ABB Power Products and Systems India Ltd
Directors Reports
Your Directors have pleasure in presenting their second annual report and audited
accounts for the financial year ended December 31, 2020.
1. Financial results:
|
|
(Amount in Rs Crores) |
| Particulars |
01.01.2020 to 31.12.2020 |
19.2.2019 to 31.12.2019 |
| Profit before tax and exceptional items |
171.78 |
261.44 |
| Profit before tax and after exceptional items |
136.28 |
220.65 |
| Tax expense: |
|
|
| - Current tax |
60.12 |
62.20 |
| - Deferred tax |
(23.64) |
(6.94) |
| Profit after tax (1) |
99.80 |
165.39 |
| Other comprehensive income/ (loss) (net of tax) (2) |
(6.04) |
0.50 |
| Total (1+2) |
93.76 |
165.89 |
| Balance of retained earnings transferred pursuant to the scheme of arrangement |
- |
149.93 |
| Balance brought forward from previous year |
315.82 |
- |
| Transition adjustment due to adoption of Ind AS 116 "Leases" |
(106) |
- |
| Amount available for appropriation |
408.52 |
315.82 |
| Appropriations: |
|
|
| Equity dividend paid |
- |
- |
| Tax on equity dividend paid |
- |
- |
| Debenture redemption reserve |
- |
- |
| General reserve |
- |
- |
| Balance carried forward |
408.52 |
315.82 |
2. Dividend:
Your Directors recommend payment of a maiden dividend at the rate of Rs 2/- (Rupees two
only) per equity share (100 percent) for the year ended December 31, 2020 on 42,381,675
equity shares of Rs 2/- each fully paid.
3. Performance review:
During the financial year ended December 2020, orders touched Rs 3,217.7 crore as
against Rs 2,641.9 crore as on December 31, 2019. The orders witnessed a healthy growth
reflecting the technology push and continued traction in transformers and system
integration. The order backlog at the end of the year stood at Rs 4,954.8 crore (December
31, 2019 was Rs 5,100.7 crore) which continued to provide visibility to the future revenue
streams. The revenue from operations for your Company for the financial year ended
December 31,2020 stood at Rs 3,438.9 crore (December 31, 2019 was Rs 3,236.5 crore),
reflecting stability of operations in an uncertain market situation. Profit before tax was
Rs 136.3 crore (December 31,2019 was Rs 220.7 crore) mainly impacted due to unprecedented
COVID-19. Accordingly, net profit after tax was Rs 99.8 crore (December 31, 2019 was Rs
165.4 crore). The earnings per share for the financial year ended December 31, 2020 stood
at Rs 23.55 (December 31, 2019 was Rs 44.69).
For detailed analysis of the performance, including industry overview, changes, and
outlook, please refer to the Management's Discussion and Analysis Report provided in
Annexure - A, forming part of this Report.
There has been no change in the nature of business during the financial year under
review.
4. COVID-19:
Impact and action plan
COVID-19 came as an unprecedented global crisis. It disrupted life, changing the way
one lives, works and interact with each other. In India, the first case was reported on
January 30, 2020 while the disease had already claimed many lives in neighboring China and
was rapidly spreading across the globe. To curtail the spread of the infection within its
border, India had imposed a strict nationwide lockdown and promulgated health and safety
regulations, shutting factories, banning all kinds of travel, mandating social distancing
and quarantines.
In this period of uncertainty, your Company's prime focus was to collaborate and manage
the crisis for its employees, customers, partners and the community, and build its spirit
and strength. Your Company adopted a three-pronged approach:
• Protecting our people,
• Preserving business continuity, and
• Preparing for the new norm
Protecting our people
Your Company's priority was to keep its employees, customers and partners safe.
In accordance with the Ministry of Home Affairs ("MHA") national lockdown
requirements from March 25, 2019, operations across plants, project sites and offices were
closed. Besides energizing the network of your Company location specific crisis teams, an
exclusive helpline for employees was started to support its employees' and their families'
emotional welfare. Medical assistance was arranged at employees' fingertips through a
third party primary and preventive care service provider even as they worked from home.
Voluntary COVID-19 testing, medical reviews and checks were organized at various
locations. As operations were permitted to resume by the various governing authorities,
your Company capped the number of employees working at a particular time at all plants and
offices; made arrangements for sanitized transportation to factories and demarcated work
and common areas to ensure strict adherence to social distancing. At project sites,
processes were put in place to ensure secure and safe lodging facilities for migrant
workforce.
Employees were provided protective gear like masks, face shields, gloves and
sanitizers; mandated to take all safety precautions and maintain absolute transparency in
health declarations. All employees were encouraged to download the Aarogya Setu app
launched by the Government of India. This is followed until date.
In addition to all this, most employees voluntarily donated one-day salary to the PM
CARES Fund. This donation was matched by your Company, totaling Rs 1.24 crore, as a mark
of solidarity in this time of crisis.
Preserve business continuity
Your Company maintained business continuity by amplifying customer engagement through
technology and leveraging digital solutions for product service and training, and even
commissioning of certain projects. Your Company implemented cost control measures to
conserve cash and recovered lost production days by strategically planning shifts and
rotations to enable maximum capacity utilization of shop floors while ensuring social
distancing, implementing a six-day workweek to compensate for productivity loss; and
focusing on collections and liquidity. Your Company was able to preserve cash by
proactively identifying and postponing non-essential spends and optimizing external
resources and personnel expenses.
All through, your Company's ambition was to prepare for the new norm in the best
possible manner and build back better.
Prepare for the new norm
Backed by your Company's resilience and zest for innovation, your Company quickly
adapted to the new norm. Besides switching to Remote Factory Acceptance Tests (RFAT) where
possible, your Company conducted numerous virtual technical webinars, attended by over
thousands of participants from utilities, industries, transport and infrastructure segment
across countries, and launched its flagship customer event Energy and Digital World. Your
Company continued engagement with industry leaders through virtual industry events, and
specific one-on-one CEO connects that helped it keep a finger on the pulse across various
verticals.
Your Company also remained a trusted partner for training top talent and had such
requests from various customers. Your Company conducted workshops for hundreds of
customers from about two dozen utilities, devoted efforts toward developing future talent
for its high-growth segments and ran more than 60 separate training programs for over
thousand people, totaling ~3,500 man-days in training.
While the blow of the pandemic couldn't be completely blunted, your Company was able to
see some semblance of normalcy by the third quarter. The closure of factories and sites -
your Company and its customers' - for half the second quarter reflected in your Company's
business performance in the April-June period. Further details on this have been shared in
subsequent sections.
By December 2020, the count of fresh COVID-19 cases had come down and dry run of
vaccination had started in some states. With the economy gradually opening up, the Reserve
Bank of India revised its forecast of economic growth for the current fiscal year
(2020-21) to (-) 7.5 percent compared to its earlier forecast of (-) 9.5 percent. While
your Company has made every effort to swiftly adapt to the new norm, the closures will
likely have an impact on its performance which can only be gauged in the quarter ending
June 30, 2020.
5. Scheme of Arrangement:
A Scheme of Arrangement ("Scheme") was entered into between (i) ABB India
Limited ("INABB"/"Transferor") and (ii) your Company
("Company"/"Transferee") and their respective shareholders and
creditors, pursuant to the provisions of Section 230 to 232 and other applicable
provisions of the Companies Act, 2013, ("Act") which provided for inter alia the
Demerger of the Power Grids
Business of INABB ("Demerged Undertaking") and the consequent issuance of
equity shares by your Company to the shareholders of INABB as per the share entitlement
ratio.
The Scheme was approved by your Board of Directors pursuant to its resolution dated
March 5, 2019 and the Board of Directors of INABB pursuant to its resolution dated March
5, 2019. Pursuant to an order dated June 27, 2019, passed by the National Company Law
Tribunal, Bengaluru Bench, ("NCLT"), meetings of the equity shareholders and the
creditors of INABB were convened. The equity shareholders and the creditors of INABB
approved the Scheme at court convened meetings, each held on August 9, 2019. The NCLT
approved the Scheme on November 27, 2019. The Appointed Date of the Scheme was April
1,2019 and the Effective Date was December 1,2019.
The Scheme provided for the transfer by way of a demerger of the Demerged Undertaking
and the consequent issue of equity shares by your Company to the shareholders of INABB in
accordance with the share entitlement ratio, and various other matters consequential or
integrally connected therewith, including the re-organisation of the share capital of the
Transferee, pursuant to Sections 230 to 232 of the Act, the SEBI circulars and in
compliance with the Income Tax Act, 1961
6. Board of Directors' response to observations, qualifications and adverse remarks in
Auditor's Report
The Statutory Auditors ("Auditors") have qualified their opinion in relation
to the matters specified in Notes 38 of the Financial Statements for the year ended
December 31,2020 ("Statements").
a. Qualified Opinion:
We have audited the accompanying Ind AS financial statements of ABB Power Products and
Systems India Limited ("the Company"), which comprise the Balance sheet as at
December 31 2020, the Statement of Profit and Loss, including the statement of Other
Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for
the year then ended, and notes to the Ind AS financial statements, including a summary of
significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations
given to us, except for the possible effects of the matters described in the ‘Basis
for Qualified Opinion' section of our report, the aforesaid Ind AS financial statements
give the information required by the Companies Act, 2013, as amended ("the Act")
in the manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India, of the state of affairs of the Company as at
December 31,2020, its profit including other comprehensive income, its cash flows and the
changes in equity for the year ended on that date.
b. Basis for Qualified Opinion:
We draw attention to Note 38 (a) to the accompanying Ind AS financial statements
regarding the Scheme of Arrangement (‘Scheme') for demerger of the power grid
business of ABB India Limited with the Company with an appointed date of April 01, 2019
and approved by the National Company Law Tribunal (‘NCLT') vide its order dated
November 27, 2019. As per the applicable accounting standard Ind AS 103, since this
demerger was a common control business combination, the financial information necessitated
restatement by the transferee at carrying amounts not from the appointed date but from the
beginning of the preceding period in the financial statements which happens to be the date
of incorporation i.e. February 19, 2019. Accordingly, the Company was required as per Ind
AS 103 to give effect to the business combination from February 19, 2019 (date of its
incorporation). However, the Company had recognized the impact of the business combination
only from April 01, 2019 (i.e. the appointed date specified in the scheme) and has not
restated and disclosed financial results for the period from February 19, 2019 to March
31, 2019, in the comparative period ended December 31, 2019. However, there is no impact
of the same on the Company's Ind AS financial statements of the year ended December
31,2020. Our opinion on the current year's statement is qualified because of the possible
effect of this matter on the comparability of the current period's figures and the
corresponding figures.
This matter was also qualified in the comparative period by the preceding auditor.
c. Board's response to qualification in Auditor's Report:
The Statutory Auditors ("Auditors") have qualified their opinion in relation
to the matters specified in Notes 38 of the Financial Statements for the financial year
ended December 31, 2020 ("Statements"). The Board's response to the
qualifications are as follows.
As per the applicable accounting standard Ind AS 103 (‘standard'), since this
demerger is a common control business combination, the financial information necessitates
restatement by the Company at carrying amounts not from the appointed date but from the
beginning of the preceding period in the financial statements which happens to be the date
of incorporation i.e. February 19, 2019. Consequentially, the Company is required to give
effect to the business combination from February 19, 2019 (date of its incorporation).
However, the Company has recognised the impact of the business combination only from April
1, 2019 (i.e. the appointed date specified in the scheme of arrangement). The Company is
of the view that due to incoherence between the appointed date i.e., April 1, 2019 and
date of incorporation i.e. February 19, 2019 and requirements of Ind AS 103 such a one-off
situation has arisen. Further, in addition to what has been stated in Note 38 (a) of the
Statements, we wish to state that in anticipation of reorganisation of ABB India Limited's
business by way of said Scheme, the Company was incorporated. Such date of incorporation
is not in control of the Company. The Registrar of Companies issued the certificate of
incorporation on February 19, 2019. The management confirms that, during the period
between February 19, 2019 and March 31,2019, no active business was undertaken other than
the initial paid up share capital. In light of the above, there is no impact on the
financial statements of the Company as at December 31,2020 as affirmed by the Auditors.
Thus, the statement of profit and loss (including other comprehensive income), statement
of changes in equity and statement of cash flows for the period do not contain the impact
of the transactions of the demerged undertaking from February 19, 2019 to March 31, 2019.
7. Change in the financial year:
Your Company was incorporated on February 19, 2019 with first financial year commencing
on February 19, 2019 and ending on March 31, 2020. Your Company subsequently made an
application to the Regional Director, South East Region, Ministry of Corporate Affairs,
Hyderabad on November 5, 2019 to change your Company's first financial year from February
19, 2019 to December 31, 2019. Pursuant to an order bearing no. F.No:10/19/Karnataka/RD
(SER)/2(41) of 2013/2019/6328 dated December 12, 2019, passed by the Regional Director,
South East Region, Ministry of Corporate Affairs, Hyderabad your Company's financial year
commenced on January 1 and ended on December 31 of a given year.
Subsequent to the transfer of shares held by promoters from ABB Asea Brown Boveri Ltd.,
to ABB Ltd and then to Hitachi ABB Power Grids Ltd., given that the financial year of
Hitachi ABB Power Grids Ltd., is April - March, the Board of Directors at their meeting
held on February 26, 2021 has approved the change in financial year of your Company to
April-March and that the current financial year will be from January 01,2021 to March 31,
2022 (15 months) and thereafter, all financial years shall commence on April 01 and end on
March 31 every year.
8. Material changes and commitments, if any, affecting the financial position of the
Company, having occurred since the end of the year and till the date of this report and
disclosures:
Other than those mentioned in this Report, there have been no material changes and
commitments, which affect the financial position of your Company which have occurred
between the end of the financial year to which the financial statements relate and the
date of this Report.
9. Annual Return:
As per provisions of Section 92 (3) of the Act read with Rule 12 of the Companies
(Management and Administration) Rules, 2014 as amended from time to time, the copy of the
Annual Return in the Form MGT-7 is hosted on website of your Company at:
https://www.hitachiabb-powergrids.com/in/en/investor-
relations/financial-results--reports-and-presentations
10. Board Meetings held during the period:
During the financial year under review, five (5) meetings of the Board of Directors
were held. The details of board meeting dates are furnished in Corporate governance report
forming part of this Annual report.
11. Independent Directors and compliance on criteria of independence by the Independent
Directors:
The following Independent Directors were appointed during FY 2019 and the Board is of
the view that they have adequate expertise, experience and proficiency.
Mr. Mukesh Butani holds a bachelor's degree in commerce from Mumbai University. He
is a certified chartered accountant from the Indian Institute of Chartered Accountants. He
founded BMR Legal Advocates, a tax law firm in India. He has expertise in taxation laws.
Ms. Akila Krishnakumar is an alumnus of Birla Institute of Technology and Sciences.
She was previously the president - global technology and country head of Sun Gard, which
was acquired by Fidelity National Information Services, Inc. She has expertise in diverse
business profiles.
Ms. Nishi Vasudeva holds a bachelor's degree in economics from Delhi University and
is an alumnus of Indian Institute of Management, Kolkata. She was the Chairperson and
Managing Director of Hindustan Petroleum Corporation Limited till March 2016. She has
expertise in diverse business profiles. All Independent Directors of your Company have
given declarations to your 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 Obligations and Disclosure Requirements) Regulations, 2015
(Listing Regulations). All Independent Directors of your Company have also given
declarations to your Company under Rule 6 of Companies (Appointment and Qualification of
Directors) Rules 2014. In the opinion of the Board, they fulfil the conditions of
independence as specified in the Act and the Listing Regulations and are independent of
management. The Independent Directors have affirmed compliance with the Code of Conduct,
as on December 31, 2020. The Independent Directors also affirmed compliance under Sec 150
with regard to Independent Directors databank, enrollment and examination in FY 2021.
During the financial year a separate meeting of the Independent Directors was held on
December 14, 2020.
12. Management Discussion and Analysis Report (MDAR):
The Management Discussion and Analysis Report (MDAR) is annexed as Annexure A to this
report.
13. Nomination and Remuneration Policy of the Company:
The Board of Directors have re-constituted the Nomination and Remuneration Committee
("NRC") at their meeting held on February 26, 2021. The Remuneration Policy of
your Company for appointment and remuneration of the Directors, Key Managerial Personnel
and Senior Management of the Company along with other related matters have been provided
in the Corporate Governance Report. The nomination and remuneration policy is available on
the website of the Company: https://www.
hitachiabb-powergrids.com/in/en/investor-relations/ board-of-di rectors.
As and when need arises to appoint Director, 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) appointment and
remuneration will be as per NRC Policy of the Company.
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 provided in Annexure - B, forming part of this report.
14. Dividend distribution policy:
As required under Regulation 43A of the Listing Regulations, your Company has a policy
on dividend distribution. This policy can be accessed on your Company's website at
https://www.hitachiabb-powergrids.com/in/en/investor-
relations/corporate-governance-policies
15. Particulars of loans, guarantees or investments under Section 186 of the Act:
During the financial year under review, your Company has not granted any Loan,
Guarantees or made investments within the meaning of Section 186 of the Act.
16. Amount, if any, proposed to be transferred to Reserves:
For the financial year under review, your Company has proposed not to transfer any
amount to the General Reserves.
17. 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.
18. Risk Management:
Your Company has constituted a Risk Management committee on December 24, 2019 and
adopted a Risk Management Policy as required under Companies Act 2013 and Listing
Regulations. The Risk Management committee was re-constituted by the Board of Directors at
their meeting held on February 26, 2021. The Committee oversees the Risk Management
process including risk identification, impact assessment, effective implementation of the
mitigation plans and risk reporting. 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 are provided as part of
Management's Discussion and Analysis which forms part of this Report.
19. Corporate Social Responsibility initiatives:
The Board of Directors had constituted a Corporate Social Responsibility (CSR)
Committee as required under the Act for implementing various CSR activities and adopted
revised CSR Policy at its meeting held on April 30, 2020 and then in the meeting held on
November 10, 2020. Composition of the Committee and other details are provided in
Corporate Governance Report which forms part of this Report. Promote gender equality and
empowering of women in engineering workforce, endorse education, employability &
healthcare, social impact projects, support national disaster management and other
government initiatives and aid in sustainable development goals are the focal area under
the CSR Policy. Your Company has implemented various CSR projects directly and / or
through implementing partners and the projects undertaken by your Company are in
accordance with Schedule VII of the Act. During the financial year under review, your
Company had partially spent the required amount on CSR activities and could not spend the
statutorily required amount due to COVID-19 pandemic and balance unspent amount will be
spent in current year FY 21. However, the unspent amount has been transferred to a
dedicated bank account. Detailed report on CSR activities as required under the Companies
(Corporate Social Responsibility Policy) Rules, 2014 is provided in Annexure - D, forming
part of this Report. The CSR Committee was reconstituted by the Board of Directors at
their meeting held on February 26, 2021.
20. Annual evaluation of Board, its Committees and Individual Directors:
The Board of Directors has carried out an annual evaluation of its performance, its
Committees and Directors for FY 2020 in FY 2021 pursuant to the requirements of the Act
and the Listing Regulations.
Further, the Independent Directors, at their exclusive meeting held in FY 2021,
reviewed the performance of the Board, its Chairman and Non-Executive Directors and other
items as stipulated under the Listing Regulations.
21. 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. The Board
has accepted all recommendation of Audit Committee, made during the financial year under
review.
22. Related Party Transactions:
The Board of Directors have adopted a policy on Related Party Transactions at its
meeting held on December 24, 2019. The objective is to ensure proper approval, disclosure
and reporting of transactions as applicable, between your Company and any of its related
parties.
Transactions with related parties, as per requirements of Indian Accounting Standard
have been disclosed in the accompanying financial statements. Your Company's Policy on
Related Party Transactions, as adopted by your Board, can be accessed on your Company's
website. Link for the same is: https://www.hitachiabb-powergrids.
com/in/en/investor-relations/corporate-governance- policies
ABB Asea Brown Boveri Ltd was holding 10 percent or more shares in your Company as on
December 31,2020. The details of transactions with promoter/promoter group holding 10
percent or more shares have been disclosed in the accompanying financial statements.
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 is attached as Annexure - E to this Report.
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.
23. Reporting of frauds:
There was no instance of fraud during the financial 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.
24. Transfer to Investor Education and Protection Fund:
As your Company was incorporated on February 19, 2019, and that no dividend was
recommended/declared during the financial year ended December 31, 2019 and as on financial
year ended December 31, 2020 there is no unclaimed dividend during the financial year
under review, no dividend amount was transferred as required under Section 124 of the Act,
to the Investor Education and Protection Fund ("IEPF") established by the
Central Government.
Pursuant to the Scheme of Arrangement (entered into between your Company, ABB India
Limited and their respective Shareholders and Creditors) approved by NCLT vide its order
dated November 27, 2019, your Company on December 24, 2019, allotted equity shares to the
shareholders of ABB India Limited. Out of 42,381,675 Equity shares allotted, 107,421
Equity Shares were directly allotted to the IEPF account as a consequence of issue of
Equity Shares by your Company to the shareholders of ABB India Limited in accordance with
the Share Entitlement Ratio.
As explained above, as no dividend was declared since incorporation of your Company nor
your Company was required to transfer any dividend amount to IEPF, other details like
amount of unclaimed/unpaid dividend and the corresponding shares were not applicable for
the financial year under review. Also, redemption amount of preference shares, amount of
matured deposits, for companies other than banking companies, along with interest accrued
thereon, amount of matured debentures along with interest accrued thereon, application
money received for allotment of any securities and due for refund along with interest
accrued, sale proceeds of fractional shares arising out of issuance of bonus shares,
merger and amalgamation resultant benefits on shares transferred to the IEPF, year wise
amount of unpaid/unclaimed dividend lying in the unpaid account upto the year and the
corresponding shares, which are liable to be transferred to the IEPF, and the due dates
for such transfer, the amount of donation, if any, given by the Company to the IEPF, such
other amounts transferred to the IEPF, if any, during the financial year under review are
not applicable. 9,266 Equity Shares arising out of fractional shares were sold on July 27,
2020 and out of that 73.20 equity shares were pertaining to IEPF and net amount Rs
49,932.30/- (after deduction of taxes) was deposited into IEPF account on August 3, 2020.
• Web-addresses of the Company where details of shares transferred to IEPF
authority is captured: https://www.hitachiabb-powergrids.com/in/en/
investor-relations/iepf
• Details of Nodal Officer: Mr. Poovanna Ammatanda, General Counsel and Company
Secretary.
25. Particulars of employees including remuneration of directors and 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
of the Company on any working day upto the date of the 2nd Annual General Meeting.
26. Directors' Responsibility Statement:
To the best of knowledge and belief and according to the information and explanations
obtained by us, your Directors make the following statements in terms of Section 134(3)(c)
and 134(5) of the Act, that:
a. in the preparation of the annual accounts, the applicable accounting standards have
been followed along with proper explanation relating to material departures;
b. they have 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, 2020, 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.
27. Disclosure on confirmation with the Secretarial Standards:
Your Directors confirm that the Secretarial Standards issued by the Institute of
Company Secretaries of India have been duly complied with.
28. 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 M/s. V. Sreedharan & Associates, Practicing Company
Secretaries, regarding compliance of conditions of Corporate Governance are provided in
Annexure - G and Annexure - H respectively, forming part of this report.
29. 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,
your Company engaged the services of M/s. BMP & Co. LLP, Company Secretaries,
Bengaluru, to conduct the Secretarial Audit of your Company for the financial year ended
December 31, 2020. The Secretarial Audit Report in Form MR-3 and Secretarial Compliance
certificate is provided in Annexure - I, forming part of this report.
30. Business Responsibility Report:
As required under Regulation 34 of the Listing Regulations, the Business Responsibility
Report forms part of the Annual Report.
31. Whistle Blower Policy/Vigil Mechanism:
Your Company has adopted a vigil mechanism/whistle blower policy for Directors,
Employees and third parties to report their concerns about unethical behaviour, actual or
suspected fraud or violation of the Company's Code of conduct, leak of unpublished price
sensitive information and related matters. The mechanism provides for adequate safeguards
against victimization of whistle blowers who avail of the mechanism. The whistle blowers
may also access their higher level/supervisors and/or the Audit Committee.
The Whistle Blower Policy/Vigil Mechanism is available on your Company's website:
https://www.hitachiabb- powergrids.com/in/en/investor-relations/corporate-
governance-policies
32. Directors and Key Managerial Personnel:
During the financial year under review, there were no changes in the constitution of
the Board. The Board is duly constituted with a mix of Executive, Non-Executive and
Independent Directors. The appointment of Mr. Frank Duggan, Chairman and Non-Executive
Director, Mr. Venu Nuguri, Managing Director, Mr. Mukesh Hari Butani, Independent
Director, Ms. Akila Krishnakumar, Independent Director, Ms. Nishi Vasudeva, Independent
Director were regularized and appointed by the members during the financial year under
review.
However, subsequent to the transfer of shares held by promoters from ABB Asea Brown
Boveri Ltd., to ABB Ltd and then to Hitachi ABB Power Grids Ltd., the Board of Directors
at their meeting held on February 25, 2021 have appointed Mr. Achim Michael Braun
(DIN:08596097) as Additional Director (Non-Executive and NonIndependent) and subsequently
as Chairman of the Board and of your Company and Mr. Ismo Antero Haka (DIN:08598862) as
Additional Director (Non-Executive and Non-Independent Director) of your Company
representing Hitachi ABB Power Grids Ltd and Mr. Venu Nuguri, the current Managing
Director and Chief Executive Officer was also nominated representing Hitachi ABB Power
Grids Ltd and this was taken note of in the board meeting held on February 25, 2021. Both
Mr. Achim Michael Braun and Mr. Ismo Antero Haka have been appointed liable to retire by
rotation and subject to approval of the Shareholders in the ensuing Annual General
Meeting. Accordingly, the proposal for regularisation of their 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 Directors of the Company. At the meeting of the Board of
Directors held on February 26, 2021, Mr. Venu Nuguri, Managing Director was designated as
Managing Director and Chief Executive Officer. Mr. Mukesh Butani, Ms. Akila Krishnakumar
and Ms. Nishi Vasudeva continued as Non-Executive and Independent Directors during the
financial year under review.
Mr. Frank Duggan and Mr. Sanjeev Sharma resigned as Directors w.e.f. February 25, 2021
due to the reconstitution of the Board of Directors. Your Directors place on record their
sincere appreciation of the valuable contribution made by them.
During the financial year under review as on December 31, 2020, and as on date, Mr.
Venu Nuguri, Managing Director and Chief Executive Officer, Mr. Ajay Singh, Chief
Financial Officer, and Mr. Poovanna Ammatanda, General Counsel, Company Secretary and
Compliance Officer are the 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.
33. Deposits:
During the financial 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.
34. Share Capital and Debt structure:
There was no change in the share capital during the financial year under review.
Out of 42,381,675 equity shares allotted on December 24, 2019, your Company allotted
9,266 Equity shares (pursuant to fractional entitlements of Members of ABB India Limited
as per share entitlement ratio) and the shares were allotted to APPSIL Fractional Shares
Trust 2019 which was constituted specifically to hold the shares on behalf of the entitled
shareholders of fractional shares in accordance with the Scheme of Arrangement and the
same was sold in the market in FY 2020. The sale proceeds were distributed amongst the
entitled shareholders.
Pursuant to a resolution passed by the members of your Company on November 26, 2019 and
subject to the provisions of the Act and the Articles of Association, the Board is
authorised to borrow money, as and when required, from, including without limitation, any
bank and/or other financial institution and/or foreign lender and/or anybody
corporate/entities/and/or authorities, either in Rupees or in such other foreign
currencies as may be permitted by law from time to time, as may be deemed appropriate by
the Board for an aggregate amount not exceeding a sum of Rs 5,000 crores for the Company,
notwithstanding that money so borrowed together with the monies already borrowed by the
Company, if any (apart from temporary loans obtained from the Company's bankers in
ordinary course of business) may exceed the aggregate of the paid-up capital of the
Company, its free reserves and securities premium. It is now proposed to increase this
limit to Rs 6,000 crores and the same is being proposed to the members seeking their
approval at the forthcoming Annual General Meeting.
Your Company is debt free as on December 31, 2020 and established credit limits with
banks. During the financial year under review, your Company had borrowed from ABB India
Limited and the outstanding loan was Rs 347.62 crores as on December 31, 2019, which has
been paid completely during the financial year under review.
Your Company did not have any debt instrument, fixed deposit programme or any scheme or
proposal for mobilization of funds. Hence, during the financial year ended December
31,2020 it had not obtained any credit rating for this purpose.
However, CRISIL has assigned its ‘CRISIL AAA/Stable/ CRISIL A1+' ratings to the
bank facilities of the Company wef January 04, 2021 as follows:
| Total Bank Loan Facilities Rated |
Rs 5,000 Crore |
| Long Term Rating |
CRISIL AAA/Stable (Assigned) |
| Short Term Rating |
CRISIL A1 + (Assigned) |
There was no issue of preference shares, debenture, warrants or other convertible
securities during the financial year under review. Your Company has not issued any shares
with differential voting rights, bonus shares, sweat equity shares, employees stock option
nor bought back any share during the financial year under review. No shares were held in
the trust for the benefit of employees during the financial year under review. There has
been no revision of financial statement or report. There was no instance of Statement
indicating deviations, if any, in the use of proceeds from the objects stated in the offer
document or explanatory statement to the notice for the general meeting.
35. Adapting to the new norm:
To adapt to the new norm, your Company revised how your Company engaged with its
customers and helped them as much as possible to stay on track with their project
timelines and maintain business continuity.
Your Company amplified customer engagement through technology. To maintain business
continuity, your Company leveraged digital solutions for de-risking factory acceptance
tests, product service and training, and even commissioning of certain projects. Your
Company carried out close to a dozen Remote Factory Acceptance Tests (RFATs) for leading
industry players in diverse sectors.
The High Voltage business unit provided a major state- owned power transmission company
a virtual tour of your Company's high and low voltage technologies. Your Company's
Transformers business unit enabled India's largest steel exporter to remotely inspect its
three-phase transformers for an upcoming project. Your Company's Grid Automation business
unit conducted RFATs to speed up activity for a leading utility service provider for its
projects in Gujarat and Maharashtra and readied Substation Automation Systems for an
upcoming metro rail line, among others. Your Company's resilience assured its customers of
on-time delivery, equipment reliability and quality and won it big-ticket projects.
Ensuring that your Company's customer engagement stayed high, your Company conducted
numerous virtual technical webinars, attended by over thousands of participants from
utilities, industries, transport and infrastructure segment across countries. Your Company
launched its flagship customer event Energy and Digital World, with over 600 customers
attending virtual inaugural event.
Your Company will be solidifying its presence in the power sector and expanding its
footprint and product portfolio to support India's talent and manufacturing capabilities.
Your Company will be investing towards expanding its GIS product line to help the Indian
transmission and distribution sector - poised to register a CAGR of 5.5 percent for the
next five years - meet present and future demand of substation systems. Within that, your
Company will augment the grid integration technology such as regulating device used on
alternating current electricity transmission networks and power quality products alone to
enable power transfer with the lowest environmental impact.
Your Company will be investing in its transformers business, building up the traction
transformers capacity and increasing its product portfolio of high-voltage class bushings
through facility expansion for meeting imminent demand from locomotives both domestically
as well as abroad. Your Company will simultaneously be investing in equipment and machines
to support research and development activities for the buildout of various high- voltage
global products, critical to India's energy revolution as well as progress under the
Make-in-India initiative. Already, your Company has made India the manufacturing base of
five global products, with the largest installed base in the power sector nationally.
Besides commensurately increasing headcount to support new projects and increased
production, your Company will be enhancing its remote monitoring, analytics and services
by expanding its customer experience center in Bengaluru. The center will augment
real-time connectivity with energy assets and systems at various sites, a part of the
Company's strategy to have more digitally enabled products and systems to grow in the
areas of digitalization services.
Your Company is at the forefront of power technology revolution, contributing to the
Government's renewable energy targets through products and systems that reduce carbon
emissions. As a global leader in power technologies, the Company is committed to make
adoption of alternate energy easier, faster and more efficient.
36. 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 significant and material orders were passed
by the regulators or courts or tribunals impacting the going concern status of your
Company.
With regard to listing process of your Company's equity shares and in terms of the SBI
circular no. CFD/DIL3/ CIR/2017/21 dated March 10, 2017 as amended vide SEBI circular
dated Jan 3, 2018 ("SEBI Circular"), your Company was required to list the
equity shares of your Company with BSE Limited and National Stock Exchange of India
Limited within 60 days of the date of the receipt of the order approving the Scheme of
Arrangement. SEBI vide letter dated March 13, 2020 notified to the Company, the delay in
compliance with the SEBI Circular and to ensure compliance in future.
37. Internal financial control systems and their adequacy:
The details on Internal financial control systems and their adequacy are provided in
the Management's Discussion and Analysis which forms part of this Report.
38. Disclosure as per the Sexual Harassment of Women at Work place (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 there under. As required
under law, an Internal Complaints 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 financial year under review, one case was reported which was
investigated and closed.
39. Statutory Auditors:
Pursuant to provisions of Section 139 of the Act read with the Companies (Audit and
Auditors) Rules, 2014, M/s. S. R. Batliboi & Associates LLP, Chartered Accountants
(Registration No. 101049W/ E300004) were appointed as Statutory Auditors, for a period of
five years, to hold office from the conclusion of first Annual General Meeting until the
conclusion of sixth Annual General Meeting at such remuneration as may be mutually agreed
amongst by the Board of Directors and the Statutory Auditors.
40. Cost Audit and Cost Auditor of the Company:
In terms of the provisions of Section 148 of the Act read with the Companies (Cost
Records and Audit) Rules, 2014, the Board of Directors, on the recommendation of the Audit
Committee, appointed M/s. Ashwin Solanki & Associates, Cost Accountants (Registration
No: 100392) as Cost Auditor of the Company, for the financial year ending December 31,
2020, on a remuneration as stated in the Postal Ballot Notice dated April 30, 2020 which
was approved by the members during the financial year under review for conducting the
audit of the cost records maintained by your Company.
The Board of Directors, on the recommendation of the Audit Committee, has appointed
M/s. Ashwin Solanki & Associates, Cost Accountants (Registration No: 100392) as Cost
Auditor of your Company, for the financial year 2021-22, for conducting the audit of the
cost records maintained by the Company.
A certificate from M/s. 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 and they are not disqualified to be appointed as Cost Auditor.
A resolution seeking Members' approval for remuneration payable to Cost Auditor forms
part of the Notice of the 2nd Annual General Meeting of your Company and same is
recommended for your consideration. Cost Audit and Compliance reports for the year 2019
were filed with the Registrar of Companies, within the prescribed time limit.
41. Listing of the equity shares of the Company:
Your Company received listing and trading approval for 4,23,81,675 Equity Shares of Rs
2 each from the BSE Limited ("BSE") and the National Stock Exchange of India
Limited ("NSE") on March 25, 2020. The equity shares of your Company commenced
trading on BSE and NSE from trading hours on March 30, 2020. The Stock Code of Equity
Shares of your Company are NSE Symbol: POWERINDIA, BSE Scrip code: 543187 (POWERINDIA) and
ISIN: INE07Y701011
42. Shifting of registered office of the Company:
The registered office of your Company was shifted from 21st Floor, World Trade Center
Brigade Gateway, No. 26/1, Dr. Rajkumar Road, Malleshwaram, Bengaluru - 560055 to 8th
Floor, Brigade Opus, 70/401, Kodigehalli Main Road, Bengaluru - 560092 w.e.f. March 16,
2020.
43. Postal ballot:
During the financial year under review your Company conducted postal ballot exercise
through remote e-voting pursuant to Section 110 and other applicable provisions, if any,
of the Act, read with Rule 22 and other applicable rules of the Companies (Management and
Administration) Rules, 2014 ("Rules") and General Circular No.14/2020 dated
April 8, 2020, read with General Circular No. 17/2020 dated April 13, 2020, issued by
Ministry of Corporate Affairs, Government of India ("MCA Circulars") and
pursuant to other applicable laws and regulations MCA circulars vide Postal Ballot Notice
dated April 30, 2020.
44. Subsidiary/Joint venture :
Your Company did not have any joint venture or subsidiary Company during the financial
year under review.
45. Branch offices:
Your Company has completed opening of branch office in Bangladesh during the year under
review. Opening of branch office in Sri Lanka and Nepal is in process.
46. Fractional shares:
Pursuant to Scheme of Demerger, your Company had also allotted fractional shares
totaling to 9,266 Equity shares (out of total 4,23,81,675 Equity shares allotted on
December 24, 2019) to APPSIL Fractional Shares Trust 2019 on December 24, 2019. Catalyst
Trusteeship Limited ("Catalyst") was appointed subsequently on April 30, 2020 as
the Trustee to handle fractional shares. 9,266 Equity shares were sold on July 27, 2020
for gross amount totalling to Rs 8,038,718.30. The tax deducted at source aggregated to Rs
1,711,516.05 and net amount for distribution was Rs 6,327,202.25. The distribution of net
proceeds commenced from August 3, 2020 through online/cheque mode.
Summary of distribution of fractional shares sale proceeds as on January 31, 2021 was
as follows:
| 20,619 shareholders holding total fractional shares : 9,266 Equity shares |
Amount |
No of shareholders/cheques/ Dollar DD |
| Gross amount arising out of sale of fractional shares |
Rs 8,038,718.30 |
20619 |
| TDS amount deducted |
Rs 1,711,516.05 |
20619 |
| Net amount arising out of fractional shares (post TDS) |
Rs 6,327,202.25 |
20619 |
| RTGS and NEFT remittance completed: |
Rs 5,709,760.12 |
18614 |
| 18,614 shareholders have been paid successfully |
(including 1st and 2nd tranche) |
(including 1st and 2nd tranche) |
| Balance shareholders cheques issued 2004 |
|
|
| Rejected online cases : 1138 Original DD cases : 867 (including 1 Dollar DD case)
Total : 2005 |
Rs 617,442.13 |
2004 cheques |
| Cheques deposited and processed (i.e. total amount and number of cheques encashed as
on Jan 31, 2021) |
Rs 406,040.47 |
1277 cheques |
|
|
727 cheques |
| Cheques balance pending for depositing by respective holders |
Rs 211,401.00 |
(out of this 338 cheques amounting to Rs 103,007 has been received back
by Kfin Technologies Private Limited, Registrar and Share Transfer Agent as on January 31,
2021) |
47. Open offer:
During the financial year under review, a Letter of Offer was issued by the Promoter
group-ABB Switzerland Ltd (Acquirer 1), Hitachi Ltd (Acquirer 2), Hitachi ABB Power Grids
AG (PAC 1) and ABB Ltd (PAC 2) dated September 02, 2020 ("Open Offer") which
opened on September 9, 2020 and closed on September 22, 2020. The open offer was tendered
for acquisition of 25 percent public shareholding of your Company. Total of 179 Equity
shares were tendered by public shareholders. The Offer price per share was Rs 872.68 per
share. 179 equity shares were acquired under the said Open Offer and the consideration was
paid on September 30, 2020 by the Acquirers.
48. New factories in pipeline:
Your Company actively worked toward increasing its market share in the HV segment. Your
Company made investment in portfolio expansion in the gas insulated switchgear (GIS) space
through the production of 145 kilovolt ELK04 GIS product line in Savli, Gujarat, a feeder
factory module assembly and an HV test setup in Savli, Gujarat to enable cost reduction of
ELK03 420 kV GIS products through local production, in new production lines in Vadodara
for various HV products to meet global and local demand, as well as in factory expansion
for medium voltage power quality products in Peenya to integrate all presently fragmented
operations under one roof to serve an ever-growing power quality market both domestically
as well as overseas.
Your Company proposes to increase the capacity of medium voltage capacitors. This unit
proposed to be in Doddaballapur Industrial Area, Bengaluru, will also cater to low and
medium voltage power quality panels and R&D. It will have state-of-the-art processes
including robotic painting and automatic conveyor systems to address advance needs of
safety and quality.
This expansion is to cater to an expanding transmission and distribution sector, poised
to register a CAGR of 5.5 percent for next five years with growth in infrastructure,
renewable & transportation. Further as per the recommendation from the Central
electricity authority (CEA), all major utilities are likely to GIS from air insulated
switchgear to conserve space, meet power demand and ensure grid reliability and
sustainability.
For your Company, these investments will bring operational efficiency and improve our
market competitiveness. They will also generate additional volume and EBIT for your
Company.
49. Transfer of shares from ABB to Hitachi:
31,786,256 equity shares aggregating 75 percent of the paid up capital of your Company
was transferred from ABB Asea Brown Boveri Ltd to ABB Ltd by way of dividend in kind, and
subsequently from ABB Ltd to Hitachi ABB Power Grids AG as contribution in kind (as
disclosed by the shareholders) on February 05, 2021.
50. Acknowledgements:
The Board of Directors take this opportunity to thank your Company's parent company,
customers, members, suppliers, bankers, associates, Central and State Governments and
employees at all levels for their support and co-operation extended to your Company during
the financial year under review.
For and on behalf of the Board of Directors
For ABB Power Products and Systems India Limited
Achim Michael Braun
Chairman
DIN: 08596097
Bengaluru
February 26, 2021