abb india 2004 annual report

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ABB Limited, India, Annual Report 2004 1

Board of Directors

Dinesh Paliwal, Chairman

Ravi Uppal, Vice Chairman and Managing Director

Peter Smits

N.S.Raghavan

Nasser Munjee

Peter Leupp

Tom Eric Sjoekvist

Company Secretary

B Gururaj

Corporate Management Committee

Ravi Uppal

I K Sadhu

Biplab Majumder

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

Auditors

S.R.Batliboi & Company

Registered Office

2nd Floor, East Wing

Khanija Bhavan

49, Race Course Road

Bangalore - 560 001

Registrar & Share Transfer Agents

Karvy Computershare Private Limited

No. 51/2, T.K.N.Complex

Vanivilas Road

Opp. National College

Basavanagudi

Bangalore - 560 004

ABB Limited

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ABB Limited, India, Annual Report 200410

NOTICE is hereby given that the FIFTY-FIFTH ANNUAL GENERALMEETING of the Members of ABB Limited will be held at ITC HotelWindsor Sheraton & Towers, “Windsor Square”, 25, Golf Course Road,Bangalore - 560052, on Tuesday, the 24 May, 2005 at 3.00 PM (IST)

to transact the following business:

Ordinary Business

1. To receive, consider and adopt the Balance Sheet as at31 December, 2004 and the Profit and Loss Account for theyear ended on that date and the Reports of the Directors andthe Auditors thereon.

2. To declare a dividend on equity shares.

3. To appoint a Director in place of Mr. Dinesh Paliwal, who retiresby rotation at this Annual General Meeting, and being eligible,offers himself for re-election.

4. To appoint a Director in place of Mr. N S Raghavan, who retiresby rotation at this Annual General Meeting, and being eligible,offers himself for re-election.

5. To appoint M/s S.R. Batliboi & Co., Chartered Accountants, asAuditors of the Company to hold office from the conclusion ofthis Annual General Meeting until the conclusion of the nextAnnual General Meeting and to fix their remuneration.

Special Business

6. To consider and if thought fit, to pass with or withoutmodification(s), the following resolution as a Special Resolution:

“RESOLVED THAT in compliance with the provisions of Section163 and all other applicable provisions, if any, of theCompanies Act, 1956 (“the Act”) the consent of the Companybe and is hereby accorded for keeping the register ofmembers, the index of members, register & index of debenture-holders if any, records relating to returns of allotment from timeto time, copies of annual returns prepared under Section 159 ofthe Act together with copies of certificates and documentsrequired to be annexed thereto under Section 161 of the Act orany one or more of them, at the Office of Karvy ComputersharePrivate Limited, the Registrar and Share Transfer Agents of theCompany, situated at #51/2, T.K.N. Complex, Vanivilas Road,Opp. National College, Basavanagudi, Bangalore 560 004 witheffect from 25 May, 2005 instead of being kept at theRegistered Office of the Company.

Notice to Members

RESOLVED FURTHER THAT the registers, indexes, returns,books, certificates or copies of certificates and documents ofthe Company required to be maintained and kept for inspectionunder the provisions of the Companies Act, 1956, be kept openfor such inspection, at the above mentioned place, for personsentitled thereto, to the extent and in the manner and on paymentof fees, if any, specified in the aforesaid Act or the Articles ofAssociation of the Company, between 10.30 AM and 12.30 PMon any working day (Monday to Friday) except when theregisters and books are closed under the provisions of the saidAct or the Articles of Association of the Company.’’

By Order of the BoardFor ABB Limited

B GururajAssistant Vice President &Company SecretaryBangalore1 February, 2005

Registered Office:2nd Floor, East Wing,Khanija Bhavan, 49, Race Course Road,Bangalore – 560 001

Notes:

1. The relative Explanatory Statement pursuant to Section 173(2) ofthe Companies Act, 1956, setting out the material facts in respectof business under item No. 6 is annexed hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THEMEETING IS ENTITLED TO APPOINT ONE OR MOREPROXY(IES) TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND A PROXY NEED NOT BE A MEMBER OF THECOMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUSTBE RECEIVED AT THE COMPANY’S REGISTERED OFFICENOT LATER THAN FORTY–EIGHT HOURS BEFORE THECOMMENCEMENT OF THE MEETING.

3. Members should bring the duly filled in attendance slips sentherewith for attending the meeting.

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4. The Register of Members and the Share Transfer Books of the

Company will remain closed from Friday, the 13 May, 2005 to

Tuesday, the 24 May, 2005 (both days inclusive) for the

purpose of payment of dividend.

5. The dividend, as recommended by the Board, if declared at the

Annual General Meeting, will be paid on or after Thursday, the

26 May, 2005 to those members whose names stand registered

on the Company’s Register of Members:-

a) as Beneficial Owners as at the end of business hours on

Thursday, the 12 May, 2005 as per the list to be furnished

by National Securities Depository Limited (NSDL) and

Central Depository Services (India) Limited (CDSL) in

respect of shares held in demat form.

b) as Members in the Register of Members of the Company

after giving effect to valid share transfers lodged with the

Company, on or before Thursday, the 12 May, 2005.

6. Members are requested to note that dividends not encashed or

remaining unclaimed within a period of seven years from the

date of transfer to the Company’s Unpaid Dividend Account, will,

be transferred, under Section 205-A of the Companies Act, 1956,

to the Investor Education and Protection Fund, established under

Section 205C of the said Act. Members, who have not yet

encashed the dividend warrant(s) are requested to forward their

claims to the Company’s Registrar and Share Transfer Agents. It

may be noted that once the unclaimed dividend is transferred to

the Investor Education and Protection Fund as above, no claim

shall lie with the Company in respect of such amount.

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.

Karvy Computershare Private Limited, #51/2, T.K.N. Complex,

Vanivilas Road, Opp. National College, Basavanagudi,

Bangalore 560 004, Karnataka or to their respective Depository

Participant (DP) in case the shares are held in demat form.

8. Members holding shares in physical form can avail of the

nomination facility by filing Form 2B (in duplicate) with the

Company or its Registrar & Share Transfer Agents which will be

made available on request and in case of shares held in demat

form the nomination has to be lodged with their Depository

Participant.

9. The particulars of Directors retiring by rotation are given in the

Corporate Governance Section of this Annual Report.

Item No. 6

The Board of Directors at its meeting held on 1st 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 SEBI registered Registrar and Transfer Agents. They are

equipped with the required infrastructure facilities, including V-Sat

connectivity with the National Securities Depository Limited (NSDL)

and the Central Depository Services (India) Limited (CDSL). Karvy

will act as common agency for share registry work in terms of both

physical and electronic connectivity. It is also proposed that the

statutory records like the Register of Members, Index of Members,

Annual Returns etc be kept at the office of Karvy at Bangalore.

Section 163 of the Companies Act, 1956 provides that the register

and index of members and debenture-holders, annual returns and

other statutory records may, instead of being kept at the registered

office of the Company, be kept at any other place within the city, in

which the registered office is situate, provided that the consent of

the members is obtained by way of a Special Resolution. Hence, the

approval of the Members is sought by way of a Special Resolution

pursuant to the provisions of Section 163 and other applicable

provisions, if any, of the Companies Act, 1956.

The Directors recommend passing of the Special Resolution by the

Members at item No.6 of the accompanying notice.

None of the Directors is, in any way, concerned or interested in the

said resolution.

By Order of the Board

For ABB Limited

B Gururaj

Assistant Vice President &

Company Secretary

Bangalore

1 February, 2005

Registered Office:

2nd Floor, East Wing

Khanija Bhavan, 49, Race Course Road

Bangalore – 560 001

Annexure to Notice

Explanatory Statement under Section 173(2)

of the Companies Act, 1956.

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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 yearended 31 ended 31

December, 2004 December, 2003

Profit Before Tax and Exceptional Item 2,365,200 1,528,927Exceptional Item – Profit on Sale of Undertaking 37,991 233,008Profit Before Taxation 2,403,191 1,761,935Less: Provision for Tax

- Current Tax 874,000 524,000- Deferred Tax (14,000) (4,000)

Profit After Tax 1,543,191 1,241,935Less: Transfer to Foreign Projects Reserve Account 4,000 2,500Balance Brought Forward from last year 278,374 258,391Amount available for Appropriation 1,817,565 1,497,826Appropriations

General Reserve 1,180,000 900,000Proposed Dividend 296,672 254,290Corporate Dividend Tax 38,771 32,581Corporate Dividend Tax – 2002 — 32,581Balance Carried Forward 302,122 278,374

1,817,565 1,497,826

Directors’ Report

Dividend

The Directors recommend payment of a dividend at the rate of Rs 7.00(Previous year Rs 6.00) per equity share for the year ended31 December, 2004 on 42,381,675 equity shares of Rs 10 each.

Performance Review

Total orders received during the year at Rs 25,878 million were 52%higher compared to Rs 17,054 in the previous year.

Order backlog at the end of 2004 increased to Rs 13,356 millioncompared to Rs 10,710 million at the end of the previous year.

Sales and other income for the year was 53% higher at Rs 23,056million compared to Rs 15,031 million in the previous year.

Profit before tax and exceptional item was significantly higher atRs 2,365 million compared to Rs 1,529 million in the previous year.Growth in profit was mainly attributable to volume growth and focusedcontrol over overheads.

Gain on sale of Control Valve business was Rs 38 million. In last yeargain on sale of Metering business was significantly higher at Rs. 233million. Profit after tax was higher at Rs 1,543 million compared toRs 1,242 million in the previous year.

Operating performance of both the segments, power technology andthe automation technology, was significantly better than previous year.For detailed analysis of the performance, please refer to management’sdiscussion and analysis section of the annual report.

Divestment of Business

As approved by the shareholders earlier, the Company has divested itsControl Valves business to Kent Introl Private Limited on 12 July, 2004.The gain on divestment was Rs 38 million reported as profit on sale ofundertaking in profit and loss account as an exceptional item. TheCompany has invested the gain in specified assets as per theprovisions of Section 54EC of the Income Tax Act, 1961. Accordingly notax liability arises on this gain.

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Change in Registrar and Transfer agents

The Board of Directors has appointed Karvy Computershare PrivateLimited as Registrar and Share Transfer Agents of the Company inplace of Tata Consultancy Services Limited who have opted out ofRegistry Services business.

Transfer to the Investor Education and Protection Fund

In terms of Section 205C of the Companies Act, 1956, the followingamounts lying with the Company as unclaimed for a period of sevenyears from the date they became due for payment were transferredduring the year to the Investor Education and Protection Fund.

1. Unclaimed Fixed Deposits Rs. 6,0002. Unclaimed Dividends Rs. 402,492

Conservation of Energy, Technology Absorption, Foreign Exchange

Earnings and Outgo

The particulars as prescribed under sub-section (1)(e) of Section 217 ofthe Companies Act, 1956, read with the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, are given inAnnexure – A, forming part of this report.

Environment, Health and Safety

The Company has in place a system for controlling and monitoringpollutants at all factories complying with environmental standards andlegislation. All the manufacturing units of the Company had receivedcertificates for ISO 14001 (EMS). Health and safety are also Company’sfocus areas. Most of the units of the Company had been awardedOHSAS 18001 certification for the health and safety system.

Particulars of Employees

The statement under sub-section (2A) of Section 217 of the CompaniesAct, 1956, read with the Companies (Particulars of Employees) Rules,1975, as amended, and forming part of this report is givenin Annexure – B.

Directors’ Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, theDirectors to the best of their knowledge and belief confirm that:i. in the preparation of the annual accounts, the applicable

accounting standards have been followed by the Company;ii. appropriate accounting policies have been selected and applied

consistently and such judgements and estimates have beenmade that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at

31 December, 2004 and of the profit of the Company for the yearended on that date;

iii. proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisionsof the Companies Act, 1956, for safeguarding the assets of theCompany and for preventing and detecting fraud and otherirregularities; and

iv. the annual accounts have been prepared on a going concernbasis.

Corporate Governance

Pursuant to clause 49 of the listing agreement, a report on corporategovernance and a certificate from the Auditors of the Company aregiven in Annexure – C and Annexure – D respectively, which forms partof this report.

Board of Directors

Mr. BoonKiat Sim and Mr. R N Bhardwaj resigned as Directors of theCompany effective 5 March, 2004 and 13 December, 2004 respectively.Your Directors place on record their appreciation of the valuableservices rendered by Mr. BoonKiat Sim and Mr. R N Bhardwaj asDirectors of the Company.The Board at its meeting held on 19 October, 2004 appointed Mr.TomEric Sjoekvist as a Director of the Company in the casual vacancycaused by the resignation of Mr. BoonKiat Sim.Mr. Dinesh Paliwal and Mr. N.S. Raghavan, Directors, retire by rotation atthe ensuing Annual General Meeting and being eligible, offerthemselves for re-appointment. The particulars of the retiring Directorsare given in the Corporate Governance section annexed to this report.Auditors

The Company’s Auditors M/s S.R. Batliboi & Company, CharteredAccountants, hold office upto the conclusion of the ensuing AnnualGeneral Meeting. The Company has received a requisite certificatepursuant to Section 224(1B) of the Companies Act, 1956, regarding theireligibility for re-appointment as Auditors of the Company.

For and on behalf ofthe Board of Directors

Dinesh PaliwalChairman

Bangalore1 February, 2005

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Conservation of Energy, Technology Absorption, Foreign Ex-

change Earnings and Outgo - Companies (Disclosure of particu-

lars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of energy

(a) Energy conservation measures taken during the year

Main areas of work during the year included installation of VFDon compressor, energy savers for lighting, felt belt for blowersand continuous monitoring of electrical energy consumption.Energy audit was conducted at one factory of the Company.Training programmes were conducted to have increasedawareness on energy conservation.

(b) Proposals being implemented for reduction of consumption

Proposed areas of work include power factor improvement up to0.999, installation of capacitor banks for power factor improve-ment. Selection of energy efficient plant and machinery,compressed air system along with manufacturing processes.Installation of solar heating system, energy efficient plants forair-cooling and air conditioning is also under consideration.

(c) Impact of measures (a) and (b) above for reduction of

energy consumption and consequent impact on cost of

production of goods

Total energy saving is estimated at around 360,000 kWh ofenergy per annum. This savings, however, has no appreciableimpact on cost of goods, as the Company’s productionprocesses are not energy intensive.

(B) Technology absorption

(a) Research and Development (R&D)

(1) Specific areas in which R&D is carried out by the

Company

R&D effort is carried out in almost all the products and pro-cesses, specifically, the major area includes standalone versionof protection coupler type NSD 50, party line system, seriescapacitors, HVDC banks, special terminal connectors, tubularconductors, corona rings, special clamps and insulators for HVcapacitors, STATCON with 1ph, 430V, 150kVAR rating, trip circuitsupervision relays, restricted earth fault relays, flag indicator forring main units, low cost Numerical measuring relay, RMUs foroutdoor application, 12kV air switch, 27.5 kV single phase VCBfor traction application of Indian Railways, 12kV, 1250A, 25kAIndoor VCB, motors with vibration monitoring system, enhance-ment of motors with different frames, 375kW/3000 RPM highspeed induction generator, disconnectors, 400kV autotransformers, single phase generator transformer, 245kV circuitbreaker, operating rods for 420kV circuit breakers, switchcubicle body for ELF 245kV and 420kV breakers and polemounted capacitor switch.

Annexure - A to Directors’ Report

(2) Benefits derived as a result of the above R&D

Multifold benefits were accrued as a result of R&D activities.Apart from strengthening of technical base, benefits have alsobeen reflected in terms of! Improvement of product reliability! Introduction of new product ranges! Reduction in material cost! Adaptation of designs to suit local markets! Increased acceptability of products in global markets

(3) Future plan of action

Continuous efforts are being made for integration of R&Dactivities with business needs so as to offer better valueadded products and services to our customers. The areas ofefforts include:Universal speech interface and multiplexer for carrier communi-cation equipment, development of new foil and film for powercapacitors, design improvements for SSX and VHXm relays, timelag relays for diesel locomotives, 12kV auto reclosure, 36kV airswitch, forced cooling arrangement for VSD motors, oilimmersed type fuse and internal breaker for transformers, higherratings of STATCONs, LTB 245 E1 breaker certification forintroduction in local markets, flame proof motors in framesJHX90, JHX80 & JHX180, 2 pole ratings of frame M2BA400L,enhanced ratings of M3BP280 frame of M3000 series motors,improved 12kV switchgear cubicle, numeric relay platforms,66kV and 132kV CTs with casted terminal blocks and 145kV and72.5 kV GOB type transformer bushing with 500 BCT.

(4) Expenditure on R&D

(Rs in Thousands)i) Capital 860ii) Revenue 17,909iii) Total 18,769iv) Total R&D expenditure as a

percentage of turnover 0.08(b) Technology absorption, adaptation and innovation

(1) Efforts made towards technology absorption, adaptation and

innovation

Extensive training and skill building exercises were conductedin-house and at collaborators’ end to improve design,development, production, commissioning and servicing. Someof the products covered were:

Fiber optic equipments type FOX515X, FOX515T, digitalprotection coupler, type testing of relays, substitution of obsolete

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components for FCX, UFX and PPX relays, MV switchgearsolutions, HVDC transformers, 315MVA autotransformers withoptimised material content, type testing of 245kV & 420kVbreakers, BLK 222 mechanisms, components of 245kV circuitbreaker type LTB 245 E1, development of the components formedium voltage circuit breakers and type testing of 145kV and72.5kV transformer type GOB bushings.

(2) Benefits derived as a result of above efforts

(i) Product improvementAs a result of the above efforts, product quality, perfor-mance and reliability have improved.

(ii) Cost reductionSubstantial cost reduction has been achieved through de-sign changes, standardization of components,indigenisation of components and developments in HVand MV breakers, disconnectors, motors, PLCC compo-nents and EPAX, transformers, relay and switchgear cu-bicles.

(iii) Product developmentImportant products developed were 145kV & 72.5kVtransformer type GOB bushings, 245kV circuit breakertype LTB 245 E1, 375kW/3000RPM high speed inductiongenerator, 10P motors in frames M2BA315 and M2BA355,retrofit product solution for 12kV & 36kV circuit breakers,12kV air switch, 27.5 kV single phase VCB for tractionapplication of Indian Railways, 12kV, 1250A, 25kA IndoorVCB, non standard variants of UVT, VHXm relays, SPAM150 with non volatile memory, Single phase 430V, 150kVAR STATCON and standalone version of NSD50protection coupler.

(iv) Import substitutionImport substitution was carried out for ring main unitcomponents, which included coils, CTs, voltage indica-tors, mimic stickers, aluminum profiles and structureassembly. Operating rods used in 420kV circuit breakerswere also locally developed.

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

(i) Technology imported" Magnetic actuator Type A2

for circuit breakers up to 36kV 2000" Medium voltage air insulated

switchboard type UNISAFE 2000" 400kV Power Transformer 2002" High voltage circuit breakers

(36kV to 420kV) 2003

" Instrument transformers(36kV to 420kV all types) 2003

" Miniature circuit breakers 2003" Power capacitor units and Banks 2003" HT Motors 2003" LV Capacitors 2003" Transformer Bushings 2004" 3100 HP Supercharger 2004" INDACTIC 1425

telemetering equipment 2004" Air circuit breakers 2004

(ii) Has technology been fully absorbed?Yes except in the case of HT Motors

(C) Foreign exchange earnings and outgo

(a) Activities related to exports; initiative taken to

increase exports; development of new export markets

for products and services; export plans

Export orders booked during the year at Rs 3,290 millionwere 13% higher compared to previous year. Thisincluded a major turnkey substation project order valuingRs 1,350 million from Middle East. Revenues fromexports were Rs 2,382 million. High and medium voltageproduct continued to be exported across the globe. Newcountries added by this product included Bolivia,Ecuador and Laos. During 2005 the Company is planningto participate in large value tenders from France, Ireland,Chile and Australia. Several orders from Malaysia, USA,China, Japan and Dubai were secured by Company’sautomation technologies segment for drives and processautomation and engineering solutions for variousindustries. Overall growth prospects for exports continuesto be promising.

(b) Total foreign exchange used and earned

(Rs in Thousands)a) Foreign Exchange earned

(including deemed exports) 3,184,556b) Foreign Exchange used 6,939,157

For and on behalf of theBoard of Directors

Dinesh PaliwalChairman

Bangalore1 February, 2005

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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 EmploymentEmployee Received (Years) Commencement (years)

(Rs.) of EmploymentName 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 EngineerTechnology 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 EngineerAffairs and Power TechnologySystems Division

Uppal Ravi Vice Chairman and 7,886,492 B. Tech. (Electrical & 30 01/10/01 52 Volvo India Pvt. Ltd. Managing DirectorManaging 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 AssistantMali 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 andCompany’s Car perquisites evaluated in accordance with the Income-tax Rules as applicable.

For and on behalf of the Board of Directors

Bangalore Dinesh Paliwal1 February, 2005 Chairman

Annexure - B to Directors’ Report

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(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.

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For and on behalf of the Board

Dinesh Paliwal

Chairman

Bangalore

01 February, 2005

(2) Company

(For any other matter, unresolved complaints)

ABB Limited

2nd Floor, East Wing, Khanija Bhavan,

No. 49, Race Course Road,

Bangalore 560 001.

Phone: 080-22949150 to 22949154

Fax : 080-22949148

Corporate Secretarial E-mail ID: [email protected]

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.

(1) Registrar and Transfer Agents:

(For share transfer, dividend related queries)

Karvy Computershare Private Limited,

(Unit: ABB Limited)

#51/2, T.K.N. Complex, Vanivilas Road,

Opp. National College, Basavanagudi,

Bangalore 560 004.

Phone: 080-26621192

Fax : 080-22621169

Email: [email protected]

(xiv) Address for Correspondence

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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

Annexure - D to Directors’ ReportAuditor’s Certificate - Compliance of conditions of corporate governance per clause 49 of the Listing Agreement with the stock exchanges.

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Investing Values



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.

Investing Values



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.

Investing Values



1. We have audited the attached balance sheet of ABB Limited as

at December 31, 2004 and also the profit and loss account and

the cash flow statement for the year ended on that date annexed

thereto. These financial statements are the responsibility of the

Company’s management. Our responsibility is to express an

opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards

generally accepted in India. Those Standards require that we

plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by

management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as

amended) issued by the Central Government of India in terms of

sub-section (4A) of Section 227 of the Companies Act, 1956, we

enclose in the Annexure a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we

report that:

i. We have obtained all the information and explanations,

which to the best of our knowledge and belief were

necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law

have been kept by the Company so far as appears from

our examination of those books;

iii. The balance sheet, profit and loss account and cash flow

statement dealt with by this report are in agreement with

the books of account;

Auditors’ Report To The Members of ABB Limited

iv. In our opinion, the balance sheet, profit and loss account and

cash flow statement dealt with by this report comply with the

accounting standards referred to in sub-section (3C) of section

211 of the Companies Act, 1956;

v. On the basis of the written representations received from the

directors, as on December 31, 2004, and taken on record by the

Board of Directors, we report that none of the directors is

disqualified as on December 31, 2004 from being appointed as a

director in terms of clause (g) of sub-section (1) of section 274 of

the Companies Act, 1956;

vi. In our opinion and to the best of our information and according to

the explanations given to us, the said accounts give the

information required by the Companies Act, 1956, in the manner

so required and give a true and fair view in conformity with the

accounting principles generally accepted in India;

a. in the case of the balance sheet, of the state of affairs of

the Company as at December 31, 2004;

b. in the case of the profit and loss account, of the profit for

the year ended on that date; and

c. in the case of cash flow statement, of the cash flows for

the year ended on that date.

For S. R. BATLIBOI & COMPANY


Sunil Bhumralkar

Partner

Membership No.: 35141

Bangalore, India

February 01, 2005

Investing Values



(i) (a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of

fixed assets.

(b) The Company has a regular programme of physical

verification of fixed assets which, in our opinion, is

reasonable having regard to the size of the Company and

the nature of its assets. In accordance with this

programme, certain fixed assets were physically verified

by the management during the year and we are informed

that no material discrepancies were noticed on such

verification.

(c) There was no substantial disposal of fixed assets during

the year.

(ii) (a) The management has conducted physical verification of

inventory at reasonable intervals during the year. In

respect of stocks lying with third parties, confirmation for

most of the stocks has been received.

(b) The procedures of physical verification of inventory

followed by the management are reasonable and

adequate in relation to the size of the Company and the

nature of its business.

(c) The Company is maintaining proper records of inventory

and no material discrepancies were noticed on physical

verification.

(iii) As informed to us, the Company has neither granted nor taken

any loans, secured or unsecured to/from companies, firms or

other parties covered in the register maintained under section

301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations

given to us, there is an adequate internal control system

commensurate with the size of the Company and the nature of its

business, for the purchase of inventory and fixed assets and for

the sale of goods and services. During the course of our audit, no

major weakness has been noticed in the internal control system

in respect of these areas.

(v) According to the information and explanations given to us, there

are no transactions that need to be entered in the register

maintained under section 301 of the Companies Act, 1956.

Annexure referred to in paragraph 3 of our report of even date

(vi) In our opinion and according to the information and explanations

given to us, directives issued by the Reserve Bank of India and

the provisions of sections 58A, 58AA or any other relevant

provisions of the Companies Act, 1956 and the rules framed

there under, to the extent applicable, have been complied with.

We are informed by the management that no order has been

passed by the Company Law Board, National Company Law

Tribunal or Reserve Bank of India or any Court or any other

Tribunal under sections 58A and 58AA.

(vii) In our opinion, the Company has an internal audit system

commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by

the Company pursuant to the rules made by the Central

Government for the maintenance of cost records under section

209(1) (d) of the Companies Act, 1956, and are of the opinion that

prima facie, the prescribed accounts and records have been

made and maintained.

(ix) (a) According to the records of the Company, the Company is

regular in depositing undisputed statutory dues including

provident fund, investor education and protection fund,

employees’ state insurance, sales-tax, excise duty, wealth-

tax, service tax, custom duty and cess with the

appropriate authorities. Undisputed statutory dues

towards income-tax have generally been regularly

deposited with the appropriate authorities.

(b) According to the information and explanations given to us,

no undisputed amounts payable in respect of provident

fund, investor education and protection fund, employees’

state insurance, income-tax, wealth-tax, service tax, sales-

tax, customs duty, excise duty, cess and other undisputed

statutory dues were outstanding, at the year end, for a

period of more than six months from the date they became

payable.

(c) According to the records of the Company, the dues

outstanding of income-tax, sales-tax, wealth-tax, service

tax, custom duty, excise duty and cess on account of any

dispute, are as follows:

Investing Values


Investing Values



(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

Balance Sheet


Dinesh Paliwal Chairman

Ravi Uppal Vice Chairman & Managing Director

Nasser Munjee Director

Umesh Prasad Singh Director

N.S. Raghavan Director

Tom Eric Sjoekvist Director

K. Rajagopal Sr. Vice President - Finance

B. Gururaj Company Secretary

Bangalore, 1 February, 2005

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

As per our report of even date

For S. R. Batliboi & Company


Sunil BhumralkarPartnerMembership No. 35141Bangalore, 1 February, 2005

Investing Values


Investing Values



(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.

Investing Values



(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

Investing Values


Investing Values



(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

Investing Values



(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

Investing Values



(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

Investing Values



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

Investing Values



(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

Investing Values



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.

Investing Values



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.

Investing Values



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.

Investing Values



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)

Investing Values



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)

Investing Values



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)

11.11.11.11.11. 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).

Investing Values



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 taxasset liability

Timing differences on account of:

Difference between book depreciation and depreciation 284,851under 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)


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 locallyagainst foreign exchange remittances 652,666 90,433

iii) Erection and other services 222,473 102,307

iv) Other Income:a. Commission 56,829 50,704b. Others 5,392 44,744

3,184,556 3,657,133

Investing Values



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

Investing Values


Investing Values



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

Investing Values



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

Investing Values



(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


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

Investing Values



(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


276,971 499,653

Integra Hindustan Control Limited (an associate) 3,000 262

Creditors


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


1,470,946 1,136,015

viii) Provision for doubtful debts

Fellow Subsidiaries 1,303 479

ix) Dividend Paid during the year


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.

Investing Values




Dinesh Paliwal ChairmanRavi Uppal Vice Chairman & Managing DirectorNasser Munjee DirectorUmesh Prasad Singh DirectorN.S. Raghavan DirectorTom Eric Sjoekvist Director








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.

Investing Values



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

Investing Values



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

Investing Values



(Rs in Thousands)


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)

Cash Flow Statement

Investing Values



(Rs in Thousands)


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.


Dinesh Paliwal ChairmanRavi Uppal Vice Chairman & Managing DirectorNasser Munjee DirectorUmesh Prasad Singh DirectorN.S. Raghavan DirectorTom Eric Sjoekvist Director








Investing Values


Investing Values


abb india 2004 annual report

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