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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 500002ISIN: INE117A01022INDUSTRY: Electric Equipment - General

BSE   ` 1275.60   Open: 1294.45   Today's Range 1271.10
-8.80 ( -0.69 %) Prev Close: 1284.40 52 Week Range 1123.00
Year End :2016-12 

d) There is no movement in the share capital during the current and previous year.

The debentures are repayable after 3 years from the date of allotment being September 4, 2015. The debentures carry interest rate of MIBOR plus 80 basis points. The proceeds have been utilized towards working capital and other corporate purposes including refinancing of Company's debt.

The Company is contesting the demands and the management believes that its position will likely be upheld in the various appellate authorities/courts. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company's financial position.

In respect of the above contingent liabilities, the future cash outflows are determinable only on receipt of judgement pending at various forums / authorities.

1. The Company has taken several premises and vehicles under cancellable and non-cancellable operating leases. These lease agreements are normally for one to ten years and have option of renewal on expiry of lease period based on mutual agreement. Rental expenses towards cancellable and non-cancellable operating lease charged to the statement of profit and loss amounts to Rs, 42.30 crores (Previous Year Rs, 52.93 crores).

Some of the lease agreements have escalation clause ranging from 5% to 15%. There are no exceptional / restrictive covenants in the lease agreement. There are no assets given on operating lease.

2. Excise duty on sales amounting to Rs, 541.31 crores (Previous year Rs, 530.43 crores) has been reduced from sales in the statement of profit and loss. Excise duty reversal on decrease in inventory of finished goods amounting to Rs, 1.15 crores (Previous year Rs, 0.90 crores) has been accounted in the statement of profit and loss under the head (Increase)/ decrease in inventories of finished goods, work-in-progress and traded goods.

3. Short term borrowings represent unsecured overdraft facility from banks. The same is repayable on demand and carries interest @ 9% to 11% p.a.

4. Related party disclosures a) List of related parties

Party where control exists:

ABB Limited, Zurich, Switzerland (Ultimate Holding Company)

ABB Asea Brown Boveri Limited, Zurich, Switzerland (Holding Company)

Other Related parties with whom transactions have taken place during the year:

Fellow subsidiaries: ABB Inc., Cary, NC, United States

ABB (Asea Brown Boveri), S.A., Oeiras, Portugal ABB Management Services Ltd., Zurich, Switzerland

ABB (China) Ltd., Beijing, China ABB Inc., Saint-Laurent, Quebec, Canada

ABB (Hong Kong) Ltd., Hong Kong, Hong Kong ABB Industries (L.L.C.), Dubai, United Arab Emirates

ABB (Namibia) (Pty) Ltd., Windhoek, Namibia ABB Industries FZ, Dubai, United Arab Emirates

ABB (Private) Ltd., Harare, Zimbabwe ABB Information Systems Ltd., Zurich, Switzerland

ABB (Pty) Ltd., Gaborone, Botswana ABB International Marketing Ltd in liquidation, Zurich, Switzerland

ABB (Pvt) Ltd., Lahore, Pakistan ABB Intra AG, Baden, Switzerland

ABB A/S, Skovlunde, Denmark ABB Inzeniring d.o.o., Ljubljana, Slovenia

ABB AB, Vasteras, Sweden ABB Jiangjin Turbo Systems Company Limited, Chongqing, China

ABB AG, Mannheim, Germany ABB Jiangsu Jingke Instrument Transformer Co., Ltd., Suqian,

ABB AG, Vienna, Austria Jiangsu, China

ABB AS, Billingstad, Norway ABB K.K., Tokyo, Japan

ABB AS, Juri, Estonia ABB Limited, Auckland, New Zealand

ABB Manufacturing Sdn. Bhd., Subang Jaya, Malaysia ABB Limited, Bangkok, Thailand

ABB Australia Pty Limited, Moorebank, NSW, Australia ABB Limited, Dar Es Salaam, Tanzania, United Republic of

ABB Automation Co. Ltd., Riyadh, Saudi Arabia ABB Limited, Dhaka, Bangladesh

ABB Automation GmbH, Mannheim, Germany ABB Limited, Dublin, Ireland

ABB Automation L.L.C., Abu Dhabi, United Arab Emirates ABB Limited, Nairobi, Kenya

ABB Automation Products GmbH, Ladenburg, Germany ABB Limited, Warrington, United Kingdom

ABB B.V., Rotterdam, Netherlands ABB Limited/Jordan LLC., Amman, Jordan

ABB Bailey Beijing Engineering Co. Ltd., Beijing, China ABB LLC, Doha, Qatar

ABB Bailey Japan Limited, Shizuoka-Ken, Japan ABB LLC, Muscat, Oman

ABB Beijing Drive Systems Co. Ltd., Beijing, China ABB LLP., Almaty, Kazakhstan

ABB Beteiligungs-Management GmbH, Mannheim, Germany ABB Logistics Center Europe GmbH, Menden, Germany

ABB Bulgaria EOOD, Sofia, Bulgaria ABB Ltd., Hanoi, Vietnam

ABB Business Services Sp. z o.o., Warsaw, Poland ABB Ltd., Kampala, Uganda

ABB Canada Holding Limited Partnership, Saint-Laurent, Canada ABB Ltd., Kiev, Ukraine

ABB Capital B.V., Rotterdam, Netherlands ABB Ltd., Lusaka, Zambia

ABB Chongqing Transformer Company Ltd., Chongqing, China ABB Ltd., Moscow, Russian Federation

ABB Contracting Company Ltd., Riyadh, Saudi Arabia ABB Ltd., Seoul, Korea, Republic of

ABB d.o.o., Belgrade, Serbia ABB Ltd., Taipei, Taiwan, Province of China

ABB Ecuador S.A., Quito, Ecuador ABB Ltd., Zagreb, Croatia

ABB Electrical Industries Ltd., Riyadh, Saudi Arabia ABB Ltda., Bogota, Colombia

ABB Electrical Machines Ltd., Shanghai, China ABB Ltda., Sao Paulo, Brazil

ABB Elektrik Sanayi A.S., Istanbul, Turkey ABB LV Installation Materials Co. Ltd. Beijing, Beijing, China

ABB Engg. Technologies Co. (KSCC), Safat, Kuwait ABB Malaysia Sdn Bhd., Subang Jaya, Malaysia

ABB Engineering (Shanghai) Ltd., Shanghai, China ABB Mexico S.A. de C.V., San Luis Potosi SLP, Mexico

ABB Engineering Trading and Service Ltd., Budapest, Hungary ABB Motion Limited, Bristol, United Kingdom

ABB Enterprise Software Inc., Atlanta, GA, United States ABB N.V., Zaventem, Belgium

ABB Enterprise Software UK Limited, Warrington, United Kingdom ABB Near East Trading Ltd., Amman, Jordan

ABB ESAP Limited, St. Peter's Port, Guernsey ABB Norden Holding AB, Vasteras, Sweden

ABB Finance B.V., Rotterdam, Netherlands ABB Oryx Motors and Generators Service LLC, Doha, Qatar

ABB for Electrical Industries (ABB ARAB) S.A.E., Cairo, Egypt ABB Oy, Helsinki, Finland

ABB France, Cergy Pontoise, France ABB Power & Automation (Private) Limited, Lahore, Pakistan

ABB FZ-LLC, Dubai, United Arab Emirates ABB Power Equipment (Xiamen) Co., Ltd., Xiamen, China

ABB Generators Ltd., Nanchang, China ABB Power Protection SA, Gambarogno, Switzerland

ABB Genway Xiamen Electrical Equipment Co. Ltd., Xiamen, China ABB Pte. Ltd., Singapore, Singapore

ABB Global Industries and Services Private Limited, Bengaluru, India ABB Research Ltd., Zurich, Switzerland

ABB Global Marketing FZ LLC, Dubai, United Arab Emirates ABB S.A., Buenos Aires, Argentina

ABB Hefei T ransformer Co. Ltd., Hefei, China ABB S.A., Casablanca, Morocco

ABB High Voltage Switchgear (Xiamen) Company Ltd., Xiamen, China ABB S.A., Lima, Peru

ABB High Voltage Switchgear Co., Ltd. Beijing, Beijing, China ABB S.A., Panama, Panama

ABB Holdings B.V., Rotterdam, Netherlands ABB S.A., Santiago, Chile

ABB Holdings Sdn. Bhd., Subang Jaya, Malaysia ABB S.p.A., Milan, Italy

ABB Import & Export Services Ltd., Oranjestad/Aruba (NA), Aruba ABB s.r.o., Prague, Czech Republic

ABB SARL, Kinshasa Gombe, Congo, Democratic Republic of the ABB, s.r.o., Bratislava, Slovakia

ABB SAS, Cergy Pontoise, France ABB NG Limited, Lagos, Nigeria

ABB Schweiz AG, Baden, Switzerland Asea Brown Boveri Electrica SGPS (Angola) Limitada, Luanda, Angola

ABB Secheron S.A., Satigny, Switzerland Asea Brown Boveri Industrial, Technical & Commercial Company of

ABB Service Co. Ltd., Al Khobar, Saudi Arabia Imports - Exports S.A., Metamorphossis Attica , Greece

ABB Shanghai Motors Co. Ltd., Shanghai, China Asea Brown Boveri Lanka (Private) Limited, Colombo, Sri Lanka

ABB Shanghai Transformer Co. Ltd., Shanghai, China Asea Brown Boveri Ltd., Moka, Mauritius

ABB Shenzhen New Energy System Co., Ltd , Shenzhen, China Asea Brown Boveri Ltda., La Paz, Bolivia, Plurinational State of

ABB SIA, Riga, Latvia Asea Brown Boveri S.A., Caracas, Venezuela, Bolivarian Republic of

ABB South Africa (Pty) Ltd., Longmeadow, South Africa Asea Brown Boveri S.A., Douala, Cameroon

ABB Sp. z o.o., Warsaw, Poland Asea Brown Boveri S.A., Madrid, Spain

ABB Stotz-Kontakt GmbH, Heidelberg, Germany Asea Brown Boveri S.A.E., Cairo, Egypt

ABB Striebel & John GmbH, Sasbach, Germany Baldor Electric (Asia) PTE Ltd., Singapore, Singapore

ABB Technologies Ltd., Haifa, Israel Baldor Electric Company, Fort Smith, AR, United States

ABB Technologies S.A., Dakar, Senegal Busch-Jaeger Elektro GmbH, Ludenscheid, Germany

ABB Technologies W.L.L., Bahrain, Bahrain Electrical Materials Center Co. Ltd, Riyadh, Saudi Arabia

ABB Technology Oy, Helsinki, Finland Maska Power T ransmission (Changzhou) Co.Ltd., Changzhou, China

ABB Technology SA, Abidjan, Cote d'Ivoire Power-One Italy S.p.A., Terranuova Bracciolini (AR), Italy

ABB Training Center GmbH & Co. KG, Heidelberg, Germany Power-One Renewable Energy Solutions India Private Limited,

ABB T ransformers S.A.E., El-Nozha El-Gedida, Egypt Mumbai, India

ABB Transmission & Distribution Limited LLC, Abu Dhabi, United Power-One Renewable Energy Solutions LLC, Delaware, United States

Arab Emirates PT ABB Sakti Industri, Jakarta, Indonesia

ABB Turbo Systems (Hong Kong) Limited, Hong Kong, Hong Kong Pucaro Elektro-Isolierstoffe GmbH, Roigheim, Germany

ABB Turbo Systems AG, Baden, Switzerland Shanghai ABB Power Transmission Company Ltd., Shanghai, China

ABB Turbo Systems Holding Ltd., Baden, Switzerland Shantou Winride Switchgear Co., Ltd., Longhu District Shantou,

ABB Turbochargers S.A.E., Suez, Egypt China

ABB UAB, Avizieniai , Lithuania Spirit IT B.V., Eindhoven, Netherlands

ABB Verwaltungs AG, Zurich, Switzerland Sucursal Panama de ABB SA, Panama, Panama

ABB Xiamen Electrical Controlgear Co. Ltd., Xiamen, China Thomas & Betts Asia (Singapore) Pte. Ltd., Singapore, Singapore

ABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen, China Thomas & Betts Corporation, Knoxville, TN, United States

ABB Xiamen Switchgear Co. Ltd., Xiamen, China Thomas & Betts India Private Ltd., Hyderabad, India

ABB Xi'an High Power Rectifier Company Limited, Xi'an, China Thomas & Betts Limited, Saint-Jean-sur-Richelieu, Quebec, Canada

ABB Xi'an Power Capacitor Company Limited, Xi'an, China Thomas & Betts Power Solutions LLC, Delaware, United States

ABB Xinhui Low Voltage Switchgear Co. Ltd., Xinhui , China T rasfor SA, Monteggio, Switzerland

ABB Zhongshan T ransformer Company Ltd., Zhongshan, China Turbo Systems United Co. Ltd., Tokyo, Japan

ABB, Inc., Paranaque, Metro Manila, Philippines

Key Managerial Personnel :

Managing Director: Mr. Sanjeev Sharma

Company Secretary: Mr. B. Gururaj

Chief Financial Officer: Mr. T.K. Sridhar

b) Nature of provisions:

i) Warranties: The Company provides warranties for its products, systems and services, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. Provision made as at December 31, 2016 represents the amount of the expected cost based on technical evaluation and past experience of meeting such obligations. It is expected that this expenditure will be incurred over the contractual warranty period.

ii) Loss orders: A provision for expected loss on construction contracts is recognised when it is probable that the contract costs will exceed total contract revenue. For all other contracts loss order provisions are made when the unavoidable costs of meeting the obligation under the contract exceed the currently estimated economic benefits.

iii) Provision for litigation represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters in litigation. The outflow would depend on the cessation of the respective events.

iv) Provision for sales tax represents mainly the differential sales tax liability on account of non - collection of declaration forms. The outflow would depend on the cessation of the respective events.

5. The employees of the Company are entitled to purchase shares of ABB Limited., Zurich (the ultimate holding company) on the settlement date, at a price 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, 0.38 crores (Previous Year Rs, Nil crores) towards the above including administrative charges and this has been charged in the statement of profit and loss under the head salaries, wages and bonus.

The Institute of Chartered Accountants 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, compensation benefits in respect of the scheme is assessed and accounted by the ultimate holding company, except for the obligation towards expenses cross charged as above. Accordingly, the Company is of the opinion that there is no further accounting treatment/ disclosure required under the said guidance note.

6. Derivative Instruments

i) Forward cover for foreign currency trade receivables outstanding as of balance sheet date is Rs, 328.10 crores (Previous Year Rs, 271.45 crores).

ii) Forward cover for expected future sales or highly probable forecast transaction as of balance sheet date is Rs, 136.88 crores (Previous Year Rs, 433.12 crores).

iii) Forward cover for foreign currency trade payables outstanding as of balance sheet date is Rs, 732.80 crores (Previous Year Rs, 716.56 crores).

iv) Forward cover for expected future purchases or highly probable forecast transaction as of balance sheet date is Rs, 176.42 crores (Previous Year Rs, 440.94 crores).

v) Foreign currency exposure (net) that are not hedged by derivative instruments or otherwise is payable Rs, 354.69 crores (Previous year payable was Rs, 187.33 crores).

7. Commodity Contracts

The Company uses commodity future contracts to hedge risk against fluctuation in commodity prices. The following are outstanding future contracts entered into by the Company as on December 31, 2016

Notes: a) Gratuity Plan

Gratuity is payable to all eligible employees of the Company as per the provisions of the Payment of Gratuity Act, 1972 or as per the Company's scheme, whichever is higher.

b) Provident Fund Plan

The Company manages provident fund plan through a provident fund trust for its employees which is permitted under the Provident Fund and Miscellaneous Provisions Act, 1952. The Contribution by employee and employer together with interest are payable at the time of separation from service or retirement whichever is earlier.

c) Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as inflation, market growth and other factors applicable to the period over which the obligation is expected to be settled.

d) The Company expects to contribute Rs, 15.00 crores (Previous Year Rs, 13.00 crores) to gratuity fund and Rs, 2.00 crores (Previous Year Rs, 18.00 crores) to provident fund in 2017.

e) The attrition rate for gratuity varies from 1% to 8% for various age groups.

8. In accordance with the provisions of Companies Act, 2013, the Company is required to contribute Rs, 7.49 crores (Previous Year Rs, 5.56 crores) towards CSR expenditure for the year ended December 31, 2016 against which actual capital expenditure is Rs, 4.96 crores (Previous Year Rs, 1.24 crores) and revenue expenditure is Rs, 2.45 crores (Previous Year Rs, 0.46 crores).

9. The previous year figures have been regrouped/ reclassified, where necessary, to conform with the current year's classifications.