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ABB India Ltd.

BSE: 500002 Sector: Engineering
NSE: ABB ISIN Code: INE117A01022
BSE 00:00 | 08 Aug 2718.15 31.20
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NSE 00:00 | 08 Aug 2721.10
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OPEN 2690.00
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VOLUME 45840
52-Week high 2834.10
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P/E 116.06
Mkt Cap.(Rs cr) 57,598
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OPEN 2690.00
CLOSE 2686.95
VOLUME 45840
52-Week high 2834.10
52-Week low 1619.30
P/E 116.06
Mkt Cap.(Rs cr) 57,598
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

ABB India Ltd. (ABB) - Director Report

Company director report

Your Directors have pleasure in presenting their Seventy Second Annual Report andAudited Accounts for the year ended December 31 2021.

1. Financial Results:

(Rs in Crores)

Particulars For the year ended
December 31 2021 December 31 2020
Profit before tax and exceptional items 585.85 230.59
Profit before tax and after exceptional items 707.19 289.38
Tax expense:
- Current tax 176.85 71.71
- Deferred tax 10.63 (1.55)
Profit after tax 519.71 219.22
Other comprehensive income/ (loss) (net of tax) 25.05 (28.18)
Balance brought forward from previous year 921.17 834.90
Amount available for appropriation 1465.93 1025.94
Demerger adjustment - -
Change in Accounting Policy (Net of Tax) - (3.05)
Appropriations:
Equity dividend paid 105.95 101.72
Tax on equity dividend paid - -
Balance carried forward 1359.98 921.17

2. Dividend:

Your Directors recommend payment of a dividend at the rate of Rs. 5.20 (Rupees Five andpaise Twenty only) per share for the year ended December 31 2021 on 211908375 equityshares of Rs 2/- each.

3. Share capital:

During the year under review there was no change in share capital of the Company.

4. Performance review:

During the year orders from continuing operations touched Rs 7666 crore as against Rs5932 crore in the Previous Year. The year 2021 was a year of unprecedented challengesbut the Company's agile business model helped to navigate headwinds and deliver consistentprofitable performance for the year. The order backlog at the end of the year held steadyat Rs 4912 crore which continued to provide visibility to the future revenue streams. Therevenue from continuing operations for the Company for the year 2021 stood at Rs 6934crore as against Rs 5821 crore in the previous year reflecting a year of unprecedentedchanges brought about by the pandemic. For the full year the Company's profit before taxstood at Rs 724crore (after accounting for net impact of 121 crore due to exceptionalitems) compared to Rs 304 crore in 2020. Profit after tax for the year was Rs 532 crore ascompared to Rs 230 crore last year. On an overall basis the catalysts for improvedprofitability include efficient opex management better mix improved service and productrevenues supported by a sharp focus on cost savings. The earnings per share for 2021stood at Rs 25.13 per share as compared to 10.87 per share in 2020 for continuingoperations without Power Grids.

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

5. Annual Return:

The Annual Return of the Company as on December 31 2021 in Form MGT - 7 in accordancewith Section 92(3) of the Act read with the Companies (Management and Administration)Rules 2014 is available on the website of the Company at: https://search.abb.com/library/Download.aspx?DocumentlD=9AKK108466A7342&LanguageCode=en&DocumentPartld=&Action=Launch

6. Board Meetings held during the year:

During the year seven meetings of the Board of Directors were held and one meeting ofIndependent Directors was also held. The details of the meetings are furnished in theCorporate Governance Report.

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 SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 (Listing Regulations) and that their names havebeen included in the data bank of Independent Directors as prescribed under the Act. Inthe opinion of the Board the Independent Directors of the Company possess necessaryexpertise integrity and experience.

8. Nomination and Remuneration Policy of the Company:

The Nomination and Remuneration Policy of the Company for appointment and remunerationof the Directors Key Managerial Personnel (KMP) and Senior Management of the Companyalong with other related matters have been provided in the Corporate Governance Report.

As and when need arises to appoint Director KMP and Senior Management Personnel theNomination and Remuneration Committee (NRC) of the Company will determine the criteriabased on the specific requirements. NRC while recommending candidature to the Boardtakes into consideration the qualification attributes experience and independence of thecandidate. Director(s) KMP(s) and Senior Management Personnel appointment andremuneration will be as per NRC Policy of the Company.

The salient features of the Nomination and Remuneration Policy of the Company has beendisclosed in the Corporate Governance Report which is a part of this report. The saidPolicy is available on the Company's website on https://new.abb.com/indian-subcontinent/investors/documents-policies

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 - B forming part of this report.

9. Dividend Distribution Policy:

As required under the Regulation 43A of the Listing Regulations the Company has aPolicy on Dividend Distribution. This Policy can be accessed on the Company's website atwww.abb.co.in

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

Your Company has not borrowed any loan or provided any guarantee and / or made anyinvestment within the meaning of Section 186 of the Act during the year under review.

11. Amount if any proposed to be transferred to Reserves:

During the year under review the Company has not proposed to transfer any amount toGeneral Reserves.

12. 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 that occurred between the end of the Financial Year of the Company to whichthe Financial Statements relate and the date of this Report.

13. 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 - C formingpart of this report.

14. Risk Management Policy:

The Company has a Risk Management Policy and constituted a Risk Management Committee asrequired under Listing Regulations. The Committee oversees the Risk Management processincluding risk identification impact assessment effective implementation of themitigation plans risk reporting and carries out other related activities as per theListing Regulations. 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 Management's Discussion and Analysis which forms part of this Report.

15. Corporate Social Responsibility (CSR) initiatives:

The Company has a Policy on Corporate Social Responsibility and has constituted a CSRCommittee as required under the Act for implementing various CSR activities. Compositionof the Committee and other details are provided in Corporate Governance Report. TheCompany's focus on CSR activities are pre-dominantly in the areas of Education Diversityand inclusion in the fabric of society Environment and Social Issues of the Communities.

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. During the year under review the Company has spent the required amount on CSRactivities.

Detailed report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is given in Annexure - D 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 Directors pursuant to the requirements of the Act and the ListingRegulations. The Board evaluation was conducted through questionnaire designed withqualitative parameters and feedback based on ratings.

The key parameters considered for Board evaluation for Financial Year 2021 are BoardMembership Board's Culture and Relationships with Key Constituencies BoardResponsibilities Decision Making and Board Committees. During evaluation process theDirectors have given rating of either ‘Strongly agree' / ‘Agree' on variousassessment questions for Financial Year 2021 which is very encouraging.

The performance of the committees was also evaluated after seeking inputs from thecommittee members on the basis of criteria such as the composition of committeesindependence of each Committee frequency of meetings and time allocated for discussionsat meetings effectiveness of committee meetings etc.

Further the Independent Directors at their exclusive meeting held during the yearreviewed the performance of the Board its Chairman and Nonexecutive 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. Sale of Company's Turbocharger Business:

Based on the decision of ABB Group globally and due to declining diesel engine marketsegment in India combined with restricted access to global technology and operationalnetwork Turbocharger business would not be sustainable and hence felt by the Company'smanagement that it would be worthwhile to exit from the said business bydivesting/selling. Hence at the Board Meeting held on December 21 2021 based on therecommendation of the Audit Committee it was decided to divest/sale Company'sturbocharger business in the process automation business segment ("TurbochargerBusiness") as a going concern on a slump sale basis to a wholly owned subsidiary tobe incorporated by the Company for consideration price of ?310 crores which was arrivedbased on the average price of valuations derived by valuers appointed by the Company.

For the purpose of transfer of Company's Turbocharger Business the Board has alsoapproved to incorporate a wholly owned subsidiary. Accordingly your Company hasincorporated its wholly owned subsidiary i.e. Turbocharging Industries and Services IndiaPrivate Limited on January 31 2022.

19. Names of companies which have become or ceased to be Subsidiaries joint venturesor associate companies during the year :

During the year under review no company has become or ceased to be Subsidiaries jointventures or associate companies.

However based on the recommendation of the Audit Committee and the Board at itsMeeting held on December 21 2021 has approved to incorporate a wholly owned subsidiary("WoS") and to invest ?3150000000 (Rupees Three Hundred Fifteen Crores only)in the WoS by way of equity infusion and subscription to the memorandum of association ofthe WoS. Accordingly your Company has incorporated its WoS i.e. Turbocharging Industriesand Services India Private Limited on January 31 2022.

20. 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 arm's length basis and in the ordinary course of the Company's business except thetransactions reported here in below:

During the financial year various lease and service agreements have been entered withHitachi Energy India Limited (formerly known as ABB Power Products and Systems IndiaLimited). These transactions fall within the definition of Related Party Transaction underthe provisions of Section 188 of the Companies Act 2013 (the Act) requiring disclosuresto be made in Form No.AOC-2 pursuant to Section 134 of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 which is attached as Annexure-E.

All contracts or arrangements were entered into only with prior approval of the AuditCommittee except transactions which qualified as Omnibus transactions as permitted underlaw.

The Company has appointed Ernst & Young LLP (EY) to review the approved RelatedParty Transactions to verify and ensure and confirm that the transactions carried outwere in the ordinary course of business and at arm's length basis. EY submits its Reportto the Audit Committee at its meetings on quarterly basis.

Transactions with related parties as per the requirements of Indian AccountingStandard 24 are disclosed in the notes to accounts annexed to the financial statements.Your Company's Policy on Related Party Transactions as adopted by your Board can beaccessed on the Company's website. Link for the same is: https://new.abb.com/docs/librariesprovider19/default- document- library/related-party-transaction-policy.pdf?sfvrsn=2

21. 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.

22. Transfer to Investor Education and Protection Fund:

As required under Section 124 of the Act the unclaimed dividend amount aggregating toRs.32.16 lakh lying with the Company for a period of seven years pertaining to thefinancial year ended on December 31 2013 was transferred during the Financial Year 2021to the Investor Education and Protection Fund established by the Central Government.

23. Particulars of Employees:

The information on employee particulars as required under Section 197(12) of the Actread with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended from time to time are given in Annexure - F formingpart of this report. In terms of Section 136 of the Act the Report and FinancialStatements are being sent to the Members and others entitled thereto excluding thisAnnexure. This Annexure shall be provided to Members on a specific request made in writingto the Company. The said information is available for electronic inspection by the Memberson any working day of the Company up to the date of the 72nd Annual General Meeting.

24. Directors' Responsibility Statement:

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) and 134(5) of the Act that:

(a) that in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;

(b) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at December 31 2021 and of the profit and loss ofthe Company for the year ended on that date;

(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

25. Disclosure on confirmation with the Secretarial Standards:

Your Directors confirm that the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India have been duly complied with.

26. Corporate Governance Report and Certificate:

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

27. Business Responsibility and Sustainability Report:

As required under Regulation 34 of the Listing Regulations the Business Responsibilityand Sustainability Report forms part of the Annual Report.

28. 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 Company's Code ofConduct. 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 Company's website at www.abb.co.in

29. Directors and Key Managerial Personnel:

Mr Jean-Christophe Deslarzes (DIN: 08064621) Chairman & Non-ExecutiveNon-Independent Director resigned from the office of Chairman and Director with effectfrom February 10 2021 before the expiry of his term. Consequently the Board of Directorsof the Company at its meeting held on February 10 2021 appointed Ms. Maria RosariaVarsellona (DIN: 08892891) as Director (Non-executive and Non-independent) of the Companyeffect from February 10 2021 liable to retire by rotation and which was approved by theShareholders at the Annual General Meeting held on April 28 2021.

The Board of Directors of the Company at their meeting held on February 10 2021appointed Mr Morten Wierod (DIN: 08753868) Non-Executive Non-Independent Director asChairman of the Board of Directors of the Company.

Ms. Gopika Pant (DIN: 00388675) was appointed as Independent Director by the Board ofDirectors effect from April 27 2021 for term of three consecutive years effective April27 2021 and which was approved by the shareholders through postal ballot on June 262021.

Mr Darius E Udwadia (DIN: 00009755) Independent Director resigned effect from April28 2021 and Ms. Maria Rosaria Varsellona (DIN: 08892891) Nonexecutive Non-independentDirector resigned effective March 31 2022.

Subject to approval of the shareholders Mr. Sanjeev Sharma (DIN: 07362344) wasre-appointed as Managing Director on June 11 2021 by the Board of Directors for a term offive consecutive years effect from January 1 2022. Accordingly the proposal for hisre-appointment is included in the Notice of Annual General Meeting for approval of theShareholders of the Company.

The Board of Directors of the Company at its meeting held on February 10 2022appointed Ms Carolina Yvonne Granat (DIN: 09477744) as Director (Non-executive andNon-independent) of the Company with effect from April 1 2022 liable to retire byrotation subject to approval of the Shareholders. Accordingly the proposal for herappointment is included in the Notice of Annual General Meeting for approval of theShareholders of the Company. Necessary Notice under Section 160 of the Act has beenreceived from Members proposing the candidature of the aforesaid Director of the Company.

In accordance with the provisions of the Act read with Article 157 of the Articles ofAssociation of the Company Mr. Morten Wierod Director will retire by rotation at theensuing Annual General Meeting of the Company and being eligible offers himself forre-appointment.

Due to unfortunate demise of Mr. B Gururaj Company Secretary of the Company on April12 2021 Mr. Sunil L Naik (ACS 15414) was appointed as the Company Secretary andCompliance Officer of the Company by the Board of Directors effect from October 6 2021.Consequent to the resignation of Mr. Naik on December 21 2021 Mr. Trivikram Guda (ACS17685) was appointed by the Board as the Company Secretary of the Company who will be aKey Managerial Personnel and Compliance Officer of the Company effect from December 222021.

Apart from aforesaid changes there are no changes in Directors and Key ManagerialPersonnel of the Company. Details of Directors Key Managerial Personnel and compositionof various Committees of the Board are provided in the Corporate Governance Report formingpart of this report.

As on date Mr. Sanjeev Sharma (DIN: 07362344) Managing Director Mr. T.K. SridharChief Financial Officer and Mr. Trivikram Guda Company Secretary are the Key ManagerialPersonnel of the Company.

30. Deposits:

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 of the Actread with the Companies (Acceptance of Deposits) Rules 2014.

31. 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 Company's operations.

32. Internal Control Systems and their adequacy:

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

33. 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 Committee has been constituted for reporting and conducting inquiryinto the complaints made by the victim on the harassments at the work place. During theyear 2021 one complaint of sexual harassment was received which is under investigation.Except the case mentioned herein there is no other complaint of sexual harassment pendingas at the date of this report.

34. Statutory Auditors:

M/s. B S R & Co. LLP Chartered Accountants (Firm RegistrationNo.101248W/W-100022) were appointed as Statutory Auditors of the Company at the 67th AGMheld on May 9 2017 to hold office till the conclusion of the ensuing 72nd AGM.

M/s. B S R & Co. LLP Chartered Accountants are eligible to be re-appointed for afurther term of 5 (five) years in terms of provisions of Sections 139 and 141 of the Act.

Accordingly the Board of Directors of the Company at their meeting held on February10 2022 on the recommendation of the Audit Committee and subject to the approval of theshareholders of the Company at the ensuing AGM have approved the re-appointment of M/s. BS R & Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022) as theStatutory Auditors for a further period of 5 (five) years from the conclusion of the 72ndAGM.

The Company has received written consent and certificate of eligibility in accordancewith Sections 139 141 and other applicable provisions of the Act and Rules issuedthereunder from M/s. B S R & Co. LLP. They have confirmed to hold a valid certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI)as required under the Listing Regulations.

The Auditors have issued an unmodified opinion on the Financial Statements for thefinancial year ended December 31 2021. The said Auditors' Report(s) for the financialyear ended December 31 2021 on the financial statements of the Company forms part of thisAnnual Report.

35. Cost Auditor:

In terms of the provisions of Section 148 of the Act read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors onthe recommendation of the Audit Committee has appointed Messrs Ashwin Solanki &Associates Cost Accountants (Registration No: 100392) as Cost Auditor of the Company forthe financial year ending December 31 2022 on a remuneration as mentioned in the Noticeconvening the 72nd Annual General Meeting for conducting the audit of the cost recordsmaintained by the Company.

A Certificate from Messrs Ashwin Solanki & Associates Cost Accountants 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' approval for remuneration payable to Cost Auditor formspart of the Notice of the 72nd Annual General Meeting of the Company and same isrecommended for your consideration.

Cost Audit and Compliance reports for the year 2020 were filed with the Registrar ofCompanies within the prescribed time limit.

36. Insolvency and Bankruptcy Code 2016:

During the financial year neither any application nor any proceeding is initiatedagainst the Company under the Insolvency and Bankruptcy Code 2016.

37. Settlements with Banks or Financial Institutions:

During the financial year no settlements were made by the Company with any Banks orFinancial Institutions.

38. 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 theretoand SEBI Listing Regulations your Company engaged the services of Messrs BMP & Co.LLP Company Secretaries Bengaluru to conduct the Secretarial Audit of the Company forthe financial year ended December 31 2021. The Secretarial Audit Report along with theirobservations is given in Annexure- I forming part of this report.

39. Change of Registered Office:

Effective October 6 2021 your Company's Registered Office address is updated as"Disha - 3rd Floor Plot No. 5 & 6 2nd Stage Peenya Industrial Area IV PeenyaBengaluru - 560 058 Karnataka".

40. Acknowledgements:

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

For and on behalf of the Board
Morten Wierod
Chairman
DIN: 08753868
Place: Bengaluru
Date: February 10 2022

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