ABB

The Directors have pleasure in presenting their Fifty-eighth Annual
 Report and Audited Accounts for the year ended December 31, 2007.
 
 Financial Results
 
                                                      (Rs in Thousands)
                             For the year ended       For the year ended
                             December 31, 2007        December 31, 2006
 
 Profit Before Taxation          7,564,569                5,232,062
 Less: Provision for Tax
 Current Tax                     2,563,879                1,671,000
 Deferred Tax                      (11,000)                  81,000
 Fringe Benefit Tax                 95,000                   77,000
 Profit After Tax                4,916,690                3,403,062
 Balance Brought Forward from
 last year                         519,255                  349,450
 Amount available for
 Appropriation                   5,435,945                 3,752,512
 Appropriations                  4,250,000                 2,750,000
 Proposed Dividend                 466,198                   423,817
 Corporate Dividend Tax             79,230                     5,440
 Corporate Dividend Tax             20.06                     12,587
 Balance Carried Forward           627,930                   519,255
                                 5,435,945                 3,752,512
 
 
 
 Dividend
 
 Your Directors recommend payment of a dividend at the rate of Rs.2.20
 (Rupees two and paise twenty only) per share (previous year Rs 10/- per
 share on 42,381,675 equity shares of Rs.10/- each) for the year ended
 December 31, 2007 on 211,908,375 equity shares of Rs 2/- each.
 
 Sub-division of the Face Value of Equity Shares
 
 In accordance with the approval of the shareholders at the 57th Annual
 General Meeting of the Company held on May 25, 2007, each equity share
 of the face value of Rs.10/- each was sub-divided into 5 equity shares
 of the face value of Rs.2/- each, effective July 6, 2007. Consequently,
 the sub-divided equity shares of the face value of Rs.2/- each have
 been issued to such shareholders who held the equity shares of the face
 value of Rs.10/- each of the Company, as on July 6, 2007.
 
 Performance Review
 
 Orders received during the year at Rs 76,682 million were 36% higher
 compared to Rs 56,236 million in the previous year. Order backlog at
 the end of 2007 was healthy at Rs 50,260 million compared to Rs 33,723
 million at the end of the previous year.
 
 Sales and other income for the year were higher by 38% at Rs 60,014
 million compared to Rs 43,477 million in the previous year. Profit
 before tax was significantly higher at Rs 7,565 million compared to Rs
 5,232 million in the previous year. Growth in profit was mainly
 attributable to volume growth and operational efficiencies.  Profit
 after tax at Rs 4,917 million for the year has improved by 44% compared
 to Rs 3,403 million in the previous year. Earning per equity share of
 face value of Rs 2 correspondingly improved to Rs 23.20 compared to Rs
 16.06 in the previous year.
 
 Operating performance of all the segments, power system, power
 products, process automation and automation products was significantly
 better than previous year. For detailed analysis of the performance,
 please refer to the managements discussion and analysis section of the
 annual report.
 
 Transfer to Investor Education and Protection Fund
 
 In terms of Section 205C of the Companies Act, 1956, the unclaimed
 dividend amount aggregating to Rs.825,720/- lying with the Company for
 a period of seven years pertaining to year ended on December 31, 1999,
 was transferred during the year 2007, to the Investor Education and
 Protection Fund established by the Central Government.  Conservation of
 Energy, Technology Absorption, Foreign Exchange Earnings and Outgo The
 particulars as prescribed under sub-section (1 )(e) of Section 217 of
 the Companies Act, 1956, read with the Companies (Disclosure of
 Particulars in the Report of Board of Directors) Rules, 1988, are given
 in Annexure - A, forming part of this report.
 
 Environment, Health and Safety
 
 The Company has in place a system for controlling and monitoring
 pollutants at all factories complying with environmental standards and
 legislation. All the manufacturing units of the Company have received
 certificates for ISO 14001 (EMS). Environment, health and safety are
 given high priority. All the units of the Company have been awarded
 OHSAS18001 certification for the health and safety system. Several
 environmental management* projects are underway across the locations.
 Some of these include energy conservation, waste management, rain water
 harvesting and greening initiatives.
 
 Delisting of Equity Shares
 
 In accordance with the approval of the shareholders at the 56th Annual
 General Meeting of the Company held on May 26,2006, the equity shares
 of the Company have been voluntarily delisted from Calcutta Stock
 Exchange Association Limited with effect from August 10, 2007. The
 voluntary delisting of equity shares from Ahmedabad Stock Exchange
 Limited and Delhi Stock Exchange Association Limited had been completed
 by the Company during the year 2006.
 
 Particulars of Employees
 
 The 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 this report is given in Annexure -
 B. The said Annexure - B shall, however, be provided to the Members on
 request to be made to the Company Secretary.
 
 Directors Responsibility Statement
 
 Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors
 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 been made that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company as at December 31, 2007 and of the profit of
 the Company for the year ended on that date;
 
 iii. proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956, for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and
 
 iv.  the annual accounts have been prepared on a going concern basis.
 
 Corporate Governance
 As required under Clause 49 of the listing agreement of stock
 exchanges, a report on corporate governance and a certificate from M/s
 D. R. Shressha & Associates, Practicing Company Secretaries, confirming
 compliance with the requirements of corporate governance are given in
 Annexure - C and Annexure - D respectively, which forms part of this
 report.
 
 Board of Directors
 
 Mr. Arun Kanti Dasgupta was appointed as a Director of the Company with
 effect from April 26, 2007 in the casual vacancy caused due to the
 resignation of Mr. K. Sridhar.
 
 Mr. Dinesh Paliwal resigned as the Chairman and Director of the Company
 effective May 25, 2007.  Consequent to taking over as the Head of
 Global Marketing and the base being shifted to Zurich, Switzerland, Mr.
 Ravi Uppal resigned as the Vice Chairman & Managing Director with
 effect from July 26, 2007. The Board of Directors, however, at its
 meeting held on July 26, 2007, appointed Mr. Ravi Uppal as an
 Additional Director and also as Chairman of the Company with effect
 therefrom. Mr. Biplab Majumder, Executive Director, has been appointed
 as the Managing Director of the Company for a period of 3 years, with
 effect from July 26, 2007.
 
 Mr. Tom Eric Sjoekvist resigned as a Director of the Company effective
 July 5, 2007 and the Board of Directors at its meeting held on July 26,
 2007, appointed Mr. Peter Leupp as a Director of the Company, in the
 casual vacancy caused due to the resignation of Mr. Tom Eric Sjoekvist.
 The Board of Directors also appointed Mr. Veli-Matti Reinikkala as an
 Additional Director of the Company, effective July 26, 2007.
 
 The Board of Directors at its meeting held on February 19, 2008,
 appointed Mr. K. Rajagopal as an Additional Director and also as
 Whole-time Director of the Company for a period of three years with
 effect therefrom.  Your Directors place on record their appreciation of
 the valuable services rendered by Mr. K. Sridhar, Mr. Dinesh Paliwal
 and Mr. Tom Eric Sjoekvist, during their tenure as Directors of the
 Company.  Mr. D. E. Udwadia and Mr. Bernhard Jucker, Directors, retire
 by rotation at the ensuing Annual General Meeting and being eligible,
 offer themselves for re-appointment. The particulars of Directors who
 are seeking appointment at the ensuing Annual General Meeting are
 furnished in the Corporate Governance section annexed to this report.
 
 Auditors
 
 The Companys Auditors-M/s. S.R. BatliboiS Co..Chartered Accountants,
 holds office upto the conclusion of the ensuing Annual General Meeting.
 The Company has received a requisite certificate from them pursuant to
 Section 224(1 B) of the Companies Act, 1956, confirming their
 eligibility for re-appointment as Auditors of the Company.
 
                                          For and on behalf of the Board
 
 
 New Delhi                                           Ravi Uppal
 February 19,2008                                    Chairman