ABB

1. Nature of Operations
  
 ABB Limited (the Company) has served utility and industry customers
 for over 50years with the complete range of endineering, 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. Basides catering to indian
 domestic market, the Companyis also playing an increasing role in the
 global market.
 
 2. Segment Reporting
 
 A) Primary Segment Reporting (by Business Segments)
 
 i) Composition of Business Segments
 
 The Companys business segments are organized around products and
 system solutions provided to its customers, which include utilities,
 industries, channel partners and original ewuipment manufactures.
 
 Power Systems Segment (PS) offers turkey systems and services for
 transmission and distributions for power grid and power plants. The
 segment offers the instrumentaion, control and the entire balance of
 power plants, which improve performance and energy efficiency through
 flexible alternating current transmission systems, high voltage direct
 current systems, network management systems and utility commucations.
 
 Power Poriducts Segment (PP) manufactures, engineers, supplies key
 components to transmit and distribute electricity, improving power
 supply and energy eficiency. The segment produces transformers,high and
 medium voltage switchgears, circuit breakers,capacitors, distribution
 relays etc.
 
 Process Automation Segment (PA) provides costomers with integrated
 solution for control, plant optimization and industry specific
 application knowledge. The industries served include oil and gas,
 power, chemicals and pharmaceuticals,pulps and paper, metals and
 minerals, marine and turbo charging.
 
 Automation Products Sigment (AP) provides products to improve
 customers productivity with high efficiency motors, variable speed
 drives, low voltage products, instrumentation and power electronics.
 
 Others Segment consist of robotics systems.
 
 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
 appropriate basis. Corpotate and other revenues, expeness, assets and
 liabilities to the extent not allocable to segments aredisclosed 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) Fogires in brackets are in respect of the previous year.
                               
                                                   (Rs in Thousands)
 3. Contingent Libilities
 
 i) Claims against the Company not acknowledged        
 as debts ub resoect if sakes tax,excise
 and other matters                                     314,914
 
 ii) Bills discounted                                      719
 The above excludes bills Co-accepted by the
 customerss bankers/guranteed by the State
 Governments Rs 17,774 thousand
 (Previous Year Rs 51,927 thousand)
 
 iii) Income tax matters in dispite                    272,981
 
 
 4. Estimated amount of contracts remaining to
 be executed on capital account and not provided
 (net of advances)                                     742,336
 
 
 5. The Company has taken several premises under cancelable and
 non-cancelable operating leases. These lease agreements are normally
 for one to five years and have option of renewal on expiry of lease
 period based on mutual agreement. These lease agreements are normally
 for oneto five years and have option of renewal on expiry of lease
 period based on mutul agreement. The Company has non-cancelable
 operating leas obligations of Rs 63,296 thousand (previous year Rs Nil)
 payable within one year and Rs 130,213 thousand (Previous Year Rs Nil)
 payable later than one year but loss account amounts to Rs 207,197
 thousand (Previous Year Rs 131,652 thousand).
 
 6. Capacities, Production, Stock and Turnover
 
 6.1 Capacities
 
 a) Installed capacities are as certified by the Managing Director,but
 not verified by the auditors, being a technical matter.
 
 6.2 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 quantitative
 information in respect of production and turnover.
 
 6.3 Project items
 
 a) These comprise sale of equipment and miscellaneoous items menat for
 execution of projects and trading items. Since the quantitative
 denominations of these items are dussimilar, it is impracticable to
 disclose the quantitative information in respect thereof.
 
 b) Purchases of these items during the year aggregated to Rs.
 26,181,596 thousand (Previous Year Rs. 23,813,414 thousand).
 
 7. Interest charge for the year includes Rs. 4,387 thousand (Previous
 Year Rs 1,555 thousand) being interest on fixed period loans. During
 the year the Company has capitalised interest on borrowing cost Rs.
 21,293 thousand (Previous Year Rs Nil).
 
 8. Research and development expenditure of Rs. 21,715 thousand
 (Previous Year Rs. 43,761 thousand) on revenue account has been
 incurred during the year.
 
 9. The pro rata difference between the forward contract rate and the
 exchange rate on the date of transaction to be charged to profit and
 loss account is Rs. 5,024 thousand (Previous Year Rs. 70,942 thousand).
 
 10. The employees of the Company are entitled to purchase shares of ABB
 Asea Brown Boveri Ltd., Zurich (the ultimate holding company) on the
 settlement date, at aprice fixed based on the fair market price on the
 grant date under ABB Employee Share Acquisition Plan. During the year,
 the Company has been cross charged Rs. 36,567 thousand (Previous Year
 Rs. Nil) towards the above and this has been charged in the profit and
 loss account under the head Salaries, Waes and Bonus.
 
 The Institute of Chartered Accounants of India has issued a Guidance
 Note on Accounting for Employee Share-based Payments, which is
 applicable to employee share based payment plans. The scheme detailed
 above is managed and administered, comensation benefits in respect of
 the scheme is asessed and accounted by the ultimate holding
 company, except for the obligation towards expenses cross charged
 above. Accordingly, the company is of the opinion that there is no
 further accounting treatment/disclosure required under the said
 Guidance Note.
 
 11. Derivative Instruments
 
 i) Forward cover for foreign currency debtors outstanding as of balance
 sheet date is Rs.2,352,388 thousand (previous year Rs.867,250
 thousand). 
 ii) Forward cover for expected future sales or highly probable forecast
 transaction as of balance sheet date is Rs2,922,990 thousand (Previous
 year Rs 3,057,714 thousand).
 
 iii) Forward cover for foreign currency creditors outstanding as of
 balance sheet date is Rs.6,896877 thousand (Previous year Rs.4,382,756
 thousand 
 
 iv) Forward cover for expected future purchases or highly probable
 forecast transaction as of balance sheet date is Rs 6,998,974 thousand
 (Previous year Rs.5,437,218 thousand).
 
 v) Foreign Currency exposure (net) that are not hedged by derivative
 instrument or otherwise is Rs 136,072 thousand (Previous Year
 Rs.116,173 thousand).
 
 12. The Company has amounts dues to Micro and Small Enterprises under
 The Micro, Small and Medium Enterprises Development Act, 2006(MSMED
 act) as at December 31, 2008
 
 13. Excisse duuty on sales amounting to Rs 5,032,076 thousand (Previous
 year Rs.4,529,568 thousand) has been reduced from sales in profit and
 loss account and excice duty on increase in inventory of finished goods
 amounting to Rs.453 thousand (Previous Year Rs.2985 thousand) has been
 accounted in the profit and loss account under the head Cost of
 Materials and Erection Services.
 
 14. The figures of the previous year have been regrouped / reclassified
 where necessary, to conform with the current years classifications.