,386,722           23,055,716
                                                                                          (12,052,801)         (2,977,768)        (15,030,569)
            Total Assets                                                                   16,698,924             383,913           17,082,837
                                                                                          (13,162,651)           (938,521)        (14,101,172)
            Capital Expenditure                                                               503,533               1,166             504,699
                                                                                             (438,708)             (1,372)           (440,080)




50                                                                                                  ABB Limited, India, Annual Report 2004
As at 31 December 2004                                                                                                                (Rs in Thousands)
                                                                                                                              2004                 2003
6.    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 Corporate Research Center Limited (Formerly ABB                                                          12,345                   —
               Industrial IT Development Center Limited)
      b)     Loans and Advances
             - Universal ABB Power Cables Limited                                                                                 —                  —
                (Maximum amount due during the year Rs Nil, previous year Rs 500 thousand)
             - ABB Corporate Research Center Limited                                                                         8,711                  728
                (Formerly ABB Industrial IT Development Center Limited)
                (Maximum amount due during the year Rs 8,711 thousand, previous year Rs 6,436 thousand)
             - ABB Holdings (South Asia) Limited                                                                               751                   —
                (Maximum amount due during the year Rs 751 thousand, previous year Rs 233 thousand)

7.    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 2004 are as per attached Annexure.                                               153,095               72,906
      This disclosure is on the basis of information available with the Company
      regarding the status of suppliers.
8.    Contingent Liabilities
      i)     Claims against the Company not acknowledged as debts in respect of                                            395,270              309,508
             sales tax, excise and other matters
      ii)    Bills discounted                                                                                              291,314              173,772
             The above excludes bills co-accepted by the customers’ bankers/guaranteed
             by the State Governments Rs 438,399 thousand
             (previous year Rs 533,069 thousand)
      iii)   Income tax matters in dispute                                                                                 183,220              238,380

9.    Estimated amount of contracts remaining to be executed on capital account
      and not provided for (net of advances)                                                                               179,875              166,647
10.   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 2004 in respect of these assets are as follows:- (Figures in brackets are in respect of the previous year):
                                                                                                                                      (Rs in Thousands)
      Due                                                                                     Total Minimum            Interest         Present Value of
                                                                                            Lease Payments             Not Due          Minimum Lease
                                                                                           outstanding as on                                  Payments
                                                                                          31 December 2004
      Within one year                                                                                    8,655            1,333                   7,322
                                                                                                      (19,791)          (2,497)                (17,294)
      Later than one year and not later than five years                                                  8,020            1,030                   6,990
                                                                                                      (14,110)          (1,772)                (12,338)
                                                                                                        16,675            2,363                  14,312
                                                                                                      (33,901)          (4,269)                (29,632)

11. The Company has non-cancelable operating lease obligations of Rs Nil (previous year Rs 4,059 thousand) payable within one year as on
    31 December 2004. Rental expenses towards cancelable and non- cancelable operating leases charges to the profit and loss account
    amounts to Rs 78,548 thousand (previous year Rs 69,339 thousand).




ABB Limited, India, Annual Report 2004                                                                                                               51
As at 31 December 2004                                                                                                                   (Rs in Thousands)
12.   Deferred Tax
      i)     The break up of net deferred tax liability as at 31 December 2004 is as follows: (Figures in brackets are in respect of the previous year):
                                                                                                                         Deferred tax          Deferred tax
                                                                                                                                asset               liability
             Timing differences on account of:
             Difference between book depreciation and depreciation                                                                                  284,851
             under the Income-tax Act, 1961                                                                                                       (260,275)
             Expenditure under Section 43B of the Income-tax Act, 1961                                                          24,614
                                                                                                                              (16,562)
             Lease Finance                                                                                                       5,237
                                                                                                                              (10,630)
             Provisions for doubtful debts and advances                                                                       105,895
                                                                                                                              (70,528)
             Others                                                                                                             16,834
                                                                                                                              (16,284)
                                                                                                                              152,580               284,851
                                                                                                                            (114,004)             (260,275)

             Net Deferred Tax Liability                                                                                                             132,271
                                                                                                                                                  (146,271)
13.   Capacities, Production, Stock and Turnover (Refer Schedule 13)
      13.1 Capacities
             a)       Installed capacities are as certified by the Managing Director, but not verified by the Auditors, being a technical matter.
      13.2 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 quanti-
                   tative information in respect of production and turnover.
      13.3 Project items
             a)    These comprise sale of equipment and miscellaneous items meant for execution of projects and trading items. Since the quanti-
                   tative 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 7,787,259 thousand (previous year Rs 4,067,237 thousand).
      13.4 Work -in-Progress
             The Work-in-progress at the beginning of the year amounted to Rs 291,566 thousand (previous year Rs 389,298 thousand).

                                                                                                                                         (Rs in Thousands)
      For the year ended 31 December 2004                                                                                        2004                  2003
14.   Earnings in Foreign Exchange
      (on accrual basis)
      i)     Export of Goods
             - Direct on FOB basis                                                                                          2,102,028            2,780,013
             - Deemed Exports                                                                                                 145,168              588,932
      ii)    Goods supplied/services rendered locally
             against foreign exchange remittances                                                                             652,666                90,433
      iii)   Erection and other services                                                                                      222,473              102,307
      iv)    Other Income:
             a.    Commission                                                                                                  56,829                50,704
             b.    Others                                                                                                       5,392                44,744
                                                                                                                            3,184,556            3,657,133




52                                                                                                             ABB Limited, India, Annual Report 2004
For the year ended 31 December 2004
                                                                                                           2004                            2003
15.   Consumption of Raw Materials and Components
                                                                                     Quantity           Rs. in          Quantity          Rs. in
                                                                                                    Thousands                         Thousands
      Ferrous Metals                                                 MT                    888           39,109           2,848          160,001
      Non-Ferrous Metals                                             MT                  1,726          325,857           1,392          217,879
      Components                                                                             *        5,980,294               *        4,494,311
      Others                                                                                            849,516                          406,950
                                                                                                      7,194,776                        5,279,141

                                                                                            %                                   %
      Imported                                                                           53.13        3,822,847           56.93        3,005,180
      Indigenously acquired                                                              46.87        3,371,929           43.07        2,273,961

                                                                                       100.00         7,194,776          100.00        5,279,141


      For the purpose of para 4D (c) of Part II of Schedule VI to the Companies Act, 1956, components and spare parts are assumed to mean those
      incorporated in the product 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)
                                                                                                                       2004                 2003
16.   Value of imports on CIF basis
      (on accrual basis)
      Raw Materials and Components                                                                                 4,622,740           2,585,410
      Finished Goods                                                                                                594,513             291,382
      Maintenance Spare Parts                                                                                           750                 611
      Capital Goods including Technical Know-how                                                                    122,066              99,108
      Software                                                                                                       11,359              14,913
      Project items                                                                                                 844,238             607,899
                                                                                                                   6,195,666           3,599,323

17.   Expenditure in foreign currency
      (on accrual basis)
      Royalty                                                                                                        24,917              22,580
      Trade Mark Fees                                                                                               113,011              73,418
      Commission and Discount                                                                                          9,224               1,218
      Professional / Project Consultancy                                                                            177,736              29,616
      Others                                                                                                        286,098             147,262
                                                                                                                    610,986             274,094

18.   Amount remitted during the year in foreign currency, on account of dividend
      i)     Number of non resident shareholders                                                                           3                  3
      ii)    Number of equity shares held by them on which dividend was paid                                      22,084,198          22,084,198

      iii)   Year ended to which the dividend related                                                      December 2003         December 2002

      iv)    Amount remitted                                                                                        132,505             132,505




ABB Limited, India, Annual Report 2004                                                                                                       53
For the year ended 31 December 2004                                                                                               (Rs. in Thousands)
                                                                                                                          2004                2003
19.   Managerial Remuneration
      a)    i)    Directors’ fee                                                                                            175                 170
            ii)   Other remuneration
                  Salary                                                                             3,000                                    2,500
                  Commission to Managing Director                                                    3,000                                    2,500
                  Commission to Non Executive Directors                                              1,200                                      900
                  Contribution to Provident and other funds                                            954                                      799
                  Other perquisites                                                                  1,958                                    1,515
                                                                                                                         10,112               8,214
                                                                                                                         10,287               8,384
      b)    Computation of Net Profit as per Section 349 of the Companies Act, 1956
            Profit Before Tax as per Profit and Loss Account                                                          2,403,191           1,761,935
            Add: Managerial Remuneration                                                            10,287                                    8,384
                 Loss on Sale of Fixed Assets                                                        8,859                                    4,715
                 Provision for doubtful debts and advances                                          13,888                                    9,295
                                                                                                                         33,034              22,394
                                                                                                                      2,436,225           1,784,329

            Less: Exceptional Item – Profit on Sale of Undertaking                                  37,991                                  233,008
                  Profit on sale of Fixed Assets                                                     1,447                                    2,450
                                                                                                                         39,438             235,458
            Net Profit as per Section 349 of the Companies Act, 1956                                                  2,396,787           1,548,871
            Commission to Managing Director                                                                               3,000               2,500
            Commission to Non Executive Directors                                                                         1,200                 900
                                                                                                                          4,200               3,400

Commission to Managing Director is subject to further recommendation and approval of Remuneration Committee and the Board. For the year ended
31 December 2003, Rs 2,100 thousand was paid as commission to Managing Director based on recommendation and approval of Remuneration
Committee and the Board.

20.   Auditors’ Remuneration including amount paid to erstwhile auditors
      i     Audit Fee                                                                                                     3,350               3,350
      ii    Tax Audit Fee                                                                                                 1,975               1,975
      iii   Other Services (includes fees for quarterly reviews)                                                          3,260               3,366
      iv    Reimbursement of out of pocket expenses                                                                       1,029                 948
                                                                                                                          9,614               9,639

21.   Interest charge for the year includes Rs 9,308 thousand (previous year Rs 5,989 thousand) being interest on fixed period loans.
22.   Net foreign exchange gain of Rs 35,360 thousand (previous year Rs 42,219 thousand) has been accounted for in the profit and loss account.
23.   Research and development expenditure of Rs 17,909 thousand (previous year Rs 43,420 thousand) on revenue account has been incurred
      during the year.
24.   Construction Contracts
      Contract revenue recognised as revenue for the year ended 31 December 2004                                    11,185,935            5,509,360
      Aggregate amount of contract costs incurred and recognised profits (less recognised losses) up to
      31 December 2004 for all the contracts in progress                                                            18,522,858            9,126,115
      The amount of customer advances outstanding for contracts in progress as at 31 December 2004                     576,359              516,728
      The amount of retentions due from customers for contracts in progress as at 31 December 2004                    1,201,026             830,889




54                                                                                                        ABB Limited, India, Annual Report 2004
25.   Related Party Disclosures

      a)   List of Related Parties
           Party where control exists:
           ABB Asea Brown Boveri Limited, Zurich (Holding Company)
           Other Related parties with whom transactions have taken place during the year:
           Fellow subsidiaries:

           ABB A/S,Frederecia, Denmark                                   ABB (Asea Brown Boveri) S.A., Amadora, Portugal
           ABB (China) Ltd., Beijing, China                              ABB (Hong Kong) Limited, Hong Kong
           ABB (P.J.S.C.), Teheran, Iran                                 ABB (Pvt) Ltd., Lahore
           ABB A/S, Skovlunde, Denmark                                   ABB AB, Västerås, Sweden
           ABB AG, Mannheim, Germany                                     ABB AG, Vienna
           ABB Agencies Pte. Ltd., Singapore, Singapore                  ABB AP Trading & Engineering AG, Zurich
           ABB Arab S.A.E., Cairo, Egypt                                 ABB AS, Billingstad
           ABB AS, Divisjon Kraft,Skien,Norway                           ABB AS, Tallinn
           ABB Asia Pacific Ltd., Hong Kong                              ABB Asia Pacific Services Ltd., Hong Kong
           ABB Australia Pty Limited, Sydney, Australia                  ABB Automation E.C., Bahrain
           ABB Automation Ltd., Stevenage, United Kingdom                ABB Automation Ltd., Warrington
           ABB Automation Products GmbH, Eschborn, Germany               ABB Automation Products S.A., Barcelona
           ABB Automation SAS, Massy, France                             ABB Automation Systems Ltd., Warrington
           ABB Automation Technologies AB, Västerås, Sweden              ABB Bailey Pte. Ltd., Singapore
           ABB BV, Rotterdam, Netherlands                                ABB Calor Emag Mittelspannung GmbH, Ratingen,
           ABB Capital, B.V., Amsterdam                                  ABB Chongqing Transformer Company Ltd., Chongqing City
           ABB Control Ltd., Exhall, Coventry, United Kingdom            ABB Distribution Transformer (Hefei) Limited, Anhui
           ABB Electrical Industries Ltd., Riyadh, Saudi Arabia          ABB Electroengineering, Russia
           ABB Elektrik Sanayi A.S., Istanbul, Turkey                    ABB Elektro s.r.o., Bratislava
           ABB Energy Automation S.p.A., Abu Dhabi, UAE                  ABB Energy Engineering AG, Zurich, Switzerland
           ABB Engg. Technologies Co. (KSCC), Safat, Kuwait              ABB Engineering (Shanghai) Ltd., Shanghai, China
           ABB Engineering Trading and Service Ltd., Budapest,Hungary    ABB Entrelec SAS, Villeurbanne
           ABB Flexible Automation Ltd., Milton Keynes, UK               ABB Group Process Center S.A.E., Cairo, Egypt
           ABB Group Services Center GmbH, Mannheim, Germany             ABB Hefei Transformer Co. Ltd., Hefei, China
           ABB High Voltage Co. S.A.E., Heliopolis/Cairo, Egypt          ABB Holding A.S., Istanbul, Turkey
           ABB Holding AS, Billingstad                                   ABB Holdings (Pty) Ltd., Sunninghill, South Africa
           ABB Holdings (South Asia) Ltd., Bangalore, India              ABB Holdings Inc., Norwalk
           ABB Holdings Pte. Ltd., Singapore                             ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia
           ABB Huadian High Voltage Switchgear (Xiamen) Company Ltd.     ABB Inc., Raleigh, NC
           ABB Inc., St. Laurent, Quebec, Canada                         ABB Industri og Offshore AS, Billingstad, Norway
           ABB Industria S.p.A. Milan, Italy                             ABB Industrial Systems Ltd., Dundalk
           ABB Industries (L.L.C), Dubai, UAE                            ABB Industries AB, Vasteras
           ABB Industries OY, Finland                                    ABB Industry Pte. Ltd., Singapore
           ABB Information Systems Ltd., Zurich, Switzerland             ABB Instrumentation Ltd., St. Neots, United Kingdom
           ABB Instrumentation Ltd., Warrington                          ABB Instrumentation S.p.A., Milan, Italy
           ABB Instrumentation, Massy, France                            ABB International Marketing Ltd., Zurich, Switzerland
           ABB K.K., Tokyo, Japan                                        ABB Karebo Manufacturers (Pty), Midrand
           ABB Limited, Auckland, New Zealand                            ABB Limited, Bangkok, Thailand
           ABB LLC, Al Hamriya, Oman                                     ABB Logistics Center Europe GmbH, Menden
           ABB Ltd, Dublin, Ireland                                      ABB Ltd, Zurich, Switzerland




ABB Limited, India, Annual Report 2004                                                                                            55
     ABB Ltd., Kampala, Uganda                                ABB Ltd., Kiev, Ukraine
     ABB Ltd., London, United Kingdom                         ABB Ltd., Lusaka, Zambia
     ABB Ltd., Seoul, South Korea                             ABB Ltd., Taipei, Taiwan
     ABB Ltd., Warrington, United Kingdom                     ABB Ltd., Zurich
     ABB Lummus Heat Transfer B.V., The Hague                 ABB Ltd., Osasco, Brazil
     ABB Malaysia Sdn Bhd, Subang Jaya, Malaysia              ABB LV Installation Materials Co. Ltd., Beijing, China
     ABB Manufacturing Sdn. Bhd., Subang Jaya, Malaysia       ABB Manufacturing & Consumer Industries AB, Västerås, Sweden
     ABB MEA Participation Ltd., Zurich, Switzerland          ABB MC, St Ouen l’Aumone, France
     ABB Norden Holding AB, Stockholm                         ABB Mexico S.A. de C.V., Tlalnepantla, Mexico
     ABB Payment Services B.V., Amstelveen                    ABB Oy, Helsinki, Finland
     ABB Power Technologies Management Ltd., Zurich           ABB Power Technologies AB, Ludvika
     ABB Power Technology Products AB, Ludvika                ABB Power Technologies S.p.A., Milano
     ABB Process Analytics Ltd., St. Neots,                   ABB Power Technology S.A., Zaragoza, Spain
     ABB Process Industries Division, Oslo                    ABB Process and Automation, Sunninghill
     ABB Progetto S.p.A., Bergamo, Italy                      ABB Process Industries GmbH, Eschborn, Germany
     ABB S.A., Panama, Panama                                 ABB S.A., Buenos Aires, Argentina
     ABB S.p.A., Milan, Italy                                 ABB S.A., Paris La Défense
     ABB SACE S.p.A., Sesto S. Giovanni (MI), Italy           ABB s.r.o., Prague
     ABB Schaltanlagentechnik GmbH, Ladenburg                 ABB SAE S.p.A, Milan, Italy
     ABB Sécheron S.A., Satigny, Switzerland                  ABB Schweiz AG Baden, Switzerland
     ABB Service Co. Ltd., Al Khobar, Saudi Arabia            ABB Service AB, Västerås, Sweden
     ABB Shanghai Motors Co. Ltd., Shanghai                   ABB Servomotors S.r.l., Milan, Italy
     ABB South Africa (Pty) Ltd., Sunninghill, South Africa   ABB Solutions S.p.A., Milano, Italy
     ABB Steward (PVT) Ltd., Harare, Zimbabwe                 ABB Sp. zo.o., Warsaw, Poland
     ABB Stotz-Kontakt GmbH, Mannheim, Germany                ABB Stotz Kontakt Eléctrica, Unipessoal, Lda., Porto
     ABB Technologies Ltd., Tirat Carmel, Israel              ABB Strömberg DO 27 Oy, Helsinki, Finland
     ABB Technology Ltd., Zurich, Switzerland                 ABB Technology FLB AB, Stockholm
     ABB Transformers Ltd., Waterford                         ABB Transformatoren GmbH, Bad Honnef, Germany
     ABB Trasmissione & Distribuzione S.p.A., Milan, Italy    ABB Transmission and Distribution Sdn. Bhd
     ABB Turbo-Systems AG, Baden, Switzerland                 ABB Tubío S.A., San Luis
     ABB Utilities GmbH, Mannheim, Germany                    ABB Utilities AB, Västerås
     ABB Xiamen electrical Contolgear Co Ltd. China           ABB Vetco Gray U.K. Ltd., Aberdeen
     ABB Xinhui LowVoltage Switchgear Co.Ltd                  ABB Xiamen Switchgear Co. Ltd., Xiamen, China
     ABB Zhongshan Transformer Company Ltd                    ABB Zamech Marine Sp. zo.o., Elblag
     Asea Brown Boveri Holding Ltd., Bangkok                  Asea Brown Boveri (China) Investments Ltd., Beijing
     Asea Brown Boveri Inc., Paranaque, Metro Manila          Asea Brown Boveri Inc., Norwalk, CT, United States
     Asea Brown Boveri Ltd., Nairobi, Kenya                   Asea Brown Boveri Jumet S.A., Jumet, Belgium
     Asea Brown Boveri Ltda., Bogotá, Colombia                Asea Brown Boveri Ltd., Port Louis
     Asea Brown Boveri S.A., Brussels, Belgium                Asea Brown Boveri Ltda., La Paz
     Asea Brown Boveri S.A., Lima, Peru                       Asea Brown Boveri S.A., Caracas, Venezuela
     Asea Brown Boveri S.A., Santiago, Chile                  Asea Brown Boveri S.A., Metamorphossis Attica
     Electrical Materials Center, Riyadh, Saudi Arabia        Busch-Jaeger Elektro GmbH, Mannheim/Lüdenscheid
     PT ABB Transmission and Distribution, Jakarta            Modulec S.A., San Luis, Argentina
     ABB Corporate Research Limited (formerly known as        Universal ABB Power Cables Ltd., Satna, India
     ABB Industrial IT Development Center Limited)
     Associate:                                               Integra Hindustan Control Limited

     Managing Director:                                       Mr. Ravi Uppal




56                                                                                     ABB Limited, India, Annual Report 2004
                                                                                          (Rs in Thousands)

                                                                                         2004         2003
b)   Transactions with related parties

     i)     Sales, Services and other income
            Fellow Subsidiaries
            -     ABB (Hong Kong) Limited, Hong Kong                                    9,646      182,390
            -     Other fellow subsidiaries                                          1,104,500     806,798
                                                                                     1,114,146     989,188


            Integra Hindustan Control Limited (an associate)                           18,611         3,448

     ii)    Purchases of Raw Materials, Components and Project items
            Fellow Subsidiaries
            -     ABB Turbo-Systems AG, Baden                                         554,507      336,492
            -     ABB Automation Technologies AB, Vasteras                             613,029      342,285
            -     Other fellow subsidiaries                                          3,843,840    2,076,294
                                                                                     5,011,376    2,755,071

     iii)   Expenditure on Royalty, Trade-mark, Technical and Consultancy Services
            Holding Company                                                           113,011       79,982
            Fellow Subsidiaries
            -     ABB Information Systems Ltd., Zurich                                     —        34,830
            -     ABB Technology Ltd., Zurich, Switzerland                                 —        25,016
            -     ABB Group Services Center GmbH, Mannheim, Germany                        —        24,648
            -     ABB Power Technologies AB, Ludvika                                       —        67,704
            -     Other fellow subsidiaries                                            19,685       26,622
                                                                                       19,685      178,820
     iv)    Expenditure on Other Services
            Holding Company                                                             6,852          654
            Fellow Subsidiaries
            -     ABB Information Systems Ltd., Zurich, Switzerland                    53,993           —
            -     ABB Technology Ltd., Zurich, Switzerland                            132,504           —
            -     ABB Power Technologies AB, Ludvika                                  164,586       10,175
            -     ABB Schweiz AG Baden, Switzerland                                        —         9,431
            -     Other fellow subsidiaries                                            89,106       33,226
                                                                                      440,189       52,832

     v)     Capital expenditure for Technical Know how
            Fellow Subsidiaries
            -     ABB Turbo-Systems AG, Baden, Switzerland                             11,220           —
            -     ABB Oy, Helsinki, Finland                                             4,481       12,513
            -     ABB SACE S.p.A., Sesto S. Giovanni (MI), Italy                       11,070           —
            -     ABB Ltd., Zurich                                                         —        19,874
            -     ABB Power Technology Products AB, Ludvika                                —         3,542
            -     ABB Industries OY, Finland                                           13,319            —
            -     Other fellow subsidiaries                                             3,391            —
                                                                                       43,481       35,929




ABB Limited, India, Annual Report 2004                                                                  57
                                                                                                                           (Rs in Thousands)

                                                                                                                         2004              2003

      vi)     Capital expenditure
              Fellow Subsidiaries
              -     ABB Australia Pty Limited, Sydney, Australia                                                       26,098                 —
              -     ABB Schweiz AG Baden, Switzerland                                                                  18,740              1,448
              -     ABB Transformatoren GmbH, Bad Honnef, Germany                                                       9,362                 —
              -     ABB Trasmissione & Distribuzione S.p.A., Milan, Italy                                              10,362                 —
              -     ABB Ltd., Zurich                                                                                       —               2,330
              -     Asea Brown Boveri Jumet S.A., Jumet, Belgium                                                           —               2,254
              -     ABB Stotz-Kontakt GmbH, Mannheim, Germany                                                               —              5,068
              -     ABB Power Technology Products AB, Ludvika                                                               —              3,307
              -     Other fellow subsidiaries                                                                            6,988               771
                                                                                                                       71,550          15,178
      vii)    Outstanding balances
              Debtors and Advances
              Holding Company                                                                                               46               —
              Fellow Subsidiaries
              -     ABB Xiamen Electrical Contolgear Co Ltd. China                                                     36,154          21,785
              -     ABB (Hong Kong) Limited, Hong Kong                                                                     —          131,964
              -     Other fellow subsidiaries                                                                         240,817         345,904
                                                                                                                      276,971         499,653
                    Integra Hindustan Control Limited (an associate)                                                    3,000             262

              Creditors
              Holding Company                                                                                          86,166          57,582
              Fellow Subsidiaries
              -     ABB Oy, Helsinki, Finland                                                                         194,338                —
              -     ABB Power Technologies AB, Ludvika                                                                175,600         202,882
              -     ABB Automation Technology AB, Västerås, Sweden                                                    152,117          92,180
              -     ABB SACE S.p.A., Sesto S. Giovanni (MI), Italy                                                    150,547          76,397
              -     ABB Automation Products GmbH, Eschborn, Germany                                                    77,135         157,028
              -     Other fellow subsidiaries                                                                         721,209         607,528
                                                                                                                    1,470,946       1,136,015
      viii)   Provision for doubtful debts
              Fellow Subsidiaries                                                                                        1,303              479

      ix)     Dividend Paid during the year
              Holding Company                                                                                         117,456         117,456
              Fellow Subsidiaries                                                                                      15,048          15,048

      x)      Remuneration to Managing Director                                                                          8,912             7,314

      xi)     Dividend received from Associate                                                                            337               224

26.   The Company has entered into factorisation arrangements with certain banks on a non recourse basis whereby debtors at the year end
      amounting to Rs 2,009,265 thousand (previous year Rs 1,427,135 thousand) have been transferred to these banks and has been netted off
      against sundry debtors.




58                                                                                                  ABB Limited, India, Annual Report 2004
27.   Current Investments bought and sold during the year:
                                                                                                                                 (Rs in Thousands)

      Name                                                                                      No. of Units       Face Value        Purchase Cost
          HDFC Liquid Fund - Premium Plan                                                        29,999,263            299,992                 360,000
          NLFID Canliquid Fund                                                                   29,887,533            298,875                 300,000
          Prudential ICICI Institutional Liquid Plan                                             21,940,002            219,400                 260,000
          HDFC Cash Management Fund                                                              23,504,193            235,042                 250,000
          Grindlays Cash Fund                                                                    25,000,000            250,000                 250,000
          Tata Gilt Securities Funds                                                             11,762,199            117,622                 200,000
          Birla Gilt Plus Regular Plan                                                            9,355,784             93,558                 200,000
          Templeton India Government Securities Fund                                               8,814,090            88,141                 200,000
          HSBC Cash Fund - Institutional Plan                                                    20,067,661            200,677                 200,000
          TATA Liquid Super High Investment Fund                                                 17,985,814            179,858                 200,000
          Templeton India Treasury Management Account                                               200,000            200,000                 200,000
          LIC Liquid Fund                                                                         9,258,059             92,581                 100,000
          HUDCO Bonds                                                                            50,000,000             50,000                  56,235

28.   The pro rata difference between the forward contract rate and the exchange rate on the date of transaction to be charged to Profit & Loss
      account is Rs 8,474 thousand (previous year to be credited Rs 12,463 thousand)

29.   The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current year’s classifications. Another
      firm of Chartered Accountants audited the prior year financial statements.




As per our report of even date                                                 For and on behalf of the Board
For S. R. Batliboi & Company                                                   Dinesh Paliwal                   Chairman
Chartered Accountants                                                          Ravi Uppal                       Vice Chairman & Managing Director
                                                                               Nasser Munjee                    Director
                                                                               Umesh Prasad Singh               Director
                                                                               N.S. Raghavan                    Director
                                                                               Tom Eric Sjoekvist               Director
Sunil Bhumralkar                                                               K. Rajagopal                     Sr. Vice President - Finance
Partner
Membership No. 35141                                                           B. Gururaj                       Company Secretary
Bangalore, 1 February, 2005                                                    Bangalore, 1 February, 2005




ABB Limited, India, Annual Report 2004                                                                                                             59
Annexure to note 7 of Schedule 17- 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 2004.

A.K.Industries                                                             Matchless Engineers
Abhilasha Engineers                                                        Mathura Switchgears Private Limited
Ace Polybond Private Limited                                               MB Control & Systems Private Limited
Adarsha Controls                                                           Mech Tex Manufacturing Company
Advance Components & Instruments                                           Metal Craft Engineering & Spring
Advance Engineering Industries                                             Microsign Sales & Services
Aeropack Corporation                                                       Milind Engineering Works
Agate Electro                                                              Minal Electricals & Engineering
Agro Auto Forging (Baroda) Private Limited                                 Minal Equipment Engineers
Agya Enterprises                                                           Mini Power Electronics Private Limited
Alan Electronic Systems Private Limited                                    Mita Fasteners Private Limited
Alfeco                                                                     Monal Equipment Engineers Private Limited
Amar Radio Corporation                                                     Monarch Industries
Amba Industries                                                            Monarch Self Adhesive Tapes (I) Private Limited
Amey Innovatives                                                           MTL India Private Limited
Anil Metal Industries                                                      Myageri Electronics
Aress High Duty Forgings Private Limited                                   Naren Electronics
As Foundries Private Limited                                               Narkhede Udyog
Ashwin N. Desai & Company                                                  NF Private Limited
Auto Shell Casts Private Limited                                           Nikitech Electronics
Avn Tools & Instruments Private Limited                                    Nootan Engineering Industries
B.B.Electrotechnic                                                         Oblum Electrical
Bajaj Insulation                                                           Okay Tools Private Limited
Baroda Bushings & Insulators                                               Pace Exim Corporation
Bri Electricals Private Limited                                            Panchal Engineers
Bumper India Private Limited                                               Paramount Seals & Packings
Capso Engineers                                                            Patel Engineering Works
Chemicals & Lacquer                                                        Pavan Pressure Cast
Chetna Engineering Company                                                 Peenya Industrial Gases
Choksi Heraeus Private Limited                                             Phenoplast Corporation
Conmat Systems                                                             Polycab Wires Private Limited
Connectwell Industries                                                     Polyphase Motors
Control Dynamics                                                           Popular Power Controls Private Limited
Crescent Engineering                                                       Power Technologies
Delton Control & Switchgears                                               Pragati Electricals Private Limited
Dhaval Electricals                                                         Prathoma Switchgears Private Limited
Diakem Products Bombay Private Limited                                     Precision Spring Works
Dolf Industries                                                            Press O Parts Industries
Duflon Polymers Private Limited                                            Priyam Switchgears
Eapen Joseph & Company                                                     Procon Instrumentation Private Limited
Eastern Electricals                                                        Rajendra Industries
Easy Pack                                                                  Ramani Enterprises
Efficient Engineering                                                      Rapid Electronics
Electrical Controls & Systems                                              Recherche Industries
Electronic Relays Private Limited                                          Reliable Electronics Components
Elmex Controls Private Limited                                             Rescon Manufacturing Company Private Limited
Enercon Systems                                                            Resistors Manufacturing
Enterprising Engineers                                                     RS Electronics
Eri Electricals                                                            Sabar Industries




60                                                                                          ABB Limited, India, Annual Report 2004
Exalt Engineering Industries                    Sahyadri Starch & Chemicals
Excel Process Private Limited                   Sai International
Fabionix Inda Private Limited                   Sainik Machine Tools
Fiber Poly Glass                                Sajas Electricals
Fibertek Communication Private Limited          Sam Tech
Fluoro Plast Private Limited                    Samarth Metal Industries
Fortifori Plastics                              Samjana Rubber Products
Futura Automation                               Sara Enterprises
Garda Tools                                     Senapathy Whitely
GD India Private Limited                        Seva Industries
GG Tronics                                      Shah Electrical Engineers
Glory Papers                                    Shanmugha Precision Forgings
Goa Resistors Private Limited                   Shinograph
Goyal Electronic Industries                     Shivam Polymers
Gujarat Cables & Enamelled Products             Shreyas Engineers
Gujarat Wire & Metal Industries                 Shripad Agencies
Gyro Laboratories Private Limited               Siddharth Industries
Hiren Industries                                Siemag Industries
Trisons Corporation                             Somesh Forge Private Limited
ID Technologies                                 Specialised Components Private Limited
Indian Reyon Industries                         Sree Venkateshwara Power Industries
Indian Technological Products Private Limited   Sri Ganesh Switchgears Private Limited
Indiana Cable Trays Corpn                       Star Plating Industries
Indus Marketing                                 Stud India
Insta Controls                                  Sun Precision Cast Private Limited
Insulators & Electricals Company                Sungrace Electrticals Private Limited
Interface Connectronics                         Suprabha Protective Products Private Limited
JK Systems                                      Supreme Steel Industries
Kedar Enterprises                               Swastik Technologies
Kei Industries                                  Switron Devices
Kerb Konus Fasteners Private Limited            Symcom Engineers
Kiran Packaging Industries                      T&F Insulations Private Limited
Klenzaids Bioclean Private Limited              Techno-Flow Industries
KS Instruments                                  The Motwane Manufacturing
Kudal Engineers                                 Tilak & Tej Industries
Kulkarni Powder Metallurgical                   Tirupati Rubber Products
Kumaran Industries                              Transvick Industries
Leonardo Engineering                            Tushar Industry
Load Controls India Private Limited             Tushar Metals Private Limited
Loius Wireless Technologies                     Uma Enterprises
M.G.Marketing                                   Vaibhav Engineers Private Limited
Manometer (India) Private Limited               Variturn Electro Products Private Limited
Maruti Engineers                                Vinmech Industries
Mascasts                                        Volco Industries




ABB Limited, India, Annual Report 2004                                                         61
Cash Flow Statement




                                                                                                        (Rs in Thousands)

For the year ended 31 December 2004                                                            2004                 2003

A.   Cash Flow from Operating Activities
     Net Profit Before Tax and Exceptional Item                                            2,365,200            1,528,927
     Exceptional Item - Profit on Sale of Undertaking                                         37,991              233,008

                                                                                           2,403,191            1,761,935
     Adjustments for
     Depreciation                                                                           203,597              184,350
     Unrealised Losses / (Gains) on Restatement of Monetary Assets (net)                       4,169              (7,487)
     Unrealised Losses / (Gains) on Restatement of Monetary Liabilities (net)                (8,413)              16,999
     Loss / (Profit) on Sale of Fixed Assets, (net)                                            7,412                2,265
     (Profit) / Loss on Sale of Investments, (net)                                           15,544               (3,179)
     Write back of provision for diminution in the value of Investment                       (1,713)                   —
     Interest Income                                                                       (145,177)            (164,144)
     Dividend Income                                                                        (11,136)                (224)
     Interest Expense                                                                         13,483                9,505
     Exceptional Item - Profit on Sale of Undertaking                                       (37,991)            (233,008)
     Operating Profit before Working Capital Changes                                       2,442,966            1,567,012

     Movement in Working Capital
     Decrease/(Increase) in Sundry Debtors                                                 (909,694)            (654,370)
     Decrease/(Increase) in Inventories                                                    (447,756)            (117,109)
     Decrease/(Increase) in Loans and Advances                                                89,213            (385,984)
     Decrease/(Increase) in Other Current Assets                                           (444,234)            (390,757)
     Increase/(Decrease) in Current Liabilities and Provisions                             1,831,139            1,849,946
     Working Capital Items Transferred on Sale of Undertakings                               (56,139)             (89,075)
     Cash Generated from Operations                                                        2,505,495            1,779,663
     Direct Taxes Paid (net of refunds)                                                    (789,231)            (528,530)
     Net cash generated from Operating Activities                                          1,716,264            1,251,133


B.   Cash Flow from Investing Activities
     Purchase of Fixed Assets                                                              (504,699)            (440,080)
     Proceeds from sale of Fixed Assets                                                       12,799                5,212
     Purchase of Investments                                                             (3,258,310)            (607,026)
     Sale/Maturity of Investments                                                          2,760,691              300,076
     Interest Received                                                                       157,279              125,273
     Dividends Received                                                                      11,136                  224
     Consideration Received from Sale of Undertaking                                        128,102              407,447
     Net cash used in Investing Activities                                                 (693,002)            (208,874)




62                                                                              ABB Limited, India, Annual Report 2004
                                                                                                                               (Rs in Thousands)
For the year ended 31 December 2004                                                                                        2004             2003

C.    Cash Flow from Financing Activities
      Proceeds from new Borrowings                                                                                      778,440                7,838
      Repayment of Borrowings                                                                                         (864,549)             (30,495)
      Interest Paid                                                                                                    (13,483)              (9,505)
      Dividend paid                                                                                                   (286,477)            (286,402)
      Net Cash used in Financing Activities                                                                            (386,069)           (318,564)

      Net Increase in Cash and Cash Equivalents (A+B+C)                                                                 637,193                723,695

      Cash and Cash Equivalents (Opening Balance)                                                                     3,530,316           2,806,621
      Cash and Cash Equivalents (Closing Balance)                                                                     4,167,509           3,530,316


      Components of Cash and Cash Equivalents as at 31 December                                                            2004                  2003

      Cash and Cheques on Hand                                                                                             3,390                 3,413
      Balances with Banks - on Current Account                                                                        1,162,766           1,435,001
                            - on Deposit Account                                                                      3,001,241           2,091,820
                            - on Margin Account                                                                             112                    82
                                                                                                                      4,167,509           3,530,316

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



As per our report of even date                                                 For and on behalf of the Board
For S. R. Batliboi & Company                                                   Dinesh Paliwal                   Chairman
Chartered Accountants                                                          Ravi Uppal                       Vice Chairman & Managing Director
                                                                               Nasser Munjee                    Director
                                                                               Umesh Prasad Singh               Director
                                                                               N.S. Raghavan                    Director
                                                                               Tom Eric Sjoekvist               Director
Sunil Bhumralkar                                                               K. Rajagopal                     Sr. Vice President - Finance
Partner                                                                        B. Gururaj                       Company Secretary
Membership No. 35141
Bangalore, 1 February, 2005                                                    Bangalore, 1 February, 2005




ABB Limited, India, Annual Report 2004                                                                                                             63
Balance Sheet Abstract and Company’s General Business Profile




I     Registration Details
      Registration No.              032923                                                           State Code                   0 8
      Balance Sheet Date           31         12   04
                                 Date Month Year
II    Capital Raised during the year (Rs in Thousands)
      Public Issue                                                                                  Rights Issue
                                        NIL                                                                                       NIL
      Bonus Issue                                                                                   Private Placement
                                        NIL                                                                                       NIL
III   Position of Mobilisation and Deployment of Funds (Rs in Thousands)
      Total Liabilities                                                                             Total Assets
                          7 3 9 3 8 2 0                                                                              7 3 9 3 8 2 0
      Sources of Funds
      Paid-up Capital                                                                               Reserves and Surplus
                            4 2 3 8 1 7                                                                              6 8 2 2 8 0 0
      Secured Loans                                                                                 Unsecured Loans
                               1 4 3 1 2                                                                                        6 2 0
      Deferred Tax Liability
                            1 3 2 2 7 1
      Application of Funds
      Net Fixed Assets                                                                              Investments
                          1 9 4 9 3 4 3                                                                              1 0 6 9 6 6 9
      Net Current Assets                                                                            Misc. Expenditure
                          4 3 7 4 8 0 8                                                                                          NIL
      Accumulated Losses
                                   N I L


IV    Performance of the Company (Rs in Thousands)
      Turnover                                                                                      Total Expenditure
                      2 3 0 5 5 7 1 6                                                                              2 0 6 9 0 5 1 6
      +/- Profit/Loss Before Tax                                                                    +/- Profit/Loss After Tax
                      + 2 4 0 3 1 9 1                                                                              +1 5 4 3 1 9 1
      Earnings per Share in Rs.                                                                     Dividend Rate %
                                3 6. 4 1                                                                                          7 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)                                                         85.04
      Product Description                                                              Transformers
      Item Code No. (ITC Code)                                                         85.04
      Product Description                                                              Electronic Control and Supply Units for Variable
                                                                                       Speed Drives and other applications




64                                                                                             ABB Limited, India, Annual Report 2004

				
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