Your Directors have pleasure in presenting their Seventy Third Annual Report and Audited Accounts for the year ended December 31, 2022.
1. Financial Summary and Highlights:
( in Crores)
|For the year ended|
|Particulars||December 31, 2022||December 31, 2021|
|Profit before tax and exceptional items||1,011.00||585.85|
|Profit before tax and after exceptional items||1,350.26||707.19|
|- Current tax||328.29||176.85|
|- Deferred tax||5.74||10.63|
|Profit after tax||1,016.23||519.71|
|Other comprehensive income / (loss) (net of tax)||(11.82)||25.05|
|Balance brought forward from previous year||1,359.98||921.17|
|Amount available for appropriation||2,364.39||1,465.93|
|Equity dividend paid||110.19||105.95|
|Balance carried forward||2,254.20||1,359.98|
Your Directors recommend payment of a dividend at the rate of 5.50 (Rupees Five and Fifty paisa only) per equity share of the face value of 2/- each (275%) for the year ended December 31, 2022. Dividend pay-out is in accordance with the Companys dividend distribution policy and will be payable subject to approval of members at the ensuing Annual General Meeting and deduction of tax at source to those Shareholders whose names appear in the Register of Members as on the Record Date.
3. Dividend Distribution Policy:
The Dividend Distribution Policy containing the requirements mentioned in Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") can be accessed at the following Web-link: https://new.abb.com/docs/ librariesprovider19/default-document-library/dividend-distribution-policyca47b9f2c1f463c09537ff0000433538.pdf
4. Transfer to Reserves:
The Directors have decided not to transfer any amount to the General Reserve for the year under review.
5. Share capital:
During the year under review, there was no change in share capital of the Company.
6. Performance and State of the companys affairs:
During the year, orders from continuing operations touched an all time historic high of 10,028 crore as against 7,666 crore in 2021. In 2022, the Company was able to optimize the stable macro environment offered in the country as compared to global headwinds of uncertainty. Proactive engagement with identified sectors of high and moderate growth and the governments focus on sectors like infrastructure and transportation provided significant traction to the journey of profitable growth. The order backlog at the end of the year held steady at
6,468 crore which continued to provide visibility to the future revenue streams. The revenue for the Company for the year 2022 stood at 8,568 crore as against 6,934 crore in the previous year. For the full year, the
Companys profit before tax before exception stood at
1,024 crore as compared to 603 crore in 2021. Profit after tax for the year was 1,026 crore. This includes an exceptional item of 339 Crore from the profit on the sale of the turbocharger business. On an overall basis, the catalysts for improved profitability include efficient opex management, better mix, improved service and product revenues, supported by a sharp focus on cost savings. The earnings per share for 2022 stood at 47.96 per share as compared to 24.53 per share in 2021.
Discussion on the performance and state of Companys affairs, has been covered as part of the Management Discussion and Analysis which forms part of this Report.
7. Management Discussion & Analysis
The Management Discussion & Analysis as required under the Listing Regulations is enclosed as in Annexure A, forming part of this Report.
8. Material changes and commitment, if any, affecting financial position of the Company from the end of Financial Year and till the date of this Report:
There has been no material change and commitment, affecting the financial performance of the Company that occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report.
9. Names of companies which have become or ceased to be Subsidiaries, joint ventures or associate companies during the year:
Turbocharging Industries and Services India Private Limited (TISPL) was incorporated as a wholly owned subsidiary of the Company on January 31, 2022 to carry on turbocharger business. The Company during the year under review sold the investment in TISPL to Turbo Systems Switzerland and by virtue of that TISPL has ceased to be a wholly owned subsidiary of the Company. Apart from this, no other company has become or ceased to be subsidiaries, joint ventures or associate companies.
10. Board Meetings and Annual General Meeting:
Four (4) meetings of the Board were held during the Financial Year 2022. Also, a separate meeting of Independent Directors as prescribed under Schedule IV of the Act, was held during the year under review. For details of the meetings of the Board and its Committees, please refer to the Corporate Governance Report forming part of this Report. The intervening gap between the Board meetings was within the period prescribed under Act.
The 72nd Annual General Meeting (AGM) of the Company was held on May 05, 2022 through Video Conferencing/ Other Audio Visual Means.
11. Directors and Key Managerial Personnel:
The Board of Directors of the Company at their meeting held on February 10, 2022 on the recommendation of the Nomination & Remuneration Committee appointed Ms. Carolina Granat (DIN: 09477744) as Non-Executive
& Non-Independent Director of the Company with effect from April 1, 2022. Further, the Shareholders of the Company approved her appointment at the 72nd AGM held on May 5, 2022. Ms. Maria Rosaria Varsellona (DIN: 08892891), resigned from the office of Non-Executive & Non-independent Director of the Company effective from March 31, 2022.
Ms. Renu Sud Karnad (DIN: 00008064), resigned from the office of Non-Executive & Independent Director with effect from March 18, 2022 before the expiry of her term due to other commitments and limitation of time. Consequently, the Board of Directors of the Company at its meeting held on May 4, 2022 appointed Ms. Monica Widhani (DIN: 07674403) as Non-Executive & Independent Director of the Company for term of three consecutive years effective from May 6, 2022 and the same was approved by the Shareholders by way of postal ballot, the results of which were declared on June 23, 2022.
Mr. Morten Wierod (DIN: 08753868) vide letter dated May 5, 2022 resigned from the office of Chairman & Non-Executive Non-Independent Director with effect from May 5, 2022.
On the recommendation of the Nomination & Remuneration Committee, the Board at its meeting held on May 4, 2022 appointed Mr. Adrian Guggisberg (DIN: 09590850) as Chairman & Non-Executive Non-Independent Director with effect from May 6, 2022. Requisite approval for his appointment was obtained from the Shareholders by way of postal ballot, the results of which were declared on June 23, 2022.
On the recommendation of the Nomination & Remuneration Committee, the Board at its meeting held on August 9, 2022 approved the re-appointment of Mr. V K Viswanathan (DIN: 01782934) as Non-Executive Independent Director for a further term of 2 consecutive years effective from November 13, 2022 and the same was approved by the shareholders by way of postal ballot, the results of which were declared on September 28, 2022.
In accordance with the provisions of the Act read with Article 157 of the Articles of Association of the Company, Ms. Carolina Yvonne Granat, Non Executive Non Independent Director, will retire by rotation at the ensuing Annual General Meeting of the Company, and being eligible, offers herself for re-appointment.
Brief profile and details of Ms. Carolina Yvonne Granat, Director proposed to be re-appointed as required under the Listing Regulations are contained in the Notice convening the ensuing 73rd Annual General Meeting of the Company.
Apart from aforesaid changes there are no changes in Directors and Key Managerial Personnel of the Company. Details of Directors and composition of various Committees of the Board are provided in the Corporate Governance Report forming part of this report. Details of the familiarization Programme for Directors have been provided under Corporate Governance section of the report.
Mr. Sanjeev Sharma (DIN: 07362344), Managing Director, Mr. T.K. Sridhar, Chief Financial Officer, and Mr. Trivikram Guda, Company Secretary continues to remain Key Managerial Personnel of the Company.
During the Financial Year, none of the Directors and Key Managerial Personnel of the Company had any material pecuniary relationship or transactions with the Company.
12. Independent Directors:
All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that, they meet the criteria of independence as prescribed both under the Companies Act, 2013 ("the Act") and Listing Regulations and that their names have been included in the data bank of Independent Directors maintained by The Indian Institute of Corporate Affairs. The Board is of the opinion that the Independent Directors of the Company hold highest standards of integrity and possess requisite expertise and experience required to fulfill their duties as Independent Directors.
13. Annual evaluation of Board Performance and Performance of its Committees and Directors:
Pursuant to applicable provisions of the Act, and the Listing Regulations, the Board has carried out annual evaluation of its own performance, performance of the Directors including Chairman assessment as well as the evaluation of the working of its Committees.
The NRC has defined the evaluation criteria and procedure for the Performance Evaluation process for the Board, its Committees and Directors.
During the year, feedback was sought by way of structured questionnaires and evaluation was carried out based on various criteria and the responses received from the Directors.
The criteria for performance evaluation of the Board included aspects such as Board composition and quality, setting strategy, overall direction, effectiveness of Board processes, Board and management relations, contribution, board development, timeliness of information etc., The criteria for performance evaluation of the Committees included aspects such as structure and composition of Committees, effective participation of member of the Committees, deliberations and suggestions made by the Committee, effectiveness of the Committees recommendation for the decisions of the Board, etc., A separate peer review exercise was carried out to evaluate the performance of Individual Directors. The performance evaluation of the Chairman of the Board was also carried out, considering the views of all the remaining Directors.
Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non- executive Directors and other items as stipulated under the Listing Regulations.
14. Nomination and Remuneration Policy:
The details of Nomination and Remuneration Policy of the Company for Directors, Key Managerial Personnel (KMP), Senior Management personnel (SMP) and other employees along with other related matters have been provided in the Corporate Governance Report.
Your Company has revised its Nomination and Remuneration Policy to inter alia cover the role of Nomination and Remuneration Committee, appointment criteria and qualifications for appointment of Board of Directors, KMP and SMP, fixing of remuneration of Independent Directors, Executive Directors, KMPs, SMP and other employees, their removal and business continuity. The copy of the Nomination and Remuneration policy can be accessed by clicking on weblink https://new.abb.com/docs/ librariesprovider19/default-document-library/nomination-and-remuneration-policy_new.pdf?sfvrsn=4548880a_2
15. Particulars of Employees and Remuneration:
The information required under Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure B which forms part of this Report. The information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of Annexure C. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon specific request made in writing to the Company by the Members. Any Member interested in obtaining the same may write to the Company Secretary at email@example.com. None of the employees listed in the said Annexure is related to any Director / KMP of the Company. The said information is available for inspection by the Members on any working day of the Company up to the date of the 73rd Annual General Meeting.
16. Particulars of loans, guarantees or investments under Section 186 of the Act:
Particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security if any are provided in notes to the Financial Statements.
Your Company has not accepted any public deposits during the year under review.
18. Internal Control Systems and their adequacy:
The Companys internal control systems are commensurate with the nature of its business, the size and complexity of its operations and such internal financial controls with reference to the Financial Statements are adequate. The Company has implemented robust processes to ensure that all internal financial controls are working effectively. The details on Internal Control Systems and their adequacy are provided in the Managements Discussion and Analysis which forms part of this Report.
19. Directors Responsibility Statement:
In accordance with Section 134(5) of the Act, your Directors confirm that, to the best of their knowledge and belief:
(a) that in the preparation of the annual accounts for the Financial year ended December 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) Appropriate accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;
(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventinganddetectingfraudandotherirregularities;
(d) The annual accounts have been prepared on a going concern basis;
(e) Appropriate internal financial controls have been laid down and that such internal financial controls are adequate and are operating effectively; and
(f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
20. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is attached as Annexure D which forms part of this Report.
21. Related Party Transactions:
The Company has adopted a policy on materiality of and Related Party Transactions for the purpose of review and approval of such transactions. The objective is to ensure proper approval, disclosure and reporting of transactions as applicable, between the Company and any of its related parties. All Related Party Transactions entered during the year were in the ordinary course of business and on arms length basis. The details of Related Party Transaction under the provisions of Section 188 of the Act, requiring disclosures to be made in Form No.AOC-2 pursuant to Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 which is attached as Annexure E. During the year under review, your Company had not entered into any Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements.
All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of Audit Committee is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arms length.
All related party transactions are subjected to independent review by Ernst & Young LLP (EY) to verify and ensure and confirm that the transactions carried out were in the ordinary course of business and at arms length basis. EY submits its Report to the Audit Committee at its quarterly meetings.
Transactions with related parties, as per the requirements of Indian Accounting Standard 24 are disclosed in the notes to accounts annexed to the financial statements. Your Companys Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Companys website and can be accessed at the Web-link https://new.abb.com/docs/librariesprovider19/default-document-library/rpt-policy-approved_feb-10-2022. pdf?sfvrsn=185cdf09_2
22. Statutory Auditors:
Pursuant to provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, Messrs. B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W / W-100022), were appointed as Statutory Auditors of the Company for a term of 5 years, to hold office from the conclusion of 72nd Annual General Meeting held on May 5, 2022 until the conclusion of 77th Annual General Meeting to be held in 2027.
The Auditors have issued an unmodified opinion on the Financial Statements, for the financial year ended December 31, 2022. The said Auditors Report(s) for the financial year ended December 31, 2022 on the financial statements of the Company forms part of this Annual Report.
23. Cost Auditor:
The Company is required to make and maintain cost records for certain products as specified by the Central Government under sub-section (1) of Section 148 of the Act. Accordingly, the Company has been making and maintaining the records as required. The Board had appointed Ashwin Solanki & Associates, Cost Accountants (Registration No: 100392), as Cost Auditor for conducting the audit of cost records of the Company for the Financial Year ended December 31, 2022.
The Board of Directors on the recommendation of the Audit Committee, has reappointed Ashwin Solanki & Associates, Cost Accountants (Registration No: 100392), as the Cost Auditors of the Company for the Financial Year ended December 31, 2023 under section 148 of the Act.
Ashwin Solanki & Associates, Cost Accountants have confirmed that their appointment is within the limits of section 141(3)(g) of the Act, and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Act. The Audit Committee has also received a Certificate from the Cost Auditors certifying their independence and arms length relationship with the Company.
As per the provisions of the Act, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their approval. Accordingly, a Resolution seeking Members approval for the remuneration payable to Ashwin Solanki & Associates, Cost Auditors is included in the Notice convening the 73rd Annual General Meeting of the Company and same is recommended for your consideration.
Cost Audit and Compliance reports for the year 2021 were filed with the Ministry of Corporate Affairs, within the prescribed time limit.
24. Reporting of frauds:
During the year under review, the Statutory Auditor, Cost Auditor and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee and / or Board under section 143(12) of the Act.
25. Secretarial Audit:
Pursuant to the provisions of section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed BMP & Co. LLP, Company Secretaries, Bengaluru (Firm Registration No. AAI-4194) to undertake the Secretarial Audit of the Company. The Company has annexed to this Boards Report as Annexure F, a Secretarial Audit Report for the Financial Year ended December 31, 2022 given by the Secretarial Auditor. The Auditor has issued an unmodified Report for the Financial Year ended December 31, 2022.
26. Annual Secretarial Compliance Report:
The Company has undertaken an audit for the Financial Year ended December 31, 2022 for all applicable compliances as per Listing Regulations and Circulars / Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Biswajit Ghosh, Partner, BMP & Co. LLP, Company Secretaries, Bengaluru has been submitted to the Stock Exchanges and is annexed at Annexure G to this Boards Report.
27. Corporate Governance Report and Certificate:
As required under Regulation 34 (3) read with Schedule V (C) of the Listing Regulations, a report on Corporate Governance and the certificate as required under Schedule V (E) of the Listing Regulations from Messrs. V. Sreedharan & Associates, Practicing Company Secretaries, regarding compliance of conditions of Corporate Governance are given in Annexure H and Annexure I respectively, forming part of this report.
28. Risk Management:
The Company has a Risk Management Policy and constituted a Risk Management Committee as required under Listing Regulations. The Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans, risk reporting and carries out other related activities as per the Listing Regulations. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to enterprise risk management.
The details and the process of Risk Management as implemented in the Company are provided as part of Managements Discussion and Analysis which forms part of this Report.
29. Vigil Mechanism and Whistle Blower Policy:
The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct. The mechanism provides for adequate safeguards to employees and business associates reporting unethical practices and encourages employees to report genuine concerns or grievances such as unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct.
The Whistle Blower Policy is available on the Companys website at www.abb.co.in
30. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company:
During the Financial Year under review, no regulator or court has passed any significant and / or material orders impacting the going concern status of the Company and its future operations.
31. Corporate Social Responsibility (CSR):
The Corporate Social Responsibility Committee had formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) which was subsequently adopted by it and is being implemented by the Company for carrying out various CSR activities
Composition of the Committee and other details are provided in Corporate Governance Report. The Companys focus on CSR activities are predominantly in the areas of Education, Diversity and inclusion in the fabric of society, Environment and Social Issues of the Communities.
The Company has implemented various CSR projects directly and / or through implementing partners and the projects undertaken by the Company are in accordance with Schedule VII of the Act.
During the year under review, your company was required to spend 9,87,67,666.59 out of which your Company spent 5,88,58,539/- and an amount of 3,99,11,461/- remained unutilised due to implementation delays, such as delay in getting requisite approvals from local authorities, overlap of the projects between two calendar years etc., The Company has transferred the unutilised amount(s) to a specified account in accordance with the Act and the same will be utilized within the prescribed time limits.
A brief outline of the Corporate Social Responsibility Policy of the Company and the initiatives undertaken on CSR activities during the Financial Year ended December 31, 2022 is given in Annexure J, forming part of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
In compliance with requirements of Section 135 of the Act, the Company has laid down a CSR Policy which is published on its website and can be accessed by clicking on https://new.abb.com/docs/librariesprovider19/default-document-library/csr-policy.pdf?sfvrsn=c5444009_2
32. Business Responsibility and Sustainability Report:
The ‘Business Responsibility and Sustainability Report (BRSR) of your Company for the Financial Year ended December 31, 2022 forms part of this Annual Report as required under Regulation 34(2)(f) of the Listing Regulations. Your Company continues to execute strong ESG proposition by working with all relevant stakeholders as well as in its own operations.
33. Transfer to Investor Education and Protection Fund:
As required under Section 124 of the Act, the unclaimed dividend amount aggregating to 40.39 lakhs lying with the Company for a period of seven years pertaining to the financial year ended on December 31, 2014, was transferred during the Financial Year 2022, to the Investor Education and Protection Fund established by the Central Government.
34. Secretarial Standards:
During the Financial Year, your Company has complied with the mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.
35. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:
Your Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. As required under law, the Company has constituted an Internal Committee for conducting inquiry into the sexual harassment complaints at the work place and for taking such actions as stipulated under the said act. During the year 2022, three complaints of sexual harassment were received, and all three were addressed and closed during the Financial Year ended December 31, 2022. No complaints were pending as at the date of this report.
36. Annual Return:
Pursuant to section 134(3)(a) and section 92(3) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, a copy of the annual return is placed on the website of the Company and can be accessed at https://new.abb. com/news/detail/87676/annual-returns-with-challans
37. Proceedings under the Insolvency and Bankruptcy Code, 2016 (31 of 2016):
During the financial year, neither any application nor any proceeding is initiated against the Company under the Insolvency and Bankruptcy Code, 2016.
38. Other Disclosures:
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions / events on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of Shares (including Sweat Equity Shares) to employees of the Company under any Scheme.
3. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Act).
4. There has been no change in the nature of business of your Company.
5. The Company has not made any one-time settlement for loans taken from the Banks or Financial Institutions.
6. There was no revision of financial statements and Boards Report.
Your Directors appreciate and value the co-operation and support of the Companys parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels and look forward to continuance of the supportive relations and assistance in the future.
|For and on behalf of the Board|
|Place : New Delhi|
|Date : February 10, 2023|