Attachment 1

Report Update On	12^th March, 1999
Report on	ADVANI-OERLIKON LIMITED
Registered Office	Ador House, 6 K. Dubhash Marg, Fort, Mumbai – 400 023, INDIA
Tel. No.	91-22-284 2525 / 284 4027
Fax No.	91-22-287 3083
E-Mail	--
Telex	--

Attachment 2

S U M M A R Y

Incorporated	1951	Status	Satisfactory
Registration No.	8647	Chief Executive	Mr. A. T. Mirchandani
Capital (Rs.)	158.283 millions	Payments	Regular
Sales (Rs.)	1,728.360 millions	Litigation	--
Net Worth (Rs.)	623.251 millions	Banking Reputation	Satisfactory
No. of Employees	1,114	Auditors	Dalal & Shah
Credit Rating	A (See attachment 3)

INDUSTRY

The much-talked about decline in growth sector is the outcome of a combination of factors affecting industry competitiveness and end user industry growth. The inverted duty structure (raw materials such as steel plates are at 30% while finished products are at 20% customs duty) alongwith special custom duty status for project impars in major end use sectors such as oil refining and fertiliser have hit the industry hard. Part of the problems is also due to the inability to offer financing options to the end use sectors.

The investments planned in the ninth plan for oil refining and fertiliser sectors are Rs.50-60 and Rs.10-15 billions respectively. If the domestic industry is not made competitive, there is a good chance that their order book position will wersen and imports would increase. Key end use sectors such as process industry, textiles and cement are witnessing sluggish growth and threat of imports.

Poor investments in power transmission and distribution sectors have resulted in the poor performance of transformer manufacturers. The fortunes of engineering industry other than capital goods has been hit by the recent decline in the growth of the automobile sector, a major end use segments of bearings and machine tools. The machine tool and bearings sectors are also witnessing significant import threats.

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CENTRAL MARKETING OFFICE

Lal Bahadur Shashtri Marg, Bhandup, Mumbai – 400 078, INDIA

Tel. No. 91-22-561 2566 / 561 2567 / 561 2568

Fax No. 91-22-564 6562 / 568 6062

PLANTS

K Bhandup, Mumbai

K Haybunder, Mumbai

K Ahmednagar, Maharashtra

K Bangalore, Karnataka

K Chinchwad, Pune, Maharashtra

K Chennai, Tamilnadu

K Jaipur, Rajasthan

AREA OFFICES

K Bangalore, Karnataka

K Baroda, Gujarat

K Calcutta, West Bangal

K Chandigarh, Punjab

K Chennai, Tamilnadu

K Cochin, Kerala

K Delhi

K Hyderabad, Andhra Pradesh

K Jamshedpur

K Mumbai

K Pune, Maharashtra

K Jaipur, Rajasthan

HISTORY

The company was incorporated on 22^nd October, 1951 at Mumbai in Maharashtra having Company Registration Number 8647 as a Private Limited Company. The company was converted into a Public Limited company w.e.f. 19^th March, 1975.

LEGAL FORM

It is a Public Limited Liability company. The company’s shares are listed on the Stock Exchange.

DIRECTORS

Ms. Aruna B. Advani	Chairperson
Mr. A. T. Mirchandani	Managing Director
Mr. S. M. Shroff	Director
Mrs. R. T. Malkani	Director
Ms. Reshma A. Lalvani	Director
Mrs. N. Malkani Nagpal	Director
Mr. Mauro Vacchi	Director
Mr. C. C. Welter	Alternate to Mr. Mauro Vacchi

BUSINESS

The company is engaged in manufacturing and marketing of Arc Welding Electrodes, Special Electrodes (Fontargen Range), Continuous Welding Electrodes, Arc Welding/Braze Welding Fluzes, Welding & Cutting Equipments & Accessories, DC Generators upto 150 KW and Customised Equipment/Systems for Welding Applications.

The company’s production status as on 31^st March, 1998 was as under :

PARTICULARS	Unit	Licensed Capacity	Installed Capacity	Actual Production
Arc Welding Electrodes	MT	--	--	412.24
Special Electrodes	MT	--	--	405.38
Continuous Welding Electrodes	MT	7,300	7,300	1,924.68
Arc Welding/Braze Welding Fluxes	MT	8,500	8,500	905.96
Welding & Cutting Equipments & Accessories	Nos.	7,225	5,625	4,397.00
DC Generators upto 150 KW	Nos.	--	--	--
Customised Equipment/ Systems for Welding Application	Rs. In mlns.	70	20	16.303

Generic Names of Three Principal Products of the company are :

Item Code No. (ITC Code)	83112000
Product Description	Manual Metal Arc Welding/Brazing Electrodes of Manufacture falling under ITC – broad description Cord Wire Base of Metal, for Electric Arc-welding continuous Welding Electrodes of Manufacture falling under ITC – broad description Cored Wire of Base Metal, for Electric Aec-Welding
Item Code No. (ITC Code)	83119000
Product Description	Arc Welding/Braze-Welding Fluxes of Manufacture falling under ITC – Broad description, other including parts
Item Code No. (ITC Code)	85151900
Product Description	Welding & Cutting Equipment & Accessories of Manufacture falling under ITC – broad description Other

The year under report was a very difficult year for the industry by and large. Due to uncertain political conditions during the year 1997, industrial growth suffered and there was a general economic slowdown and slackened demand. The welding industry too was affected as it has a direct correlation to infrastructural development, projects and rate of industrial production in the country.

Viewed to this backdrop, the company’s sales and other income for the year 1997-98 amounted to Rs.1,710.2 millions as against Rs.1,784.8 millions of the previous year. Profit before tax was Rs.130.2 millions compared to Rs.175.3 millions of the previous year. Profit after tax was Rs.97.7 millions as compared to Rs.115.3 millions of the previous year.

Though the sales & other income have dipped marginally (4.18%), the net profit has been affected because of enhanced material costs, depreciation and marketing overheads which were required to push sales in recessionary market conditions.

One redeeming feature was that on the exports front, the company has witnessed a good improvement over the previous year. The exports increased from Rs.93.7 millions to Rs.123.3 millions, registering a growth of over 30%. The market development activities are being geared to access new markets and increase the volume of exports.

The company imports raw materials & components, capital goods, spares, etc. from Europe & Far East against L/C, D/A & D/P terms.

The company’s fixed assets of important value includes Freehold Land, Leasehold Land, Ownership Premises, Plant & Machinery, Electrical Installations, Furniture, Fixtures & Equipments, Vehicles, Temporary Sheds, R&D Land – Freehold, R&D Building, R&D Plant & Machinery and Air Conditioners.

ASSOCIATES

K Ador Powertron Industries Limited

K Ador-Samia Limited

K Ador Thermal Engineering Limited

K Ador-Fontech Limited

K Ador Technopak Limited

K Ador Finance Limited

K Ador Multiproducts Limited

K JBA Printing Inks Limited

K J. B. Advani & Company Limited

K Qualteam Consultants (India) Private Limited

K Trans Electronics Private Limited

SUBSIDIARIES

K Semiconductors Limited

BANKERS

K State Bank of India

K State Bank of Travancore

K Bank of Baroda

K ABN AMRO Bank NV

AUDITORS

K Dalal & Shah

Chartered Accountants

Mumbai

FINANCIAL INFORMATION

The company's latest financial information for the period ended 31^st March, 1998 is enclosed herewith.

CAPITAL STRUCTURE

Authorised Capital :
30,000,000	Equity Shares of Rs.10/- each	Rs.300.000 millions
Issued, Subscribed & Paid-up Capital :
15,828,300	Equity Shares of Rs.10/- each	Rs.158283 millions

COMMENTS

Subject is a well-established and reputed company in it’s field. The company’s products are well received in the market. Directors are reputed and resourceful industrialists. Their trade relations are fair. Financial position of the company is good. Payments are usually correct and as per commitments.

The company can be considered good for any normal business dealings at usual trade terms and conditions.

ABRIDGED BALANCE SHEET AS ON 31^ST March, 1998

[figures are in Rupees Millions]

SOURCES OF FUNDS	31.03.1998	31.03.1997
SHAREHOLDERS FUNDS
1] Share Capital	158.283	158.283
2] Reserves & Surplus	464.968	414.908
LOAN FUNDS
1] Secured Loans	423.388	394.487
2] Unsecured Loans	28.948	33.513
GRAND TOTAL	1,075.587	1,001.191
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]	690.623	604.592
Capital work-in-progress	0.096	9.002
INVESTMENTS	153.483	153.483
CURRENT ASSETS, LOANS & ADVANCES
Inventories	160.660	155.594
Sundry Debtors	165.022	81.308
Cash & Bank Balances	79.808	58.486
Loans & Advances	168.297	239.970
Total Current Assets	573.787	535.358
Less :
Current Liabilities	205.816	96.502
Provisions	136.586	204.742
Net Current Assets	231.385	234.114
GRAND TOTAL	1,075.587	1,001.191

IMPORTANT FINANCIAL INFORMATION FOR LAST TWO PERIODS

[figures are in Rupees Millions]

PARTICULARS	31.03.1998	31.03.1997
Sales Turnover	1,728.360	1,761.380
[including other income]
Profit/(Loss) Before Tax	130.188	175.315
Provision for Taxation	32.500	60.000
Profit/(Loss) After Tax	97.688	115.315
Dividend	39.571	50.592
Earnings in Foreign Currency :
Export Earnings	123.320	93.705
Commissioned Received	2.361	7.324
Other Earnings	0.165	0.014
Total Earnings	125.846	101.043
Imports :
Raw Materials	69.403	81.005
Components & Spares	1.900	13.616
Capital Goods	74.144	9.247
Purchase of Goods for Resale	3.894	5.652
Others	0.000	0.095
Total Imports	149.341	109.615
Expenditures :
Raw Materials & Components Consumed	726.078	675.281
Purchase of Goods for Resale	19.446	84.862
Manufacturing Expenses	223.356	221.796
Other Expenses	461.723	449.375
Interest & Finance Charges	97.483	98.658
Depreciation	70.086	56.093
Total Expenditures	1,598.172	1,586.065

Attachment 3

SCORE SHEET

SCORE	CREDIT RATING	STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments. Maybe drawn to slightly difficult position as unfavourable conditions arise. Minimal assurance for timely payment on interest and principal sums	Moderate
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively limited or considered not known. Capability to pay both interest and principal sums is doubtful	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended

Attachment 4

INDIA

In 1998, the Hindu-nationalist party, the BJP was elected and formed a new Government. Soon after, however, both India and Pakistan conducted nuclear tests and tension in Kashmir grew. 1999 is not likely to be much calmer with regard to neighbouring Pakistan, but it is believed that the tensions will be more loud than physical in nature. India is growing at a healthy 5% pace and is expected to continue its level for the coming year. Inflation has been high however and was 16.3% for the year, as of the end of September, 1998. 1999 inflation is expected to be reduced to 9.3%, still high. Foreign reserves have grown by $2.1 billion to $26.5 billion as of November, in comparison to one year earlier. The trade deficit and current account balance remain in red.

Ranked among the ten most corrupt nations in the world, the parallel economy is conservatively estimated to be Rs.300,000 millions – roughly equal to the Gross Domestic Product.