MIRA
INFORM REPORT
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Report Date : |
27.02.2007 |
IDENTIFICATION
DETAILS
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Name : |
ESAB INDIA LIMITED |
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Registered Office : |
Lloyds Centre Point, 2nd Floor, 1096-A, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025, Maharashtra |
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Country : |
India. |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
10.11.1987 |
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Com. Reg. No.: |
11-45251 |
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CIN No.: [Company
Identification No.] |
U99999MH1987PTC045251 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUME00307G |
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Legal Form : |
Private Limited Liability Company |
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Line of Business : |
Manufacturing and Marketing of Welding Electrodes, Gas Cylinder Valves, Medical Equipments, Copper Coated Wires and Arc Welding Machines. |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
USD 1250000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established and reputed company having satisfactory
track. Directors are reported as experienced and respectable businessmen.
Trade relations are reported as fair. Business is active. Payments are
usually correct and as per commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
LOCATIONS
|
Registered
Office : |
Lloyds Centre Point, 2nd Floor, 1096-A, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025, Maharashtra, India. |
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Tel. No.: |
91-22-24329937 / 24313224 / 4569 / 4573 / 3224 |
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Fax No.: |
91-22-24329940 |
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E-Mail : |
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Website : |
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Factory 1 : |
Plot No. 4, MIDC, Industrial Estate, Thane-Belapur Road, Thane 400 601, Maharashtra |
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Tel. No.: |
91-22-27600271 / 272 / 266 |
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Fax No.: |
91-22-27600267 / 269 |
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E-Mail : |
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Factory 2 : |
Plot No. 13, 3rd Main Road, Industrial Estate, Ambattur, Chennai - 600 058, Tamil Nadu |
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Tel. No.: |
91-44-26252115 / 3657 |
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Fax No.: |
91-44-26253108 |
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E-Mail : |
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Factory 3 : |
Arc and Gas Equipment Factory, P-41, Taratala Road, Kolkata - 700 088, West Bengal |
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Tel. No.: |
91-33-24011947 |
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Fax No.: |
91-33-24681880 |
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E-Mail : |
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Factory 4 : |
Electrode Factory, B. T. Road, Khardah, P.O : B. D. Sopan, North 24- Parganas, Kolkata - 743 121, West Bengal |
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Tel. No.: |
91-33-25532897 / 98 / 2918 / 2695 / 3479 |
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Fax No.: |
91-33-25532429 |
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E-Mail : |
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Factory 5 : |
B-28, MIDC Industrial Area, Kalmeshwar, Nagpur - 441 501, Maharashtra |
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Tel. No.: |
91-7118-271337 / 462 / 463 |
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Fax No.: |
91-7118-271461 |
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E-Mail : |
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Standard
Consumables / Reclamation Consumables |
Electrode Factory, B. T. Road, Khardah, PO : B. D. Sopan, North 24- Parganas, Kolkata - 743 121, West Bengal |
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Tel. No.: |
91-33-25532003 |
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Fax No.: |
91-33-25532429 |
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E-Mail : |
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Special
Consumables |
Plot No. 4, MIDC Industrial Area, Thane Belapur Road, Thane - 400 601, Maharashtra |
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Tel. No.: |
91-22-27600261 |
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Fax No.: |
91-22-27600267 |
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E-Mail : |
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Arc Equipment /
Gas Equipment |
Arc and Gas Equipment Factory, P-41, Taratala Road, Kolkata - 700 088, West Bengal |
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Tel. No.: |
91-33-24011947 |
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Fax No.: |
91-33-24681880 |
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E-Mail : |
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Regional Offices |
Located at:- Kolkata, Thane, New Delhi and Chennai |
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Branches : |
144, 145 Kodambakkam High Road, Chennai – 600 034, Tamilandu |
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Tel. No.: |
91-44-28221152/28220724/28312821 |
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Fax No.: |
91-44-28312860 |
SOLE
PROPRIETOR/PARTNERS/DIRECTORS
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Name : |
Mr. G. Hariharan |
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Designation : |
Chief Operating Officer |
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Name : |
Mr. Nawshir H. Mirza |
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Designation : |
Director |
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Name : |
Mr. J. Templeman |
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Designation : |
Director |
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Name : |
Mr. S. N. Talwar |
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Designation : |
Alternate to J. Templeman |
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Name : |
Mr. M.G. Foster |
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Designation : |
Chairman |
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Name : |
Mr. Sundar Ram |
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Designation : |
Managing Director |
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Name : |
Mr. P. Mallick |
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Designation : |
Director |
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Name : |
Mr. S. Tondon |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. Sanat Bhattacharya |
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Designation : |
Managing Director |
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Date of Birth/Age : |
58 years |
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Qualification : |
B.Sc. (Hons.) (Mining Engg.) AISM (Mining Engg), PGCGM (Indian Institute of Management) |
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Experience : |
38 years |
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Date of Appointment : |
01.02.1993 |
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Other Directorships : |
Atlas Copco (India) Limited, Vice President (Manufacturing) M & C |
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Name : |
Mr. B. Moham |
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Designation : |
Chief Financial Officer and Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
Esab Holdings Limited |
5743200 |
37.31 |
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Mutual Funds and UTI |
1359675 |
8.83 |
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Banks, Financial Institutions and Insurance Companies |
202460 |
1.32 |
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Foreign Institutional Investors |
1375757 |
8.94 |
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Corporate Bodies |
1775237 |
11.53 |
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NRIs/OCBs |
142981 |
0.93 |
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Indian Public |
4793710 |
31.14 |
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Total |
15393020 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturing and Marketing of Welding Electrodes, Gas Cylinder Valves, Medical Equipments, Copper Coated Wires and Arc Welding Machines. |
PRODUCTION STATUS
|
Particulars |
Unit |
Licensed
Capacity |
Installed
Capacity |
Actual
Production |
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Welding Electrodes |
1000 Mtrs. |
317128 |
153600 |
166125 |
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Continuous Electrodes / Copper Coated Wires |
Tonnes |
7640 |
6100 |
6035 |
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Automatic Submerged Arc Electrodes |
Tonnes |
480 |
-- |
-- |
|
MS Welding Rods (Copper Coated Welding Fluxes) |
Tonnes |
360 |
200 |
165 |
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Welding Fluxes |
Tonnes |
4061 |
2440 |
1023 |
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Gas and Electric Welding and Cutting Equipment and Accessories |
Nos. |
233540 |
140837 |
82829 |
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Gas Cylinder Valves |
Nos. |
74000 |
61000 |
-- |
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Cutting Unit and Small Tools |
Nos. |
6000 |
7500 |
-- |
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Medical Equipment |
Nos. |
6650 |
7772 |
35 |
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Industrial Voltage Regulators and Stabilizer Equipment |
Nos. |
12000 |
-- |
-- |
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Flux Cored Wires |
Tonnes |
600 |
-- |
-- |
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Industrial Uninterrupted Power Supply System |
Nos. |
2000 |
-- |
-- |
GENERAL
INFORMATION
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Bankers : |
v State Bank of India, Mumbai v Standard Chartered Grindlays Bank Limited, Mumbai v State Bank of Bikaner & Jaipur, Mumbai v State Bank of Travancore, Mumbai v Bank of Baroda, Mumbai v UTI Bank Limited |
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Facilities : |
Unsecured Loans
: Long Term Loan External Commercial Borrowings : Rs.113.081 millions |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
BSR & Company Chartered Accountants |
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Memberships : |
Confederation of India Industry |
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Parent Company : |
Esab Holding Limited, UK |
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Associates/Subsidiaries : |
ASSOCIATES v Esab AB, Sweden v Esab Cutting Systems GmbH, Germany v The Esab Group Inc., USA v Esab SA Industriae Comercio, Brazil v Conarco Alambresy Soldaduras S.A., Argentina v Esab Asia Pacific Pte Limited, Singapore v Howden Power Limited, Northern Ireland v Howden Sirocco SA, France v Burton Corblin SA, France v Ventilatoren Sirocco Howden BV, The Netherlands v Turbowerke Meissen Howden GmbH, Germany v Voith Howden GmbH, Germany v Howden Power A/S, Denmark v Howden Buffalo Inc., USA v Howden Hua Engineering Company Limited, China v Howden African Holdings Limited, South Africa v Howden Food Equipment Inc., USA v Howden Airdynamics Inc., USA v Western Design Howden Inc, USA v Bauer Howden Inc, USA v HD Engineering Limited, Hong Kong v Esab Group (UK) Limited, England and Wales v Esab Automation Limited, England and Wales v Esab Group (Ireland) Limited, Ireland v ESAB Limited, England and Wales v ESAB Pensions Limited, England and Wales v Murex Welding Products Limited, England and Wales v Murex Limited, England and Wales v Hancock Cutting Machines Limited, England and Wales v Brinal Limited, England and Wales v Filarc Welding Limited, England and Wales v Arcos Welding Products Limited, England and Wales v Bilston Wire Mill Compound, England and Wales v Hobart Overseas Holdings Limited v Exelvia Netherlands BV v Esab Middle East LLC v Esab Seach Corporation, Korea SUBSIDIARIES Flo-Tech Welding & Cutting Systems Limited Block F2, Plot No. 71, MIDC, Pimpri, Pune - 411 018, Maharashtra E Mail : esabopune@vsnl.com |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
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17000000 |
Equity Shares |
Rs.10/- each |
Rs.170.000 millions |
|
3000000 |
Unclassified Shares |
Rs.10/- each |
Rs.30.000 millions |
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Total |
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Rs.200.000
millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
15393020 |
Equity Shares |
Rs.10/- each |
Rs.153.930
millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2005 |
31.03.2004 |
31.03.2003 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
153.930 |
153.930 |
153.900 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
187.425 |
246.680 |
43.200 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
341.355 |
400.610 |
197.100 |
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LOAN FUNDS |
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1] Secured Loans |
0.000 |
0.000 |
69.100 |
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2] Unsecured Loans |
113.081 |
110.300 |
114.800 |
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TOTAL BORROWING |
113.081 |
110.300 |
183.9 |
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DEFERRED TAX LIABILITIES |
2.320 |
0.000 |
0.000 |
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TOTAL |
456.756 |
510.910 |
381.000 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
352.947 |
377.246 |
422.300 |
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Capital work-in-progress |
58.966 |
2.629 |
0.000 |
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INVESTMENT |
1.571 |
1.571 |
5.300 |
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DEFERREX TAX ASSETS |
0.000 |
8.276 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
260.324 |
199.082 |
161.500 |
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Sundry Debtors |
52.181 |
46.611 |
50.900 |
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Cash & Bank Balances |
562.763 |
257.805 |
30.100 |
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Other Current Assets and Loans & Advances |
59.489 |
40.113 |
177.800 |
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Total
Current Assets |
934.757 |
543.611 |
420.3 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
391.654 |
340.637 |
406.600 |
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Provisions |
499.831 |
81.786 |
60.300 |
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Total
Current Liabilities |
891.485 |
422.423 |
466.9 |
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Net Current Assets |
43.272 |
121.188 |
(46.600) |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
456.756 |
510.910 |
381.000 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2005 |
31.03.2004 |
31.03.2003 |
|
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Sales Turnover |
2381.629 |
1878.791 |
1542.000 |
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Other Income |
99.063 |
39.162 |
54.600 |
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Total Income |
2480.692 |
1917.953 |
1596.600 |
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Profit/(Loss) Before Tax |
581.803 |
330.990 |
6.300 |
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Provision for Taxation |
184.708 |
127.488 |
(0.700) |
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Profit/(Loss) After Tax |
397.095 |
203.502 |
7.000 |
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Earnings in Foreign Currency : |
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Export Earnings |
94.992 |
78.968 |
NA |
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Commission Earnings |
4.137 |
3.866 |
NA |
|
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Other Earnings |
0.299 |
0.407 |
NA |
|
Total Earnings |
99.428 |
83.241 |
NA |
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Imports : |
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Raw Materials |
54.839 |
31.087 |
NA |
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Stores & Spares |
3.765 |
0.600 |
NA |
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Capital Goods |
0.131 |
0.000 |
NA |
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Total Imports |
58.735 |
31.687 |
NA |
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Expenditures : |
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Cost of Goods Sold |
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Manufacturing Expenses |
517.769 |
488.351 |
39.300 |
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Administrative Expenses |
NA |
NA |
112.500 |
|
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Raw Material Consumed |
1331.522 |
1034.497 |
844.900 |
|
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Miscellaneous Expenses |
NA |
NA |
117.400 |
|
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Salaries, Wages, Bonus, etc. |
NA |
NA |
153.000 |
|
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Interest |
5.030 |
7.267 |
23.000 |
|
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Power & Fuel |
NA |
NA |
53.800 |
|
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Depreciation & Amortization |
44.568 |
53.148 |
55.700 |
|
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Other Expenditure |
0.000 |
3.700 |
190.700 |
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Total Expenditure |
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QUARTERLY RESULTS
|
PARTICULARS |
31.03.2006 |
30.06.2006 |
30.09.2006 |
|
Sales
Turnover |
629.100 |
603.800 |
809.700 |
|
Other Income |
11.900 |
13.200 |
12.300 |
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Total Income |
641.000 |
617.000 |
822.000 |
|
Total
Expenditure |
493.100 |
451.200 |
606.400 |
|
Operating
Profit |
147.900 |
165.800 |
215.600 |
|
Interest |
1.300 |
1.300 |
1.100 |
|
Gross Profit |
146.600 |
164.500 |
214.500 |
|
Depreciation |
10.700 |
11.500 |
12.100 |
|
Tax |
49.600 |
52.800 |
68.600 |
|
Reported PAT |
89.100 |
100.100 |
132.200 |
200603 Quarter 1
Notes
Expenditure Includes (Increase) / Decrease in Stock in Trade Rs 18.30 million Consumption of Raw & Packing Materials Rs 283.20 million Purchases-Finished Goods Rs 66.70 million Staff Cost Rs 45.30 million Other Expenditure Rs 79.60 million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended March 31, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 10 Complaints disposed off during the quarter 10 Complaints unresolved at the end of the quarter Nil 1. The above financial results of the Company, which exclude the results of the subsidiary, were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on April 28, 2006. 2. The statutory auditors have carried out a limited review of the results for the quarter ended March 31, 2006. 3. The provision for taxation of Rs 46.80 million during the quarter comprises Rs 48.60 million in respect of current year taxation, Rs (2.80) million for deferred tax and Rs 1.00 million in respect of Fringe Benefit Tax. 4. Previous periods figures have been regrouped or reclassified wherever necessary.
200606 Quarter 2
Notes
Expenditure Includes (Increase) / Decrease in Stock in Trade Rs (28.20) million Consumption of Raw & Packing Materials Rs 320.60 million Purchases-Finished Goods Rs 68.60 million Staff Cost Rs 30.90 million Other Expenditure Rs 96.30 million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 63 Complaints disposed off during the quarter 63 Complaints unresolved at the end of the quarter Nil 1. The above financial results of the Company, which exclude the results of the subsidiary, were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on July 27, 2006. 2. The statutory auditors have carried out a limited review of the results for the quarter ended June 30, 2006. 3. The provision for taxation of Rs 54.20 million during the quarter comprises Rs 51.60 million in respect of current year taxation, Rs 1.80 million for deferred tax and Rs 0.8 million in respect of Fringe Benefit Tax. 4. Previous periods figures have been regrouped or reclassified wherever necessary.
200609 Quarter 3
Notes
Expenditure Includes (Increase) / Decrease in Stock in Trade Rs 16.20 million Consumption of Raw & Packing Materials Rs 383.50 million Purchases-Finished Goods Rs 73.60 million Staff Cost Rs 43.60 million Other Expenditure Rs 89.50 million EPS is Basic & Diluted Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 56 Complaints disposed off during the quarter 56 Complaints unresolved at the end of the quarter Nil 1. The financial results for the quarter ended September 30, 2005 and the year ended December 31, 2005 included a non-recurring gain of Rs 45.3 Million on sale of leasehold land. 2. The above financial results of the Company, which exclude the results of the subsidiary, were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on October 26, 2006. 3. The statutory auditors have carried out a limited review of the results for the quarter ended September 30, 2006. 4. The provision for taxation of Rs 70.2 million during the quarter comprises Rs 66.7 million in respect of current year taxation, Rs 1.6 million for deferred tax and Rs 1.9 million in respect of Fringe Benefits Tax. 5. Previous periods' figures have been regrouped or reclassified wherever necessary.
KEY RATIOS
|
PARTICULARS |
31.03.2006 |
30.06.2006 |
30.09.2006 |
|
Debt-Equity Ratio |
0.30 |
0.49 |
1.07 |
|
Long Term Debt-Equity Ratio |
0.00 |
0.11 |
0.42 |
|
Current Ratio |
0.97 |
0.88 |
0.72 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
3.70 |
2.88 |
2.09 |
|
Inventory |
11.82 |
11.84 |
10.76 |
|
Debtors |
54.98 |
43.81 |
17.68 |
|
Interest Cover Ratio |
117.36 |
46.34 |
0.94 |
|
Operating Profit Margin(%) |
23.25 |
18.33 |
5.02 |
|
Profit Before Interest And Tax Margin(%) |
21.61 |
15.84 |
1.41 |
|
Cash Profit Margin(%) |
16.26 |
12.02 |
3.59 |
|
Adjusted Net Profit Margin(%) |
14.62 |
9.53 |
(0.03) |
|
Return On Capital Employed(%) |
121.58 |
67.59 |
4.70 |
|
Return On Net Worth(%) |
107.05 |
57.58 |
(0.16) |
STOCK PRICES
|
Face Value |
Rs.10.00/- |
|
High |
Rs.385.00/- |
|
Low |
Rs.370.05/- |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
The company was incorporated on 10.11.1987 at Mumbai in Maharashtra under the name and style of Esweld Private Limited and changed its’ name to Esab India Private Limited. It was converted into a public limited with effect from 17th August, 1988.
It’s Company Registration No. is 45251.
The company was promoted by Esab Holding Limited, UK, a wholly owned subsidiary of Esab AB, Sweden, who took over the welding operations of Philips, Netherlands, parent company of Peico Electronics & Electricals Limited, Europe. Hence, the company acquired the existing welding units of Peico at MIDC industrial area, Thane, Maharashtra, on 1st July, 1988.
In August, 1994, the Esab group was acquired by Charter, UK. Esab, Sweden has a 37.31% stake in the company.
In May, 1991, the company acquired the welding division of IOL (erstwhile Industrial Oxygen). On 18th February, 1994, with retrospective effect from 1st April, 1992, Maharashtra Weldaids Limited (MWL) was amalgamated with the company. As per the merger scheme the erstwhile shareholders of MWL were allotted one share of every two shares held by them in MWL. However, the acquisition of these units, which were not doing well, had its own shortcomings and the company had to struggle to improve profitability in the initial years to prune excess workforce of IOL’s welding division by around 300 employees, the company offered VRS (Substantial part of VRS expense was written off by FY97).
In 1904, Oscar Kjellberg, a Swedish Engineer invented the first covered electrode. Shortly afterwards, he founded ESAB (Electriska-Svetsnings-Aktie-Bolaget), the landmark of beginning of a new era in the field of welding.
During the year 1999-2000, the company had introduced VRS for permanent workmen in its Kalwa Unit, which received an overwhelming response and as all the permanent workmen opted for the VRS, the company discounted the manufacturing operations at Kalwa Factory, the company is presently in the process of redeploying plant and machineries and other movable assets to other units.
Milestones
|
Year |
Milestones Achieved |
|
1904 |
The Coated Electrode (MMA Welding) |
|
1937 |
Unionmelt (Submerged- Arc Welding) |
|
1938 |
Gravity Welding |
|
1944 |
Heliarc (TIG Welding) |
|
1947 |
MIG / MAG (Welding) |
|
1955 |
Plasma Cutting |
|
1960 |
Flux - Cored Wire |
|
1979 |
Narrow Gap Welding |
|
1982 |
LMA Electrodes (Low-Moisture Absorption) |
|
1989 |
Adaptive-Butt Welding and VacPac® (Vacuum-Packed) Electrodes |
|
1995 |
High Speed Cored Wire |
|
1996 |
Friction - Stir Welding |
|
1997 |
Laser-Bevel Cutting |
The ESAB group of companies employ about 8000 people. It has research and development centres in Sweden, Holland, Great Britain, Germany, USA and India.
At present, subject is the world's largest supplier of welding and cutting products.
BUSINESS
The company is engaged in manufacturing and marketing of Welding Electrodes, Gas Cylinder Valves, Medical Equipments, Copper Coated Wires and Arc Welding Machines.
Its' products find application in the automobile and general engineering industries. The company plans to launch additional products in the existing line of business. It has also undertaken a major diversification by launching new-generation working-environment products. Gas and arc equipment factories and electrode factory at Ambattur has received the ISO 9001 and 9002 accreditation. The company has also installed sophisticated inspection and testing equipments to upgrade the quality.
The company obtained a term loan to the extent of Rs. 75.000 millions for its capital expenditure programme. Out of this Rs. 60.000 millions was availed during the year 2002. In 2003 the company has relocated its manufacture of certain welding equipment products from Esab Thailand to the company’s Equipment factory at Taratala, Kolkata and the company had started exporting machines to international markets.
The company has technical collaboration with ESAB Holdings Limited, U.K.
The company's production status as on 31st December, 2002 was as under :
It is in trade terms with:
v Basanti Enterprise
v Chemicals and Meters
v Eastern Lamination Private Limited
v EPC Electricals Limited
v Ferro Curves
v Laminations Core Fabricators
v Medrubb Industries
v Profulla Box Manufacturing Company
v R. K. Enterprise
v Sarada Steel Industries
v Sun Electrical Engineering Company
v Unicare Emergency Equipment
v Yetazu Instrumentation
Collaborator:
Esab India is a 38% subsidiary of the Charter Group, UK (which took over the Esab group worldwide in 1994), which has interests in welding and rail track equipments. The group’s turnover stood at Pound 854 millions in 1995, with welding operations contributing Pound 713.3 millions. The Esab group constitutes the Charter group’s welding division and is the world leader with presence in 25 countries. It produces consumables in 23 countries and equipment in five countries (including India). The Esab group has a strong market position in leading technologies such as cored wire welding, plasma cutting equipment and mechanised cutting systems, the markets for which are growing at twice the industry average. The group has started sourcing some products for its Indian affiliate, though only on a limited scale. There is a possibility of The Charter group hiking its stake in Esab (India) to 51%.
The Company’s fixed assets include Freehold land, Leasehold land, Building, Plant and Machinery, Furniture and Fixtures and Motor Vehicles.
Profit before taxation increased by Rs.250.8 million over
the previous year. Profit on sale of leasehold rights represents profits
arising from the assignment of leasehold rights in the premises of the
Company's erstwhile factory at Kalwa.
MANAGEMENT DISCUSSION AND ANALYSIS
2005 was an eventful year for your Company. The Board had
prioritized strengthening the operating management through recruitments and
also initiated steps towards capacity expansions and widening the Company's
product range. The technical knowhow fee of Rs.11.5 million paid on this
account appears in note 6 of Schedule P. Some of the key recruitments,
including those of Managing Director, Chief Financial Officer and GM Human
Resources were concluded in 2005.
The Company also launched a project for commissioning a new
manufacturing facility at Irungattukottai near Chennai for the manufacture of
Welding and Cutting Equipment. The Company is working with international
affiliates of Esab on technology transfers and related licences for the above
projects and for expanding its range of consumables for the domestic market.
The Company focused on customer quality, productivity,
delivery processes and organization building as the key thrust areas in 2005.
The Company has been setting up processes and monitoring systems on the above.
In addition to the above, improvement in work practices and strengthening of
discipline at the various Plants have been priority areas for 2005.
The Management has identified focus on costs, project
management, absorption of technology, management of new products and
performance management as key priorities for 2006.
The Company has received statutory approvals for shifting
its Registered Office from the State of Maharashtra to the State of Tamilnadu.
The Company has completed requisite legal formalities in this regard and
received a Certificate of Registration from the Registrar of Companies, Chennai
in February 2006.
INCOME STATEMENT
The Company continued to benefit from a good economic
environment and favourable market conditions. Demand for your Company's
products improved over the previous year resulting in a growth in Net Sales by
26.8% over 2004 in value terms. In quantity terms, the growth in Consumables
was approximately 14% with the average realisation growing approximately 8%.
This growth has been due to growth in manufacturing activity and ongoing
investments in Infrastructure, Energy, Construction and Engineering Industries.
The focus on improving the performance of the Equipment segment is demonstrated
by the increase in Net Sales of this segment by 45.5%. The Company concluded
the year with a clear leadership position in terms of Sales.
The segment wise financial performance is given in Note 19
of Schedule P relating to Notes to Accounts. While there was an improvement in
the percentage on net segment results to turnover in both segments, the
improvement was much more pronounced in the Equipments segment where the
percentage increased from 11.6% in 2004 to 17.1% in 2005. The corresponding
percentages for the Consumables segment are 25.4% and 26.4%. In the Equipments
business, the company has discontinued the medical equipment business,
concentrating on gas and arc welding equipment and cutting machines.
Other income increased by Rs.14.6 million primarily due to
increase in interest income on deposits arising from cash of Rs. 342 million
generated through operations. Input costs, especially Steel where the average
cost increased by 22.7% per tonne, continued to increase during the year before
stabilizing towards the end of the year. These were partly offset by better
realizations on the Company's products and a decline in the cost of other raw
materials such as nonferrous metals and minerals, where the average rate
declined 6 Esab India Limited by 15.2% and 9.7%, respectively. Materials
consumption in terms of percentage to sales increased from 55.1% to 55.9%
largely on account of variance in sales mix. The company has effectively
controlled power and fuel costs with a rise of 6% which is less than the
increase in production.
Personnel costs fell by 9.4% from Rs. 177.2 million in 2004
to Rs.160.6 million in 2005 largely due to reduction in pension fund
contributions. Contributions to pension schemes fell by Rs. 38.1 million during
the year. This is attributable to a reduction in members covered by Defined
Benefits Scheme and also due to better funds position of the Schemes. The
hardening of interest rates is also expected to help reduce additional funding
in relation to the defined benefits scheme.
The Company has also switched to a defined contribution
scheme in respect of its recruitments effective November 2004 with a view to
reducing risks arising from economic variables. The Company has also achieved
reasonably good progress in reduction of liabilities on pending litigations on
Sales Tax. Consequently, there is no additional charge to Rates & Taxes on
this account in 2005 as against Rs.38 million in 2004.
The ageing machines and buildings of the company are
reflected in the Repairs and Maintenance expenses increasing by Rs.9 million
over 2004 and reduced depreciation charges.
Management is cognisant of this and is systematically
replacing old plant. The new factory at Irungattukottai is also one of the
responses to the need to upgrade our capacities.
The increase is attributable to the age of Plant and
Machinery at the Company's Plants and also ongoing layout changes in some of
the Company's Plants. The higher expenditure on Repairs have been compensated
by higher output at the Company's Plants resulting in overall reductions in
costs.
Expenses on domestic and foreign travel were higher due to
growth in business. Miscellaneous expenses were higher mainly due to higher
expenses on recruitment and participation in exhibitions.
Changes in the Company's distribution and sales arrangements
resulted in higher outflows on Transportation,
Discounts and Incentives in 2005. Weakening of the Rupee
resulted in an exchange loss as compared to an exchange gain in 2004.
Interest outgo was lower by Rs. 2.2 million as Interest in
2004 included outgo on term loans from Banks, that were fully repaid in 2004.
Depreciation charge for the year was lower by Rs.8.6 million
due to higher charge in 2004 relating to Cars and Computers. The charge is lower
also due to end of depreciable life in 2004 with respect to certain items of
Plant and Machinery.
Provision for current and deferred taxes was Rs.184.7
million as against Rs.127.5 million in 2004. The effective tax rate was lower
at 31.8% as against 38.5% in 2004 due to reduction in tax rates in 2005 and
also the incidence of minimum alternate tax in 2004. The Company has invested
an amount equivalent to taxable capital gain arising from sale of premises at
Kalwa in bonds prescribed for this purpose and no tax has therefore been
provided on the capital gain.
BALANCE SHEET
The Company added Rs.43.6 million to its Gross Fixed Assets.
Significant additions were on account of leasehold land for proposed Equipments
Factory, Building for the new Registered Office, Extrusion Plant at Ambattur
Factory and Diesel Generator for Ambattur Factory. Disposals were primarily on
assignment of leasehold rights at Kalwa. Capital Work in Progress at the end of
the year was higher due to progress payments on Buildings and know how fees
paid with respect to the upcoming Equipments Factory at Irungattukottai.
Inventory at the end of 2005 was higher at Rs.260.3 million
though only marginally higher in terms of days to sales as compared to 2004.
Receivables in terms of days to sales declined by about 1
day as compared to 2004. Other current assets increased due to higher supplier
advances and higher interest accrued but not due at the end of the year as
compared to 2004.
Cash accruals during the year were at Rs.305 million as
against Rs. 227.7 million in 2004. Current Liabilities increased by Rs.51
million primarily on account of a Rs.33.4 million increase in advances from
customers.
OUTLOOK, OPPORTUNITIES AND THREATS
The outlook for the Company hinges primarily on trends in
consumption of steel. The growth is also linked to growth in the manufacturing
and infrastructure segments of the economy.
The Company recognizes opportunities emerging from new
products and capacities being developed. Opportunities arising from growth in
the economy and infrastructure could also contribute to the performance of the
Company.
The Company faces competition from low-end domestic
competitors and from imports. The outcome of ongoing and upcoming settlements
with Unions at Factories could also have a bearing on the Company's operational
performance.
CHARTER PLC GROUP
Esab India Limited is a part of the Charter pic Group. The
Company's principal shareholder, Esab Holdings Limited, an unlisted company incorporated
under the laws of England and Wales and having its registered office at 50
Curzon Street, London W1J 7UW, United Kingdom, held 37.31% of the paid-up
equity share capital of the Company as at 31 December 2005. Esab Holdings
Limited is owned through various intermediary companies by Charter pic., the
ultimate parent, a listed company incorporated under the laws of England and
Wales and having its registered office at 52, Grosvenor Gardens, London SW1W
OAU, United Kingdom.
Charter pic has over 280 subsidiaries and affiliates.
Charter pic, its subsidiaries and affiliates including Charter Overseas
Holdings Limited, Weldcure Limited, Esab Holdings Limited, Exelvia Netherlands
BV, Exelvia International Holdings BV, Charter Consolidated pic, Cecil Holdings
Limited and Esab International Holdings BV form the Charter pic Group. This
information is given pursuant to SEBI (Substantial Acquisition of Shares and
Takeover) Regulations, 1997, as amended to date.
FINANCE
The Company's relationships with its bankers remained
cordial throughout the year. The improvements in liquidity and operating
performance allowed your Company to end the year with Rs.562.8 million in cash
and bank balances. Surplus funds were placed in short term deposits with banks
pending deployment for operational and capital servicing needs.
PREMISES
The lease with respect to the Company's Premises at Taratala
in Kolkata expired in October 2005. The Kolkata Port Trust has initiated
eviction proceedings against the Company though the Company had expressed its
intent on renewing the lease on fair and equitable terms. The matter is
currently under litigation in Kolkata.
SUBSIDIARY
Esab Welding & Cutting Systems Limited [EWCS] ceased
operations in June 2004 pursuant to the transfer of its
operations to the Company's Equipment Factory at Taratala.
Website Details :
Milestones
A century of ESAB innovations
In 1903, Oscar Kjellberg, a Swedish machine engineer was
working on ships and boilers in Göteborg, Sweden. His dissatisfaction with the quality of repair jobs fueled his
quest for a better solution that led to the invention of the world's first flux
covered electrode. On 12th September 1904, Elektriska Svetsnings Aktie Bolaget
(ESAB) was founded in Göteborg, Sweden. The major innovations in the course of
ESAB's history are:
1904 - The Coated Electrode (MMA Welding)
1937 - Union melt (Submerged-Arc Welding)
1938 - Gravity Welding
1944 - Heliarc (TIG Welding)
1947 - MIG/MAG (Welding)
1955 - Plasma Cutting
1960 - Flux-cored Wire
1979 - Narrow gap Welding
1982 - LMA Electrodes (Low-moisture Absorption)
1989 - Adaptive butt Welding
1995 - High speed Cored Wire
1996 - Friction stir Welding
1997 - Laser bevel Welding
Products
ESAB India has a wide and comprehensive range of welding,
cutting and allied products and services. The product range covers Welding
Consumables, Reclamation Consumables, Arc Equipment, Industrial Gas Equipment,
Cutting Machines and Working Environment Products for your specialised welding,
cutting and allied needs. These are manufactured to stringent quality control
measures in the state-of-the-art manufacturing units.
ESAB India also markets the latest generation of Welding
Consumables and equipment and cutting machines from other group companies
located outside India and thereby acts as a one-point source for all the needs
of the industry. ESAB India also manufactures and markets medical gas
equipment.
We have classified our products into the following
categories:
v Welding Consumables
v Reclamation Consumables
v Arc Equipment
v Industrial Gas Equipment
v Environment Products
v
Cutting Systems
Exports :
ESAB India Limited, directly exports welding consumables and
welding and cutting equipment to Nepal, Bangladesh and Sri Lanka. The company
also exports products to Africa, Middle East, Asia Pacific, Europe and the USA
through its group companies in Sweden, Singapore and Dubai.
ESAB India Ltd will showcase its latest products and
services at the 17th International Engineering & Trade Fair during 13-16 February
2007 being held at Pragati Maidan, New Delhi. Please visit stall # 04 at the
Manufacturing Pavilion.
Northern
Region Office shifted.
The Northern Region Office of
the Company has been shifted to the following address:
ESAB
INDIA LIMITED
Northern Region Office
71 / 1, Najafgarh Road, New Delhi - 110015
Tel. 91-11-25415763
Fax. 91-11-25440843
New
Central Region Office set up.
To enhance the sales and service
network in Central India, a new Central Region Office has been set up in
Nagpur. The new regional office will cover Madhya Pradesh, Chattisgarh,
Vidharbha and Marathwada.
ESAB
INDIA LIMITED
Central Region Office
No. 218, Ashirvad, South Ambazari Road, Bajaj Nagar, Nagpur - 440010.
Tel. 91-7118- 271462
Fax. 91-7118- 271461
Southern
Region Office shifted.
The Southern Region Office of
the Company has been shifted to the following address:
ESAB
INDIA LIMITED
Southern Region Office
Karumuttu Centre
New No.634,(Old No.498), Anna Salai, Nandanam, Chennai- 600035.
Tel.91-44 52040292/93/94/95
Fax.91-44 52040289
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON DESIGNATED
PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is or
was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No available
information exist that suggest that subject or any of its principals have been
formally charged or convicted by a competent governmental authority for any
financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on Corporate
Governance to identify management and governance. These factors often have been
predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.44.27 |
|
UK Pound |
1 |
Rs.86.87 |
|
Euro |
1 |
Rs.58.53 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
6 |
|
--PROFITABILIRY |
1~10 |
3 |
|
--LIQUIDITY |
1~10 |
5 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
5 |
|
--CREDIT LINES |
1~10 |
6 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
51 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
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. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
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 |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|
PRIVATE & CONFIDENTIAL : This information
is provided to you at your request, you having employed MIPL for such purpose.
You will use the information as aid only in determining the propriety of giving
credit and generally as an aid to your business and for no other purpose. You
will hold the information in strict confidence, and shall not reveal it or make
it known to the subject persons, firms or corporations or to any other. MIPL
does not warrant the correctness of the information as you hold it free of any
liability whatsoever. You will be liable to and indemnify MIPL for any loss,
damage or expense, occasioned by your breach or non observance of any one, or
more of these conditions