Your Directors have pleasure in presenting their Sixty Sixth Annual Report and AuditedAccounts for the year ended December 31 2015.
1. Financial Results
( Rs in Crores)
|Particulars ||For the year ended |
| ||December 31 2015 ||December 31 2014 |
|Profit Before Taxation ||474.59 ||355.21 |
|Less: Provision for Tax || || |
|- Current Tax ||203.71 ||114.00 |
|- Deferred Tax ||(29.00) ||12.70 |
|Profit after Tax ||299.88 ||228.51 |
|Balance Brought Forward from last year ||103.90 ||89.48 |
|Amount available for Appropriation ||403.78 ||317.99 |
|Appropriations: || || |
|General Reserve ||150.00 ||120.00 |
|Debenture Redemption Reserve ||50.00 ||- |
|Proposed Dividend ||78.41 ||78.41 |
|Corporate Dividend Tax ||15.96 ||15.68 |
|Balance Carried Forward ||109.41 ||103.90 |
| ||403.78 ||317.99 |
Your Directors recommend payment of a dividend at the rate of Rs 3.70 (Rupees three andpaise seventy only) per share for the year ended December 31 2015 on 211908375 equityshares of Rs 2/- each.
3. Performance Review:
The Company secured orders valued Rs 8100 crore in 2015 as against
Rs 7908 crore in the previous year. Base orders from wider spectrum of customersformed a large portion with few large projects. Service led sales resulted in morecomprehensive customer engagement. The order backlog at the end of the year stood at Rs7946 crore providing visibility to the future revenue streams. The revenue fromoperations for the Company for the year 2015 stood at Rs 8140 crore as against
Rs 7733 crore in the previous year reflecting stability of operations in an uncertainmarket. Profit before tax was up by 34% at Rs 475 crore in 2015 as compared to Rs 355crore in the previous year mainly due to efforts towards internal operational excellenceentering new market lower material cost and extensively participating in the shift torenewable energy. Net profit after tax was up by 31% at Rs 300 crore for the current yearas compared to Rs 229 crore in the previous year. Consequently the earnings per share forthe year 2015 stood at
Rs 14.15 per share as compared to Rs 10.78 per share in the year 2014.
For detailed analysis of the performance please refer to the ManagementsDiscussion and Analysis given in Annexure - A forming part of this Report.
4. Extract of Annual Return:
As per provisions of Section 92 (3) of the Companies Act 2013 (the Act) read with Rule12 of the Companies (Management and Administration) Rules 2014 the extract of the AnnualReturn in the Form MGT-9 is given in Annexure - B forming part of this report.
5. Board Meetings held during the year:
During the year 8 meetings of the Board of Directors were held which includes ameeting of Independent Directors as required under the Act and Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (theListing Regulations). The details of the meetings are furnished in the CorporateGovernance Report.
6. Issue of Debentures:
As approved by the Members through Postal Ballot during August 2015 the Company hasissued 600 unsecured rated listed redeemable non-convertible debentures having facevalue of
Rs 10000000/- (Rupees One Crore only) aggregating to Rs 600 Crore on privateplacement basis under Foreign Portfolio Investment route to an identified investor whichare listed with BSE Limited. The proceeds of these debentures were used for refinancingthe Companys debt.
7. Compliance on criteria of Independence by the Independent Directors:
All Independent Directors of the Company have given declarations to the Company underSection 149 (7) of the Act that they meet the criteria of independence as provided inSub-Section 6 of Section 149 of the Act and also under the Listing Regulations.
8. Remuneration Policy of the Company:
The Remuneration Policy of the Company for appointment and remuneration of theDirectors Key Managerial Personnel and Senior Executives of the Company along with otherrelated matters have been provided in the Corporate Governance Report.
As and when need arises to appoint Director the Nomination and Remuneration Committee(NRC) of the Company will determine the criteria based on the specific requirements. NRCwhile recommending candidature to the Board will take into consideration thequalification attributes experience and Independence of the Candidate. Director(s)appointment and remuneration will be as per NRC Policy of the Company.
A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read withRule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is given in Annexure - C forming part of this report.
9. Particulars of loans guarantees or investments under Section 186 of the Act:
During the year under review your Company has not granted any Loan Guarantees or madeInvestments within the meaning of Section 186 of the Act.
10. Amount if any proposed to be transferred to Reserves:
The Company transferred a sum of Rs 150 Crore towards General Reserve and Rs 50 Croretowards Debenture Redemption Reserve during the Financial Year 2015.
11. Material changes and commitment if any affecting financial position of theCompany from the end of Financial Year and till the date of this Report
There has been no material change and commitment affecting the financial performanceof the Company occurred between the end of the Financial Year of the Company to which theFinancial Statements relate and the date of this Report.
12. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo:
The particulars as prescribed under Section 134 of the Act read with Rule 8 (3) of theCompanies (Accounts) Rules 2014 relating to Conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Outgo are given in Annexure - D formingpart of this report.
13. Listing Agreements:
Your Company has entered into new Listing Agreements with BSE Limited and NationalStock Exchange of India Limited in compliance with Regulation 109 of Securities andExchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009as amended by SEBI.
14. Risk Management Policy:
The Board of Directors has adopted a Risk Management Policy and constituted a RiskManagement Committee. The Committee oversees the Risk Management process including riskidentification impact assessment effective implementation of the mitigation plans andrisk reporting. The purpose of the Committee is to assist the Board of Directors infulfilling its oversight responsibilities with regard to enterprise risk management.
The details and the process of Risk Management as implemented in the Company areprovided as part of Managements Discussion and Analysis which forms part of thisReport.
15. Corporate Social Responsibility (CSR) initiatives:
In accordance with the provisions of Section 135 of the Act and Rules framed thereunderyour Company has adopted a policy for CSR and the Board has constituted a Committee forimplementing the CSR activities. Composition of the Committee and other details areprovided in Corporate Governance Report. Education Access to Electricity Health CareEnvironment skills enhancement for creating employable opportunities for the differentlyabled personnel etc. are the focal area under the CSR Policy.
The Company has implemented various CSR projects directly and / or through implementingpartners and the projects undertaken by the Company are in accordance with Schedule VII ofthe Act. The report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is given in Annexure - E forming part of thisreport.
16. Annual evaluation of Board its Committees and Individual Directors:
The Board of Directors has carried out an annual evaluation of its own performance itsCommittees and individual Directors pursuant to the requirements of the Act and theListing Regulations.
Further the Independent Directors at their exclusive meeting held during the yearreviewed the performance of the Board its Chairman and Non-Executive Directors and otheritems as stipulated under the Listing Regulations.
17. Audit Committee:
The details pertaining to composition of the Audit Committee and terms of reference areincluded in the Corporate Governance Report which forms part of this Report.
18. Related Party Transactions:
The Board of Directors has adopted a policy on Related Party Transactions. Theobjective is to ensure proper approval disclosure and reporting of transactions asapplicable between the Company and any of its related parties. All contracts orarrangements with related parties entered into or modified during the financial year wereat arms length basis and in the ordinary course of the Companys business. Allsuch contracts or arrangements were entered into only with prior approval of the AuditCommittee except transactions which qualified under Omnibus approval as permitted underlaw. No material contract or arrangement with related parties were entered into during theyear under review. Therefore there is no requirement to report any transaction in FormNo. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts)Rules 2014. Transactions with related parties as per requirements of Accounting Standard18 are disclosed in the notes to accounts annexed to the financial statements. YourCompanys Policy on Related Party Transactions as adopted by your Board can beaccessed on the Companys website at www.abb.co.in.
19. Reporting of frauds:
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and /or Board under Section 143(12) ofthe Act and Rules framed thereunder.
20. Transfer to Investor Education and Protection Fund:
As required under Section 205C of the Companies Act 1956 the unclaimed dividendamount aggregating to Rs 18.09 lakh lying with the Company for a period of seven yearspertaining to year ended on December 31 2007 was transferred during the year 2015 tothe Investor Education and Protection Fund established by the Central Government.
21. Particulars of Employees:
The statement under Rule 5 (2) and Rule 5 (3) of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and particulars required under Section197 (12) of the Act are given in Annexure - F forming part of this report.
The said Annexure shall be provided to Members on a specific request made in writing tothe Company. The said information is available for inspection by the Members at theRegistered Office of the Company on any working day of the Company up to the date of the66th Annual General Meeting.
22. Directors Responsibility Statement:
To the best of our knowledge and belief and according to the information andexplanations obtained by us your Directors make the following statements in terms ofSection 134(3) (c) and 134 (5) of the Act that:
a) in the preparation of the annual financial statements for the year ended December31 2015 the applicable Accounting Standards have been followed along with properexplanation relating to material departures if applicable;
b) for the financial year ended December 31 2015 such accounting policies asmentioned in the Notes to the financial statements have been applied consistently andjudgments and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs of the Company and of the Profit and Loss ofthe Company for the year ended December 31 2015;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual financial statements have been prepared on a going concern basis;
e) proper internal financial controls are in place and such internal financial controlsare adequate and were operating effectively;
f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and are adequate and operating effectively.
23. Corporate Governance Report and Certificate:
As required under Regulation 34 (3) read with Schedule V (C) of the
Listing Regulations a report on Corporate Governance and the certificate as requiredunder Schedule V (E) of the Listing Regulations from Messrs V. Sreedharan &Associates Practicing Company Secretaries regarding compliance of conditions ofCorporate Governance are given in Annexure - G and Annexure - Hrespectively forming part of this report.
24. Secretarial Audit:
Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and amendments theretoyour Company engaged the services of Messrs HBP & Co. Company Secretaries Bengaluruto conduct the Secretarial Audit of the Company for the financial year ended December 312015. The Secretarial Audit Report in Form MR-3 is given in Annexure - I formingpart of this report.
25. Business Responsibility Report:
As required under Regulation 34 of the Listing Regulations the Business ResponsibilityReport forms part of the Annual Report.
26. Whistle Blower Policy:
The Company has a Vigil Mechanism for Directors and Employees to report their concernsabout unethical behavior actual or suspected fraud or violation of the CompanysCode of conduct. The mechanism provides for adequate safeguards against victimization ofDirector(s) and Employee(s) who avail of the mechanism.
The Whistle Blower Policy is available on Companys website.
27. Directors and Key Managerial Personnel:
Mr. Bazmi R. Husain (DIN: 00965992) resigned as Director and the Managing Director ofthe Company on September 2 2015 and as per the Companys policy he has beenrelieved from the services of the Company effective close of office hours on December 312015. Your Directors place on record their appreciation of the valuable service renderedby Mr. Husain during his tenure as the Managing Director of the Company.
Further your Directors at their meeting held on December 11 2015 appointed Mr.Sanjeev Sharma (DIN: 07362344) as Director and Managing Director of the Company effectiveJanuary 1 2016.
The Board at its meeting held on October 28 2014 appointed Mr. Frank Duggan(DIN: 02937233) as a Director in the casual vacancy caused due to the resignation of Mr.Gary Steel (DIN: 02500073). Since Mr. Gary Steel was to retire by rotation at the ensuingAnnual General Meeting Mr. Frank Duggan would also cease to hold the office of Directorat ensuing Annual General Meeting pursuant to Section 161(4) of the Act and is eligiblefor reappointment as Director.
Pursuant to the Act and Regulation 25 of the Listing Regulations all the threeIndependent Directors viz. Mr. Nasser Munjee Mr. Darius E Udwadia and Mrs. Renu SudKarnad were appointed at the 65th Annual General Meeting held on May 6 2015for a period of 5 years effective conclusion of the said meeting. Hence none of theIndependent Directors is liable to retire by rotation.
NecessaryresolutionsrelatingtoDirectorswhoareseekingappointment/ reappointment areincluded in the Notice of Annual General Meeting. The relevant details of the saidDirectors are given in the annexure to the Notice of the Annual General Meeting.
During the year Mr. Amlan Datta Majumdar resigned as Chief Financial Officer of theCompany and was relieved from the services effective close of office hours on March 102015. Mr. T. K. Sridhar was appointed as Chief Financial Officer of the Company effectiveJuly 23 2015.
As on date Mr. Sanjeev Sharma Managing Director Mr. B. Gururaj Company Secretaryand Mr. T.K. Sridhar Chief Financial Officer are the Key Managerial Personnel of theCompany.
During the year under review your Company did not accept any deposit within themeaning of the provisions of Chapter V - Acceptance of Deposits by Companies read with theCompanies (Acceptance of Deposits) Rules 2014.
29. Financial Year:
The Act requires every company to have the period April to March as its Financial Yearmandatorily. Exception is however permitted to have a different period as financial yearprovided the Company obtains permission from the Ministry of Corporate Affairs.
Your Company is one of the key subsidiaries of ABB Group which follows calendar yearas its financial year. To support consolidation of group financial statements and auditthereof as per overall group process and timeline it was necessary for the Company tofollow the financial year as January - December. Therefore your Company intended tocontinue the calendar year i.e. January - December as its financial year and made anapplication to the Honble Company Law Board Southern Region Bench Chennai toretain its current financial year period instead of changing it to April - March period.The Honble Company Law Board allowed the Companys application and permittedthe Company to continue to have calendar year i.e. January - December as its financialyear.
30. Significant and Material Orders Passed by the Regulators or Courts or Tribunalsimpacting the Going Concern status of the Company:
There has been no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and Companys operations. All ordersreceived by the Company during the year are of routine in nature which have no significant/ material impact.
31. Internal Control Systems and their adequacy:
The details on Internal Control Systems and their adequacy are provided in theManagements Discussion and Analysis which forms part of this Report.
32. Disclosure as per the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder. As requiredunder law an Internal Compliance Committee has been constituted for reporting andconducting inquiry in to the complaints made by the victim on the harassments at the workplace. During the year 2015 the Company has received one complaint of sexual harassmentand the same has been duly inquired and concluded by taking appropriate action.
33. Statutory Auditors:
Pursuant to provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 Messrs S R BATLIBOI & ASSOCIATES LLP Chartered Accountants(Firm Registration No. 101049W) were appointed as Statutory Auditors of theCompany for a term of 2 years to hold office from the conclusion of 65thAnnual General Meeting held on May 6 2015 until the conclusion of 67th Annual GeneralMeeting subject to ratification of their appointment at every subsequent Annual GeneralMeeting.
Consent and certificate from them has been received to the effect that theirappointment as Statutory Auditors of the Company if ratified at ensuing Annual GeneralMeeting would be according to the terms and conditions prescribed under Section 139 ofthe Act and Rules framed thereunder.
A resolution seeking ratification of their appointment forms part of the noticeconvening the 66th Annual General Meeting and the same is recommended for yourconsideration and approval.
34. Cost Auditor:
In terms of the provisions of Section 148 of the Act read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Board of Directors on the recommendation ofthe Audit Committee have appointed Messrs Ashwin Solanki & Associates CostAccountant (Registration No: 100392) as Cost Auditor of the Company for the financialyear ending December 31 2016 on a remuneration as mentioned in the Notice convening the66th Annual General Meeting for conducting the audit of the cost recordsmaintained by the Company.
A Certificate from Messrs Ashwin Solanki & Associates Cost Accountant has beenreceived to the effect that their appointment as Cost Auditor of the Company if madewould be in accordance with the limits specified under Section 141 of the Act and Rulesframed thereunder.
A resolution seeking Members ratification for the remuneration payable to CostAuditor forms part of the Notice of the 66th Annual General Meeting of theCompany and same is recommended for your consideration and approval.
Cost Audit and Compliance report for the year 2014 were filed on May 27 2015 which iswithin the time limit as prescribed in Companies (Cost Audit Report) Rules 2011.
The Board of Directors take this opportunity to thank the Companys parentcompany customers members suppliers bankers associates Central and State Governmentsand employees at all levels for their support and co-operation extended to the Companyduring the year.
| ||For and on behalf of the Board |
| ||Frank Duggan |
|Place : Bengaluru ||Chairman |
|Date : February 4 2016 ||DIN: 02937233 |