ador secretarial 2010 · 2018-02-23 · aws classification: aws a/sfa 5.5 e7010-p1 it is cellulosic...

57th Annual Report 2009-10

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1

Contents

Board of Directors, Executive Management Team,Bankers, Solicitors and RTA ........................................................................ 2

Distribution of Revenue ........................................................................ 3

Innovations / New Developments .................................................................. 4 - 8

Directors’ Report and its Annexures ................................................................ 9 - 30

Auditor’s Report and its Annexures .............................................................. 31 - 33

Balance Sheet, Profit and Loss Account .............................................................. 34 - 35

Cash Flow Statement .............................................................. 36 - 37

Schedules, Notes to Accounts and Annexure I .............................................................. 38 - 55

Balance Sheet Abstract and Company’sGeneral Business Profile ...................................................................... 56

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2

Board of Directors

Ms. A. B. AdvaniExecutive Chairman

Mr. Raman KumarManaging Director

Mrs. N. Malkani NagpalDirector

Mr. R. A. MirchandaniDirector

Mr. A. T. MalkaniDirector

Mr. D. A. LalvaniDirector

Mr. Anil HarishDirector

Mr. M. K. MaheshwariDirector

Mr. P. K. GuptaDirector

Mr. R. N. SapruDirector

Mr. K. Digvijay SinghDirector

Mr. J. N. Hinduja*Director(*Upto 30th March, 2010since superannuated)

BOARD OF DIRECTORS, EXECUTIVE MANAGEMENT TEAM,BANKERS, SOLICITORS AND RTA

Executive Management Team

Mr. S. M. Bhat

Mr. V. B. Tamboli

Mr. K. N. Subramanian

Mr. R. Ravi

Mr. V. M. Bhide

Mr. T. P. Mukherjee

Mr. J. Rajagopalan

Mr. H. K. Bhatia

Mr. S. S. Bhoi

Mr. A. R. Vilekar

Mr. R. R. Mohapatra

Mr. M.G. Gadre

Mr. S. Ajay Kumar

Mr. H. Venkataraman

Company Secretary

Mr. V. M. Bhide

Registered & Head OfficeAdor House,6, K. Dubash Marg,Fort, Mumbai – 400 001 – 16.Tel: 2284 2525, 2287 2548Fax: 2287 3083Web: www.adorwelding.com

BankersHDFC Bank LimitedBank of Baroda

AuditorsDalal & Shah,Chartered AccountantsMumbai

SolicitorsNanu Hormasjee & Co.,Mumbai

Registrar &Share Transfer Agent (RTA)M/s. Sharex Dynamic (I) Pvt. Ltd.

Head Office:17/B, Dena Bank Building2nd Floor, Horniman Circle,Fort, Mumbai – 400 001.Tel: 2270 2485, 2264 1376Fax: 2264 1349

Branch Office:Unit No. 1,Luthra Industrial Premises,Andheri Kurla Road,Safed Pool,Andheri (East),Mumbai – 400 072Tel: 2851 5606/44Fax: 2851 2885Web: www.sharexindia.com


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3

DISTRIBUTION OF REVENUE

(Figures in bracket indicate Previous Year)

4% Dividend & Dividend Tax 951(3%) (636)

4% Tax (Net) 1,056(4%) (926)

5% Depreciation 1,311(6%) (1,328)

9% Administrative / Selling & Other Expenses 2,576(11%) (2,531)

6% Manufacturing Expenses 1,610(7%) (1,610)

0 Interest & Finance Charges 57 (1%) (198)

10% Employee Expenses 2,532ee Expenses 2,532(11%) (2,463)

56% Cost of Good Sold 14,855(55%) (12,427)

6% Retained Profit 1,608(2%) (580)

(Rs. in lacs)

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4

WELDING CONSUMABLES[NEW DEVELOPMENTS]

SMAW Electrodes:1. Tenalloy-70A L:

AWS Classification: AWS A/SFA 5.5 E7018-C1LIt is low hydrogen, iron-powder electrode, speciallydeveloped to weld 2.5 % Ni steels in refineries andpower plants. It is specifically designed to givebetter strength along with good toughness attemperatures upto -75°C.

2. Tenalloy-70C L:AWS Classification: AWS A/SFA 5.5 E7018-C3LIt is low hydrogen, iron-powder electrode, speciallydeveloped to weld 1 % Ni steels in refineries andpower plants. It is specifically designed to givebetter strength along with good toughness attemperatures upto -50°C.

3. Celwel-70P:AWS Classification: AWS A/SFA 5.5 E7010-P1It is cellulosic electrode, specially made to weldroot pass, hot pass and filler passes on cross countrypipelines, which are subjected to dynamic loadingand mechanical restraint. It gives smooth andstable arc with very good slag removal. It hasexceptional all position working characteristic,especially in stove-pipe welding technique.

4. Cromoten-9M Spl:AWS Classification: AWS A/SFA 5.5 E9016-B9It is 9Cr-1Mo non-synthetic type, hydrogencontrolled electrode modified with Niobium andVanadium. It is used to weld creep resistant steelswhich are to be used for, boilers, power plants,refineries, etc. The weld metal is designed to meetstrength requirements even after prolongedholding at elevated temperatures and also to havegood impact resistance even at sub-zerotemperatures. It is specially developed for PowerEquipment manufacturers.

5. Tenalloy-450:AWS Classification: AWS A/SFA 5.1 E7018-1It is low hydrogen, iron-powder, all-positionelectrode for welding of Medium and high tensilesteels, heavy sections and restrained joints in hightensile steels. The weld metal produced is resistantto hot and cold cracking. It is specially developedfor Power Equipment manufacturers.

6. Supabase-180:AWS Classification: AWS A/SFA 5.1 E7028It is a heavy coated, hydrogen controlled, iron-powder electrode to weld heavy structures likecranes, bridge girders, pressure vessels, boilers, earth

moving equipments, etc. This electrode gives veryhigh weld metal recovery, with approx. 180%deposition efficiency.

7. Nicalloy Mo3:AWS Classification AWS A/SFA 5.11 ENiCrMo3A special purpose Ni alloy electrode for weldingNi alloys meant for critical applications.

SAW Fluxes:1. Automelt A57:

AWS Classification: AWS A/SFA 5.17 F7AZ-EL8, F7AZ-EM12KIt is aluminate-rutile type agglomerated flux,designed for welding of structural steels with EL8wire. This flux can be used for a varying range ofoperating parameters, especially at very low travelspeeds, without any difficulty. It is also tolerant torust and scale of the base metal.

2. Automelt B20 Plus:AWS Classification: AWS A/SFA 5.17/5.23 F7A8-EM12K, F7A6/P8-EH10K, F7P6-EH14It is Fluoride-Basic type of agglomerated high basicflux with manganese pick-up. It can be best usedwith wires like EM12K & EH10K. This flux givesexcellent sub-zero impact properties and can beusable with low alloyed wires. It can be used forwelding structural components above 20mmthickness as well as pressure retaining butt joints.

3. Automelt B21 Plus:AWS Classification: AWS A/SFA 5.17/5.23 F7A6/P8-EH10K, F7A4/P6-EH14It is Fluoride-Basic type of agglomerated high basicflux, which behaves neutrally with respect tomanganese. It can be best used with wires likeEH10K & EH14. It can be used for welding structuralcomponents above 20mm thickness as well aspressure retaining butt joints. It can also be usedfor welding heat resistant, cold tough and ageresistant steels.

4. Automelt B25 Plus:AWS Classification: AWS A/SFA 5.17/5.23 F7A8/P8-EH10KIt is a special agglomerated Fluoride-Basic typeflux best suited for welding heat-resistant steels. Itcan be best used with micro alloyed wires like EB2,EB2R, EB3, EB3R, EB9 etc. This flux gives very goodsub-zero impact properties with very goodweldability. It is to be used for welding of heatresistant Chrome-Molybdenum steels. It is alsocharacterized by low S, P and X-factor with EB2Rand EB3R wires.


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5

In continuation with last year’s efforts, we strategicallyfocused the development of new generation, energyefficient Inverter based welding power sources forstandard and specific applications like cross countrypipeline welding etc. We developed and introducedfollowing power sources to bridge the product gapwith respect to competitive market requirements forsome industry segments like Shipyards, Power etc.

1. CHAMP 163 / CHAMP 253:

These are the world class, high efficiency and highpower factor, IGBT type inverter based MMA DCwelders, resulting over 35% energy savingscompared to the conventional thyristor type powersources. They are suitable for light and mediumduty, general purpose production andmaintenance welding applications.

These power sources have following salientfeatures:

• Latest IGBT based Inverter technology

• High operating frequency

• High efficiency (>85%) and High power factor

• Smooth and stable arc with minimum spatter

• Hot start / Arc force control / soft arc controlfeatures available as standard

• TIG welding operation possible with lift arc orscratch start technique without HF unit

These machines are provided with followingprotections:

• Over Voltage and Under Voltage

• Over Temperature

• Single phasing

EQUIPMENT GROUP[NEW DEVELOPMENTS]

2. CHAMPMULTI 400 (SSPW) :

CHAMP MULTI 400 is IGBT inverter based, fully digitalcontrolled, synergic welding power source, suitablefor multi process MIG/MAG and MMA weldingapplications. It is specially designed for Manualand Semi Automatic (self shielded FCAW) weldingof cross country pipe welding applications.

The complete system consists of Power source, Wirefeeder, Torch and interconnecting cables. Byselecting the CC or CV mode through Digitalpanel, SMAW or GMAW process can be selected.

The power source has following salient features:

• Digital Panel for adjusting the weldingparameters and selection of Process eitherSMAW or GMAW.

• Fully digitally controlled Synergic operation forsingle point control in short circuit arc in MIG /MAG welding.

• 30% more Energy efficient than conventionalmachines.

• Excellent dynamic response enables superiorarc characteristics.

• Unique feature of Fresh Tip Transfer (FTT) toavoid globule formation.

• Weld programmes for 10 Nos of Job can bestored for GMAW / FCAW process.

• Automatic “Weld Stop” facility.

• Suitable for TIG operation by interfacingseparate HF control unit in CC mode

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6

These machines are provided with followingprotections:

• Over Voltage and Under Voltage

• Over Temperature

• Protection against Single phasing

3. CHAMPTIG 163 / CHAMPTIG 303 / CHAMPTIG303AD:

These are the Inverter based, energy efficient TIGwelding outfits for 160 amps, 300 amps ratings. Thefirst two machines are recommended for DC TIGwelding applications, where as the last outfit canbe used for DC as well as for AC TIG weldingapplications. These machines are the advancedInverter based technology power sourcesoptimized for the best Arc performance and areused for welding of varieties of metals, i.e.CHAMPTIG 163 and CHAMPTIG 303 for thin andmedium thickness steel and stainless steel materialswhere as CHAMPTIG 303AD for Aluminum andMagnesium materials.

These machines have following salient features:

• The range these models provide TIG weldingsolutions for thin sheet to thick sheet weldingapplications.

• Light weight, compact power sources for easymobility on shopfloor.

• Energy efficient power sources – saves energyup to 30% resulting reductions in energy billand operating cost.

• CHAMPTIG 163 is single phase machine,whereas other machines are three phasemachines.

• They are provided with full TIG control functionslike, current up slope / down slope, Gaspre-postflow, pulse frequency, crater currentcontrols etc.

These machines are provided with intelligentprotections against over/under voltage, overload,over temperature etc.

4. RANGER 403 / RANGER 503:

These thyristor based MIG/MAG welding outfits of400 amps and 500 amps capacity are basicallydeveloped for heavy duty, rough and toughhandling and usage of equipments at someindustry segments like Shipyards and Power projectsetc.

These machines have the following salient features:

• Vertical construction of power source enablesbetter ventilation of the critical componentsof machine.

• Edge wound coils and welded coreconstruction improves reliability and makesthem ideal for heavy duty applications likeshipyards and power projects.

• Power source is provided with protectionsagainst over load and over heating.


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7

5. THYROLUXE 500:

This thyristor based 500 amps DC MMA welder isdeveloped for heavy duty structural weldingapplication against specific requirement ofoverseas customer in middle east market. It has allthe features of our present MMA welder Model –Thyroluxe 401. However, design and constructionof the power source is further improved towithstand high ambient and humidity levels ofworking environments available in Middle Eastcountries. It is also made easy for the maintenanceof critical components

6. WELDING PAYLOADS:

Champ 4x403

Champ Multi 2x400

Champ Multi 4x400

We have developed and introduced weldingpayloads for Manual welding (SMAW) andSemiautomatic (FCAW) welding applications atproject sites including cross country pipelinewelding and power projects. These weldingpayloads are suitable for simultaneous use by 2, 4,6 or 8 welders. These welding payloads along withDG sets are mounted in the trailer or the truck assuitable for the particular project site.

These welding payloads have specific advantagesof reduced handling, compared to the handlingof many individual power sources at project sites,and thus improve overall welding productivity. Theyare also very easy for transportation from oneproject site to another project site.

7. FILLET WELDING MIG TORCH TRACTOR:

This Fillet welding MIG tractor or more commonlycalled as carriage is developed and introduced toincrease the welding productivity within workshops,shipyards or project sites. MIG Torch tractor isbasically a motorized tractor or trolley which holdsthe MIG torch and does the continuous fillet weldingin horizontal as well as vertical plane. It works onsingle phase 230 volts AC supply and has themagnet at the base, which holds the trolley forsteady run in vertical plane also.

This trolley has following main features:

• It is light weight compact tractor, which is veryeasy to carry anywhere. It weighs only 6 kgs.

• Four wheel, chain dr ive enables steadytraveling and strong magnet at the baseprovides firm grip while traveling duringwelding.

• Input supply protection in case of short circuitof input supply cable.

• Improves welding productivity multifold

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8

PROJECT ENGINEERING BUSINESS[NEW DEVELOPMENTS]

1. FLARE SYSTEM AT BORL BINA

Top three meter Tip ismade from Inconel &Incolloy followed by SSMolecular Seal. FlareSystem is Ignited atBharat Oman RefineriesLtd. Bina with the help ofFlame Front generatorpanel. The height is morethan 100 Meters, derricksupporting structure andWater seal at Bottom.

The flare componentsare inspected byleading gas and oilconsultant in IndiaEngineers India Limited.

Capacity : 9,46,973 kg/hr.

Tip Size : 66 Inch

2. HEAT EXCHANGERS FOR ESSAR VADINAR

Four heat exchangers are fabricated at PEB, ASMEapproved work shop. The scope for the saidincluded Procurement, fabr ication surfacetreatment, testing, inspection supply, spares & Thirdparty inspection.

MOC of heat exchangers were:

Shell material: SA 516 Gr.70

Tube Sheet: SA 516 Gr.70

Flanges: SA 266 Gr.4

Tubes: SA 179

Nozzles: SA 106 Gr.B

3. WATER SEAL DRUM FOR IISCO

Water seal drum vessel of 4 Mtr.dia X 10 Mtr. Lengthwas fabricated in March 2010, and transported toSAIL (IISCO) Burnpur.

Approx. 1,00,000 litre water is used for hydro test ofthis large vessel.

The final inspection is done by MECON.

4. MODIFICATION OF EXISTING SYSTEMS

Large order is received from Oman forreplacement of ignition system supplied by JohnZink USA for Petroleum development of Oman,Yibalsite.


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9

DIRECTORS’ REPORT

ToThe Members,

The Directors have pleasure in presenting the Fifty-Seventh Annual Report of the Company and the AuditedStatement of Accounts for the year ended 31st March, 2010.

1.0 Financial Performance (Rupees in Crore)

Sr. Key Financial Indicators For the year ended For the year endedNo. 31st March, 2010 31st March, 2009

1.1 Sales & other Income (Net of Excise Duty,Discounts & Incentives) 265.37 226.19

1.2 Profit before Interest and Depreciation 50.58 37.09

1.3 Profit before Tax (PBT) 36.90 21.83

1.4 Provision for Tax (Net of deferred tax) 10.56 9.26

1.5 Profit for the year after Tax (PAT) 26.34 12.57

1.6 Capital Expenditure 13.05 15.14

1.7 Capital – work in progress 0.42 9.96

2.0 Dividend and Reserves

2.1 The Board of Directors is pleased torecommend a Dividend of 60% (i.e. @ Rs. 6/-per Equity Share) for the financial year2009–10, subject to the approval of theMembers. Dividend for the previous financialyear 2008–09 was declared @ 40% (i.e. @Rs. 4/- per Equity Share).

2.2 The Dividend for the financial year 2009-10 shallbe paid to those Shareholders and BeneficialOwners whose names appear in the Registerof Members as on the date of the Book closurefor Dividend payment.

2.3 The Board recommends transfer of Rs. 7.00Crore (Rs. 8.00 Crore)* to the General Reserve,and the balance of Rs. 13.84 Crore (Rs. 4.75Crore)* for retention in the Profit & LossAccount.

(*Figures in brackets indicate previous year).

3.0 Operations

In the financial year 2009-10, the operational andother income went up by over 17%. The year endedwith an operational & other income ofRs. 265.37 Crore (Rs. 226.19 Crore)*.

The Company’s Sales and Income during thefinancial year 2009-10 comprised of the following:

3.1 Welding Consumables at Rs.196.01 Crore(Rs. 165.17 Crore)*

3.2 Equipment & Project Engineering at Rs. 64.73Crore (Rs. 58.67 Crore)*

3.3 Other Income at Rs. 4.63 Crore (Rs. 2.36 Crore)*

(*Figures in brackets indicate previous year).

4.0 Domestic Business

4.1 Welding Consumables

Domestic Sales of Consumables recorded avolume growth of 57% over the previous year.This was driven by aggressive Sales policies,market demand and the expansion of ourreach to more and more end-users / projectsites. Our product portfolio expansion in wiresand fluxes, were key to this success.

4.2 Welding Equipment and Project Engineering

The Welding Equipment / Accessories / sparesvolume business grew by 63% over the previousyear. The Project engineering business grew by50% over the last year. The volume growthswere facilitated by the strategic cost reduction

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10

projects successfully implemented across mostproducts for mass markets as well as aggressivesales initiatives taken to increase market share.

5.0 Exports

During the year under review, there has been adecline in our exports compared to the previousyear. The Export Income during the financial year2009-10 was at Rs. 24.82 Crore (Rs. 32.76 Crore)*

Since our main exports have been to the Oilproducing Gulf countries, the slow-recovery in theoil-based economies in these countr ies hasadversely affected our business. Similarly impactof recession in UAE has also contributed to thedecline in the sale. We are in the process ofrestructuring our business in countries of SaudiArabia / Africa and some of the South East Asiannations, with an effective distribution system withpre-and-post sales support to the customers / endusers.

(*Figures in bracket indicate previous year.)

6.0 CAPEXWe completed CAPEX of Rs.13.05 Crore andRs. 0.42 Crore are in various stages of progress. Theentire CAPEX programme of FY 2009-10 shall becompleted by end of June 2010.

For the FY 2010-11 the CAPEX has been budgetedto Rs. 15 Crore mainly for –

(a) Enhancement of Capacities in the Wireproducts.

(b) Lab Infrastructure / equipments required byTechnology Development Centers (TDCs’) fordevelopment of new products etc.

(c) Strengthening IT infrastructure andreplacement of old vehicles.

7.0 Directors’ Responsibility StatementPursuant to Section 217 (2AA) of the CompaniesAct, 1956, the Board of Directors of the Companyhereby confirm that:

7.1 In preparation of the Annual Accounts, all theapplicable Accounting Standards have beenfollowed.

7.2 Proper accounting policies have beenselected & applied them consistently andmade judgments & estimates that arereasonable and prudent so as to give a true& fair view of the state of affairs of theCompany as at the end of the financial yearand of the profits of the Company for thatperiod.

7.3 Proper & sufficient care has been taken formaintenance of adequate accounting /Statutory records in accordance with theprovisions of the Companies Act, 1956, forsafeguarding the Assets of the Company andfor preventing / detecting fraud & otherirregularities.

7.4 Annual Accounts have been prepared on agoing-concern basis.

8.0 Technology Development Centers

The Company has two (2) TechnologyDevelopment Centers (TDCs’) at Silvassa in theUnion Territory of Dadra & Nagar Haveli and atChinchwad (Pune) in Maharashtra forConsumables and Equipment respectively, whichare recognized by the Department of Scientificand Industrial Research, Government of India.These TDCs’ continue to pursue their goals, withrenewed vigour, in terms of innovations,up-gradations, improvements and cost reductions.These TDCs’ regular ly interact with themarket / users for improving the competitivefeatures and performances of the Company’sproducts.

9.0 Directors

9.1 During the FY 2009-10 Mr. J. N. Hinduja retiredfrom the Board on attaining superannuationat the age of 65 years on 30th March, 2010,and thus ceased to be a Director of theCompany.

Mr. J. N. Hinduja was appointed on28th March, 2005 and was on the Board of theCompany for 5 years. We are grateful for hisvaluable advice & guidance and appreciatehis contributions towards the Company’sgrowth and prosperity.

9.2 Mr. A.T. Malkani, Mr. D.A.Lalvani andMr. P. K.Gupta, Directors of the Company, retireby rotation, as per the Articles of Associationof the Company and are eligible for re-appointment.

9.3 The Board of Directors has received Form DD-A from all the above named Directors, asprescr ibed under the CompaniesDisqualification of Directors (under Section274(1)(g) of the Companies Act, 1956) Rules,2003, informing the Company that they arenot disqualified under Section 274(1)(g) of theCompanies Act, 1956.


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11

10.0 Fixed Deposits

The Company has neither accepted nor renewedFixed Deposits in the financial year 2009-10.

11.0 Insurance

The properties / assets of the Company areadequately insured.

12.0 Energy Conservation, Technology Absorption &Foreign Exchange

The information required under Section 217 (1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in Report ofthe Board of Directors) Rules, 1988 with respectto conservation of energy, technology absorption& foreign exchange earnings / outgo isappended hereto as Annexure - I and forms partof this report.

13.0 Corporate Governance

As per the Listing Agreements executed with theStock Exchanges, the Company has beenfollowing the Corporate Governance Code fromthe financial year 2001–02 onwards. The Companyhas successfully complied with all therequirements of the Corporate Governance asper Clause 49 of the Listing Agreement and aseparate Report is attached herewith to thisReport as Annexure - II.

The Corporate Governance ComplianceCertificate obtained from M/s. Dalal & Shah,Chartered Accountants, Mumbai, the StatutoryAuditors of the Company, is also attached to thisReport

The Management Discussion and Analysis Report,as mandated under the Code of CorporateGovernance, is also attached to the Directors’Report as Annexure - III.

14.0 Auditor’s Report

There are no qualifications contained in theAuditor’s Report & therefore there are no furtherexplanations to be provided for in this Report.

15.0 Auditors

The Company’s Statutory Auditors M/s. Dalal &Shah, Chartered Accountants, Mumbai, retire andare eligible for re-appointment.

16.0 Employees

16.1 The industrial relation in all the Plants andOffices of the Company continues to beharmonious, cordial and peaceful.

16.2 The information required in terms of Section217 (2A) of the Companies Act, 1956, readwith Companies (particulars of Employees)Rules, 1975, forms part of this report. However,as per the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, this AnnualReport is being sent to all the Members ofthe Company excluding the said statementof particulars of Employees (which isavailable for inspection by any Member atthe Registered Office of the Companyduring working hours upto the date of theAnnual General Meeting). Any Memberinterested in obtaining a copy of the saidstatement may write to the CompanySecretary at the Registered Office of theCompany.

16.3 The manpower strength of the Companyas at the date of this report is 698.

17.0 Acknowledgement

Your Directors take this opportunity to place onrecord their warm appreciation for the invaluablecontribution given and the spirit of dedicationshown by the employees at all levels during thefinancial year 2009-10. The Directors also expresstheir deep gratitude for the business assistance,co-operation and support extended to yourCompany by its Customers, Distributors, Dealers,Suppliers / Service Providers, Bankers, variousGovernment Organisations / Agencies, Employees& Shareholders and look forward to theircontinued support and co-operation in future also.

For and on behalf of the Board

Place: Mumbai A. B. Advani

Date: 29th May, 2010 Executive Chairman

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12

ANNEXURE I - TO THE DIRECTORS’ REPORTDISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS & OUTGO AS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS INTHE BOARD OF DIRECTORS’ REPORT) RULES, 1988.

A) Conservation of Energy

The Company is not covered under the list of Specified Industries. However, the required energy conservationmeasures have already been taken to ensure optimum power consumption to the extent necessary. All theConsumable Plants of the Company have been certified by DNV for EMS 14000 Standards Compliance. Allthe Plants of the Company also adhere to the guidelines of the MPCB/CPCB.

B) Technology Absorption

The Disclosure of particulars with respect to Absorption of Technology, Research & Development (R&D) isgiven below as per the prescribed format in Form B:

FORM B

a) Research and Development (R&D)

1.0 Specific areas in which R&D is carried out by the Company

1.1 Manual Metal Arc Welding Electrodes and Consumables

(a) Special Purpose Electrodes for critical applications.

(b) Welding Fluxes for special / critical applications.

1.2 New range of Welding Equipment

1.3 Welding Automation Products and Systems.

1.4 Alternators for Power Generators.

2.0 Benefits derived as a result of the above R&D

2.1 Customised application oriented products.

2.2 Import substitution of products.

2.3 Updation in product quality.

2.4 Development of new products.

2.5 Cost reduction in the existing range of products.

2.6 Enlarged choices for customers in Welding Consumables and Equipment

2.7 Standardization of input materials.

3.0 Future Plan of Action

3.1 Continuous updating of the existing equipment, consumable ranges and technologies.

3.2 Introduce additional product features to meet customers’ specific needs.

3.3 Introduce new product and manufacturing process technologies of International Standards.

3.4 Continuously improve the performance efficiency of existing products.

3.5 Continue to work on reduction of cost of products and develop customized products for domestic& overseas markets.


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13

4.0 Expenditure on R&D

4.1 Capital Rs. 0.01 Crore (Rs. 0.01 Crore)*

4.2 Recurring Rs. 1.47 Crore (Rs. 0.78 Crore)*

4.3 Total Rs. 1.48 Crore (Rs. 0.79 Crore)*

4.4 Total R&D expenditure as a % of total Turnover 0.56% (0.35%)*

b) Technology Absorption, Adaptation and Innovation

1.0 Efforts in brief made towards the technology absorption, adaptation and innovations:

The Company has made rigorous efforts on improvements in designs through innovations, materialsubstitutions, process improvements and import substitutions.

2.0 Benefits derived as a result of the above effort:

The Company’s above efforts have resulted in several benefits - i.e. product improvement &development for giving user-friendly products to the customers and substitution of imported productsby indigenous products.

3.0 Technology imported during the last 5 years: NIL

C) Foreign Exchange Earnings and Outgo

The information on foreign exchange earnings and outgo is given below:

Foreign exchange earnings: Rs. 24.82 Crore (Rs.32.76 Crore)*

Foreign exchange outgo: Rs. 15.30 Crore (Rs.13.78 Crore)*

(*Figures in bracket indicate previous year).

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14

CORPORATE GOVERNANCE REPORTThe detailed Report on Corporate Governance, as per the format prescribed by SEBI and incorporated inClause 49 of the Listing Agreement, is set out below. In this report, we confirm the compliance of the CorporateGovernance criteria as required under the revised Clause 49 of the Listing Agreement.

A) MANDATORY REQUIREMENTS

1) Company’s Philosophy on the Code of Corporate Governance

The Company believes that sound corporate practices based on transparency, accountability and highlevel of integrity in the functioning of the Company is essential for the long term enhancement of theshareholders / stakeholders value & interest. The Company believes that its actions must result in enhancingcorporate performance by maximizing shareholders / stakeholders value and also result in motivated workforce. We, as a Company, have always focused on good Corporate Governance practices, which is a keydriver of sustainable corporate growth and long-term value creation for our shareholders / stakeholders.

2) Board of Directors

Composition, Number of Meetings held and Attendance:

The strength of the Board of Directors was twelve (12) consisting of two (2) Executive/ Whole-timeDirectors and ten (10) Non-Executive Directors till 30th March, 2010.

The Meetings of the Board of Directors are generally held at the Registered Office of the Company inMumbai. The Meetings are scheduled well in advance and the notice of each Board Meeting is given inwriting to each Director about 8 to 10 weeks before the scheduled date of the Meeting. The Board ofDirectors meets, generally once in a quarter, primarily to review the quarterly performance and financialresults of the Company amongst other things.

The Company Secretary in consultation with the Executive Chairman and the Managing Director preparesdetailed agenda for the Board Meetings. All the necessary papers along with annexures, explanatorynotes etc., if any, are circulated along with the agenda to all the Directors about 7 to 10 days inadvance. The Board Members are also free to recommend inclusion of any other matter in the agendafor discussion in the Board Meeting.

During the financial year 2009-10 under review, four (4) Board Meetings were held i.e. on 30th May 2009,30th July 2009, 31st October 2009, and 30th January 2010.

The composition of the Board of Directors, attendance at the Board Meetings held during the year andat the last Annual General Meeting, number of Directorships in other Companies and Memberships ofcommittees across various other Companies in which the Director is a Member / Chairman are givenbelow:

Sr. Name of the Director Category of Financial Year 2009 - 10 As on March 31, 2010No. Directorship Attendance at

Board Last AGM No. of other Committee PositionsMeetings (held on 30th Director- No. of Chairman

July, 2009) ships # Memberships @

1 Ms. A. B. Advani Executive 4 Present 3 NIL NIL

2 Mr. Raman Kumar Executive 4 Present NIL NIL NIL

3 Mrs. N. Malkani Nagpal Non-Executive 3 Present 3 2 1

4 Mr. R. A. Mirchandani Non-Executive 4 Present 2 NIL NIL

5 Mr. A. T. Malkani Non-Executive 3 Present 2 NIL NIL

ANNEXURE II - TO THE DIRECTORS’ REPORT

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6 Mr. D. A. Lalvani Non-Executive 4 Present 2 NIL NIL

7 Mr. Anil Harish Independent &Non-Executive 3 Present 13 6 4

8 Mr. M. K. Maheshwari Independent &Non-Executive 3 Present 6 4 NIL

9 Mr. P. K. Gupta Independent &Non-Executive 4 Present NIL NIL NIL

10 Mr. R. N. Sapru Independent &Non-Executive 4 Present NIL NIL NIL

11 Mr. K. Digvijay Singh Independent &Non-Executive 4 Present NIL NIL NIL

12 Mr. J. N. Hinduja* Independent &Non-Executive 4 Present NIL NIL NIL

# Excludes Directorships in Foreign Companies, Private Limited Companies and Charitable Companies,if any.

@ Memberships in Audit Committee and Shareholders/ Investors Grievance Committee.* Retired / superannuated on 30th March, 2010.

None of the Directors is a Member of more than ten (10) Board Committees or a Chairman of more thanfive (5) such Committees as required under the Clause 49 of the Listing Agreement. The same is alsoevidenced from the above table.

None of the above-referred Independent Directors have any material pecuniary relationship ortransactions with the Company, its Promoters or with its Management, which would affect theindependence or judgement of the Directors. The Company has also not entered into any materiallysignificant transactions with its Promoters, Directors or their relatives or with the Management etc. thatmay have potential conflict with the interest of the Company at large.

The following information is generally provided to the Board of Directors:

• Annual operating plans & budgets and any updates thereon.

• Capital budgets and any updates thereon.

• Quarterly unaudited financial results of the Company and its operating divisions or business segments.

• Minutes of Meetings of Audit Committee and other committees of the Board.

• The information on recruitment and remuneration of senior officers just below the Board level.

• Show cause, demand, prosecution notices and penalty notices, which are materially important.

• Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.

Sr. Name of the Director Category of Financial Year 2009 - 10 As on March 31, 2010No. Directorship Attendance at

Board Last AGM No. of other Committee PositionsMeetings (held on 30th Director- No. of Chairman

July, 2009) ships # Memberships @

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• Any material default in financial obligations to and by the Company, or substantial non-payment ofgoods sold by the Company.

• Any issue, which involves possible public or product liability claims of substantial nature, includingany judgement or order which, may have passed strictures on the conduct of the Company ortaken an adverse view regarding another enterprise that can have negative implications on theCompany.

• Details of any joint venture or Collaboration Agreement.

• Transactions that involve substantial payment towards Goodwill, Brand Equity or Intellectual Property.

• Significant labour problems and their proposed solutions. Any significant development in HumanResources / Industrial Relations front like signing of wage agreement, implementation of VoluntaryRetirement Scheme etc.

• Sale of material nature, of investments, subsidiaries, assets, etc. which is not in the normal course ofthe business.

• Quarterly details of Foreign Exchange exposures and the steps taken by Management to limit therisks of adverse exchange rate movement, if material.

• Non-compliance of any regulatory, statutory or Listing requirements and shareholders service suchas non-payment of dividend, delay in share transfer etc.

• Risk assessment of the business.

The Board of Directors is routinely provided with all the information under the above referred heads,whenever applicable and materially significant. These are submitted either as a part of Agenda papersor are tabled in the course of the Board Meeting.

Code of Conduct:

The Board of Directors has laid down / adopted a Code of Conduct for all the Board Members andSenior Management of the Company. The Code of Conduct has also been posted onto the website ofthe Company – www.adorwelding.com. All the Board Members and Senior Management personnelhave affirmed compliance with the Code of Conduct for the financial year 2009 – 10.

3) Audit Committee

Broad Terms of Reference:

The Committee reviews and ensures that financial statements are correct, sufficient and credible with referenceparticularly to the requirements as enumerated under Clause 49 of the Listing Agreement, to the extentapplicable.

In order to effectively discharge their responsibility, the Audit Committee Members have been empowered:

• To investigate any activity within its terms of reference.

• To seek information from any employee of the Company.

• To obtain outside legal or other professional advice.

• To secure attendance of the outsiders with relevant expertise, if it considers necessary.

• To invite Statutory / Internal Auditors for meetings / discussions.


During the financial year 2009-10 under review, four (4) Audit Committee Meetings were held on 30th May,2009, 30th July 2009, 31st October 2009, and 30th January 2010.

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17

On 30th May, 2009, the Audit Committee was reconstituted by the Board of Directors by inductingMrs. N. Malkani Nagpal in place of Mr. R. A. Mirchandani. Mrs. N. Malkani Nagpal, aged 39, has done herMasters Degree in Business Administration (MBA) with specialization in Finance. She has been associatedwith the Company for over thirteen (13) years and has been on the Board of Directors since 1997.

On 31st October, 2009, the Board of Directors of the Company inducted Mr. K. Digvijay Singh as an AdditionalMember of the Audit Committee. Mr. K. Digvijay Singh, 51, is a Member of the top management team atNimbus Sport. He is an Economics (Honours) graduate of Delhi University from St. Stephens’ College, Delhi,India and Business Management post-graduate from XLRI, Jamshedpur, Jharkhand, India.

As Mr. Anil Harish had expressed his inability to attend the Meeting held on 30th January, 2010 the Committeeelected Mr. M. K. Maheshwari as its Chairman for that Meeting. Mr. M. K. Maheshwari is 53 years of age and isa second-generation entrepreneur with interests in the Information Technology, Marketing and ChemicalIndustries. He is a graduate from the Bombay University with a major in Chemistry and has done his postgraduation in Industrial Management. Mr. Maheshwari’s work experience encompasses the projectmanagement, production, marketing, financial and general management areas of medium sized companiesand is on the Board of several Public and Private Limited Companies as an Executive and IndependentNon-Executive Director.

The Company Secretary acts as the Secretary of the Audit Committee.

It is the prerogative of the Audit Committee to invite Senior Executives, whom it considers appropriate to bepresent at the Meeting. Almost in all the Audit Committee Meetings, Senior Executives and Auditors of theCompany were invited.

The composition of the Audit Committee and attendance at its Meetings is given hereunder:

Sr. Name of the Position Category Attendance duringNo. Director Member the FY 2009-10

1 Mr. Anil Harish Chairman Independent & Non - Executive Director 3

2 Mrs. N. Malkani Nagpal** Member Non - Executive Director 3

3 Mr. R. A. Mirchandani* Member Non - Executive Director 1

4 Mr. M. K. Maheshwari Member Independent & Non - Executive Director 3

5 Mr. K. Digvijay Singh*** Member Independent & Non - Executive Director 2

* Till 30th May, 2009** From 30th May, 2009*** From 31st October, 2009

The Minutes of each of the Audit Committee Meeting are placed before the Board of Directors anddiscussed in the Board Meeting.

4) Remuneration Committee


The Committee is vested with all the necessary powers and authority to ensure appropriate disclosure on theRemuneration of Directors and to deal with all the elements of the Remuneration package of all theDirectors including but not restricted to the following:

• To review, assess and recommend the appointment and remuneration of the Wholetime Directors.

• To review the remuneration package including the retirement benefits, payable to the Directors periodicallyand recommend suitable revision / increments, whenever required, to the Board of Directors.

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18

Composition, Number of Meetings held and Attendance:During the financial year 2009 - 10 under review, one (1) Remuneration Committee Meeting was held on30th May, 2009.

On 30th May, 2009 the Remuneration Committee was reconstituted by the Board of Directors by inductingMr. R. A. Mirchandani in place of Mr. D. A. Lalvani. Mr. R. A. Mirchandani is a Commerce Graduate and has aMasters Degree in Business Administration (MBA) from The Queensland University of Technology, Australia. Heis presently working as the Managing Director of M/s. Cryolor Asia Pacific Pvt. Ltd, Chennai, Tamil Nadu, India.

The Company Secretary acts as the Secretary of the Remuneration Committee.

The composition of the Remuneration Committee and attendance at its Meetings is given hereunder:

Sr. Name of the Position Category Attendance duringNo. Director Member the year FY 2009-10

1 Mr. M. K. Maheshwari Chairman Independent & Non - Executive Director 1

2 Mr. Anil Harish Member Independent & Non - Executive Director 1

3 Mr. D. A. Lalvani* Member Non - Executive Director 1

4 Mr. R. A. Mirchandani^ Member Non - Executive Director NA

*Till 30th May,2009.^w.e.f. 30th May, 2009.

Remuneration to the Executive Directors:The remuneration of the Whole-time / Executive Director/(s) is decided by the Remuneration Committeebased on the criteria such as industry benchmarks, the Company’s performance vis-à-vis the Industryperformance / track record of the Whole-time / Executive Director/(s) and the same is reported to the Boardof Directors. The Company pays remuneration by way of salary, perquisites & allowances (fixed component)to all its Whole-time / Executive Directors and commission (variable component) to Whole-time / ExecutiveDirectors at a maximum of 1% of the net profits of the Company as specifically computed for this purpose asper the provisions of the Companies Act 1956 (as amended from time to time) such that the total remuneration(including commission / ex-gratia / bonus) as decided by the Board in its absolute discretion, does notexceed the limits prescribed under section 198 and 309 of the Companies Act, 1956. Annual increments aredecided by the Remuneration Committee within the salary scale / terms of remunerations approved by theShareholders at the Annual General Meeting and are effective as per their individual Agreements.

Remuneration to the Non-Executive Directors:The Non-Executive Directors are paid a Commission upto a maximum of 1% of the net profits of the Companyas specifically computed for this purpose as per the provisions of the Companies Act 1956 (as amendedfrom time to time). The Non-Executive Directors are also paid a sitting fee of Rs.10,000/- for attending everyMeeting of the Board of Directors, Rs.8,000/- for attending every Meeting of the Audit Committee, Rs.5,000/- forattending every Meeting of the Shareholders / Investors’ Grievance Committee and Rs.5,000/- for attendingevery Meeting of the Remuneration Committee.

The details of the remuneration paid / payable to all the Directors during the Financial Year 2009 –10 is givenbelow: -

(Rupees in lacs)

Sr. Name of the Director Salary Benefits Commission Sitting TotalNo. (perquisites) Fees @

1 Ms. A. B. Advani 57.22 2.80 36.79 _ 96.81

2 Mr. Raman Kumar 86.10 0.55 36.79 _ 123.44

3 Mrs. N. Malkani Nagpal _ _ 3.68 0.74 4.42

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19

4 Mr. R. A. Mirchandani _ _ 3.68 0.92 4.60

5 Mr. A. T. Malkani _ _ 3.68 0.74 4.42

6 Mr. D. A. Lalvani _ _ 3.68 0.97 4.65

7 Mr. J. N. Hinduja* _ _ 3.68 0.40 4.08

8 Mr. Anil Harish _ _ 3.68 0.59 4.27

9 Mr. M. K. Maheshwari _ _ 3.68 0.59 4.27

10 Mr. P. K. Gupta _ _ 3.68 0.40 4.08

11 Mr. R. N. Sapru _ _ 3.68 0.40 4.08

12 Mr. K. Digvijay Singh _ _ 3.68 0.56 4.24

TOTAL 143.32 3.35 110.38 6.31 263.36

* Retired / Superannuated on 30th March, 2010.@ As Member / Invitee, wherever applicable.

Notes:

• The Agreement with the Executive Chairman is for a period of Five years. Either party to the Agreementis entitled to terminate the Agreement by giving notice as mentioned in their agreement to the otherparty.

• The Agreement with the Managing Director is for a period of Three years. Either party to the Agreementis entitled to terminate the Agreement by giving notice as mentioned in their agreement to the otherparty.

• According to the Articles of Association of the Company all the Directors, except the Managing Director,retire by rotation.

• Presently, the Company does not have any stock option scheme or performance linked incentive schemefor its Directors (other than the Commissions / Bonus payable to them as explained in above paragraphs).

5) Shareholders / Investors’ Grievance Committee


The Shareholders / Investors’ Grievance Committee of the Board looks into the redressal of investors’ complaintslike non-receipt of Annual Report, dividend payments etc. and matters related to share transfers, issue ofduplicate share certificates, de-materialisation / re-materialisation of shares, transfer / transmission of shares,other allied transactions and also delegates necessary powers to the executives of the Company to processtransfers etc.

The status on various complaints received and replied is also reported to the Board of Directors as anAgenda item in every Board Meeting.


During the financial year 2009–10 under review, four (4) Shareholders/ Investors Grievance Committee Meetingswere held on 29th April 2009, 30th July 2009, 30th October 2009, and 28th January 2010.

(Rupees in lacs)

Sr. Name of the Director Salary Benefits Commission Sitting TotalNo. (perquisites) Fees @

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20

Mr. D. A. Lalvani was elected as the Chairman of the Committee in the meeting of Shareholders / InvestorsGrievance Committee held on 30th July, 2009. Mr. D. A. Lalvani is a Commerce Graduate, from HR College ofCommerce, Mumbai, India with a distinction in Marketing and Advertising. He has done his Masters inCommerce (M.Com.) with specialisation in Accounting. He has also done courses on International BusinessStrategy and Business Analysis & Valuations at London School of Economics, UK and also in Financial Planning& Basics in Derivatives. He has completed his MBA from Manchester Business School, UK. He has worked withLangham Capital, London (financial advisory firm focusing on M&A), DHL Europe & Penny – on (UK) (anNGO). He has hands on experience of over seven (7) years with many reputed National & International firms.

The composition of the Shareholders / Investors Grievance Committee and attendance at its Meetings isgiven hereunder:

Sr. Name of the Position Category Attendance duringNo. Director Member the FY 2009-10

1 Mr. D. A. Lalvani Chairman Non - Executive Director 4

2 Mrs. N. Malkani Nagpal Member Non - Executive Director 4

3 Mr. R. A. Mirchandani Member Non - Executive Director 4

4 Mr. A. T. Malkani Member Non - Executive Director 4

The Minutes of each of the Shareholders / Investors’ Grievance Committee Meeting are placed before theBoard of Directors and discussed in the Board Meeting.

Compliance Officer:

Mr. V. M. Bhide, the Company Secretary, has been designated by the Board of Directors as the ComplianceOfficer.

Details of shareholder’s complaints received & replied and the status on pending share transfers is givenbelow:

The total number of complaints received and replied to the satisfaction of the shareholders during thefinancial year 2009 – 10 was Twentythree (23).

There were no outstanding complaint/s as on 31st March, 2010.

There are no pending share transfers in physical as well as in demat category. All the requests received upto31st March, 2010 for share transfers have been processed by the Registrar & Share Transfer Agent of theCompany.

The Statement of Directors Shareholding is as under:

Sr. No. Name of the DirectorShareholding

As on March 31, 2010 As on May 29, 2010

1 Ms. A. B. Advani 2,53,330 2,53,330

2 Mr. Raman Kumar 600 600

3 Mrs. N. Malkani Nagpal 57,352 57,352

4 Mr. R. A. Mirchandani 6,150 6,150

5 Mr. A. T. Malkani 1,04,975 1,04,975

6 Mr. D. A. Lalvani 11,961 13,461

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21

7 Mr. J. N. Hinduja* NA NA

8 Mr. Anil Harish – –

9 Mr. M. K. Maheshwari – –

10 Mr. P. K. Gupta – –

11 Mr. R. N. Sapru – –

12 Mr. K. Digvijay Singh – –

* Retired / superannuated on 30th March, 2010.

6) General Body Meetings

Location and time of the last three (3) General Meetings of the Company is given below:

Sr. No. Financial Year Date Location Time

1 2006-07 26th July, 2007 Walchand Hirachand Hall, Mumbai 04:00 pm

2 2007-08 29th July, 2008 Walchand Hirachand Hall, Mumbai 12:00 Noon

3 2008-09 30th July, 2009 Walchand Hirachand Hall, Mumbai 03:30 pm

The special resolution moved at the last Annual General Meeting was passed by show of hands unanimouslyby all the Members present at the Meeting and no special resolution was put to vote through postal ballot.

Dividend History:Sr. Financial Dividend Type Dividend Dividend Total PAT % of Div. to PATNo. Year % Outflow Tax outflow (Amt. Rs.

(Amt. Rs. Outflow (Amt. Rs. in lacs.)in lacs) (Amt. Rs. in lacs)

in lacs)

A B C D E F (E+F) = G H G/H (X) 100 = I

1 2009-10 60 Final $ 815.91 135.51 951.42 2,633.52 36.13

2 2008-09 40 Final 543.94 92.44 636.38 1,257.18 50.62

3 2007-08 80 Final 1,087.88 184.88 1,272.76 2,291.61 55.54

4 2006-07 120 Final 1,631.82 277.33 1,909.15 3,261.78 58.53

5 2005-06 150 Interim, Final & Special * 2,039.77 286.08 2,325.85 4,020.37 57.85

6 2004-05 80 Final & Special # 1,087.88 152.57 1,240.45 2,792.50 44.42

7 2003-04 25 Final 339.96 43.56 383.52 881.56 43.50

8 2002-03 25 Final 339.96 43.56 383.52 836.51 45.85

* Interim @ 50%, Final @ 50% & Special @ 50%

# Final @ 30% & Special @ 50%

$ subject to the approval by the Members at the ensuing AGM

Sr. No. Name of the DirectorShareholding

As on March 31, 2010 As on May 29, 2010

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22

7) Corporate Social Responsibilities

The Company, as a Corporate Citizen of the Country, is well aware of its social obligations. It has alwaysparticipated in social reformation activities mainly in the field of education and healthcare. It continuouslyparticipates to provide help to the needy ones for education, medical & natural disasters. The Companycontinues to support the various social causes on a need basis.

As a good Corporate Citizen, the Company pays all the taxes, Government dues, cess, duties etc. well ontime because it believes that payment of taxes and levies is a way of fulfilling its social responsibilities.

8) Disclosures

Materially significant related party transactions:

During the financial year 2009-10 under review, there were no materially significant related party transactionsof the Company with its Promoters, Directors or the Management, their subsidiaries or relatives etc. that hada potential conflict with the interest of the Company at large.

Details of non compliance by the Company, penalties, strictures imposed on the Company by the StockExchange or Securities and Exchange Board of India (SEBI) or any Authority on any matter related to capitalmarkets during the last three years:

The Company has generally complied with all the rules & regulations prescribed by the Stock Exchanges,SEBI and all other statutory authorities relating to the capital markets during the last three financial years. Nopenalties or strictures have been imposed by them on the Company.

9) Means of Communication

Half-yearly / Quarterly Financial Results - sent to each NoShareholders residence

In which Newspapers Quarterly / Half Yearly / Annual Results Business Standard – Englishare normally Published Mumbai Sakal – Marathi

Any website, where results or official news are displayed www.adorwelding.com

The presentations made to the Institutional Investors or to Analysts Yes, whenever required

Whether Management Discussion & Analysis Report is a part Yesof the Annual Report or not

10) General Shareholder InformationAnnual General Meeting

Day, Date and Time : Saturday 31st July, 2010 at 03.30 pm.

Venue : Walchand Hirachand Hall, Indian Merchant Chambers,Churchgate,Mumbai 400 020, Maharashtra, India.

Financial Year : 01st April, 2009 – 31st March, 2010

Book Closure Dates : Friday 23rd July 2010 to Saturday 31st July 2010

Dividend Payment Day and Date : By Thursday 05th August, 2010.

Financial Calendar for the : Financial Reporting (unaudited) for the quarter endingyear 2010 – 11 June 2010 – by 15th August, 2010

: Financial Reporting (unaudited) for the quarter endingSeptember 2010 – by 15th November, 2010

: Financial Reporting (unaudited) for the quarter endingDecember 2010 – by 15th February, 2011

: Financial Reporting (audited) for the year endingMarch 2011 – by the end of May 2011.

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23

50

100

150

200

250

Mar-10Feb-10Jan-10Dec-09Nov-09Oct-09Sep-09Aug-09Jul-09Jun-09May-09Apr-090

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

COMPANY SHARE PRICE WITH MONTHLY HIGH & LOW V/S BSE SENSEX

High Low Bse Index

Listing :

The name of the Stock Exchanges on which the Company’s securities are listed and the Company’scorresponding Stock Code is given below:

Sr. No. Name of the Stock Exchange Stock Code

1 The Bombay Stock Exchange Limited (BSE), Mumbai 517041

2 The National Stock Exchange of India Limited (NSE), Mumbai ADORWELD

Market Price Data:

High / Low during each month of the last financial year 2009 - 10 is given hereunder

Month High Low No. of Shares No. of Trades

April, 2009 131.00 81.00 1,42,069 3,162

May, 2009 158.60 110.00 2,12,602 3,906

June, 2009 148.00 122.00 95,388 1,852

July, 2009 148.00 107.00 63,141 1,461

August, 2009 150.00 121.00 68,142 1,552

September, 2009 179.85 132.75 6,58,728 10,341

October, 2009 172.30 133.00 11,75,493 16,984

November, 2009 177.90 125.30 8,68,210 14,545

December, 2009 218.60 157.00 60,35,809 78,803

January, 2010 221.90 161.00 11,30,033 20,276

February, 2010 200.00 167.55 24,82,065 38,664

March, 2010 192.50 166.60 5,05,173 11,078

Source – The Bombay Stock Exchange (BSE), Mumbai

Performance in comparison to broad based indices such as BSE Sensex

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24

Share Transfer Agents:

• The name of the Registrar and Share Transfer Agents (RTA) of the Company is ‘M/s Sharex Dynamic(India) Pvt. Ltd.’

• The share transfer for both physical and electronic (demat) segment is handled by the Company’s RTAM/s. Sharex Dynamic (India) Pvt. Ltd., at the following addresses:

Head Office Branch Office

17/B, Dena Bank Building, Unit No.1, Luthra Industrial Premises,2nd Floor, Andheri Kurla Road,Horniman Circle, Fort, Safed Pool, Andheri (E),Mumbai – 400 001, Mumbai – 400 072,Maharashtra, India. Maharashtra, India.Contact No. 022 22702483 Contact No. 022 28515606 / 28515644email: [email protected] email: [email protected]: www.sharexindia.com web: www.sharexindia.com

Share Transfer System:

Shares lodged for transfer at the RTA of the Company are normally processed within a period of fifteen (15)days from the date of lodgement, provided the documents are clear in all respects. All requests fordematerialisation of shares are processed and the confirmation is given to the depositories within fifteen (15)days. The Company Secretary and a couple of Senior Executives of the Company are empowered toapprove the share transfers. Grievances and other miscellaneous correspondence on change of address,bank mandates, etc. received from Members are generally processed either by the Investors ServiceDepartment or by RTA of the Company within seven (7) working days.

Distribution of shareholding as on 31st March, 2010:

Sr. No. Range of No. of % of total No. of % of totalShareholding shareholders shareholders shares held shareholding

1 1 - 100 9,087 50.60 5,09,385 3.75

2 101 - 200 3,943 21.95 6,28,347 4.62

3 201 - 500 3,987 22.20 11,65,507 8.57

4 501 - 1,000 530 2.95 4,16,791 3.06

5 1,001 - 5,000 334 1.86 6,70,476 4.93

6 5,001 - 10,000 37 0.21 2,73,412 2.01

7 10,001 - 1,00,000 34 0.19 11,40,335 8.39

8 1,00,001 and Above 8 0.04 87,94,214 64.67

T O T A L 17,960 100.00 1,35,98,467 100.00

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25

Shareholding pattern (category wise) as on 31st March, 2010:

Sr. No. Category No. of shares held % of total shareholding

1 Promoters 76,58,693 56.32

2 Mutual Funds 14,52,556 10.68

3 Banks / Financial Institutions 432 0.01

4 FIIs’ 27,947 0.21

5 NRIs / OCBs 4,63,178 3.40

6 Private Corporate Bodies 5,82,524 4.28

7 Resident Individuals & others 33,92,522 24.95

8 Clearing Members 20,615 0.15

T O T A L 1,35,98,467 100.00

Dematerialisation of shares and Liquidity:

• About 92.37% of the shares of the Company have been dematerialised as on 31st March, 2010.

• Trading in the shares of ADOR WELDING LIMITED is permitted only in dematerialised form with effect from08th May, 2000.

Statutory Compliance:During the financial year 2009-10 under review, the Company has generally complied with all the applicableprovisions, filed all returns, forms etc. & furnished all the relevant particulars as required under the CompaniesAct, 1956 and allied acts/rules, the Securities & Exchange Board of India’s (SEBI) Regulations and the ListingAgreements.

Outstanding GDR / ADR / Warrants or any convertible instruments, conversion date and its impact onequity: Nil

Plant Locations:The Company has the following manufacturing plants as of 31st March, 2010:

Chennai Plant Raipur Plant Silvassa PlantMelakottaiyur via Vandalur, Bilaspur Road, Industrial Estate, Survey No. 59/11/1, Khanvel Road,Chennai - 600 048. Raipur - 493 221. Opp. Gulf Oil, Masat, Silvassa – 396 230TAMIL NADU, INDIA CHATTISGARH, INDIA U. T. OF DADRA & NAGAR HAVELI, INDIA

Chinchwad Plant Pimpri PlantAkurdi, Chinchwad, Plot No. 54 & 55,Pune - 411 019. F-II Block, MIDC Pimpri,MAHARASHTRA, INDIA Pune - 411 018.

MAHARASHTRA, INDIA.

Address for Correspondence:

ADOR WELDING LIMITEDAdor House, 6 K. Dubash Marg,Fort, Mumbai - 400 001-16.MAHARASHTRA, INDIA.

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26

B) Non Mandatory Requirements

• Chairman of the Board:

The Company has an Executive Chairman and hence the requirement pertaining to reimbursement ofexpenses to a Non - Executive Chairman does not arise.

• Remuneration Committee:

The Company has a Remuneration Committee. Please refer paragraph 4 under Mandatory Requirements.

• Shareholder Rights:

As the Company’s financial results are published in English newspaper having a wide circulation all overIndia and in a Marathi newspaper widely circulated in Mumbai (Maharashtra), the same are not sent tothe shareholders of the Company, individually. The Company’s Quarterly / Half Yearly / Annual AuditedResults are also posted on to the Company’s website.

• Audit Qualifications :

There are no qualifications in the Auditor’s Report.

• Training of Board Members :

The necessary training will be provided to the Board Members as and when required.

• Mechanism to evaluate Non-Executive Board Members :

The Board of Directors does not feel the necessity of evaluating the performance of its Non-ExecutiveDirectors as of now.

• Whistle Blower Policy:

The Company has not formulated a Whistle Blower Policy as of now.

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27

ANNUAL CERTIFICATION BY MANAGING DIRECTORPURSUANT TO CLAUSE 49 I D (ii) OF THE LISTING AGREEMENT

As the Managing Director of Ador Welding Limited and as required pursuant to Clause 49 I D (ii) of the ListingAgreement, I hereby declare and certify that all the Board Members and Senior Management personnel of AdorWelding Limited have affirmed compliance with the Code of Conduct adopted by the Company for theFinancial Year 2009-10.

For ADOR WELDING LIMITED

Place: Mumbai Raman KumarDate: 29th May, 2010 MANAGING DIRECTOR

AUDITOR’S CERTIFICATE REGARDING COMPLIANCE OFCONDITIONS OF CORPORATE GOVERNANCE

To the Members ofAdor Welding Limited

We have examined the compliance of conditions of Corporate Governance by Ador Welding Limited, for the yearended 31st March 2010, as stipulated in Clause 49 of the Listing Agreement(s) of the said Company with stockexchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Company’s management. Ourexamination was carried out in accordance with the Guidance Note on Certification of Corporate Governance(as stipulated in Clause 49 of the Listing Agreement), issued by the Institute of Chartered Accountants of India andwas limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance ofthe conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statementsof the Company.

We certify that the Company has complied with the conditions of Corporate Governance as stipulated in theabove mentioned Listing Agreements.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiencyor effectiveness with which the management has conducted the affairs of the Company.

For Dalal & ShahFirm Registration No. :102021W

Chartered Accountants

Ashish DalalPartner

Mumbai, May 29, 2010 Membership No. :033596

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28

1.0 BUSINESS SCENARIO

The year saw the Company achieve a growth ofaround 17% over last year. The over all marketopportunities were better as compared to theearlier year. The Indian Economy grew at anannual GDP rate of around 7%. The Companycould achieve a better PBT from theunprecedented sales volume growth and strongcost control measures undertaken. The stable steelprices also contributed to some extent. TheCompany successfully followed high impactstrategies which included conserving cash, drivingdown the cost of goods sold, getting closer tocustomers and improving per employeeproductivity.

The economy in the Current Year is expected tocontinue to gradually improve and is expectedto attain a reasonable GDP growth level by theHY2 of this year. The emphasis on acceleratinginfrastructure growth is a good augury for ourbusiness and we are fully geared to meet therequirements.

The new submerged – Arc Flux Line has beencommissioned which will substantially improve ourbusiness of consumables in the current year. TheCompany is also in the process of introducingseveral new products which will generate asizeable turnover in the coming years. Theadditional investments in the coming year in R &D and manufacturing facilities will help us growour business substantially.

2.0 SEGMENTWISE PERFORMANCE

This is already detailed in the Directors’ Report,under para 3.0.

3.0 PERFORMANCE SNAP SHOT

The year was marked by efforts to have profitablerevenue streams sustainable over the years. Sellingand manufacturing efficiencies led to healthyprofit growth of 69%. Total operating revenues forthe year reported a growth of 17%. The totalconsumable business for the year was Rs.196 croreregistering a growth of about 19% over theprevious year. The Equipment business wasRs.64.73 crore registering a growth of about 10%over the previous year.

ANNEXURE III - TO THE DIRECTORS’ REPORT

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The total operating cost excluding depreciationand interest was Rs.214.79 crore for theFY 2009-10 compared to Rs.189.10 crore for FY2008-09. The ratio of the operating cost to totalsales works out to 82% for FY 2009-10 as against84.5% for FY 2008-09. The PBT was Rs.36.90 crorefor FY 2009-10 compared to Rs. 21.83 crore for FY2008-09, an increase of 69%. The ratio of PBT tosales is 14.15% for FY 2009-10 compared to 9.75%for FY 2008-09.

The establishment of ERP, has strengthened ourfinancial and accounting management systems.The Company has been able to take advantageof its ERP stabilization to focus on reducing costinefficiencies.

The Company has a very good compliance trackrecord with all legal and statutory entities in thecountry, and there is a regular audit mechanismto ensure that the Company does not violateany of the legal or statutory provisions applicableto the Company or Industry.

An overview of the financial performance isalready given in the main Directors’ Report. TheAudit Committee constituted by the Board ofDirectors periodically reviews the financialperformance and reporting systems.

4.0 WORKING CAPITAL & LIQUIDITY

The Company continues to be DEBT FREE as on31st March, 2010 and has a very sound financialmanagement system. The working capitalinvestment (net current assets including currentinvestment) increased by Rs. 25.87 crore, anincrease of 64%. The liquidity of the Companyreflected in the cash and bank balances andcurrent investments increased by Rs.16.62 crores(from Rs.7.47 crore at the end of FY 2008-09 toRs.24.09 crore at the end of FY 2009-10).

5.0 MANUFACTURING

The Company has commissioned the Saw FluxLine at Chennai which will help in increasing thebusiness from Flux and Wire. The FCAW productionline has stabilized for consistent and capacityproduction for a range of FCAW products.The manufacturing facilities at all the units

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29

undertook specific projects to improve in thecritical areas of Cost, Quality and Delivery. Animportant cost reduction programme undertakenduring the year was in the area of manufacturingexpenses wherein significant savings wereachieved.

6.0 NEW CAPITAL INVESTMENT & NEW PRODUCTS

The Company plans to spend around Rs.15 croresin the coming year in upgrading themanufacturing facility and R&D.

The Company is currently working on manyinteresting projects, at the instance of keycustomers – in the areas of nuclear power, fossilpower plants with lower emissions, hightemperature and creep resistant propertiesconsumables, low-cost automation solutionsfor accelerating power equipment deliverycycles, more efficient and reliable steelconstruction for the infrastructure sector andmodern production lines for shipyards andoffshore fabrication yards.

The Company continues to invest in significantresources in R&D. The R&D expenditure isexpected to go up substantially in the comingyear.

7.0 OUTLOOK, CONCERNS & RISKS – and ourRESPONSE

Welding will play a vital role in the growth ofinfrastructure of our country be it Railways, Bridges,Power Plants, Refineries, Shipyards or Pipe Lines.At least 100 industries are involved in projectsrelated to welding activities. Major projects indiversified sectors like Steel, Power, Chemicals,Railways, etc. promise a lot, in terms of growth, inWelding Industries in India. This will further boostthe market size of Rs. 2,500 crores of WeldingIndustry. Indian Welding Market will have extensiveuse for stainless steel solid & FCAW wires and otherspecial consumables. Similarly potential forwelding equipment, and low cost as well as high-end automation aids to speed-up weldingproductivity will provide many opportunitiesfor growth. With an estimated investment ofRs.40,000 crores in infrastructure in GovernmentPlan, welding industry in general and theCompany in particular is gearing up to meet thechallenges.

The Competition meanwhile continues to be

challenging. More international players areestablishing bases in India. With globalisation ofthe Indian market, the Company has also takensteps to develop partnerships with global experts,academicians and engineers to expand ourtechnology base, product portfolio and markets.Our technical experts constantly participate invarious welding forums, seminars, exhibitions inIndia and abroad.

The major challenges faced by local market isthe unorganised imports of welding products,specifically equipment of non-standardspecifications and safety aspects. This is over &above the unequal competition from thedomestic unorganized sector in the mass marketproducts. The other challenge will be instability insteel prices and currency exchange rates.

8.0 INTERNAL CONTROL SYSTEMS AND THEIRADEQUACY

The Company believes that internal control isinherent to the principle of governance, andfreedom of Management should be exercisedwithin the framework of appropriate checks andrestraints.

The Company has a reasonable system of internalcontrol comprising of authority level & power,supervision, checks and balances, planning &procedures. The system is reviewed and updatedon an on going basis.

These systems cover the following aspects ofbusiness process and reporting.

• Financial propriety of business transactions

• Accurate reporting of the financialtransactions as per the applicableAccounting Standards

• Efficient use and protection of resources ofthe Company

• Compliance with the established Companypolicies, guidelines and statutes.

The Company has in place a well defined InternalAudit System whereby an internal audit ofprocesses and operating data is performedacross all units of the Company and results of

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30

the audit findings are reviewed by the AuditCommittee. Internal Audits help to test theadequacy, effectiveness and adherence to allinternal controls laid down by the Managementand suggest improvements, if any. The AuditCommittee, consisting of Independent Directors,reviews the Internal Audit Reports and offersnecessary guidance with respect to theadequacy and scope of the Internal Audits.

The Company has upgraded its ERP system forSCM functions-the ORACLE e-Business Suiteversion to 12.0.6. It is our resolve to use the ERPsystem to substantially improve the SCM functionin our manufactur ing operations with theobjective to improve the effectiveness of our CostReduction mission and the efficiency & integrityof financial reporting, for improved decisionmaking.

9.0 MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The Company firmly believes that the employeesare its key assets. It is our constant endeavour to

keep sharpening these assets and enable themdeliver the growth objectives. Initiatives from HRDare built around programmes that providelearning, training, skil l upgrades and raisemotivational levels to stimulate performanceswhich are best in class. Controlling the attritionof trained personnel to expanding marketemployment opportunities is also of pr imeconcern to us.

Safety and health of employees is a major areaof focus for the HRD. At all manufacturing plantsthe process to certify under OHSAS 18001 hasbeen completed. Certifications for ISO 14001-2004are meticulously maintained through regularaudits.

The Company continues to have harmoniousrelations with all its employees at all the locations.The employee strength as of 31st March, 2010was 705.

Disclaimer :

The information and opinion expressed in this section of the Annual Report may contain certain forward lookingstatements, which the Management believes are true to the best of its knowledge at the time of its preparation.The Company and the Management shall not be held liable for any loss, which may arise as a result of anyaction taken on the basis of the information contained herein.

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31

AUDITORS’ REPORT TO THE MEMBERS

1. We have audited the attached Balance Sheet ofADOR WELDING LIMITED, as at 31st March, 2010, andthe related Profit and Loss Account and Cash FlowStatement for the year ended on that dateannexed thereto, which we have signed underreference to this report. These financial statementsare the responsibility of the Company’smanagement. Our responsibility is to express anopinion on these financial statements based onour audit.

2. We conducted our audit in accordance with theauditing standards generally accepted in India.Those Standards require that we plan and performthe audit to obtain reasonable assurance aboutwhether the financial statements are free ofmaterial misstatement. An audit includesexamining, on a test basis, evidence supportingthe amounts and disclosures in the financialstatements. An audit also includes assessing theaccounting pr inciples used and significantestimates made by management, as well asevaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report)Order, 2003, as amended by the Companies(Auditor’s Report) (Amendment) Order, 2004, issuedby the Central Government of India in terms ofsub-section (4A) of Section 227 of ‘The CompaniesAct, 1956’ of India (the ‘Act’) and on the basis ofsuch checks of the books and records of theCompany as we considered appropriate andaccording to the information and explanationsgiven to us, we give in the Annexure a statementon the matters specified in paragraphs 4 and 5 ofthe said Order.

4. Further to our comments in the Annexure referredto in paragraph 3 above, we report that:

(a) We have obtained all the information andexplanations, which to the best of our knowledgeand belief were necessary for the purposes of ouraudit;

(b) In our opinion, proper books of account as requiredby law have been kept by the Company so far asappears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account andCash Flow Statement dealt with by this report arein agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow Statement dealt with bythis report comply with the accounting standardsreferred to in sub-section (3C) of Section 211 ofthe Act;

(e) On the basis of written representations receivedfrom the directors, as on 31st March, 2010 and takenon record by the Board of Directors, none of thedirectors is disqualified as on 31st March, 2010 frombeing appointed as a director in terms of clause(g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our informationand according to the explanations given to us,the said financial statements together with thenotes thereon and attached thereto, give in theprescribed manner, the information required by theAct and give a true and fair view in conformitywith the accounting principles generally acceptedin India:

(i) in the case of the Balance Sheet, of the stateof affairs of the Company as at 31st March2010;

(ii) in the case of the Profit and Loss Account, ofthe Profit for the year ended on that date;and

(iii) in the case of the Cash Flow Statement, of thecash flows for the year ended on that date.

For Dalal & ShahFirm Registration No.: 102021W


Ashish DalalPartner

Mumbai, 29th May,2010 Membership No.: 033596

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32

i. (a) The Company is maintaining proper recordsshowing full particulars, including quantitativedetails and situation, of fixed assets.

(b) The fixed assets are physically verified by theManagement according to a phasedprogramme designed to cover all the itemsover a period of 3 years which, in our opinion,is reasonable having regard to the size of theCompany and the nature of its assets. Pursuantto the programme, a portion of the fixed assetshas been physically verified by theManagement during the year and no materialdiscrepancies between the book records andthe physical inventory have been noticed.

(c) In our opinion and according to the informationand explanations given to us, a substantial partof fixed assets has not been disposed of by theCompany during the year.

ii. (a) The inventory has been physically verified bythe Management during the year. In our opinion,the frequency of verification is reasonable.

(b) In our opinion, the procedures of physicalverification of inventory followed by theManagement are reasonable and adequatein relation to the size of the Company and thenature of its business.

(c) On the basis of our examination of the inventoryrecords, in our opinion, the Company ismaintaining proper records of inventory. Thediscrepancies noticed on physical verificationof inventory as compared to book records werenot material.

iii. (a) The Company has not granted any loans,secured or unsecured, to companies, firms orother parties covered in the register maintainedunder Section 301 of the Act.

(b) The Company has not taken any loans, securedor unsecured, from companies, firms or otherparties covered in the register maintainedunder Section 301 of the Act.

iv. In our opinion and according to the informationand explanations given to us, there is an adequate

internal control system commensurate with the sizeof the Company and the nature of its business forthe purchase of inventory, fixed assets and for thesale of goods and services. Further, on the basis ofour examination of the books and records of theCompany, and according to the information andexplanations given to us, we have neither comeacross nor have been informed of any continuingfailure to correct major weaknesses in the aforesaidinternal control system.

v. (a) In our opinion and according to the informationand explanations given to us, the particularsof contracts or arrangements referred to inSection 301 of the Act have been entered inthe register required to be maintained underthat section.

(b) In our opinion and according to the informationand explanations given to us with regard tothe transactions in pursuance of contracts andarrangements entered in the registermaintained under Section 301 and exceedingthe value of rupees five lacs in respect of anyparty during the year, we have to state that,sales were made at the prevailing market price.However in case of purchase, since the itemswere of specialized nature, the Company hasnot called for quotations, since, as explainedto us, this would have resulted in parting ofproprietary drawings with outsiders, which is notcommercially advisable for the Company.

vi. The Company has not accepted any deposits fromthe public within the meaning of Section 58A ofthe Act and the rules framed there under.

vii. In our opinion, the Company has an internal auditsystem commensurate with its size and nature of itsbusiness.

viii. We have broadly reviewed the books of accountmaintained by the Company in respect of productswhere, pursuant to the Rules made by the CentralGovernment of India, the maintenance of costrecords has been prescribed under clause (d) ofsub-section (1) of Section 209 of the Act, and areof the opinion that prima facie, the prescribed

ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of the Auditors' Report of even date to the Members of ADOR WELDING LIMITED on thefinancial statements for the year ended 31ST MARCH, 2010.

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33

accounts and records have been made andmaintained. We have not, however, made adetailed examination of the records with a view todetermine whether they are accurate or complete.

ix. (a) According to the information and explanationsgiven to us and the records of the Companyexamined by us, in our opinion, the Companyis generally regular in depositing the undisputedstatutory dues including provident fund, investoreducation and protection fund, employees'state insurance, income-tax, sales-tax, wealthtax, service tax, customs duty, excise duty, cessand other material statutory dues as applicablewith the appropriate authorities.

(b) According to the information and explanationsgiven to us and the records of the Companyexamined by us, the particulars of dues ofincome-tax, sales-tax, wealth-tax, service-tax,customs duty, excise duty and cess as at 31stMarch, 2010 which have not been depositedon account of a dispute, are as follows:

Nature of Amount Forum where the dispute isthe Dues (Rs. In lacs) pending

Excise Duty 96.32 Central Excise and ServicesTax Appellate Tribunal

Sales Tax 23.15 High Court

35.16 Sales Tax Departmental Authorities

x. The Company has no accumulated losses as at31st March, 2010 and it has not incurred any cashlosses in the financial year ended on that date orin the immediately preceding financial year.

xi. According to the records of the Companyexamined by us and the information andexplanation given to us, the Company has notdefaulted in repayment of dues to any bank as atthe balance sheet date. The Company has notobtained any borrowings from any financialinstitution or by way of debentures.

xii. The Company has not granted any loans andadvances on the basis of security by way of pledgeof shares, debentures and other securities.

xiii. In respect of shares, securities, debentures and otherinvestments dealt or traded by the Company,proper records have been maintained in respectof the transactions and contracts and timely entries

have been made therein. All the investments areheld by the Company in its own name.

xiv. In our opinion and according to the informationand explanations given to us, the Company hasnot given any guarantee for loans taken by othersfrom banks or financial institutions during the year.

xv. The Company has not obtained any term loansduring the year.

xvi. On the basis of an overall examination of thebalance sheet of the Company, in our opinion andaccording to the information and explanations givento us, there are no funds raised on a short-term basiswhich have been used for long-term investment.

xvii. The Company has not made any preferentialallotment of shares to parties and companiescovered in the register maintained under Section301 of the Act during the year.

xviii.The Company has not issued any debentures duringthe year.

xix. The Company has not raised any money by publicissues during the year.

xx. During the course of our examination of the booksand records of the Company, carried out inaccordance with the generally accepted auditingpractices in India, and according to the informationand explanations given to us, we have neither comeacross any instance of fraud on or by the Company,noticed or reported during the year, nor have webeen informed of such case by the Management.

xxi. The other clauses, (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g)and (xiii) of paragraph 4 of the Companies(Auditor's Report) Order 2003, as amended by theCompanies (Auditor's Report) (Amendment) Order,2004,are not applicable in the case of theCompany for the year, since in our opinion there isno matter which arises to be reported in theaforesaid Order.

For DALAL & SHAHFirm Registration No. : 102021W


Ashish DalalPartner

Mumbai, 29th May, 2010 Membership No. : 033596

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34

BALANCE SHEET AS AT 31ST MARCH, 2010(Rupees in lacs)

Schedule 31.03.2010 31.03.2009SOURCES OF FUNDS:

SHAREHOLDERS’ FUNDS:Share Capital A 1,359.85 1,359.85Reserves and Surplus B 13,387.79 11,779.52

14,747.64 13,139.37LOAN FUNDS:

Secured Loans C — —

DEFERRED TAX LIABILITY (Net) (Refer Note 15) 93.50 122.47

TOTAL 14,841.14 13,261.84

APPLICATION OF FUNDS:FIXED ASSETS: DA) Gross Block 19,289.53 18,074.85

Less: Depreciation 11,105.66 9,837.71

Net Block 8,183.87 8,237.14B) Capital Work-in-Progress,

expenditure to date 41.54 995.99

8,225.41 9,233.13INVESTMENTS E 1,107.43 0.02CURRENT ASSETS, LOANS AND ADVANCES:Inventories F 3,799.16 3,580.87Sundry Debtors G 2,627.34 1,306.63Cash and Bank Balances H 1,302.45 747.97Loans and Advances I 1,461.14 2,126.40

9,190.09 7,761.87

Less:CURRENT LIABILITIES AND PROVISIONS:Current Liabilities J 2,350.15 2,647.51Provisions K 1,331.64 1,085.67

3,681.79 3,733.18

Net Current Assets 5,508.30 4,028.69

TOTAL 14,841.14 13,261.84

Notes forming part of the Accounts T

As per our attached report of even date On behalf of the Board of Directors

For DALAL & SHAHChartered Accountants A. B. AdvaniFirm Registration No.: 102021W Executive Chairman

Ashish Dalal V. M. Bhide K. N. SubramanianPartner General Manager & Vice President Raman KumarMembership No. 033596 Company Secretary (Finance, Accounts & IT) Managing Director

& Chief Financial Officer

Mumbai, 29th May, 2010 Mumbai, 29th May, 2010

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35

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010(Rupees in lacs)

Schedule 2009-10 2008-09INCOME:

Sales, Services, Export Incentive, etc. L 28,125.91 24,605.98Less : Excise Duty 2,052.56 2,222.17

26,073.35 22,383.81Other Income M 463.42 235.56

26,536.77 22,619.37EXPENDITURE:

Cost of Goods Sold N 14,855.14 12,427.19Manufacturing Expenses O 1,610.18 1,610.29Employment Costs P 2,531.63 2,463.29Administrative and Selling Expenses Q 2,406.43 2,456.93Other Expenses R 96.07 32.62Interest and Finance Charges S 56.59 198.13Depreciation 1,311.36 1,328.17

22,867.40 20,516.62Less : Finished Goods Capitalised 20.18 79.94

22,847.22 20,436.68

PROFIT FOR THE YEAR BEFORE TAX 3,689.55 2,182.69Add/(Less):Provision for Income Tax:Current Tax (1,080.00) (690.00)Deferred Tax (Refer Note 15) 28.97 (150.51)Provision for Fringe Benefit Tax — (80.00)Provision for Wealth Tax (5.00) (5.00)

PROFIT AFTER TAX 2,633.52 1,257.18Add/(Less):Prior period adjustments (Net) (75.40) 47.40Excess/(Short) Provision of Taxes in respect of earlier years (Net) 1.57 (88.49)

2,559.69 1,216.09Balance brought forward from previous year 475.45 695.74

BALANCE AVAILABLE FOR APPROPRIATION 3,035.14 1,911.83APPROPRIATIONS:

General Reserve 700.00 800.00Proposed Dividend 815.91 543.94Provision for tax on Proposed Dividend 135.51 92.44

Balance carried to Balance Sheet 1,383.72 475.45

Weighted average number of Equity Shares outstanding during the year 13,598,467 13,598,467Nominal Value of Shares (In Rs.) 10.00 10.00

Basic and Diluted Earnings Per Share (In Rs.) 18.82 8.94

Notes forming part of the Accounts T






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36

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010(Rupees in lacs)

PARTICULARS 2009-10 2008-09A) Cash Flow arising from Operating Activities

Net Profit Before Tax 3,689.55 2,182.69

Add/(Less) :

a) Depreciation 1,311.36 1,328.17

b) Interest and Finance Charges 56.59 198.13

c) Amount Written off against leasehold land 0.65 0.62

d) Assets Written Off / discarded — 13.65

e) Loss on Sale of Fixed Assets — 3.00

f) Surplus on Sale of Fixed Assets (269.24) —

g) Interest received from Banks and Others (7.44) (9.52)

h) Interest received on Investments — (9.28)

i) Prior Period Adjustments (75.40) 43.48

j) Income from Mutual Funds (7.41) —1,009.11 1,568.25

Operating Profit before Working Capital Changes 4,698.66 3,750.94

Adjustment for :

a) (Increase)/Decrease in Trade and Other Receivables (973.04) 412.27

b) (Increase)/Decrease in Inventories (218.29) (219.18)(1,191.33) 193.09

3,507.33 3,944.03

(Decrease)/Increase in Trade Payables (328.31) 319.10

Cash Inflow From Operations 3,179.02 4,263.13

Add / (Less) :

Direct Tax paid (769.84) (1,008.36)

Cash Inflow in course of Operating Activities 2,409.18 3,254.77B) Cash Flow arising from Investing Activities

Outflow:

a) Acquisition of Fixed Assets 350.96 2,151.19

b) Purchase of Investments 1,107.41 —

Inflow:

a) Sale of Fixed Assets 315.91 73.28

b) Sale/Redemption of Investments — 400.00

c) Interest Received on Fixed Deposits 7.44 9.52

d) Interest received on Investments — 9.28

e) Income from Mutual Funds 7.41 —

330.76 492.08

Net Cash (Outflow) in course of Investing Activities (1,127.61) (1,659.11)

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37

C) Cash Flow arising from Financing Activities

Inflow — —

Outflow:

a) Interest and Finance Charges 56.59 198.13

b) Dividend Paid 543.80 1,076.36

c) Dividend Tax Paid 92.44 184.88

692.83 1,459.37

Net Cash (Outflow) in course of Financing Activities (692.83) (1,459.37)

Net Increase in Cash/Cash Equivalents (A+B+C) 588.74 136.29

Add :

Balance at the beginning of the year 662.22 525.93

Cash/Cash Equivalents at the close of the year 1,250.96 662.22

Reconciliation to Cash and Bank Balances given inSchedule H, is as follows :

Cash and Bank Balances 1,302.45 747.97

Less :

Deposits endorsed in favour of Banks as security againstguarantees and letters of credit 51.49 85.75

Cash and Cash Equivalents at the end of the year 1,250.96 662.22

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010 (Contd.)(Rupees in lacs)

PARTICULARS 2009-10 2008-09






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38

SCHEDULE “A” TO “T” ATTACHED TO AND FORMING PART OF THE BALANCE SHEET AS ATAND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010

(Rupees in lacs)

31.03.2010 31.03.2009

SCHEDULE “A” - SHARE CAPITAL

AUTHORISED:

3,00,00,000 Equity Shares of Rs.10/- each 3,000.00 3,000.00

TOTAL 3,000.00 3,000.00

ISSUED, SUBSCRIBED AND PAID UP:

*1,35,98,467 Equity Shares of Rs.10/- each, fully paid-up 1,359.85 1,359.85

TOTAL 1,359.85 1,359.85

*85,26,100 Equity Shares of Rs.10/- each, were alloted as fully paid-up bonus shares, by way of Capitalisationof Securities Premium Account and General Reserve.

*52,200 Equity Shares of Rs. 10/- each, were alloted as fully paid up, at par, to the shareholders ofAdvanced Welding Alloys Limited, pursuant to a Scheme of Amalgamation.

(Rupees in lacs)

31.03.2010 31.03.2009

SCHEDULE “B” - RESERVES AND SURPLUS

General Reserve

Balance as per Last Account 11,081.09 10,281.09

Add:

Transfer from Profit and Loss Account 700.00 800.00

11,781.09 11,081.09

Capital Redemption Reserve Account

Balance as per Last Account 222.98 222.98

Surplus as per Profit and Loss Account 1,383.72 475.45

TOTAL 13,387.79 11,779.52

(Rupees in lacs)

31.03.2010 31.03.2009

SCHEDULE “C” - SECURED LOANS

Working Capital Loans from Banks — —

TOTAL — —

Refer Note 1 for details of Security.

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39

SCHEDULE “D” - FIXED ASSETS (Rupees in lacs)(A) Assets G R O S S B L O C K AT COST / BOOK VALUE D E P R E C I A T I O N N E T B L O C K

Particulars As At Additions/ Deductions/ As At Upto For the Deductions/ Upto As At As At01.04.2009 Adjustments Adjustments 31.03.2010 31.03.2009 Year Adjustments 31.03.2010 31.03.2010 31.03.2009

Land - Freehold 211.47 28.41 34.02 205.86 - - - - 205.86 211.47Land - Leasehold (a) 50.72 - 0.65(c) 50.07 - - - - 50.07 50.72Buildings 4,767.31 518.94 3.78 5,282.47 1,334.05 351.15 2.46 1,682.74 3,599.73 3,433.26Ownership Premises (b) 322.80 - - 322.80 137.16 9.28 - 146.44 176.36 185.64Plant and Machinery 9,882.04 610.11 13.18 10,478.97 6,708.09 731.03 11.52 7,427.60 3,051.37 3,173.95Electrical Installations 617.90 63.34 - 681.24 191.52 66.95 - 258.47 422.77 426.38Furniture, Fixtures and Equipments 762.99 17.66 4.54 776.11 478.02 56.83 2.93 531.92 244.19 284.97Vehicles 531.48 66.32 34.56 563.24 262.98 74.06 26.50 310.54 252.70 268.50Temporary Shed 3.64 - - 3.64 3.64 - - 3.64 - -Research & Development Assets:Land Freehold 33.61 - - 33.61 - - - - 33.61 33.61Buildings 90.49 - - 90.49 84.68 0.56 - 85.24 5.25 5.81Plant and Machinery 799.90 - - 799.90 637.44 21.36 - 658.80 141.10 162.46Air Conditioners 0.50 0.63 - 1.13 0.13 0.14 - 0.27 0.86 0.37

TOTAL 18,074.85 1,305.41 90.73 19,289.53 9,837.71 1,311.36 43.41(d) 11,105.66 8,183.87 8,237.14

Previous Year’s TOTAL 17,098.58 1,513.92 537.65 18,074.85 8,960.55 1,328.17 451.01(d) 9,837.71 8,237.14

(B) Capital Work-in-Progress 41.54 995.99

GRAND TOTAL 8,225.41 9,233.13

Notes: (a) Leasehold Land includes Land Rs.41.24 lacs (Net of amortisation Rs.40.28 lacs) acquired by the Company on a co-ownership/lease basis for which conveyance deed is yet to beexecuted.

(b) Includes :(i) Rs.0.01 lac being the aggregate value of Shares in Co-operative Housing Societies.(ii) Rs.4.17 lacs for Tenements in an Association of Apartment Owners.

(c) Represents amount written off on account of amortisation of leasehold land Rs.0.65 lac; (Previous year Rs. 0.62 lac)(d) Includes Rs.Nil on account of net excess provision for depreciation relating to earlier years; {Previous year Rs.3.92 lacs}.

SCHEDULE “E”- INVESTMENTS - OTHER THAN TRADE (UNQUOTED)(Rupees in lacs)

Face Value 31.03.2010 31.03.2009Rupees

Nos. Long Term Investments (At Cost):-In Government and Trust Securities:6 Years National Savings Certificates* 2,500 0.02 0.02

0.02 0.02Current Investments (At Lower ofCost and Fair Value):-In Mutual Funds:Templeton India IncomeOpportunities Fund - Growth Option982714.060 units of Rs.10.1759 each 100.00 -NAV Rs.101.41 lacsReliance Regular Savings Fund -Debt Plan - Growth Option1596959.389 units of Rs.12.5238 each 200.00 -NAV Rs.201.92 lacsTata Fixed Income Portfolio Fund -Scheme B3 Inst Quarterly Dividend 100.00 -10000000 Units of Rs.10/- eachNAV Rs.100.14 lacsTata Floater Fund - Daily Dividend6052535.511 units of Rs.10/- each 607.41 -NAV Rs.607.41 lacsUTI Fixed Income Interval Fund -Monthly Interval Plan831531.681 units of Rs.12.0260 each 100.00 -NAV Rs.100.07 lacs

1,107.41 -

TOTAL 1,107.43 0.02

* indicates deposited with Government Departments 0.02 0.02

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40

SCHEDULE “F” - INVENTORIES (Rupees in lacs)

31.03.2010 31.03.2009

1) Stores, Spares 276.48 249.832) Stock - in - Trade

a) Raw Materials & Components and Packing Material 1,661.56 1,210.41b) Goods-in-Process 787.05 815.98c) Finished Goods 1,004.53 1,239.63d) Goods for Resale 69.54 65.02

TOTAL 3,799.16 3,580.87

SCHEDULE “G” - SUNDRY DEBTORS (UNSECURED) (Rupees in lacs)

31.03.2010 31.03.2009

A) Over Six Months:Considered good 141.16 104.57

B) Others, considered good 2,486.18 1,202.06

TOTAL 2,627.34 1,306.63

SCHEDULE “H” - CASH AND BANK BALANCES (Rupees in lacs)

31.03.2010 31.03.2009

A) Cash on hand 9.00 4.05B) Balances with Scheduled Banks:

i) In Current Accounts 1,227.86 656.33ii) In Fixed Deposits (including Rs.51.49 lacs;

previous year Rs.85.75 lacs endorsed in favourof banks as security against guarantees given) 52.31 86.58

C) Balances with Non Scheduled Banks:In Current Accounts - with HSBC-Sharjah(Maximum balance during the year Rs.24.24 lacs; 13.28 1.01previous year Rs.11.35 lacs)

TOTAL 1,302.45 747.97

SCHEDULE “I” - LOANS AND ADVANCES (Rupees in lacs)

31.03.2010 31.03.2009

(UNSECURED, CONSIDERED GOOD)Loans and Advances to Employees 15.38 12.32Advances recoverable in cash or in kind orfor value to be received 1,154.86 1,452.81Balances with Central Excise, Customs and Port Trust 14.00 14.48Sundry Deposits 161.33 179.37Advance payment of Income Tax (Net of provisions) 115.57 467.42

TOTAL 1,461.14 2,126.40

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SCHEDULE “J” - CURRENT LIABILITIES (Rupees in lacs)

31.03.2010 31.03.2009

Sundry Creditors [Refer Note 4] 970.16 1,296.59* Other Current Liabilities 765.36 801.96Advance against Sales and Services 234.60 425.58Deposits and Advances from Distributors and Others 380.03 123.38

TOTAL 2,350.15 2,647.51

* Includes - Rs.110.38 lacs (Previous Year Rs.71.65 lacs)being remuneration to the Executive Chairman,Managing Director and other Non-Executive Directors

SCHEDULE “K” - PROVISIONS (Rupees in lacs)

31.03.2010 31.03.2009

For Excise Duty on Finished Goods Stock 106.68 110.67For Employee Benefits 216.83 275.99For Wealth Tax (Net of advances) 4.71 42.98For Warranties 52.00 19.65For Proposed Dividend 815.91 543.94For tax on Proposed Dividend 135.51 92.44

TOTAL 1,331.64 1,085.67

SCHEDULE “L” - SALES, SERVICES, EXPORT INCENTIVE, ETC. (Rupees in lacs)

2009-10 2008-09

Sales and Services (Adjusted for usual discounts and incentives) 28,403.36 24,975.27Less: Returns, Allowances, etc. 365.89 511.99

28,037.47 24,463.28Agency Commission 13.77 43.46Export Incentives 74.67 98.74Welding School Fees - 0.50

TOTAL 28,125.91 24,605.98

SCHEDULE “M” - OTHER INCOME (Rupees in lacs)

2009-10 2008-09

Interest received on investments (Long term, other than trade) - 9.28Interest received from Banks and Others (Gross)(tax deducted 7.44 9.52at source Rs.0.83 lac; Previous year Rs.13.54 lacs)Credit Balances appropriated 67.09 13.54Surplus on sale of fixed assets (Net) 269.24 -Excess Provision written back 10.45 25.03Income from Mutual Funds 7.41 -Exchange Difference Gain (Net) - 107.72Rent and Compensation 41.30 39.24Miscellaneous Income 60.49 31.23

TOTAL 463.42 235.56

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42

SCHEDULE “N” - COST OF GOODS SOLD (Rupees in lacs)

2009-10 2008-09

Opening Stock of Raw Materials, Components andPacking Materials 1,210.41 1,035.99Add: Purchases (after deducting sales Rs.9.08 lacs ;

Previous year Rs. Nil) 14,822.29 12,670.75

16,032.70 13,706.74Less : Closing Stock of Raw Materials, Components and

Packing Materials 1,661.56 1,210.41

Consumption of Raw Materials, Components andPacking Materials 14,371.14 12,496.33Purchase of Goods for Resale 228.48 58.04(Increase)/Decrease in Inventories:

Opening Stock:Finished Goods 1,239.63 1,319.83Goods for Resale 65.02 64.36Goods-in-Process 815.98 716.01

2,120.63 2,100.20

Closing Stock:Finished Goods 1,004.53 1,239.63Goods for Resale 69.54 65.02Goods-in-Process 787.05 815.98

1,861.12 2,120.63

259.51 (20.43)Variation in Excise Duty on inventory of Finished Goods Stock (3.99) (106.75)

TOTAL 14,855.14 12,427.19

SCHEDULE “O” - MANUFACTURING EXPENSES (Rupees in lacs)

2009-10 2008-09

Stores, Spare Parts, etc. 593.64 597.01Power and Fuel 565.79 431.44Repairs:

Machinery 86.92 94.28Buildings 17.95 122.64Others 74.78 94.51

179.65 311.43Other Manufacturing Expenses 271.10 270.41

TOTAL 1,610.18 1,610.29

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SCHEDULE “P” - EMPLOYMENT COSTS (Rupees in lacs)

2009-10 2008-09

Salaries, Wages, etc. 1,894.77 1,867.51Contribution to Provident and Other Funds 114.17 107.55Welfare Expenses 265.64 273.35Directors’ Remuneration 257.05 214.88

TOTAL 2,531.63 2,463.29

SCHEDULE “Q” - ADMINISTRATIVE AND SELLING EXPENSES(Rupees in lacs)

2009-10 2008-09

Freight, etc. (Net) 287.97 195.56Rent 134.84 169.79Rates and Taxes 23.62 20.69Insurance 22.75 19.83Travelling, Conveyance and Vehicle Expenses 610.93 711.09Directors’ Fees 6.31 6.17Advertisement and Publicity 80.62 187.03Commission 9.07 5.71Telephone, Postage, etc. 158.13 162.44Repairs at Administrative and Sales offices 32.10 60.28Miscellaneous Expenses 1,040.09 918.34

TOTAL 2,406.43 2,456.93

SCHEDULE “R” - OTHER EXPENSES (Rupees in lacs)

2009-10 2008-09

Alterations to and maintenance of rented premises 1.07 0.01Donations 0.22 5.30Bad Debts, deposits and debit balances written off (Net) 69.64 10.04Exchange Difference (Net) 24.49 -Loss on sale of Fixed Assets (Net) - 3.00Assets written off/discarded - 13.65Amounts written off against amortisation of Leasehold land 0.65 0.62

TOTAL 96.07 32.62

SCHEDULE “S” - INTEREST AND FINANCE CHARGES (Rupees in lacs)

2009-10 2008-09

Interest :Others 15.36 150.37

Finance Charges and Bank charges 41.23 47.76

TOTAL 56.59 198.13

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44

SCHEDULE “T” - NOTES FORMING PART OF THE ACCOUNTS

1) Secured Loans and Guarantees:

i) Working Capital facilities from Banks are secured by hypothecation of stocks and other tangible movableassets of the Company, both present and future and book debts in favour of Bank of Baroda and HDFCBank Limited. The said facilities are also secured by way of pari-passu charge on the entire plant andmachinery and other moveable fixed assets of the Company and on the land & building at theCompany’s Silvassa Unit.

ii) Guarantees given by banks to third parties amounting to Rs.379.51 lacs; (Previous year Rs. 315.89 lacs) onbehalf of the Company are secured against securities mentioned in (i) above.

(Rupees in lacs)

2) Contingent Liabilities not provided for : 31.03.2010 31.03.2009

a) Disputed income tax as the matters are in appeal(advance paid Rs.14.38 lacs; Previous Year Rs.15.65 lacs) 14.38 15.65

b) Disputed Sales Tax as the matters are in appeal(advance paid Rs.9.21 lacs; Previous Year Rs.9.21 lacs) 67.52 67.52

c) Disputed Excise duties as the matters are in appeal(advance paid Rs.3.15 lacs; Previous Year Rs.1 lac) 118.38 117.99

d) On account of bills discounted by the Company Nil 105.26

e) Bonds/Undertakings given by the Company under concessionalduty/exemption scheme to Customs Authorities. 294.31 232.29

3) Estimated amount of Contracts remaining to be executed on CapitalAccount and not provided for (Net of advances) 13.00 177.57

4) a) Sundry Creditors in Schedule “J” to the Accounts include (i) Rs.0.99 lac (Previous Year Rs.Nil) due to microand small enterprises registered under The Micro, Small and Medium Enterprises Development Act, 2006(MSME); and (ii) Rs. 969.17 lacs (Previous Year Rs.1,296.59 lacs) due to other creditors. During the year noamounts have been paid beyond the appointed day in terms of the MSME and, there are no amountspaid towards interest. Further, there is no interest accrued / payable under the said Act at the close ofthe year.

b) The disclosure in (a) above is based on the information available with the Company regarding the statusof suppliers under the MSME.

5) In the opinion of the Management, no item of current assets, including inventories has a value on realisationin the ordinary course of business, which is less than the amount at which it is stated in the Balance Sheet.

6) Revenue expenditure incurred during the year on Research and Development, through the natural heads ofaccount, amounts to Rs 146.72 lacs (Previous year Rs. 77.91 lacs) (including Depreciation Rs.22.06 lacs;Previous year Rs. 25.57 lacs) and Capital expenditure thereof amounts to Rs.0.63 lac (Previous yearRs. 0.52 lac).

(Rupees in lacs)

7) A) Directors’ Remuneration : 2009-10 2008-09

Salary 90.60 79.27

Contribution to Provident and Other Funds 16.36 20.69

Commission 110.38 71.65

House Rent Allowance 36.36 36.16

Other Perquisites 3.35 7.11

TOTAL 257.05 214.88

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(Rupees in lacs)

B) Computation of Net Profit in accordance with 2009–10 2008–09Section 198(1) of the Companies Act, 1956.

Profit after Tax 2,633.52 1,257.18

Add : a) Provision for Taxation (Net of Deferred Tax) 1,056.03 925.51

b) Directors Remuneration 257.05 214.88

3,946.60 2,397.57

Less : a) Interest on Capital Gain Bonds — 9.28

b) Profit on Sale of Assets as per Section 349 267.37 —

Net Profit as per Section 198(1) of the Companies Act, 1956 3,679.23 2,388.29

Commission to the Executive Chairman 36.79 23.88

Commission to the Managing Director 36.79 23.88

Commission to the Non - Executive Directors @ 1% 36.80 23.89

8) Payment to Auditors :

a) Audit fees (including Branch Auditors Rs.Nil; Previous year Rs.6.00 lacs) 18.00 18.00

b) Tax Audit Fees(including Branch Auditors Rs.Nil; Previous Year Rs.2.60 lacs) 6.00 5.80

c) Certification and Other Matters(including Branch Auditors Rs. Nil; Previous Year Rs. 0.39 lac) 5.55 5.09

d) Reimbursement of out of pocket expenses 0.67 0.82

9) A) Details of CIF value of Imports (including in-transit) :

Raw Materials and Components 1,285.99 948.25

Capital Goods — 86.17

Spares, etc. 53.06 35.70

Purchase of goods for resale 11.93 —

B) Details of Expenditure in Foreign Currency :

Travelling 75.89 119.93

Staff Training — 0.43

Bank charges 8.08 18.13

Others 94.52 169.06

10) A) Details of Earnings in Foreign Exchange :

FOB Value of Exports (Net of Returns) 2,468.37 3,232.83

Commission received 13.77 43.46

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B) *Details of Dividend remitted to Non-Resident shareholders inForeign Currency:

Number of Non-Resident Shareholders 69 70

Number of Equity Shares held 10,010 10,160

Financial Year ended for which dividend is remitted 2008-09 2007-08

Amount of dividend remitted (Rs. in Lac) 0.40 0.81

*excluding dividend credited to the shareholders’ Non-Resident External Accounts with banks in India.

(Rupees in lacs)

2009–10 2008–09

11) A) Detailed information regarding Registered Capacity,Installed Capacity,Actual Production,Opening Stocks,Turnover and Closing Stocks

Annual Annual Annual Opening Stock Turnover Closing StockParticulars Unit Registered Installed Production

Capacity Capacity Quantity Quantity Rupees Quantity Rupees Quantity Rupeesin Lacs in Lacs in Lacs

INDUSTRIAL MOUs/Registrations

1) Welding Consumables(Arc WeldingElectrodes/ M.Tonnes 26,000 26,000 24,454.06 679.53 582.66 24,402.27 21,684.40 731.32 539.10Continuous WeldingWires and Fluxes) (per shift) (per shift) (16,965.76) (358.70) (430.64) (16,644.93) (18,223.81) (679.53) (582.66)

2) Welding Equipments(Welding and CuttingEquipment/Systems, Value 125Crs 125Crs Not Not 633.33 Not 6,866.97 Not 473.06Accessories/Spares/ Enumerable Enumerable (831.01) Enumerable (6,332.59) Enumerable (633.33)Service)

3) Power Generators(15-300 KVA) Nos 5,000 5,000 20.00 133.00 88.66 39.00 88.17 114.00 61.92

(166.00) (31.00) (122.54) (64.00) (111.84) (133.00) (88.66)

4) Goods for Resale Rupeesin lacs

NotEnumerable 228.48

228.48 1,304.65 28,639.54 1,074.08(58.04) (1,384.19) (24,668.25) (1,304.65)

Less: Usual discounts and incentives 602.07

(204.97)

NET SALES 28,037.47

(24,463.28)

Notes : 1. The Company’s products are exempt from licencing requirements under New industrial Policy in terms of Notification No.477 (E) dated 25th July 1991and F.No. 10/43/91-LP dated 02nd August 1991.The Company has registered all its products (including existing products) with Secretariat for IndustrialAssistance.

2. Opening Stock,Turnover,Closing Stock in respect of Goods for Resale are included in respective catagories in item no.1 to 3

3. Figures in bracket indicate figures relating to the previous year.

4. Figures have been regrouped wherever necessary.

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11) B) i) Turnover quantity is derived on the basis of opening stock plus production and purchases for tradingactivity, less physical quantities of closing stock.

ii) ‘Annual Installed Capacity’ in Note 11(A) is as certified by the Managing Director, and being atechnical matter, is accepted by the Auditors as correct.

C) Details of Raw Materials, Components and Packing Materials consumed

2009–10 2008–09

Particulars Unit Qty. Rs. in lacs Qty Rs. in lacs

Wires and Rods MT 19,541.57 7,409.33 13,059.70 5,860.00Titanium Dioxide and Rutile Sand MT 1,750.01 699.88 1,057.32 433.09Manganese MT 503.91 613.67 346.71 546.17Metal, Nickel and Iron Powder MT 493.44 310.90 364.08 266.90Others :Electrical Components 554.55 370.36Mechanical Fittings 1,943.93 1,964.73Miscellaneous 2,838.88 3,055.08

TOTAL 14,371.14 12,496.33

D) Value of imported and indigenous Raw Materials, Components and Packing Materials consumed and %thereof to total value of consumption

2009–10 2008–09

Particulars (Rs. in lacs) % (Rs. in lacs) %

a) Imported 1,041.26 7.25 735.47 5.89b) Indigenous 13,329.88 92.75 11,760.86 94.11

TOTAL 14,371.14 100.00 12,496.33 100.00

E) Value of imported and indigenous Stores & Spare-parts, consumed and % thereof to total value ofconsumption :

2009–10 2008–09

Particulars (Rs. in lacs) % (Rs. in lacs) %

a) Imported 59.87 10.09 39.24 6.57b) Indigenous 533.77 89.91 557.77 93.43

TOTAL 593.64 100.00 597.01 100.00

12) Prior Period adjustments represent: (Rupees in lacs)

Particulars 2009–10 2008–09

a) Debits Relating to earlier years (97.57) (0.94)b) Credits Relating to earlier years 22.17 44.42c) Excess/(Short) Depreciation adjustments (Net) — 3.92

Net (Debit)/Credit (75.40) 47.40

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48

13) Segment Information:A) Business Segment

(Rupees in lacs)

Particulars Consumables Equipments & Total Project Engineering

Current Previous Current Previous Current PreviousYear Year Year Year Year Year

Segment Revenue

External Revenue 19,600.64 16,516.67 6,472.71 5,867.14 26,073.35 22,383.81

Inter Segment Revenue — — — — — —

Total Revenue 19,600.64 16,516.67 6,472.71 5,867.14 26,073.35 22,383.81

Segment Result before Interest and tax 3,590.05 2,616.82 916.43 764.06 4,506.48 3,380.88

Add/(Less) :

Unallocable expenses

(Net of unallocable income) — — — — (760.34) (1,000.06)

Interest and Finance charges (net) — — — — (56.59) (198.13)

Excess/(Short) Provision of Taxes

in respect of earlier years (net) — — — — 1.57 (88.49)

Prior Period Adjustments (35.52) 44.66 (38.73) (0.18) (74.25) 44.48

Prior Period Adjustments-Unallocable — — — — (1.15) 2.92

Provision for taxes (Net of Deferred Tax) — — — — (1,056.03) (925.51)

Net Profit 3,554.53 2,661.48 877.70 763.88 2,559.69 1,216.09

Other Information

Segment Assets 9,826.20 10,137.99 5,431.09 5,077.08 15,257.29 15,215.07

Unallocated Assets — — — — 3,265.64 1,779.95

Total Assets — — — — 18,522.93 16,995.02

Segment Liabilities 1,123.16 1,485.11 777.80 789.85 1,900.96 2,274.96

Unallocated Liabilities — — — — 1,780.83 1,458.22

Total Liabilities — — — — 3,681.79 3,733.18

Capital Expenditure

Segment Capital Expenditure 140.07 1,167.79 128.50 944.82 268.57 2,112.61

Unallocated Capital Expenditure — — — — 82.39 38.58

Total Capital Expenditure (Tangible Assets) — — — — 350.96 2,151.19

Depreciation and Amortisation

Segment Depreciation and Amortisation 827.59 907.34 431.98 363.95 1,259.57 1,271.29

Unallocated Depreciation and Amortisation — — — — 52.44 57.50

Total Depreciation and Amortisation — — — — 1,312.01 1,328.79

Significant Non Cash Expenditure

Segment Significant Non Cash Expenditure — 0.12 — 0.02 — 0.14

Unallocated Significant Non Cash Expenditure — — — — — 13.51

Total Significant Non Cash Expenditure — — — — — 13.65

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B) Geographical Segment(Rupees in lacs)

Particulars India Outside India Total

Current Previous Current Previous Current PreviousYear Year Year Year Year Year

Segment Revenue 23,591.21 19,107.52 2,482.14 3,276.29 26,073.35 22,383.81

Carrying Amount of Segment Assets 14,770.46 14,962.84 486.83 252.23 15,257.29 15,215.07

Additions to Fixed Assets(Tangible Assets) 268.57 2,112.61 — — 268.57 2,112.61

C) Other Disclosures:

1. Segments have been identified in line with the Accounting Standard on Segment Reporting(AS – 17) taking into account the organisation structure as well as differential risks and returns ofthese segments.

2. The Company has disclosed Business Segment as the primary segment.

3. Types of Products and Services in each Business Segment:

Business Segment Types of Products and Services

a) Consumables — Electrodes, Wires, Agency Items related to consumables.

b) Equipment & Project Engineering — Equipment, Spares, cutting products and Agency Itemsrelated to Equipment and Cutting Products & Design,Engineering, Procurement and commissioning of Flares,Incinerators, Furnaces, etc.

4. The Segment Revenues, Results, Assets and Liabilities include the respective amounts identifiable toeach of the segment and amounts allocated on areasonable basis.

14) Related Parties Disclosure:

A. Relationships:

Relationship Name of the Person / Company

a) Investor having significant influence J. B. Advani & Co. Pvt. Ltd.and its associates Ador Powertron Limited

Ador Fontech LimitedAdor Multiproducts Limited

b) Key Management Personnel Ms. A. B. AdvaniMr. Raman Kumar

c) Relatives of Key Management No Transactions have taken place during the year.Personnel where transacationshave taken place

Note: Related Party relationship is as identified by the Company and relied upon by the Auditors.

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B. Transactions:

(Rupees in lacs)

Particulars Investor having Key Management Relatives of Keysignificant influence Personnel Management

and its associates Personnel

Sales and Services

Goods, Materials and Services 933.62 — —(911.46) (—) (—)

Other Income

Rent {Ador Fontech Ltd. Rs.4.74 lacs 9.58 — —(Rs.4.38 lacs)} (8.82) (—) (—)

Royalty {Ador Fontech Ltd. Rs.2.30 lacs 3.92 — —(Rs.1.93 lacs)} (3.73) (—) (—)

Purchases

Goods and Agency Items 1,302.61 — —{J.B.Advani & Co. Pvt. Ltd. (1,278.93) (—) (—)Rs.1,292.68 lacs (Rs.1,133.54 lacs)}

Other Expenses

Product Development Charges 2.23 — —(Ador Fontech. Ltd.) (—) (—) (—)

Repair Charges paid 1.54 — —(—) (—) (—)

Sales Incentive — — —(3.00) (—) (—)

Remuneration — 220.25 —(—) (190.99) (—)

Sale of Fixed assets

{J.B.Advani & Co. Pvt. Ltd 305.17 — —Rs.305.17 lacs (Rs.Nil)} (—) (—) (—)

Reimbursement of Expenses

{J.B.Advani & Co. Pvt. Ltd. 17.58 — —Rs.17.58 lacs (Rs. 3.35 lacs)} (3.35) (—) (—)

Other Receivables

{J.B.Advani & Co. Pvt. Ltd. 230.17 — —Rs.230.17 lacs (Rs.Nil)} (—) (—) (—)

Outstandings

Receivables as Sundry Debtors 4.96 — —(13.95) (—) (—)

Payables as Sundry Creditors/ 0.54 — —Advance Received (22.34) (34.61) (—)

(Figures in brackets indicate previous year)

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15) Deferred Tax: (Rupees in lacs)

Particulars As at As at As at31.03.2010 31.03.2009 31.03.2008

Deferred Tax Liability on account of:

Depreciation 114.95 142.46 49.35

Capital Expenditure for Scientific Research 50.04 57.32 24.76

164.99 199.78 74.11

Deferred Tax Assets on account of:

Employee Benefits 65.68 62.32 72.60

VRS Payments 5.81 14.99 29.55

71.49 77.31 102.15

Net Deferred Tax (Asset) / Liability 93.50 122.47 (28.04)

16) Computation of Profit for Earnings per Share: (Rupees in lacs)

Particulars 2009-10 2008-09

Profit for the year after tax 2,633.52 1,257.18

Add/ (Less): Prior Period Adjustments (75.40) 47.40

Excess / (Short) Provision of Taxes in respect of earlier years (Net) 1.57 (88.49)

Earnings 2,559.69 1,216.09

17) Disclosure in respect of derivative instruments:

a) Derivative instruments for hedging purposes,outstanding : Nil

b) Foreign currency exposures that are not hedged by derivative instruments :

Particulars USD EURO DHMS SR GBP

i) Debtors 10,55,879.58 — — — —

ii) Creditors — 25,781.72 — — 50.04

iii) Other Advances/Deposits 11,609.43 — 67,457.72 3,500.00 —

iv) Bank Balance — — 1,08,268.67 — —

v) Other Liability — — 11,819.17 — —

18) Fixed Assets under Schedule D to the Accounts, include net book value of assets at the Company’sAhmednagar division aggregating Rs. 76.84 lacs, which have been retired from active use. As per theestimates made by the Management, the net realisable value of such fixed assets would atleast be equal tothe carrying value of the fixed assets. Hence, in the opinion of the Management, no expected loss needs tobe recognised.

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19) Employee Benefits:An amount of Rs.42.11 lacs (Previous Year Rs. 38.70 lacs) towards defined contribution plans is recognised asexpense in the Profit and Loss Account.The following table sets out the status of the gratuity plan as required under AS 15 (Revised 2005) and thereconciliation of opening and closing balances of the present value of the defined benefit obligation:

(Rupees in lacs)Particulars 2009-10 2008-09

Change in present value of obligationObligation at beginning of the year 295.31 280.05Current Service Cost 23.38 17.89Interest Cost 17.89 20.24Actuarial (gain)/loss (30.09) 72.52Benefits paid (28.80) (95.39)Obligation at the end of the year 277.69 295.31Change in Plan assetsFair value of Plan assets at beginning of the year 228.24 304.84Expected return on plan assets 17.09 20.49Actuarial gain / (loss) (7.76) (1.70)Contributions 70.50 -Benefits paid (28.80) (95.39)Fair value of plan assets at the end of the year 279.27 228.24Reconciliation of present value of the obligation and the fair value ofplan assets and amount recognized in the balance sheet:Present value of the defined benefit obligation at the end of the year 277.69 295.31Fair value of plan assets at the end of the year (279.27) (228.24)

Net liability / (Asset) recognized in the balance sheet (1.58) 67.07Gratuity cost recognized for the year:Current Service cost 23.38 17.89Interest cost 17.89 20.24Expected return on plan assets (17.09) (20.49)Actuarial (gain)/loss (22.33) 74.22Net gratuity cost 1.85 91.86

Break-up of Plan Assets at the end of the yearGovernment of India Securities 16% 21%Corporate Bonds 28% 32%Special Deposit Schemes 37% 46%Equity shares of Listed companies 17% 0%Others 3% 1%

Assumptions:Interest rate 7.55% 6.00%Estimated rate of return on plan assets 7.50% 7.50%Rate of growth in salary levels* 8.00% 8.00%

*The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority,promotion and other relevant factors.

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20) Lease Rental Obligation:

(Rupees in lacs)

Particulars As at As at31.03.2010 31.03.2009

Amount due within one year 105.57 103.12

Amount due from one year to five years 439.39 416.42

Amount due from five years and above 292.77 414.14

21) Previous year’s figures have been regrouped wherever necessary

22) Significant accounting policies and practices adopted by the Company are as disclosed in the Statementannexed to these Accounts as Annexure I.






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ANNEXURE - I ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2010.Statement of Significant Accounting Policies and Practices: -I) Basis of preparation of financial statements :-

The financial statements are prepared under the historical cost convention in accordance with the generallyaccepted accounting principles, the applicable mandatory accounting standards and the relevantprovisions of the Companies Act, 1956.

II) Use of Estimates :-The preparation of financial statements in confirmity with generally accepted accounting principles requiresestimates and assumptions to be made that affect the reported amounts of assets and liabilities on thedate of the financial statements and the reported amounts of revenues and expenses during the reportingperiod. Differences between actual results and estimates are recognised in the period in which the resultsare known.

III) Recognition of Income and Expenditure :-1. Sale of goods is recognized on transfer of significant risks and rewards of ownership which is generally

on the dispatch of goods by the Company.2. Benefit on account of entitlement to import duty - free materials under Duty Entitlement Passbook

Scheme is accounted in the year of export as Export Incentives.3. Compensation paid to employees, is fully charged to the Profit and Loss Account in the year in which

it is incurred.4. Other Revenue/Income and Cost/Expenditure are generally accounted on accrual as they are earned

or incurred.IV) Fixed Assets : -

1. Fixed Assets are accounted by the Company on the basis of historical costs. Gains or Losses arising ondisposal are recognised in the Profit and Loss Account of the relevant financial year.

2. Method of Depreciation / Amortisation:a) Depreciation for the year is provided on the written down value method based on estimated

useful life or at the rates and in the manner specified in the Schedule XIV to the Companies Act,1956.

b) Cost of leasehold land is amortised over the period of lease.c) Depreciation on additions/deletions is charged on pro-rata basis, upto the month of purchase/

including the month of sale.V) Investments :-

Long Term Investments are stated at ‘Cost’. A provision for diminution is made to recognise a decline,other than temporary in the value of long term investments. Current Investments are stated at lower of costand fair value.

VI) Valuation of Inventories :-Inventories of Raw Materials and Components, Goods in Process, Finished Goods, Goods for Trade, Stores,Spares and Packing Materials are stated ‘at cost or net realisable value, whichever is lower’. Goods inTransit are stated ‘at cost’. Cost comprises all cost of purchase, cost of conversion and other costs incurredin bringing the inventories to their present location and condition. The excise duty in respect of closinginventory of finished goods is included as part of finished goods.Cost formula used is ‘Average Cost’. Due allowance is estimated and made for defective and obsoleteitems, wherever necessary, based on the past experience of the Company.

VII) Foreign Currency Translations :-All transactions in foreign currency, are recorded at the rates of exchange prevailing on the dates whenthe relevant transactions take place;Monetary items in the form of Current Assets and Current Liabilities in foreign currency, outstanding at theclose of the year, are converted in Indian Currency at the appropriate rates of exchange prevailing on thedate of the Balance Sheet. Resultant gain or loss is accounted during the year;In respect of Forward Exchange contracts entered into to hedge foreign currency risks, the differencebetween the forward rate and exchange rate at the inception of the contract is recognized as income orexpense over the life of the contract. Further, the exchange differences arising on such contracts arerecognised as income or expense along with the exchange differences on the underlying assets / liabilities.Profit or loss on cancellations / renewals of forward contracts is recognised during the year.

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Accounting of foreign branches / integral operations:-a. Monetary items in the form of Current Assets and Current Liabilities in foreign currency, outstanding at

the close of the year, are converted at the appropriate rates of exchange prevailing on the date ofthe Balance Sheet.

b. Fixed assets and depreciation thereon, are converted at the exchange rates prevailing on the date ofacquisition of the respective asset.

c. Revenue items, excluding depreciation, are converted at the monthly exchange rates prevailing onthe date of the transaction

VIII) Research and Development :-1. Revenue expenditure on Research and Development (including overheads) are charged out as expense

through the natural heads of account in the year in which they are incurred.2. Expenditure of a capital nature on Research and Development is debited to Fixed Assets and

depreciation is provided on such assets as are depreciable.IX) Retirement and Other Employee Related Benefits :-

a. Short term employee benefits - All employee benefits payable within twelve months of rendering theservice are recognised in the period in which the employee renders the related service

b. Post Employment / Retirement Benefits - Defined Contribution Plans such as Government Pension Fundetc., are charged to the Profit and Loss Account as incurred.

c. Defined Benefit Obligation Plans – The present value of the obligation under such plans, is determinedbased on an actuarial valuation, using the Projected Unit Credit Method, carried out (approximately)at the close of the year. Actuarial gains and losses arising on such valuation are recognised immediatelyin the Profit and Loss Account. In the case of gratuity, which is funded, the fair value of the plan assetsis reduced from the gross obligation under the defined benefit plans, to recognise the obligation onnet basis.

d. Other Long Term Employee Benefits are recognised in the same manner as Defined Benefit Plans.e. Termination Benefits are charged to the Profit and Loss Account in the year in which they are incurred.

X) Assets taken on Lease :-For assets taken under operating lease, lease rentals payable are charged to Profit and Loss Account.

XI) Taxation :-Income tax expense comprises Current Tax and Deferred Tax charge or credit. Provision for current tax ismade on the basis of the assessable income at the tax rate applicable to the relevant assessment year.Thedeferred tax asset and deferred tax liability is calculated by applying tax rate and laws that have beenenacted or substantively enacted by the Balance Sheet date. Deferred tax assets arising mainly onaccount of brought forward losses and unabsorbed depreciation under tax laws, are recognized, only ifthere is a virtual certainty of its realization, supported by convincing evidence. Deferred tax assets onaccount of other timing differences are recognized only to the extent there is a reasonable certainty of itsrealization. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed toreassure realization.

XII) Impairment of Assets :-The carrying amount of assets are reviewed at each Balance Sheet date if there is any indication ofimpairment based on internal / external factors. An asset is impaired when the carrying amount of theasset exceeds the recoverable amount. An impairment loss is charged to the Profit and Loss Account inthe year in which an asset is identified as impaired. Impairment losses recognised in prior accountingperiods are reversed if there has been any change in the estimate of the recoverable amount.

XIII) Borrowing Costs :-Interests and other borrowing costs attributable to qualifying assets are capitalised. Other interests andborrowing costs are charged to revenue.

XIV) Provisions, Contingent Liabilities and Contingent Assets :-Provisions involving a substantial degree of estimation in measurement are recognised when there is apresent obligation as a result of past events and it is probable that there will be an outflow of resources.Contingent Liabilities are not recognised but are disclosed in the financial statements. Contingent Assetsare neither recognised nor disclosed in the financial statements.

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56

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEI Registration Details

Registration No.: L70100MH1951PLC008647 State Code : 11Balance Sheet Date : 31-03-2010

II Capital Raised during the year (Amount in Rupees Thousands)Public Issue Rights Issue

Nil NilBonus Issue Private Placement

Nil NilIII Position of Mobilisation and Deployment of Funds (Amount in Rupees Thousands)

Total Liabilities Total Assets1484114 1484114

Sources of FundsPaid - up Capital Reserves & Surplus

135985 1338779Secured Loans Unsecured Loans

Nil NilDeferred Tax Liability (net)

9350Application of Funds

Net Fixed Assets Investments822541 110743

Net Current Assets Misc. Expenditure550830 Nil

Accumulated Losses Deferred Tax Assets (Net)Nil Nil

IV Performance of the Company (Amount in Rupees Thousands)Turnover Total Expenditure2607335 2284722

Profit Before Tax Profit After Tax368955 263352

Earning Per Share including Dividend Rate %extra ordinary items In Rs. 60

18.82Earning Per Share excluding

extra ordinary items In Rs.18.82

V Generic Names of Three Principle Products / Services of the Company (as per monetary terms)1) Item Code No.: 83112000

PRODUCTION DESCRIPTION: MANUAL METAL ARC WELDING / BRAZING ELECTRODES of manufacturefalling under ITC - broad description of CORED WIRE BASE OF METAL FORELECTRIC ARC-WELDINGCONTINUOUS WELDING ELECTRODES of Manufacture falling under ITC -broad description CORED WIRED OF BASE METAL FOR ELECTRIC ARC-WELDING

2) Item Code No.: 83119000PRODUCTION DESCRIPTION: ARC WELDING / BRAZE-WELDING FLUXES of Manufacture falling under ITC -

broad description of OTHER, INCLUDING PARTS.3) Item Code No.: 85151900

PRODUCTION DESCRIPTION: WELDING & CUTTING EQUIPMENT & ACCESSORIES of Manufacture fallingunder ITC - broad description OTHER

On behalf of the Board of Directors

A. B. AdvaniExecutive Chairman

V. M. Bhide K. N. SubramanianGeneral Manager & Vice President Raman KumarCompany Secretary (Finance, Accounts & IT) Managing Director

Mumbai, 29th May, 2010 & Chief Financial Officer

ador secretarial 2010 · 2018-02-23 · aws classification: aws a/sfa 5.5 e7010-p1 it is cellulosic...

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