ABB India Ltd Directors Report.

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

1. Financial Results:

(Rs in Crores)

Particulars For the year ended
December 31, 2021 December 31, 2020
Profit before tax and exceptional items 585.85 230.59
Profit before tax and after exceptional items 707.19 289.38
Tax expense:
- Current tax 176.85 71.71
- Deferred tax 10.63 (1.55)
Profit after tax 519.71 219.22
Other comprehensive income/ (loss) (net of tax) 25.05 (28.18)
Balance brought forward from previous year 921.17 834.90
Amount available for appropriation 1,465.93 1,025.94
Demerger adjustment - -
Change in Accounting Policy (Net of Tax) - (3.05)
Appropriations:
Equity dividend paid 105.95 101.72
Tax on equity dividend paid - -
Balance carried forward 1,359.98 921.17

2. Dividend:

Your Directors recommend payment of a dividend at the rate of Rs. 5.20 (Rupees Five and paise Twenty only) per share for the year ended December 31, 2021 on 211,908,375 equity shares of Rs 2/- each.

3. Share capital:

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

4. Performance review:

During the year, orders from continuing operations touched Rs 7,666 crore as against Rs 5,932 crore in the Previous Year. The year 2021 was a year of unprecedented challenges, but the Companys agile business model helped to navigate headwinds and deliver consistent profitable performance for the year. The order backlog at the end of the year held steady at Rs 4,912 crore which continued to provide visibility to the future revenue streams. The revenue from continuing operations for the Company for the year 2021 stood at Rs 6,934 crore as against Rs 5,821 crore in the previous year, reflecting a year of unprecedented changes brought about by the pandemic. For the full year, the Companys profit before tax stood at Rs 724crore (after accounting for net impact of 121 crore due to exceptional items) compared to Rs 304 crore in 2020. Profit after tax for the year was Rs 532 crore as compared to Rs 230 crore last year. 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 2021 stood at Rs 25.13 per share as compared to 10.87 per share in 2020 for continuing operations without Power Grids.

For detailed analysis of the performance, please refer to the Managements Discussion and Analysis given in Annexure - A, forming part of this Report.

5. Annual Return:

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

6. Board Meetings held during the year:

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

7. Compliance on criteria of independence by the 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 provided in Sub-Section 6 of Section 149 of the Act and also under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and that their names have been included in the data bank of Independent Directors as prescribed under the Act. In the opinion of the Board, the Independent Directors of the Company possess necessary expertise, integrity and experience.

8. Nomination and Remuneration Policy of the Company:

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

As and when need arises to appoint Director, KMP and Senior Management Personnel, the Nomination and Remuneration Committee (NRC) of the Company will determine the criteria based on the specific requirements. NRC, while recommending candidature to the Board, takes into consideration the qualification, attributes, experience and independence of the candidate. Director(s), KMP(s) and Senior Management Personnel appointment and remuneration will be as per NRC Policy of the Company.

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

A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in Annexure - B, forming part of this report.

9. Dividend Distribution Policy:

As required under the Regulation 43A of the Listing Regulations, the Company has a Policy on Dividend Distribution. This Policy can be accessed on the Companys website at www.abb.co.in

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

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

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

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

12. 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.

13. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The particulars as prescribed under Section 134 of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are given in Annexure - C, forming part of this report.

14. Risk Management Policy:

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.

15. Corporate Social Responsibility (CSR) initiatives:

The Company has a Policy on Corporate Social Responsibility and has constituted a CSR Committee as required under the Act for implementing various CSR activities. Composition of the Committee and other details are provided in Corporate Governance Report. The Companys focus on CSR activities are pre-dominantly 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, the Company has spent the required amount on CSR activities.

Detailed report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure - D, forming part of this report.

16. Annual evaluation of Board, its Committees and Individual Directors:

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and Directors pursuant to the requirements of the Act and the Listing Regulations. The Board evaluation was conducted through questionnaire designed with qualitative parameters and feedback based on ratings.

The key parameters considered for Board evaluation for Financial Year 2021 are Board Membership, Boards Culture and Relationships with Key Constituencies, Board Responsibilities, Decision Making and Board Committees. During evaluation process, the Directors have given rating of either ‘Strongly agree / ‘Agree on various assessment questions for Financial Year 2021 which is very encouraging.

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

Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Nonexecutive Directors and other items as stipulated under the Listing Regulations.

17. Audit Committee:

The details pertaining to composition of the Audit Committee and terms of reference are included in the Corporate Governance Report, which forms part of this Report.

18. Sale of Companys Turbocharger Business:

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

For the purpose of transfer of Companys Turbocharger Business, the Board has also approved to incorporate a wholly owned subsidiary. Accordingly, your Company has incorporated its wholly owned subsidiary i.e., Turbocharging Industries and Services India Private Limited, on January 31, 2022.

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

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

However, based on the recommendation of the Audit Committee and the Board at its Meeting held on December 21, 2021 has approved to incorporate a wholly owned subsidiary ("WoS") and to invest ?315,00,00,000 (Rupees Three Hundred Fifteen Crores only) in the WoS by way of equity infusion and subscription to the memorandum of association of the WoS. Accordingly, your Company has incorporated its WoS i.e., Turbocharging Industries and Services India Private Limited, on January 31, 2022.

20. Related Party Transactions:

The Board of Directors has adopted a policy on Related Party 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 contracts or arrangements with related parties, entered into or modified during the financial year were at arms length basis and in the ordinary course of the Companys business except the transactions reported here in below:

During the financial year various lease and service agreements have been entered with Hitachi Energy India Limited (formerly known as ABB Power Products and Systems India Limited). These transactions fall within the definition of Related Party Transaction under the provisions of Section 188 of the Companies Act, 2013 (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.

All contracts or arrangements were entered into only with prior approval of the Audit Committee, except transactions which qualified as Omnibus transactions as permitted under law.

The Company has appointed Ernst & Young LLP (EY) to review the approved Related Party Transactions, 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 meetings on quarterly basis.

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. Link for the same is: https://new.abb.com/docs/ librariesprovider19/default- document- library/ related-party-transaction-policy.pdf?sfvrsn=2

21. Reporting of frauds:

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act and Rules framed thereunder.

22. Transfer to Investor Education and Protection Fund:

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

23. Particulars of Employees:

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

24. Directors Responsibility Statement:

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

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

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

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

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

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

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

25. Disclosure on confirmation with the Secretarial Standards:

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

26. Corporate Governance Report and Certificate:

As required under Regulation 34 (3) read with Schedule V (C) of the 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 - G and Annexure - H respectively, forming part of this report.

27. Business Responsibility and Sustainability Report:

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

28. Whistle Blower Policy:

The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct. The mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail of the mechanism.

The Whistle Blower Policy is available on Companys website at www.abb.co.in

29. Directors and Key Managerial Personnel:

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

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

Ms. Gopika Pant (DIN: 00388675) was appointed as Independent Director by the Board of Directors effect from April 27, 2021 for term of three consecutive years effective April 27, 2021 and which was approved by the shareholders through postal ballot on June 26, 2021.

Mr Darius E Udwadia (DIN: 00009755), Independent Director resigned effect from April 28, 2021 and Ms. Maria Rosaria Varsellona (DIN: 08892891), Nonexecutive Non-independent Director resigned effective March 31, 2022.

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

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

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

Due to unfortunate demise of Mr. B Gururaj, Company Secretary of the Company, on April 12, 2021, Mr. Sunil L Naik (ACS 15414) was appointed as the Company Secretary and Compliance Officer of the Company by the Board of Directors effect from October 6, 2021. Consequent to the resignation of Mr. Naik on December 21, 2021, Mr. Trivikram Guda (ACS 17685) was appointed by the Board as the Company Secretary of the Company who will be a Key Managerial Personnel and Compliance Officer of the Company effect from December 22, 2021.

Apart from aforesaid changes there are no changes in Directors and Key Managerial Personnel of the Company. Details of Directors, Key Managerial Personnel and composition of various Committees of the Board are provided in the Corporate Governance Report forming part of this report.

As on date, Mr. Sanjeev Sharma (DIN: 07362344), Managing Director, Mr. T.K. Sridhar, Chief Financial Officer, and Mr. Trivikram Guda, Company Secretary are the Key Managerial Personnel of the Company.

30. Deposits:

During the year under review, your Company did not accept any deposit within the meaning of the provisions of Chapter V - Acceptance of Deposits by Companies, of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.

31. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company:

There has been no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations.

32. Internal Control Systems and their adequacy:

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

33. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The 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, an Internal Committee has been constituted for reporting and conducting inquiry into the complaints made by the victim on the harassments at the work place. During the year 2021, one complaint of sexual harassment was received, which is under investigation. Except the case mentioned herein, there is no other complaint of sexual harassment pending as at the date of this report.

34. Statutory Auditors:

M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022), were appointed as Statutory Auditors of the Company at the 67th AGM held on May 9, 2017, to hold office till the conclusion of the ensuing 72nd AGM.

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

Accordingly, the Board of Directors of the Company at their meeting held on February 10, 2022 on the recommendation of the Audit Committee and subject to the approval of the shareholders of the Company at the ensuing AGM, have approved the re-appointment of M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), as the Statutory Auditors, for a further period of 5 (five) years from the conclusion of the 72nd AGM.

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

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

35. Cost Auditor:

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

A Certificate from Messrs Ashwin Solanki & Associates, Cost Accountants has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder.

A resolution seeking Members approval for remuneration payable to Cost Auditor forms part of the Notice of the 72nd Annual General Meeting of the Company and same is recommended for your consideration.

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

36. Insolvency and Bankruptcy Code, 2016:

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

37. Settlements with Banks or Financial Institutions:

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

38. Secretarial Audit:

Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments thereto and SEBI Listing Regulations, your Company engaged the services of Messrs BMP & Co. LLP, Company Secretaries, Bengaluru, to conduct the Secretarial Audit of the Company for the financial year ended December 31, 2021. The Secretarial Audit Report along with their observations is given in Annexure- I, forming part of this report.

39. Change of Registered Office:

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

40. Acknowledgements:

The Board of Directors take this opportunity to thank the Companys parent company, customers, members, suppliers, bankers, associates, Central and State Governments and employees at all levels for their support and co-operation extended to the Company during the year.

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