ESAB INDIA LIMITED

Annual Report 2002

www.esabindia.com Your partner in welding and cutting

 ESAB INDIA LIMITED
Annual Report 2002
BOARD OF DIRECTORS
H. P. R. Mullan Chairman
G Hariharan Wholetime Director
N.H.Mirza
T-Mitra
BPekkari
J.Templeman
S.N.Talwar Alternate to B. Pekkari
Ms. A.R.Yapp Alternate to J. Templeman

A.Banerjee Company Secretary

REGISTERED OFFICE
Lloyds Centre Point, 2nd Floor,
1096-A, Appasaheb Marathe Marg,
Prabhadevi, Mumbai - 400 025
Tel: 24313224 Fax: 2432 9940
E-mail: esabho@bom4.vsnl.net.in

BANKERS
State Bank of India
Standard Chartered Bank
State Bank of Bikaner & Jaipur
State Bank of Travancore
BankofBaroda

SOLICITORS
Crawford Bayley & Company

Contents Page AUDITORS

Lovelock & Lewes
Board of Directors.. 1
Notice 2-4 FACTORIES
Directors' Report... 5-10 Ambattur Industrial Estate B.T. Road
Ambattur P.O.Balaram D. Sopan
Corporate Governance Report 11-14 Madras-600 058 24, Parganas
Auditors' Report 15-17 P-41,TaratalaRoad Khardah-743121
Balance Sheet 18 Kolkata-700088
Plot No. 4
Profit &Loss Account 19 B-28 MIDC Industrial M.I.D.C. Industrial Estate
Schedules to Accounts 20-37 Area, Kalmeshwar Thane-Belapur Road
Nagpur-441501 Thane-400 601
Cash Flow Statement 38
Auditors' Report on Consolidated Accounts 39
REGISTRARS & SHARE TRANSFER AGENTS
Consolidated Accounts 40-55 Computech Sharecap Limited, 147, Mahatma Gandhi Road,
Accounts of Subsidiary Company : Opp. Jehangir Art Gallery, Fort, Mumbai - 400 023
Flotech Welding & Cutting Systems Limited... 56-72 Tel: 2267 1824 Fax: 2267 0380
Esab India Limited
Notice
NOTICE is hereby given that the Sixteenth Annual General
Meeting of the Members of the Company will be held at the
Bombay House Auditorium, Bombay House, Honii Mody
Street, Mumbai 400 001, on Thursday, 12th June, 2003, at
4.00 p.m. to transact the following business:
ORDINARY BUSINESS:
1. To consider and adopt the Balance Sheet as at 31st
December, 2002 and Profit and Loss Account for the
year ended on that date together with the Reports of
the Directors and the Auditors thereon.
2. To appoint a Director in place of Mr. B.Pekkari who
retires by rotation and, being eligible, offers himself
for re-appointment.
3. To appoint a Director in place of Mr. N. H. Mirza who
retires by rotation and, being eligible, offers himself
for re-appointment.
4. To appoint Auditors to hold office from the conclusion
of this Annual General Meeting until the conclusion of
the next Annual General Meeting and to fix their
remuneration.
SPECIAL BUSINESS:
5. To appoint Mr.G Hariharan as a Director of the
Company.
6. To consider and, if thought fit, to pass with or without
modification, as an Ordinary Resolution, the following:
"RESOLVED THAT pursuant to the provisions of
Sections 198, 269, 309 and 310 and other applicable
provisions, if any, of the Companies Act, 1956, consent
of the Company be and it is hereby accorded to the
appointment of Mr. G. Hariharan as the Wholetime
Director of the Company and to his receiving
remuneration, benefits and amenities as Wholetime
Director of the Company for a period of one year from
7th January 2003 to 6th January 2004 upon the terms and
conditions as specified in the resolutions of the Board
of Directors passed on 7th January, 2003 and 8th March,
2003."
NOTES:
a. The explanatory statement required pursuant to
Section 173 of the Companies Act, 1956 in relation to
Items 5 and 6 above is annexed hereto.
b. A member entitled to attend and vote is entitled to
appoint a proxy to attend and vote instead of himself
on a poll only, and a proxy need not be a member.
Proxies, in order to be effective, must be received at the
office of the Company's Registrars and Share Transfer
Agents, Computech Sharecap Limited, 147, Mahatma
Gandhi Road, Opp. Jehangir Art Gallery, Fort, Mumbai
400 023, not less than forty-eight hours before the
scheduled start of the Meeting.
c. The Register of Members and Share Transfer Books of
the Company will remain closed from 16* April, 2003 to
25th April, 2003 (both days inclusive).
d. Queries on the accounts and operations of the
Company, if any, may please be sent to the Company at
its Registered Office (and marked for the attention of
the Company Secretary) at least seven days in advance
of the Meeting.
e. Members are requested to notify any change in
address to the Company's Registrars and Share
Transfer Agents quoting the relevant Folio number in
each case.
f. Members are requested to bring their copies of the
Company's Report and Accounts for the year ended 31
December, 2002 to the Meeting.
g. Members holding shares in identical order of names in
more than one Folio are requested to write to the
Company's Registrars and Share Transfer Agents,
enclosing their share certificates, to enable
consolidation of their holdings into one Folio.
h. Members holding shares in dematerialised form, may
please note that when opening a depository account
they may have provided their bank account details,
which will be printed on their dividend warrants.
Members wishing to change or delete these bank
account details should inform their Depository
Participant directly. The Company will not entertain
any direct request from Members in this connection.
L Members who hold shares in the physical form can
nominate a person in respect of all the shares held by
them singly or jointly. Members who hold shares in a
single name are advised, in their own interest, to avail
of the nomination facility by completing and submitting
Form 2B. Blank forms will be supplied by the
Company's Registrars and Share Transfer Agents on
request. Members holding shares in the dematerialised
form may contact their Depository Participant for

recording the nomination in respect of their shares,
j. The Company has transferred unclaimed dividends in
respect of all years up to and including the financial
year 1994-95 to the General Revenue Account of the
Central Government under the provisions of Section
205 A of the Companies Act, 1956. Members who have
so far not claimed or collected their dividends in respect
of such years may do so from the Registrar of
Companies, Maharashtra, Mumbai, by submitting an
application in the prescribed form.
Shareholders are hereby informed that the Company
will be obliged to transfer any amounts in the Unpaid
Dividend Account, which remain unpaid or unclaimed
for a period of seven years from the date of the transfer
into the Unpaid Dividend Account, to the credit of the
Investor Education and Protection Fund (the "Fund")
established by the Central Government. In accordance
with Section 205C of the Companies Act, 1956, no claim
shall lie against the Company or the Fund in respect of
any dividends remaining unclaimed and unpaid for a
period of seven years from the dates they first became
due for payment and no payment shall be made in
respect of any such claims.
k. As required under Clause 49(VI) of the Listing
Agreement, details of Directors being appointed and
retiring by rotation (and eligible for re-appointment)
are as follows:
(i) Appointment of Director
Mr. G Hariharan
Mr. Hariharan is a Metallurgical Engineer having
graduated from I.I.T Mumbai. He has thirty years' of
rich experience having worked in various capacities at
W.GForge & Allied Industries Ltd, M.N.Dastur & Co
(P) Ltd, Kirloskar Consultants Ltd and Philips India
Ltd before joining the Company in 1988. Since then he
has been responsible for Sales, Marketing, and Exports
and, latterly, the Company's Welding Consumables
Division,
(ii) Directors retiring by rotation and eligible for
re-appointment
Mr.B.Pekkari
Mr. Pekkari has a Master of Science in Electrical
Engineering and an academic degree in Economy. He
has worked in various positions in ESAB AB, Sweden
during the last 37 years, including Design Engineer;
Group Manager, Electronic Design; Laboratory
Esab India Limited
Manager; Production Manager; Development
Manager, Welding Equipment; Plant Manager; Division
Manager, Welding Automation and Business Area
Director, Automation. He is currently the Group Vice
President and Technical Director of ESAB AB, Sweden
with responsibility for R&D, Quality and Environment
Affairs.
Mr.Pekkari has the distinction of being,(i) Chairman of
the Swedish Welding Research Council,(ii) Member of
the Royal Swedish Academy of Engineering Sciences,
(iii) Chairman of the Swedish Welding Commission and
(iv) Chairman of the Welding Institute, Cambridge. He
has been involved in authoring a number of
professional publications in the field of welding and
cutting systems.
He is a Director of the fallowing companies:
ESAB Welding Equipment AB, Laxa, Sweden; ESAB
AB, Gothenburg, Sweden; GCE Gas Control Equipment
AB, Malmo, Sweden.
Mr. N. H. Mirza
Mr.Mirza is a B.Com and F.C.A. He is a Senior Partner
of M/s S.R.Batliboi & Co.Chartered Accountants and a
Director of Ernst & Young Pvt Ltd. Most of his career
has been with these entities. During his career,
Mr.Mirza has held the positions of Audit Partner,
Director of Client EDP Services, National Director of
Audit & Accounting Services and Managing
Partner,Western India. He has been involved in the
authoring of a number of professional publications of
the Institute of Chartered Accountants of India. He
has been President of the Institute of Internal Auditors,
Calcutta and President of the Indo-American Chamber
of Commerce, Western India. He has been a member of
the governing committee of the Bombay Chamber of
Commerce & Industry.
By Order of the Board of Directors
A.BANERJEE
Company Secretary
Mumbai, 8th March, 2003
Registered Office :
Lloyds Centre Point, 2nd floor,
1096-A, Appasaheb Marathe Marg,
Prabhadevi, Mumbai 400 025
Esab India Limited
Annexure to Notice
Explanatory Statement pursuant to Section 173 of the
Companies Act,1956
Item no 5
Mr. G. Hariharan has been appointed as an Additional
Director with effect from 7th January, 2003. Pursuant to the
provisions of Article 116 of the Companies Articles of
Association read with Section 260 of the Companies Act,
1956, he holds office until the date of this Annual General
Meeting. As required by Section 257 of the Companies Act,
1956, notice has been received from a member signifying
his intention to propose Mr. Hariharan as a Director. The
Board recommends this resolution for acceptance by the
members.
None of the Directors, except Mr. Hariharan, is concerned
or interested in this resolution.
Item no 6
The Board of Directors at its meeting held on 7* January,
2003 appointed Mr. G Hariharan as Wholetime Director for
a period of one year with effect from 7th January, 2003, subject
to the approval of shareholders. Mr. Hariharan is a qualified
Engineer and has rich experience in the Welding Industry.
Prior to this appointment Mr. Hariharan has served the
Company since 1988 as National Sales Manager, General
Manager - Exports, General Manager - Marketing and
General Manager - Welding Consumables Division. The
remuneration payable and perquisites to be granted to
Mr. Hariharan on his appointment and the other main terms
of his appointment as Wholetime Director for such period,
specified in the resolutions of Board of Directors passed on
7th January, 2003 and subsequently revised on 8* March,
2003 are as follows:
a] Salary of Rs.20,000 (Rupees Twenty Thousand Only)
per month in the scale of Rs.20,000 - Rs.75,000 per
month, with authority to the Board to fix his salary
within this scale.
b] Other Allowances : Rs.38,540 (Rupees Thirty Eight
Thousand Five Hundred Forty Only) per month with
authority to the Board to grant such increase as it may
consider necessary, subject to such allowances not
exceeding Rs. 100,000 (Rupees One Hundred Thousand
Only) per month.
c] Housing: Rent free unfurnished accommodation or a
house rent allowance of 60% of Salary.
d] Medical: Reimbursement of actual medical expenses
incurred including hospitalization expenses for himself,
his spouse and two dependent children.
e] Pension, Gratuity, and Provident Fund as provided for
under the Rules thereunder as may be amended from
time to time.
f] Transport & Communication: The provision of a
suitable car and a telephone at his residence for official
use.
g] No sitting fees for attending the meetings of the Board
of Directors or Committees thereof.
h] Where in any financial year, during the remaining tenure
of the Wholetime Director, the Company has no profits
or its profits are inadequate, the Wholetime Director
shall be paid such remuneration (by way of salary,
allowances and perquisites) as shall be determined at
the discretion of the Board of Directors subject to the
applicable provisions of Schedule XIII of the
Companies Act, 1956 as may be amended from time to
time or any equivalent statutory reenactment thereof.
i] The Wholetime Director or his spouse or any of his
relatives (as defined in Schedule 1A of the Companies
Act, 1956) shall not without the sanction of the Board
of Directors, accept any office or place of profit in the
Company or its subsidiaries, nor shall any of them
accept any dealership/distributorship/selling agency
of the Company, either directly or indirectly.
j] The Wholetime Director shall not so long as he
functions as such, without the sanction of the Board
of Directors, engage himself in any business or
occupation.
k] The Wholetime Director shall be entitled to annual
leave, sick leave and casual leave in accordance with
the rules applicable to Management Staff of the
Company as may be amended from time to time. He
shall be entitled to encashment of privilege leave,
standing to his credit at the time of cessation of his
appointment, in accordance with the rules then
applicable to the Management Staff.
The terms and conditions set out above may be treated as
an abstract under Section 302 of the Companies Act, 1956.
Mr. Hariharan is concerned and interested in this resolution
as it relates to his appointment. The Board recommends this
resolution for acceptance by the members.
By Order of the Board of Directors
A.BANERJEE
Company Secretary
Mumbai, 8th March, 2003
Registered Office :
Lloyds Centre Point, 2nd floor,
1096-A, Appasaheb Marathe Marg,
Prabhadevi, Mumbai 400 025
 Esab India Limited

Directors' Report to the Members

Your Directors herewith present the Sixteenth Annual on balance the amount provided for is reasonable and
Report together with the audited accounts of the necessary to reflect a prudent view of your Company's
Company for the year ended 31st December, 2002: current position in this matter.

FINANCIAL RESULTS The Audit Committee of your Board of Directors

12 months 9 months instituted a thorough inquiry into the Company's potential
to 31 Dec to 31 Dec income tax liability in respect of earlier years. Based on
2002 2001 the advice of external tax advisers it was concluded that
Rs OOOs Rs OOOs
this potential liability could amount to an aggregate of
Sales and other income 1,431,001 1,009,566 Rs.24 million. Notwithstanding management's firm intent
vigorously to challenge any such liability, your Directors
Operating loss after interest (76,305) (18,983)
decided that, in the interests of prudence, the entire
Depreciation 42,079 30,587 amount of Rs.24 million be provided for in the Company's
books.
Extraordinary items 28,121 29,190
Your Directors were also obliged to make an additional
(Loss) before tax (146,505) (78,760) provision during the year of some Rs 21 million in respect
Taxation credit 30,333 27,142 of the cumulative deficits arising in certain of the
Company's retirement benefit schemes. These deficits,
Loss for the year (116,172) (51,618) which have been quantified on the basis of valuations
Balance brought forward - 30,722 obtained from independent actuaries, have arisen largely
from the recent reductions in interest and annuity rates.
Loss carried forward (116,172) (20,896)
In addition, your Directors have also been obliged to
include certain other exceptional provisions, but of less
SPECIAL PROVISIONS
sizeable amounts, including the write down in the
The loss for the year under review was exacerbated by carrying value of your Company's investment in its
certain sizeable and exceptional provisions that, in the subsidiary, Flotech Welding & Cutting Systems Limited.
opinion of your Directors and the Company's auditors,
The financial and operating performance of the Company
it was prudent to incorporate into the year's results.
during the year is considered further below.
The largest of these special provisions amounted to some
OPERATIONS
Rs 58 million in respect of sales tax assessments relating
to earlier years, which have been challenged by the Your Company's turnover in 2002 recorded a growth of
Company. The amount provided does not take into about 7% on an annualised basis over the preceding
account any interest or penalty that may be levied in period, with exports registering an increase of some
addition to the original assessed amounts, but neither 31%. This was achieved in spite of the demand for
does it allow for any sales tax that may not be payable welding consumables and equipment remaining sluggish
as a result of a successful challenge of the amounts throughout the year and continuing price competition in
assessed. All of these assessments will continue to be the domestic market.
vigorously challenged; but it is your Directors' opinion, The rationalisation of the Company's manufacturing
endorsed by the Company's auditors and advisers, that facilities undertaken in previous years yielded results. In
Esab India Limited
order to improve the working capital situation and to
liquidate inventories, your Company had to resort to a
reduction in the level of production during the year under
review. As a result, inventory levels were reduced during
the first half of the year, but there was also some
underrecovery of factory overheads. An increase in
demand, especially from the automative industry and
infrastructure developments during the second half of
the year, enabled production volumes to be restored and
reduced inventory levels further.
Performance was also improved as a result of the
continuing restructuring and improvement initiatives
taken by management, which included the introduction
of receivables and inventory management, the adoption
of more efficient manufacturing practices, sales and
marketing strategies, and measures to reduce unit
employment costs.
The relocation of the manufacture of certain welding
equipment products from Esab Thailand to the
Company's Equipment Factory at Taratala, Kolkata, was
completed and the Company has successfully begun
exporting machines to international markets. The "mass
marketing" of certain categories of electrode continued
with the objective of widening and strengthening the
Company's brand presence throughout the country. The
special emphasis placed on the promotion of the newly
launched "Marathon Pac" solid wire has also started
yielding results. The Company continued its efforts to
drive down costs, and is well positioned to take advantage
of likely demand from the implementation of
infrastructure projects.
MANAGEMENT DISCUSSION AND ANALYSIS
Many user industries are upgrading their technology
from manual to semi-automatic and automatic welding.
Still, there are a large number of users of manual welding
electrodes, especially for fabrication. Small-scale
manufacturers of welding products are many in number
and cater to localized markets mostly concentrating on
low and plain carbon steel welding applications. Those
in the medium segment cater to a slightly larger market
comprising users of plain carbon steel as well as low/
high alloy steel welding applications. The organized sector
consists of two major manufacturers, one of which is
your Company, which cater to the entire spectrum of
welding applications, but especially to those users
engaged in medium and high-end welding applications.
A few international companies, some of whom are
reportedly contemplating setting up manufacturing
facilities in India, also cater to these user segments
through imports, taking advantage of the liberalized import
duty regime.
In recent times, small and medium scale manufacturers
have grown their share of the markets they operate in
by offering low prices and attractive credit terms. Other
manufacturers have responded with the same strategy
as a result of which, in spite of a recent modest
improvement in demand, selling prices remain under
pressure. In the more sophisticated segments too, cheap
imports have created pressure on prices. Users of
welding products also remain under severe cost pressure
due to the sluggish demand for their products. This has
pushed even the more sophisticated users of welding
products to small and medium scale manufacturers
because of their lower prices. Essentially, much of the
industry is characterized by high volumes and low
margins.
Demand growth has been more or less stagnant during
the last few years. The recent announcement of
investments aggregating Rs. 60,000 crores for the
housing and infrastructure sector, and of tax relief for
the automotive and white goods sectors, should boost
consumption of long and flat steel products. The lowering
of customs duty on power equipment and the
liberalization of large power projects should also boost
steel consumption. The rate of growth in capital

investment is also expected to improve. Since demand
for your Company's products is related to steel
consumption, infrastructure building and the level of
capital investment, an increase in the demand for welding
consumables, equipment and cutting products is foreseen
for 2003. However, the consequences of a prolonged
conflict in Iraq could have a negative effect on demand.
Your Company's business is structured into two broad
segments, based on market, product and manufacturing
characteristics. The contribution of each to total revenue
for the year ended 31st December 2002 has been as
follows:
Consumables 72%
Equipment 28%
The segmental data in the Notes to the financial statements
provides details of the performance of each of these
segments.
Your Company enjoys an international reputation; it has
a large product offering, a wide distribution network
and a good technology base. Management is reasonably
confident of utilizing these strengths to overcome
competitive pressures and to improve your Company's
performance in 2003.
The major contributors to the 7% increase in turnover
during the year were the "mass market" electrodes, solid
MIG wire continuous electrodes and exports. There were
a number of product lines where there were reductions
in turnover, mainly due to declining demand.
The high sales of "mass market" electrodes was reflected
in the increased proportion of material cost to sales of
68% as compared to the previous year's 63.5%. The
company sold these items to dealers on a Cost & Freight
basis, resulting in the increase in transport & freight
costs. Other direct costs have broadly moved in line
with the increased volume of business. Several costs
have reduced as a result of cost control of overheads.
The increase in Rates & Taxes is on account of the
provision for sales tax for earlier years. The decrease in
Esab India Limited
Salaries & Wages is due to a reduction in total employee
strength from 666 to 574 in the course of the year. On
the other hand, the reduction in earnings of employees'
retirement benefit trusts, owing to lower interest rates,
has meant that the Company has had to provide an
additional Rs. 21 million contribution, based on actuarial
valuations. By replacing higher cost loans for those with
lower interest rates, and by negotiating a reduction in
rates on other loans, the interest cost has reduced.
The mechanism of deferred tax accounting has resulted
in a part of the current year's loss being offset by a
deferred tax credit to the revenue account.
The increased sales tax and retirement benefit provisions
are reflected in an increase in Current Liabilities. Amounts
not provided in respect of income tax and sales tax,
because of their contingent nature, are included in
contingent liabilities.
Plant purchased from Esab Thailand, consequent upon
the transfer of manufacturing of certain welding
equipment from Thailand to the Company's Taratala
factory, led to an increase in Fixed Assets. The other
major addition was a "Marathon Pac" machine at the
Nagpur factory.
Continuous efforts to control working capital led to the
reduction of finished goods inventories by nearly 75%.
This release of some Rs.123 million has been critical to
cash flow. A similar reduction in Debtors has not been
possible due to the dynamics of a stagnant market,
requiring increased credit to customers.
Loans and Advances include Rs.3.922 million treated as
recoverable from the former Managing Director. As
against this, the Company has recovered a deposit of
Rs.15 million, which had been provided as security for
a flat rented by the Company for his occupation.
During the year the internal auditors conducted a review
of the internal controls and systems operating in the
Company. These reviews disclosed several areas for
improvement, especially on account of inadequate
Esab India Limited
standardization of practices between locations, practices
based on an organization structure that has now changed
and inconsistent application. Your Directors have put
into operation a process for setting these right as soon
as possible.
FINANCE
During the year under review, the Company prepaid a
high interest loan by drawing on a term loan of Rs 75
million from HDFC Bank. The Company also borrowed
Rs.50 million from UTI Bank Limited for capital
expenditure and long term working capital. Since no
commercial paper was outstanding, the PI rating from
Credit Rating Information Services of India Limited
(CRISIL) which had been assigned to the Company,
was withdrawn during the year.
SUBSIDIARY
The Directors' Report and the Audited Accounts for the
year ended 31st December, 2002 along with the Report
of the Auditors and the statement required under Section
212(l)(e) of the Companies Act, 1956 for Flotech
Welding & Cutting Systems Limited, a subsidiary, are
appended. In view of the depressed state of the capital
goods sector, the subsidiary registered a 6% decline in
annual turnover to Rs 17.5 million, andalossof Rs.1.09
million for the year.
ENVIRONMENT AND SAFETY
The Company is committed to industrial safety and
environment protection. The Equipment factory at
Taratala and all three Consumables manufacturing units
hold ISO 14001:1996 certification.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief, and according
to the information and explanations obtained by them,
your Directors make the following statement in terms
of Section 217(2AA) of the Companies Act, 1956:
1. that in the preparation of the annual accounts for
the year ended 31 st December, 2002, the applicable
accounting standards have been followed;
8
2. that the accounting policies mentioned in Note 1,
Schedule 18 of the Annual Accounts have been
selected and applied consistently and judgements
and estimates that are reasonable and prudent made
so as to give a true and fair view of the state of
affairs of the Company at the end of the financial
year on 31st December, 2002 and of the loss of the
Company for that year;
3. that proper and sufficient care has been taken for
the maintenance of adequate accounting records in
accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud
and other irregularities;
4. that the annual accounts for the year ended 31st
December, 2002 have been prepared on a going
concern basis.
ENERGY CONSERVATION, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE
The information required under Section 217(l)(e) of the
Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, is given in the Annexure and
forms part of this Report.
DIRECTORS
Mr. H.V. Schoyck resigned as Director and Chairman of
the Board of Directors with effect from 29 th
October,2002.
Mr. S.K. Bhattacharyya's term of office as Managing
Director ended on 31st January 2003 upon the expiry of
his contract.
Mr. H.P.R. Mullan was appointed as a non-retiring
Director as well as the Chairman of the Board of Directors
with effect from 29th October, 2002 pursuant to Article
112 and Article 148, respectively of the Company's
Articles of Association.

Mr. G. Hariharan was appointed as Wholetime Director
with effect from 7th January 2003. Necessary resolutions
for the shareholders' approval of his appointment and
remuneration are being proposed at the forthcoming
Annual General Meeting.
In accordance with the provisions of Article 130 of the
Company's Articles of Association, Mr. B. Pekkari and
Mr. N.H. Mirza retire by rotation at the ensuing Annual
General Meeting and, being eligible, have offered
themselves for re-appointment. Necessary resolutions
are being proposed for their re-appointment at the
forthcoming Annual General Meeting.
In connection with the qualification contained in clause
4(g) of the Auditors' Report, details of the excess
remuneration paid to the Managing Director are provided
at Note 13 of Schedule 18 to the Accounts.
During the year under review, Mr S.K.Bhattacharyya,
the Managing Director, withdrew remuneration
aggregating to some Rs 6.026 million. Under Schedule
XIII of the Companies Act, 1956, in view of the
Company's losses, shareholders would require to
approve by way of special resolution any remuneration
to Mr S.K.Bhattacharyya for the year in excess of Rs
1.8 million. In view of the continuing losses at the
Company, its current financial condition, and a number
of other factors, your Board has determined not to
approach shareholders for the payment of remuneration
to Mr S.K.Bhattacharyya in excess of the stipulated
amount of Rs 1.8 million. Mr S.K.Bhattacharyya has been
required to repay the excess remuneration for the year,
of which an amount of about Rs 0.304 million relates to
provident fund contributions. The process for recovering
the remaining excess of Rs 3.922 million has been
initiated.
AUDITORS
Messrs Lovelock & Lewes, Chartered Accountants,
retire as Auditors of the Company and are eligible for re-
appointment. The Company has received confirmation
that their appointment will be within the limits prescribed
under Section 224 (IB) of the Companies Act, 1956.
PERSONNEL
Your Company regards its human resources amongst
its most valuable assets. Special emphasis is being placed
Esab India Limited
on creating a work environment that encourages initiative,
provides challenge and opportunity and recognises the
performance and potential of employees at all levels and
in all functions. Industrial relations during the year
remained cordial. As at the end of December 2002, the
Company had 574 employees as against 666 at the end
of 2001.
A statement of particulars of employees' remuneration
under Section 217 (2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees)
Rules, 1975 forms part of this Report. However, in
accordance with the provisions of Section 219(l)(b)(iv)
of the Companies Act, 1956, the Report and Accounts
are being sent to all shareholders of the Company without
the statement of particulars of employees' remuneration.
Any shareholder interested in obtaining a copy of the
particulars should write to the Company Secretary at
the Registered Office.
CORPORATE GOVERNANCE
The information required to comply with Clause 49 of
the Listing Agreement is given as a separate Report on
Corporate Governance. The Auditors have examined the
Company's compliance and their certificate is reproduced
in the Report.
ACKNOWLEDGEMENTS
Your Directors wish to record their sincere appreciation
of the support extended to the Company by its many
customers, suppliers and shareholders as well as the
Company's bankers and financial institutions.
Your Directors also wish to place on record their
appreciation of the efforts and contribution of the
Company's employees at all levels and across different
locations all over the country during the difficult year
under review.
For and on behalf of the Board of Directors
HOMIER. MULLAN
Chairman
Mumbai, 8th March, 2003
Esab India Limited
Annexure to the Directors' Report
Statement under Section 217(l)(e) of the Companies
Act, 1956 read with Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules,
1988 and forming part of the Directors' Report for the
year ended 31st December, 2002:
Conservation of Energy
Energy Conservation Measures:
Baking ovens control system changed to
programmable automatic controller from manual
mode of operation.
Reduced baking time cycles for various types of
electrodes established and programmed.
Capacitor Banks installed to maintain power factor
at required levels in order to avoid penal energy
charges.
Improved design of Heater Bank and control system
for continuous chain oven to be implemented.
The energy conservation measures adopted have reduced
production costs. Energy consumption data is not
supplied, since the Company does not fall within the list
of specified industries.
Technology Absorption
Research and Development was conducted into:
Quality improvement of stainless steel and some
special purpose electrodes.
Adaptation of ESAB technology for new Mild Steel
General Purpose electrodes.
Introduction of Power Compact MIG Welding
Machine for both domestic and international
markets.
Introduction of advanced models of Anaesthesia
Machines and ceiling pendants in Medical Product
Group.
Indigenisation of components for existing
machines.
10
The Research and Development programme has led to a
reduction in production costs, the introduction of a wider
product range, improved product quality, and increased
exports.
Research and Development is also proposed into:
Indigenisation of Manley Multivent Ventilator's
electronic components.
Introduction of modular wire feeding system in all
MIG machines.
Introduction of Marathon Pac MIG welding wire
manufactured indigenously.
Expenditure on Research and Development amounted
to Rs 3.504 million (capital) and Rs 4.582 million
(recurring). The total of Rs 8.086 million represents some
0.57% of annual turnover.
Ventilator technology imported in 1999 has been fully
absorbed.
Foreign Exchange
Export markets are USA, Japan, Singapore, Canada,
Bangladesh, Sri Lanka and certain countries in Africa.
During the year, the total foreign exchange expenditure
amounted to Rs.38 million (including Rs.28.57 million
for the import of raw materials, Rs.0.35 million for the
import of components, Rs.6.08 million for the import of
capital goods and Rs. 3 million towards expenditure in
foreign currency).
Foreign exchange earnings in the year, represented by
the FOB value of exports, amounted to Rs.79.99 million
For and on behalf of the Board of Directors
HOMIER. MULLAN
Chairman
Mumbai, 8th March, 2003
 Esab India Limited

Corp6rate Governance
The Company is committed to good corporate Director Other Membership of other Board
Directorships* Committees
governance. The Board of Directors is determined to
Mr. H.P.R. Mullan Nil
create an inclusive culture, which is open and
transparent. Policies and procedures that are designed Mr. G Hariharan Nil
to secure shareholder value are now being rigorously Mr. N. H. Mirza Nil
implemented. Mr. T. Mitra 3(of which 1 as Chairman)
Mr. B. Pekkari Nil
The flow of financial and operating information to the Mr. J.Templeman Nil
Board of Directors has already improved considerably.
Internal controls and procedures have been Mr. S.N. Talwar 15 10 (of which 4 as Chairman)
comprehensively examined under an extensive internal Ms. A.R. Yapp Nil
audit conducted by an external firm that reports directly
* Excluding Alternate Directorships and Directorships of Private
to the Board's Audit Committee. Improvements are being Limited Companies and Foreign Companies, wherever applicable.
implemented to counteract observed weaknesses, and
liabilities in respect of earlier years have now been Audit Committee
prudently accounted for. The terms of reference of the Committee cover the
Board of Directors matters specified under the Listing Agreements and
The Board of Directors consists of six members. Other Section 292Aof the Companies Act, 1956. The members
than the wholetime director, all other members of the of the Committee are:
Board are non-executive directors, including two who Mr. N. H. Mirza (Chairman)
are independent directors. Mr. T. Mitra
Four Board Meetings were held during the year on: Mr. J. Templeman
6 March, 2002 The composition of the Audit Committee meets the
26 April, 2002 stipulated requirement for independent directors. The
13 August, 2002 Company's Corporate Finance Manager, its statutory
auditors and its internal auditors are permanent invites
29 October, 2002 to the Committee's meetings. The Company Secretary
Category Meetings Attended is Secretary to the Committee. The quorum for
Director of Directorship Board AGM Committee meetings is two members or one third of the
1
total strength of the Committee, whichever is higher.
Mr. H.P.R. Mullan Nominee N.A. Appointed on
Esab Holdings 29 October 2002
Limited
There were four meetings of the Audit Committee held
Mr. G. Hariharan Executive N.A. N.A. Appointed on during the financial year 2002 on:
7 January 2003
Mr. N. H. Mirza Independent & 4 Yes
6 March, 2002
Non-Executive 25 April, 2002
Mr. T. Mitra Independent & 4 Yes
Non-Executive
13 August, 2002
Mr. B.Pekkari Non-Executive 1 No 29 October, 2002
Mr. J. Templeman Non-Executive 4 Yes Appointed on
6 March 2002 All three Committee members attended all four meetings.
Mr. S.N.Talwar Non-Executive 4 Yes
Alternate to Mr.B.Pekkari
Remuneration Committee
Ms. A.R.Yapp Non-Executive N.A. N.A. Appointed on
Alternate to MrJ.Templeman 8 March 2003 The Company has not set up a Remuneration Committee
(which is not mandatory) as only one director is in an
Mr. H.V. Schoyck Non-Executive 3 Yes Resigned on
29 October 2002 executive capacity. The remuneration of that Director is
Mr. S. K. Bhattacharyya Executive 4 Yes Until determined and approved by the Board of Directors and
31 January 2003 is subject to the approval of the Company in general
Mr. O. Rebeling Non-Executive N.A. Resigned on meeting and other relevant regulatory or statutory
6 March 2002
authorities.

11
Esab India Limited
During the year under review, Mr S.K.Bhattacharyya,
the Managing Director, withdrew remuneration
aggregating to some Rs 6.026 million (excluding pension
and gratuity contributions and separation benefits) as
set out in Note 13 of Schedule 18 of the Annual Accounts.
The remuneration includes Rs.3.922 million drawn by
Mr. Bhattacharyya in excess of the limits specified under
Schedule XIII to the Companies Act, 1956 and the
Company has initiated the process for recovery of the
said excess amount.
The five year service contract of Mr.S.K.Bhattacharyya
expired on 31st January, 2003 and, consequently, his
employment with the Company terminated on that date.
Mr. Bhattacharyya was not entitled to any severance
fees and none were paid.
Mr. Bhattacharyya was not paid any commission or
performance linked incentives during the period under
review.
The Company does not grant stock options to any of its
Directors or employees.
The other Indian Directors, who are all non-executive,
do not draw any remuneration from the Company except
sitting fees, which in respect of the year ended
31st December 2002 were paid as follows:
Mr. S. N. Talwar Rs 20,000
Mr. N. H. Mirza Rs 47,000
Mr. T. Mitra Rs 44,000
The Directors received no commission in the absence
of profits.
The foreign Directors do not draw any remuneration
from the Company.
During the year, the Company paid professional fees
amounting to Rs. 35,050 to Crawford Bayley & Co.,
Advocates and Solicitors, a firm in which Mr. S. N.
Talwar is a Partner.
Share Transfer cum Investors' Grievance
Committee
The Committee functions under the Chairmanship of
Mr. T. Mitra, a non-Executive Independent Director. The
other members of the Committee are Mr. N.H. Mirza
and Mr. J. Templeman.
Mr. A. Banerjee, Company Secretary is the Compliance
Officer of the Company.
12
The Directors take stock of the position on all major
investors' grievances at the meetings of the Board of
Directors and the Share Transfer cum Investors'
Grievance Committee.
During the year, the Company received 74 complaints
from shareholders, out of which 73 complaints had been
resolved to the satisfaction of the shareholders. As of
31st December, 2002 there were no pending share
transfers (excepting those sent under objections or held
up due to warning notices sent to the sellers).
General Body Meetings
The last three Annual General Meetings of the Company
have been held at Bombay House Auditorium, Bombay
House, Mumbai at 4.00 p.m. All the proposed resolutions,
including special resolutions, were passed by the
shareholders as set out in their respective Notices.
No resolutions were put through postal ballot, and the
Company is not considering the introduction of a postal
ballot.
Disclosures
There have been no transactions of a material nature
which present a potential conflict of interest.
There has been no non-compliance by the Company,
and no penalties or strictures have been imposed by any
regulatory or statutory authority, on any matter relating
to the capital market during the last three years.
Communication
The Company's quarterly and half-yearly financial results,
after their approval by the Board of Directors, are
promptly issued to all the Stock Exchanges with whom
the Company has Listing arrangements. These financial
results, in the prescribed format, are also published in
leading local and national newspapers (including Business
Standard and Sakal) as well as being posted on the
Company's website at www.esabindia.com. The half-
yearly report is not sent to individual shareholders.
On occasion, presentations are made to institutional
investors and analysts, after filing of the periodic results
with the Stock Exchanges. A Management Discussion
and Analysis forms part of the Directors' Report, included
in the Annual Report.
During the year, the Company sought a rating on its
Corporate Governance practices from ICRA Limited, an
 Esab India Limited

independent rating agency. The rating assigned to the Market Price Data
Company by the rating agency, was "CGR4", which The Stock National Stock Calcutta Stock
Exchange, Mumbai BSE Sensex Exchange Exchange*
implies that, in ICRA's opinion, the Company has adopted High Low High Low High Low High Low
(inRs.) (inRs.) (inRs.) (inRs.) (inRs.) (inRs.)
and follows such practices, conventions and codes as
January, 2002 46 42 3438 3246 46 42 46 45
would provide its financial stakeholders a moderate level
February, 2002 49 41 3713 3312 49 42 43 34
of assurance on the quality of its corporate governance.
March, 2002 44 40 3690 3459 44 40 -
General Shareholder Information
April, 2002 45 38 3513 3301 44 39 -
AGM : Date, Time & Venue 4.00 pm on 12"1 June, 2003 at
May, 2002 46 41 3462 3114 46 41 45 40
Bombay House Auditorium,
Bombay House, Homi Mody June, 2002 53 42 3362 3161 53 42 -
Street, Mumbai - 400 001
July, 2002 56 43 3359 2988 56 43 -
Financial Year January to December
August, 2002 44 41 3181 2950 44 41
Board Meeting to approve
periodic financial results September, 2002 41 37 3187 2991 41 37 40 40

Quarter ending 31s' March, 2003 Last week of April, 2003 October, 2002 37 34 3010 2834 37 34 35 35

Quarter/Half Year ending November, 2002 44 36 3229 2948 43 36 -

30th June 2003
Quarter ending
30* September 2003
Year ending
31s1 December 2003
Annual General Meeting for the year
ending 31st December,2003
Dates of Book Closure
Dividend payment date
Listing on Stock Exchanges
Stock Code
Last week of August, 2003
Last week of October, 2003
Last week of February, 2004
April / May 2004
16"1 April, 2003 to 25"1 April,
2003 (both days inclusive)
No dividend recommended.
The Stock Exchange, Mumbai
The National Stock Exchange
The Calcutta Stock Exchange
The listing fees for financial
year 2003-04 to these Stock
Exchanges will be paid within
the stipulated time on their be-
coming due.
Physical
- 500133 on the Stock
Exchange, Mumbai
- ESABINDIA on National
Stock Exchange
- 10015010 on Calcutta Stock
Exchange
Demat
- INE284A01012
December, 2002 46 42 3398 3207 46 42 43 43
* Excepting January 2002, February 2002, May 2002, September 2002, October
2002 and December 2002, no trading has taken place on Company's equity shares
during the relevant period.
Registrars and Share Computech Sharecap Limited
Transfer Agents 147, Mahatma Gandhi Road,
Fort, Mumbai - 400 023
Share Transfer System Shares sent for transfer are
processed and approved by the
Share Transfer cum Investors'
Grievance Committee or by the
Board of Directors, subject to
receipt of all requisite documents.
Depending on the volume of
transfers, the Committee meets to
ensure that all transfers are
approved for registration within
the stipulated period. Pursuant to
applicable provisions contained
in the Listing Agreements, the
Board of Directors with a view to
expedite the process, has
severally authorized the
Chairman of the Board of
Directors, the Chairman of the
Share Transfer cum
Investors'Grievance Committee
and the Company Secretary to
approve the transfers of shares.

13
Esab India Limited

Distribution of shareholding as on 3l" December, 2002 company, has not been

dematerialised. The Company
Number of Equity Number of Number of %of has entered into an Agreement
Shares held Shareholders Shares total
with National Securities
Upto 500 14,608 2,489,336 16.17 Depository Ltd. and Central
501 - 1000 905 695,519 4.52 Depository Services (India)
1001 - 2000 300 442,664 2.88 Ltd. to offer shareholders the
2001 - 3000 102 257,377 1.67 option to dematerialise their
3001 - 4000 36 126,539 0.82 shares with Depositories.
4001 - 5000 30 141,570 0.92 Outstanding GDRs/ADRs There are no outstanding
32 1.60 GDRs/ADRs /Warrants or any
5001 - 10000 245,905
41 71.42 convertible instruments.
10001 and above 10,994,110
Plant Locations
Total 16,054 15,393,020 100.00
Shareholding pattern as on 31st December, 2002: ESAB INDIA LIMITED ESAB INDIA LIMITED
Plot No. 13, 3ri Main Road, Equipment Factory,
Number of %of Industrial Estate, Ambattur, P-41 Taratala Road,
Shares total Chennai - 600 058 Kolkata - 700 088

Esab Holdings Limited
Unit Trust of India
Mutual Funds
Banks, Financial Institutions
and Insurance Companies
Foreign Institutional Investors
Corporate Bodies
Directors and Relatives
Non-resident Indians
Indian Public
Dematerialisation of
shares & liquidity
5,743,200 37.31 ESAB INDIA LIMITED ESAB INDIA LIMITED
B-28, MIDC Industrial Area, Electrode Factory, B.T. Road,
1,397,997 9.08 Kalmeshwar, Khardah, P.O. B.D. Sopan,
10,801 0.07 Nagpur - 441 501 North 24 - Parganas,
Kolkata - 743 121
1,322,615 8.59 ESAB INDIA LIMITED
700 0.00 Plot No. 4, MIDC Industrial Area,
1,799,418 11.69 Thane Belapur Road, Thane - 400 601
2,440 0.02 Address for correspondence Company Secretary
36,795 0.24 ESAB INDIA LIMITED
Lloyds Centre Point, 2"d Floor,
5,079,054 33.00
1096-A, Appasaheb Marathe Marg,
15,393,020 100.00 Prabhadevi, Mumbai - 400 025
Tel : 022 2431 3224
st
As on 31 December, 2002, Fax: 022 2432 9940
55.02% of the total paid-up E-mail: esabho@bom4.vsnl.net.in
equity capital was held in
dematerialised form. 37.31% of For and on behalf of the Board of Directors
the paid up equity capital
which is held by Esab Holdings Horn! P.R. Mullan
Limited, a U.K. incorporated Mumbai, 8th March, 2003 Chairman

Auditors' Certificate on compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreement(s)
To the Members of Esab India Limited
We have examined the compliance of the conditions of Corporate Governance by Esab India Limited for the year ended December 31, 2002
as stipulated in clause 49 of the Listing Agreements of the said Company with the Stock Exchanges in India.
The compliance of conditions of Corporate Governance is the responsibility of the Company's management. Our examination was limited to
the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance.
It is neither an audit nor an expression of an opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, the Company has complied with the conditions
of Corporate Governance as stipulated in the above mentioned Listing Agreements.
We state that there is one investor grievance pending for a period exceeding one month against the Company as per the records maintained by
the Company.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with
which the management has conducted the affairs of the Company.
For Lovelock and Lewes
Chartered Accountants
Place : Mumbai Vasant Gujarathi
Date : 8* March, 2003 Partner

14

Auditors' Report to the Members of
Esab India Limited
We have audited the attached Balance Sheet of
Esab India Limited as at December 31, 2002, the
relatedTrofit and Loss Account for the year ended
on tiifltCTtntr annexed thereto and the Cash Flow
Statement for the year ended on that date, which
we have signed under reference to this report.
These financial statements are the responsibility
of the management of the Company. Our
responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with
auditing standards generally accepted in India.
Those Standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by
management, as well as evaluating the overall
financial statement presentation. We believe that
our audit provides a reasonable basis for our
opinion.
As required by the Manufacturing and Other
Companies (Auditor's Report) Order, 1988, issued
by the Central Government of India in terms of
sub-section (4 A) of Section 227 of the Companies
Act, 1956 of India (the 'Act') and on the basis of
such checks as we considered appropriate and
according to the information and explanations
given to us, we set out in the Annexure a statement
on the matters specified in paragraphs 4 and 5 of
the said Order.
Further to our comments in the Annexure referred
to in paragraph 3 above, we report that:
(a) Read together with our comments in
paragraph (d) below, we have obtained all
the information and explanations, which to
Esab India Limited
the best of our knowledge and belief were
necessary for the purposes of our audit;
(b) In our opinion, proper books of account as
required by law have been kept by the
Company so far as appears from our
examination of those books;
(c) The Balance Sheet and Profit and Loss
Account dealt with by this report are in
agreement with the books of account;
(d) We refer to Note 24 of Schedule 18, our
verification of related party disclosures as
required under Accounting Standard 18-
Related Party Disclosures has been based
on the information made available to us by
the Company. Read together with the
comment above, in our opinion, the Balance
Sheet and Profit and Loss Account dealt with
by this report comply with the accounting
standards referred to in Section 211 (3C) of
the Act;
(e) On the basis of written representations
received from the directors, as on December
31, 2002, and taken on record by the Board
of Directors, we report that no director of
the Company is disqualified as on December
31, 2002 from being appointed as a director
as referred to in Section 274(1 )(g) of the
Act;
(f) We refer to Note 13 B of Schedule 18. During
the year, the Company has paid to the former
Managing Director, remuneration
amounting to Rs. 6.026 million, which in
the absence of profits, is in excess of the
limit specified under Schedule XIII of the
Act by Rs. 3.922 million. Consequently the
excess remuneration ofRs. 3.922 million has
been credited to the Profit and Loss Account
and is recoverable from him.
15
Esab India Limited
(g) Subject to the matter referred to in paragraph
(f) above, in our opinion and to the best of
our information and according to the
explanations given to us, the Balance Sheet
and Profit and Loss Account together with
the Schedules 1 to 18 annexed thereto, give
in the prescribed manner, the information
required by the Act, and give a true and fair
view in conformity with the accounting
principles generally accepted in India :
i) in the case of the Balance Sheet, of the state
of affairs of the Company as at December
31, 2002;
Annexure referred to in paragraph 3 of Auditors' Report of even date to the members of
Esab India Limited on the accounts for the year ended December 31, 2002
The Company has maintained proper records to
show full particulars including quantitative details
and situation of its fixed assets. The fixed assets
of the Company have been physically verified
during the year by the management. The
discrepancies noticed on such verification have
been properly dealt with in the books of account.
The fixed assets of the Company have not been
revalued during the year.
The stocks of finished goods, work-in-progress,
raw materials and stores & spare parts of the
Company at all its locations have been physically
verified by the management during the year. In
respect of stocks lying with third parties, these
have substantially been confirmed by them. In our
opinion, the frequency of physical verification of
stocks is reasonable.
The procedures for physical verification of stocks
followed by the management are reasonable and
adequate in relation to the size of the Company
and the nature of its business.
The discrepancies noticed on such verification
between the physical stocks and the book records
were not material and these have been properly
dealt with in the books of account.
16
ii) in the case of the Profit and Loss Account,
of the loss for the year ended on that date;
and
iii) in the case of Cash Flow Statement, of the
cash flows for the year ended on that date.
For Lovelock & Lewes
Chartered Accountants
Vasant Gujarathi
Partner
Place: Mumbai
Date : March 8, 2003
6. On the basis of our examination of stock records
we are of the opinion that the valuation of stocks
is fair and proper in accordance with normally
accepted accounting principles and is on the same
basis as in the preceding year.
7. The Company has not taken any loans, secured or
unsecured, from companies, firms or other parties
listed in the register maintained under Section 301
of the Act. In terms of sub-section (6) of Section
370 of the Act, provisions of the Section are not
applicable to a company on or after the
commencement of The Companies (Amendment)
Act, 1999, of India.
8. The Company has not granted any loans, secured
or unsecured, to companies, firms or other parties
listed in the register maintained under Section 301 of
the Act. In terms of sub-section (6) of Section
370 of the Act, provisions of the Section are not
applicable to a company on or after the
commencement of The Companies (Amendment)
Act, 1999, of India.
9. The parties including employees to whom loans
or advances in the nature of loans have been given
by the Company are repaying the principal amounts
as stipulated and are also regular in payment of
interest, where applicable.

10. In our opinion and having regard to the
explanations that some of the items are of a special
nature for which alternate quotations are not
available, there are adequate internal control
procedures commensurate with the size of the
Company and the nature of its business for
purchases of stores, raw materials including
components, plant and machinery, equipment and
other assets and for the sale of goods.
11. In our opinion, in respect of the transactions of
purchase of raw materials, made in pursuance of
contracts or arrangements as is evident from the
register maintained under Section 301 of the Act
and aggregating during the year to Rs. 50,0007- or
more in respect of each party, no comparison of
prices could be made since the purchase of raw
materials were of highly special nature and there
were no other transactions of similar nature with
other parties. There are no transactions for
purchase of goods and sale of goods, materials
and services made in pursuance of contracts or
arrangements entered in the register maintained
under Section 301 of the Act.
12. The Company has a regular procedure for the
determination of unserviceable or damaged stores,
raw materials and finished goods and necessary
adjustment for the loss has been made in the
accounts.
13. The Company has not accepted any deposits from
the public.
14. In our opinion, reasonable records have been
maintained by the Company for the sale and
disposal of realisable scrap. As explained to us,
there are no by-products.
15. In our opinion, the Company has an internal audit
system commensurate with its size and nature of
its business.
16. The maintenance of cost records has not been
prescribed by the Central Government of India
under Section 209( 1 )(d) of the Act, for the products
manufactured by the Company.
Esab India Limited
17. The Company has generally been regular during
the year in depositing Provident Fund and
Employees' State Insurance dues, with the
appropriate authorities in India. However, as regards
Employees' State Insurance dues, pertaining to the
employees of Kolkata establishments, consequent
to the amendment in the Employees' State
Insurance Act with effect from January 1, 1997,
the Company has neither deducted nor deposited
such contributions during the year, in view of an
interim stay order granted by the Honorable
Calcutta High Court.
18. There were no undisputed amounts payable in
respect of income tax, wealth tax, sales tax,
customs duty and excise duty as at December 31,
2002, which were outstanding for more than six
months from the date they became payable.
19. During the course of our examination of the books
of account carried out in accordance with the
generally accepted auditing practices in India, we
have not come across any personal expenses of
employees or directors which have been charged
to Profit and Loss Account, nor have we been
informed of such case by the management other
than those payable under contractual obligations
and / or accepted business practices.
20. The Company is not a sick industrial company
within the meaning of clause (o) of Section 3(1)
of the Sick Industrial Companies (Special
Provisions) Act, 1985, of India.
21. In respect of the Company's trading activities,
damaged goods have been determined and
necessary adjustment for the loss has been made
in the accounts.
For Lovelock & Lewes
Chartered Accountants
Vasant Gujarathi
Partner
Place: Mumbai
Date : March 8, 2003
17
Esab India Limited

Balance Sheet
as at 31 st December, 2002
31st December, 2001
Schedule Rs.'OOO Rs.'OOO Rs.'OOO

SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
SHARE CAPITAL 1 153,930 153,930
RESERVES AND SURPLUS 2 110,590 158,779
264,520 312,709
LOAN FUNDS
SECURED LOANS 3 237,084 124,293
UNSECURED LOANS 4 120,000
237,084 244,293
501,604 557,002
APPLICATION OF FUNDS
FIXED ASSETS
Gross Block 5 733,484 735,435
Less: Depreciation 261,308 232,245
Net Block 472,176 503,190
Capital Work-in-progress including Advances 1,089 6,821
473,265 510,011
INVESTMENTS 6 5,271 7,199
CURRENT ASSETS, LOANS AND ADVANCES
Inventories 7 125,088 247,370
Sundry Debtors 8 123,465 111,878
Cash and Bank Balances 9 50,836 60,438
Loans and Advances 10 46,040 77,416
345,429 497,102
LESS:
CURRENT LIABILITIES AND PROVISIONS
Liabilities 11 450,258 471,637
Provisions 12 8,746
459,004 471,637
NET CURRENT ASSETS (113,575) 25,465
DEFERRED TAX (Refer Note 22 of Schedule 18)
- ASSET 136,324 76,149
- LIABILITY (67,664) (61,822)
68,660 14,327
PROFIT AND LOSS ACCOUNT 13 67,983
501,604 557,002
Notes to Accounts 18
The Schedules referred to above form an integral part of the Balance Sheet
In terms of our report of even date For and on behalf of the Board of Directors
For Lovelock & Lewes H. P. R. Mullan Chairman
Chartered Accountants G. Hariharan Wholetime Director
Vasant Gujarathi A. Banerjee N.H.Mirza J.Templeman
T.Mitra S. N. Talwar Directors
Partner Company Secretary
Mumbai, 8th March, 2003 Mumbai, 8th March, 2003

18
 Esab India Limited

Profit and Loss Account

for the year ended 31 st December, 2002
12 Months to 9 Months to
31st December, 2002 31st December, 2001
Schedule Rs.'000 Rs.'OOO
INCOME
Sales (Gross) 1,414,885 993,786
Less : Excise Duty 164,618 114,741
Sales(Net) 1,250,267 879,045
Other Income 14 16,116 15,780
1,266,383 894,825
EXPENDITURE
Materials 15 849,604 558,007
Manufacturing, Selling and Administrative Expenses 16 467,163 335,265
Interest 17 25,921 20,536
Depreciation 42,079 30,587
1,384,767 944,395
LOSS BEFORE EXTRAORDINARY ITEMS AND TAXES (118,384) (49,570)
Extraordinary Items :
Voluntary Separation Compensation and related payments 26,193 14,826
Fixed Assets written off 8,568
Diminution in the value of investment 1,928 5,796
(Refer Note 16 of Schedule 18)

LOSS BEFORE TAXATION (146,505) (78,760)

Taxation (Refer Notes 22 and 25 of Schedule 18) 30,333 27,142
LOSS AFTER TAXATION (116,172) (51,618)
Balance brought forward from previous year 30,722
AVAILABLE FOR APPROPRIATION (116,172) (20,896)
APPROPRIATIONS
General Reserve (20,896)
Balance carried to Balance Sheet (116,172)
(116,172) (20,896)

Earnings per share : (Refer Note 23 of Schedule 18)

Basic Rs (7.55) Rs (3.35)
Diluted Rs (7.55) Rs (3.35)
Notes to Accounts 18
The Schedules referred to above form an integral part of the Profit & Loss Account
In terms of our report of even date For and on behalf of the Board of Directors
For Lovelock & Lewes H. P. R. Mullan Chairman
Chartered Accountants GHariharan Wholetime Director
N H Mirza
Vasant Gujarathi A. Banerjee - ; J.Templeman l Directors
Partner Cnmnnrrv Sprrptnrv !• Mltra S. N. lalwar

Mumbai, 8th March, 2003 Mumbai, 8th March, 2003

19
Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002
31st December, 2001
Rs.'OOO Rs.'OOO
SHARE CAPITAL
Authorised:
17,000,000 Equity Shares of Rs. 10 each 170,000 170,000
3,000,000 Unclassified Shares of Rs. 10 each 30,000 30,000
200,000 200,000
Issued and Subscribed:
15,393,020 Equity Shares of Rs.10 each fully paid up
- Of the above, 999,000 shares were allotted as fully paid
up pursuant to a Scheme of Amalgamation 153,930 153,930
2. RESERVES AND SURPLUS
Amalgamation Reserve
As per last Balance Sheet 10,000 10,000
Securities Premium Account
As per last Balance Sheet 93,190 93,190
Special Capital Incentive Subsidy
As per last Balance Sheet 2,000 2,000
Investment Allowance Reserve Account
As per last Balance Sheet 5,400 5,400
General Reserve
As per last Balance Sheet 48,189 80,000
Deferred Tax Liability as at start of the period (10,915)
Loss Transferred from Profit and Loss Account (20,896)
48,189 48,189
Less : Debit Balance in Profit and Loss Account 48,189
(as per contra - Schedule 13) 48,189
110,590 158,779
3. SECURED LOANS
Term Loans from Banks/Institutions 100,000 75,000
Cash Credits from Banks 23,260 13,736
Working Capital Demand Loans from Banks 113,300 35,300
Interest Accrued and Due 524 257
237,084 124,293
Notes
The Term Loans are secured by hypothecation of certain movable assets (excluding stocks and debts) at manufacturing plants.
Cash Credit and Working Capital Demand Loans from Banks are secured by hypothecation of stocks and debts.
The Term Loans include amounts repayable within one year of Rs. 34.2 million (previous period Rs. 25.0 million)

4. UNSECURED LOANS
Short Term Loans and Advances :
Commercial Paper [Maximum amount due during the year
Rs. 140.0 million (previous period Rs. 120.0 million)] - 120,000

20
 Schedules to Balance Sheet and Profit and Loss Account
31st December, 2002

5. FIXED ASSETS
( Refer Notes 17 to 19 of Schedule 18) Rs.'OOO

GROSS BLOCK AT COST DEPRECIATION NET BLOCK

Type of Assets 1st January, Additions Deductions 31st December, 1st January, For the Deductions 31st December, 31st December, 31st December,
2002 2002 2002 Year 2002 2002 2001

Land Freehold 40,557 - - 40,557 40,557 40,557

Land Leasehold 18,261 - - 18,261 7,650 180 7,830 10,431 10,611

Building 132,895 3,306 954 135,247 25,746 4,263 260 29,749 105,498 107,149

Plant & Machinery 511,701 17,549 18,478 510,772 189,973 35,041 11,470 213,544 297,228 321,728

Furniture & Fixtures 15,686 180 3,293 12,573 4,871 1,079 1,067 4,883 7,690 10,815

Motor Vehicles 16,335 - 261 16,074 4,005 1,516 219 5302 10,772 12,330

Current Year 735,435 21,035 22,986 733,484 232,245 42,079 13,016 261,308 472,176 503,190

Previous Period 680,999 87,592 33,156 735,435 221,405 30,587 19,747 232,245

Capital Work in Progress including Advances 1,089 6,821

473,265 510,011
Esab India Limited

Schedules to .Balance Sheet and Profit and Loss Account

31st December, 2002
31st December, 2001
Rs. '000 Rs.'OOO
6. INVESTMENTS, AT COST (UNQUOTED)
Long Term Investment in Subsidiary Company
- Flotech Welding & Cutting Systems Limited.
1,200,000 (previous period 1,200,000) Equity Shares
Of Rs. 10 each fully paid up. (Refer Note 16 of Schedule 18) 7,199
7. INVENTORIES
Raw and Packing Materials 50,968 51,870
Work-in-Process 27,132 23,991
Finished Goods 42,794 165,751
Stores and Spare Parts 4,194 5,758
125,088 247,370
8. SUNDRY DEBTORS (UNSECURED)
Over six months -
Considered Good 15,313 32,924
Considered Doubtful 21,268 32,016
Others, Considered Good 108,152 78,954
144,733 143,894
Less: Provision for Doubtful Debts 21,268 32,016
123,465 111,878
9. CASH AND BANK BALANCES
Cash on hand 452 361
Cheques on hand and remittances in transit 39,945 37,219
Balances with Scheduled Banks on Current Account 10,014 22,276
Margin money with bank 425 582
50,836 60,438
10. LOANS AND ADVANCES
Secured
Vehicle Loans to employees 1,503 1,488
(Secured against hypothecation of vehicles)
Unsecured, considered good
Advances to Flotech Welding & Cutting Systems
Limited, a subsidiary company 2,525 2,189
Advances recoverable in cash or in kind or for value
to be received (Refer Note 20 of Schedule 18) 39,946 56,548
Advance tax payments less provision for Income-tax 14,963
Balances with Customs, Port Trust, Excise, etc. 2,066 2,228
46,040 77,416

22
 Esab India Limited

Schedules to Balance Sheet and Profit-arid Loss Account

31st December, 2002
31st December, 2001
Rs.'000 Rs.'OOO
11. CURRENT LIABILITIES
Sundry Creditors (Refer Notes 14 and 15 of Schedule 18). 348,161 422,637
Customers' Credit Balances 29,882 34,424
Other Liabilities 69,889 11,276
Unclaimed Dividends * 1,269 1,736
Interest accrued and not due 1,057 1,564
450,258 471,637

* There is no amount due and outstanding to be credited to

Investor Education and Protection Fund.

12. PROVISIONS
Provision for Income-tax less advance tax payments 8,746
8,746
13. PROFIT AND LOSS ACCOUNT
Debit Balance in Profit and Loss Account 116,172
Less : As per Contra in General Reserve (Schedule 2) 48,189
67,983
14. OTHER INCOME
Scrap Sales 7,386 8,780
Less:Excise Duty 1,044 6,342 1,063 7,717
Profit on sale of fixed assets (net) 590
Sale of Fixed Assets written off in earlier years 1,778
Provisions for liabilities no longer required written back 987 574
Miscellaneous 7,009 6,899
16,116 15,780
15. MATERIALS
A. Raw & Packing Materials Consumed 603,775 488,141
Purchases of Finished Goods 126,013 100,045
729,788 588,186
B. Decrease / (Increase) in Finished Goods & Work-in-Process
Opening Stock
Finished Goods 165,751 140,098
Work-in-Process 23,991 19,465
189,742 159,563
Closing Stock
Finished Goods 42,794 165,751
Work-in-Process 27,132 23,991
69,926 189,742
119,816 (30,179)
849,604 558,007

23
Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002
31st December, 2001
Rs.'000 Rs.'OOO
16. MANUFACTURING, SELLING AND ADMINISTRATIVE EXPENSES
Salaries, Wages and Bonus 95,208 83,324
Contributions to Provident and Other Funds 35,226 12,348
Workmen and Staff Welfare Expenses 12,798 12,630
Consumption of Stores and Spare parts 13,974 5,778
Power and Fuel 48,642 33,695
Repairs:
Buildings 5,833 8,857
Plant and Machinery 5,778 7,698
Others 7,413 5,174
Rent 15,477 9,460
Rates and Taxes 61,780 5,270
Excise Duty (19,802) 2,944
Insurance 3,371 3,389
Provision for Doubtful Debts 21,268 32,016
Less : Writeback of provisions, no longer required (2,903) 18,365 (539) 31,477
Bad Debts written off 29,113 3,673
Less : Provision 29,113 — 3,673
Transport and Freight 18,706 6,590
Communication Costs 16,109 18,699
Travelling, Conveyance and Motor Car Expenses 37,765 29,430
Special Discounts and Commissions 6,912 6,158
Loss on sale of fixed assets (net) 3,817 —
Fixed Assets written off 4,105 3,968
Advertising 1,519 5,214
Sundry balances written off 3,250 —
Miscellaneous Expenses 70,917 43,162
467,163 335,265
17. INTEREST
On Fixed Loans 8,814 6,680
On Other Loans 17,613 14,036
26,427 20,716
Less : Interest income [ tax deducted at source Rs. 0.11 506 180
million (Previous period Rs. 0.04 million)]
25,921 20,536

24
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002
18. NOTES FORMING PART OF THE ACCOUNTS
Note 1. Accounting Policies
Sch. 18
a) The accounts have been prepared to comply in all material aspects with applicable accounting principles in
India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant
provisions of the Companies Act, 1956.
b) Fixed assets are stated at cost and in the case of projects include identifiable incidental and installation
expenses and interest on funds borrowed in order to bring the assets into use.
c) Depreciation for the year is provided (except in the case of leasehold land, the cost of which is amortised
over the lease period) on the straight line method at the rates and in the manner specified in Schedule XIV
of the Companies Act, 1956.
d) Inventories of raw and packing materials are valued at the lower of cost and net realisable value on a First-
In-First-Out basis. Work-in-process and finished goods are valued at the lower of cost and net realisable
value. Costs are generally calculated at standards adjusted to actuals and in the case of manufactured
inventories include cost of conversion and other costs incurred in bringing the inventories to their present
location and condition. Inventories of stores and spare parts are valued at cost.
e) Voluntary Separation Compensation and related payments including payments made in installments are
charged to the Profit and Loss Account during the year in which they are incurred.
f) Revenue from the sale of goods is recognised on despatch to customer. Sales are net of trade discounts,
rebates etc.
g) The liabilities for gratuity, pension and leave salary are assessed actuarially.
h) Foreign currency transactions are accounted at the exchange rates prevailing on the date of the relevant
transaction. Foreign currency monetary assets and liabilities are restated at rates ruling at the year end.
Exchange differences relating to the liability incurred for the purchase of fixed assets are adjusted in the
cost of the assets. Other exchange differences are dealt with in the Profit and Loss Account.
i) The excise duty in respect of closing inventory of finished goods is included as part of inventory. The
amount of CENVAT credits in respect of materials consumed for sales is deducted from the cost of
materials consumed.
j) Current tax is determined on the basis of the amount of tax payable on taxable income for the year.
Deferred tax is calculated at the current statutory income tax rate and is recognised on timing differences
between taxable income and accounting income that originate in one period and are capable of reversal in
one or more subsequent periods. Deferred tax assets are recognised and carried forward only to the extent
that there is reasonable certainty that sufficient future taxable income will be available against which such
deferred tax assets can be realised.
k) Investments are stated at cost. Provision is made for diminution if, in the opinion of the management, the
diminution is other than temporary.
1) The accounting policies adopted for segment reporting are in line with the accounting policies of the
Company.
Revenue and expenses have been identified to segments on the basis of their relationship to the operating
activities of the segment. Revenue and expenses which relate to the enterprise as a whole and are not
allocable to segments on a reasonable basis, have been included under the heading "other common expenses".

25
Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002
31st December, 2001
Rs.'OOO Rs.'OOO
Note 2. Estimated amount of contracts remaining to be executed 14,548 9,477
Sch. 18 on capital account and not provided for (net of advances)
Note 3. Contingent Liabilities :
Sch. 18
For disputed taxes and duties * 221,410 68,494
Guarantee given to bank on behalf of Subsidiary Company 20,900 20,900
[Facilities outstanding - Rs. 6.88 million (previous period -
Rs. 7.42 million)]
* Interest and penalty, if any, payable on contingent liability relating
to sales tax and excise duty demands are presently not ascertainable.

Note 4. Auditors' Remuneration :

Sch. 18 Audit fees 800 500
Tax Audit and Tax Accounts 319
Certification 56 85
Other Professional Services 525 280
Reimbursement of out of pocket expenses 34 11

Note 5A) Particulars of Licensed and Installed Capacity and Actual Production :
Sch. 18
31st December, 2002 31st December, 2001
Licensed Installed Actual Licensed Installed Actual
Class of Goods Unit Capacity Capacity* Production Capacity Capacity* Production
a) Welding Electrodes 1000 Mtrs 267,996 294,037 109,736 267,9% 294,037 84,716
b) Continuous Electrodes/
Copper Coated Wires Tonnes 4,640 4,100 4,145 4,640 4,100 3,067
c) Automatic Submerged
Arc Electrodes Tonnes 480 — — 480 — —
d) MS Welding Rods
(Copper Coated) Tonnes 360 — — 360 — —
e) Welding Fluxes Tonnes 7,061 3,061 785 7,061 3,061 481
f) Gas & Electric Welding
& Cutting Equipment &
Accessories Nos. 69,790 91,606 54,901 69,790 91,606 41,530
g) Gas Cylinder Valves Nos. 74,000 61,000 74,000 61,000 —
h) Cutting Unit & Small
Tools Nos. 6,000 7,500 6,000 7,500 —
i) Medical Equipment Nos. 6,650 8,312 7,992 6,650 8,312 5,990
j) Industrial Voltage Regu-
lators & Stabilizer
Equipment Nos. 12,000 — — 12,000 — —
_ _
k) Flux Cored Wires Tonnes 2,600 2,600 — —
1) Industrial Uninterrupted
Power Supply System Nos. 2,000 — — 2,000 — -
* As certified by the Management.

26
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

Note 5B) Particulars of Opening and Closing Stocks of Finished Goods :

Sch. 18
1st January, 2002 31st December, 2002 1st April, 2001 31st December, 2001

Class of Goods Unit Opening Stock Closing Stock Opening Stock Closing Stock
Qty Value Qty Value Qty Value Qty Value
Rs.'OOO Rs.'000 Rs.'OOO Rs.'OOO
1 Welding Electrodes i) PCS (OOOs) 43,758 88,561 3,623 9,824 30,742 55,227 43,758 88,561
ii) Tonnes 58 10,195 33 5,925 78 11,447 58 10,195
2 Continuous Electrodes/
Copper Coated Wires Tonnes 368 17,472 13 588 91 3,845 368 17,472
3 Welding Fluxes Tonnes 23 1,622 30 1,824 78 3,249 23 1,622
4 Gas & Electric Welding &
Cutting Equipment &
Accessories 38,756 20,453 53,508 38,756
5 Gas Cylinder Valves Nos. 426 98 426 98 1,212 279 426 98
6 Medical Equipment &
Accessories 7,576 3,418 10,705 7,576
7 Others 1,471 664 1,838 1,471
165,751 42,794 140,098 165,751

Note 5C) Particulars of Sales :

Sch. 18
31st December, 2002 31st December, 2001
Class of Goods Unit Qty Value Qty Value
Rs.'OOO Rs.'OOO
1 Welding Electrodes i) PCS (OOOs) 304,847 590,844 183,986 377,221
ii) Tonnes 531 146,956 538 130,228
2 Continuous Electrodes/ Tonnes 4,420 193,676 2,734 121,308
Copper Coated Wires
3 Welding Fluxes Tonnes 745 42,244 506 27,640
4 Gas & Electric Welding &
Cutting Equipment &
Accessories 328,613 242,896
5 Gas Cylinder Valves Nos. — — 786 99
6 Medical Equipment & 65,539 57,264
Accessories
7 Others 47,013 37,130
1,414,885 993,786
Notes :
i) Separate information for purchases, stock and turnover of traded items is not conveniently available, these are included in the above
figures.
ii) Quantitative data for equipment and spares is not given as it covers a large variety of items, which would not be meaningful in
aggregate. Special electrodes, for which separate licenses were issued for some plants, are included with Welding Electrodes.

27
Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

Note 6. Details of Raw & Packing Materials consumed :

Sch. 18 Quantity (Metric Tonnes) Value Rs.'OOO
31st December, 2002 31st December, 2001 31st December, 2002 31st December, 2001

Mild Steel 13,580 10,464 242,880 184,311

Non-Ferrous Metalss 231 264 42,505 53,145
Minerals 4,713 3,178 74,888 59,834
Chemicals 1,912 1,584 77,860 60,247
Piece Parts 118,251 92,585
Others 47,391 38,019
603,775 488,141
Note 7. i) Value of Imported and Indigenous Raw & Packing Materials and Components consumed :
Sch. 18
Value Rs.'000 % age of Total Consumption
31st December,2002 31st December,2001 31st December,2002 31st December,2001
Imported 40,850 25,372 6.8 5.2
Indigenous 562,925 462,769 93.2 94.8
603,775 488,141 100.0 100.0

ii) Value of Imported and Indigenous Stores and Spare parts consumed :
Value Rs.'OOO % age of Total Consumption
31st December, 2002 31st December, 2001 31st December, 2002 31st December, 2001
Imported 357 169 2.6 2.9
Indigenous 13,617 5,609 97.4 97.1
13,974 5,778 100.0 100.0

31st December, 2002 31st December, 2001

Rs.'OOO Rs.'OOO
Note 8. C.I.F. Value of Imports :
Sch. 18 Raw Materials 28,566 15,797
Components 352 169
Capital Goods 6,077 5,272
34,995 21,238
Note 9. Expenditure in Foreign Currency
Sch. 18 - Technical Know-how Fee 881
- Travelling 851 491
- Royalty 713 1,428
- Others 550 150
2,995 2,069

28
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

31st December, 2001

Ks.'O(M) Rs.'OOO
Note 10. Earnings in Foreign Exchange :
Sch.18 - FOB Value of Exports 79,995 45,772
Note 11. Remittance in Foreign Currency on account of Dividend :
Sch. 18 No. of No. of Amount
Year Shareholders Shares Rs.'OOO
Current Year : 2001 5,743,20Q
Previous Year : 2000 - 01 5,743,200 14,358
Note 12. Net difference in foreign exchange debited to Profit and Loss Account is Rs. 2.63 million (previous
Sch. 18 period Rs. 0.50 million).
Note 13. Managerial Remuneration:
Sch. 18 31st December, 2002 31st December, 2001
Rs.'OOO Rs.'OOO Rs.'OOO Rs.'OOO
A) Computation of net profit in accordance with
Section 198 of the Companies Act, 1956 -
Loss before Tax as per Profit & Loss Account (146,505) (78,760)
Add: Directors' remuneration 6,137 5,681
Provision for Bad & Doubtful Debts 18,365 31,477
Loss on Investment in Subsidiary Company 1,928 5,796
Loss on sale of Fixed Assets (net) 3,817
Voluntary Separation Compensation and
related payments 26,193 14,826
Fixed Assets written off 4,105 3,968
Fixed Assets written off as an
Extraordinary item 8,568
60,545 70,316

Less: Excess remuneration to Managing Director

credited to Profit and Loss Account 3,922
Bad Debts written off 29,113 3,673
Profit on sale of fixed assets (net) 590
Excess of expenditure over income
pertaining to previous period to the
extent not adjusted 12,707
45,742 4,263
(131,702) (12,707)

In view of the net loss resulting from the computation under Section 198 of the Companies Act, 1956, no
commission is payable to the Directors.

29
Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

B) Managerial remuneration:
31st December, 2001
Rs.'000 Rs.'OOO
i) Managing Director
Salary 2,530 2,070
Contribution to Provident Fund 304 248
Perquisites 3,192 1,218
Performance based bonus 2,070
5,606
ii) Non wholetime Directors
Sitting fees 75

111 75
Notes :
a) In view of the computation pursuant to Section 198 read with Section 309 (5) of the Companies Act,
1956 resulting in a loss, the remuneration paid to the Managing Director during the year is in excess
of the limit specified under Schedule XIII of the Companies Act, 1956 by Rs. 3.922 million.
Consequently, this amount has been credited to the Profit and Loss Account and is shown in the
balance sheet under Loans and Advances. Approval from the shareholders of the Company and the
Central Government of India is, therefore, not necessary. The Company has already initiated the
process for recovery of this excess remuneration.
b) The above remuneration excludes provision for contribution to pension and gratuity funds since these
are based on actuarial valuations done on an overall company basis.
Note 14. Sundry Creditors include :
Sch. 18
Rs. 3.30 million (previous period Rs. 3.30 million) advance payment received for sale of a portion of excess
vacant land at the Khardah factory, West Bengal which is held in escrow.
Rs. 2.87 million (previous period Rs. 1.87 million) payable to Flotech Welding & Cutting Systems Limited,
a subsidiary company.

Note 15. a) Sundry Creditors comprise Rs. 12.61 million outstanding to Small Scale Industrial Undertakings and Rs.
Sch. 18 335.55 million to other Creditors.
b) Small Scale Industrial Undertakings to whom amounts are outstanding for more than 30 days :
Basanti Enterprise
Chemicals & Meters
Eastern Lamination Private Limited
Electrical Micanite Corporation
EPC Electricals Limited
Ferro Curves
Laminations Core Fabricators
Medrubb Industries
Profulla Box Mfg. Co.
30
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

Progressive Rubber Works

R. K. Enterprise
Sarada Steel Industries
Senate Engineering Industries
Sun Electrical Engineering Co.
Supersmelt
Superstar Cable Industries
Tara Spring & Engineering Co.
Unicare Emergency Equipment
Yetazu Instrumentation

c) The above information has been compiled in respect of creditors to the extent they could be identified as
Small Scale Industrial Undertakings on the basis of information available with the Company.

Note 16. The Company holds 1,200,000 equity shares of Rs. 10 each fully paid-up in its subsidiary, Flotech Welding
Sch. 18 £ Cutting Systems Limited. The audited accounts of the subsidiary for the year ended 31 st December,
2002 disclose a loss of Rs. 1.09 million against paid-up capital of Rs. 14.00 million. A provision of Rs.
5.80 million being the Company's share of accumulated losses in the subsidiary was made in the previous
period against the carrying value of the investment. A further provision of Rs. 1.93 million has been made
in the current year based on the Company's share in the net assets of the subsidiary.

Note 17. Additions to Fixed Assets for the year include interest amounting to Rs.Nil (previous period Rs. 0.78
Sch. 18 million) on term loan taken for capital expenditure.

Note 18. The written down value of Fixed Assets includes Rs. 15.62 million (previous period Rs. 16.05 million) in
Sch. 18 respect of buildings constructed on leasehold land at Taratala, Kolkata. In the opinion of the management,
the lease will be renewed on expiry of its current term and, consequently, depreciation on buildings is
provided at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956.

Note 19. The written down value of Fixed Assets includes Rs. 27.86 million in respect of assets at Kalwa, which
Sch. 18 are not use(j
for procjuctive purposes and are held for disposal.

Note 20. Loans and Advances include the following amounts due from a Director :
Sch. 18
a) Rs. Nil (previous period Rs. 15.00 million), towards security deposit, for use of residential accommodation
provided by the Company, maximum amount due during the year, Rs. 15.00 million (previous period
Rs. 15.00 million)

b) Rs. 3.922 million (previous period Rs. Nil) recoverable from the Managing Director being remuneration
paid in excess of the limit specified under Schedule XIII of the Companies Act, 1956, maximum
amount due during the year Rs. 3.922 million (previous period Rs.Nil).

31
Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

Note 21. Information about Business Segments :

Sch. 18 Included in each category of business are:-
Consumables : Welding electrodes, Copper coated wires and Welding fluxes
Equipment : Welding machines and Cutting equipment
Rs.'OOO
PARTICULARS CONSUMABLES EQUIPMENT TOTAL
31st December, 3 1st December, 31st December, 3 1st December 31st December, 3 1st December,
2002 2001 2002 2001 2002 2001
REVENUE
External sales (Gross) 1,021,449 684,882 393,436 308,904 1,414,885 993,786
Segment results 45,740 13,917 (24,728) (7,060) 21,012 6,857
Less: Interest (Net) 25,921 20,536
Other common expenses 113,475 35,891
Extraordinary expenses 28,121 29,190
Total Loss before tax (146,505 (78,760)
Capital employed
Segment Assets 519,263 650,511 239,684 251,324 758,947 901,835
Common Assets 201,342 188,626
Total Assets 960,289 1,090,461
Segment Liabilities 189,469 256,087 94,829 119,594 284,298 375,681
Common Liabilities 479,454 402,071
Total Liabilities 763,752 777,752
Segment Capital Employed 329,794 394,424 144,855 131,730 474,649 526,154
Common Capital Employed (278,112) (213,445)
Total Capital Employed 196,537 312,709
Segment Capital Expenditure 13,379 73,848 6,525 5,978 19,904 79,826
Common Capital Expenditure 1,131 7,766
Total Capital Expenditure 21,035 87,592
Segment Depreciation 31,022 21,796 6,688 4,496 37,710 26,292
Common Depreciation 4,369 4,295
Total Depreciation 42,079 30,587
Segment non cash expenditure 3,876 26,184 16,467 9,261 20,343 35,445
Common non cash expenditure 4,987 14,364
Total non cash expenditure 25,330 49,809
Notes :
1) The Business Segment is the Company's primary segment.
2) Segments have been identified and reported taking into account the nature of products and services, the differing
risks and returns, the organisation structure and the internal financial reporting systems.

32
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

Note 22. Deferred taxation

Sch. 18 31st December, 2001
Rs. •()()() Rs.'000 Rs.'OOO Rs.'OOO
Deferred Tax Asset -
Unabsorbed Losses * 30,170 17,975
Unabsorbed Depreciation * 59,033 34,178
Technical Know-how fee (debited to Profit and Loss 21
Account but deductible for tax over six equal annual
instalments)
Voluntary Separation Compensation and related 14,310 9,458
payments (debited to Profit and Loss Account but
deductible for tax over five equal annual instalments)
Provision for doubtful debts 7,816 11,238
Amounts disallowed under Section 43B of the
Income-tax Act, 1961 24,249 2,378
Provision for royalty 746 136,324 901 76,149
Deferred Tax Liability -
Excess of net block over written down value as per
the provisions of the Income-tax Act, 1961 (67,664) (61,822)
68,660 14,327

* In the opinion of the management, the C o m p a n y will have sufficient taxable profits to recoup
unabsorbed losses and depreciation in subsequent periods.
Note 23. Earnings per Share :-
Sch. 18
31st December, 2002 3 1st December, 2001
Basic Earnings per Share Rs. (7.55) Rs. (3.35)
Diluted Earnings per Share Rs. (7.55) Rs. (3.35)
Nominal value per Share Rs. 10.00 Rs. 10.00

Earnings per share are calculated by dividing the loss attributable to the Equity Shareholders by the weighted
average number of Equity Shares outstanding during the year. The numbers used in calculating basic and
diluted earnings per share are :

31st December, 2002 31st December, 2001

'OOOs 'OOOs
Loss after taxation Rs. (116,172) Rs. (51,618)
Weighted average number of shares outstanding
during the year : Nos. 15,393 Nos. 15,393

33
Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002
Note 24. Related Party Disclosures
Sch. 18 a) Names of Related Parties and description of Relationship
1) Parties where control exists
i) Esab Holdings Limited
ii) Flotech Welding & Cutting Systems
Limited
in) Other related parties in the Charter pic
Group where common control exists
2) Key Management Personnel
Managing Director
Whole-time Director
Substantial Interest ( Holds 37.31 % of the paid equity
share capital of the Company as at 31st December, 2002).
Charter Overseas Holdings Limited, the Holding
Company of Esab Holdings Limited is a subsidiary of
Charter pic, the ultimate Holding Company.
Subsidiary Company (85.71 % of whose paid up
equity Limited share capital is held by Esab India
Limited as at 31st December, 2002)
EsabAB, Sweden
Esab Cutting Systems GmbH, Germany
The Esab Group Inc., USA
Esab S A Industriae Comercio, Brazil
Conarco Alambresy Soldaduras S.A., Argentina
Esab Asia/Pacific Pte Limited, Singapore
Howden Power Limited, Northern Ireland
Howden Sirocco SA, France
Burton Corblin SA, France
Ventilatoren Sirocco Howden BV, Netherlands
Turbowerke Meissen Howden GmbH, Germany
Voith Howden GmbH, Germany
Howden Power A/S, Denmark
Howden Talleres Sanchez Luengo SA, Spain
Howden Buffalo Inc., USA
Howden Hua Engineering Co Limited, China
Howden African Holdings Limited, South Africa
Howden Food Equipment Inc., USA
Howden Airdynamics Inc., USA
Western Design Howden Inc., USA
Bauer Howden Inc., USA
HD Engineering Limited, Hong Kong
Esab Group (UK) Limited, England & Wales
Esab Automation Limited, England & Wales
Esab Group (Ireland) Limited, Ireland
ESAB Limited, England & Wales
ESAB Pensions Limited, England & Wales
Murex Welding Products Limited, England & Wales
Murex Limited, England & Wales
Hancock Cutting Machines Limited, England & Wales
Brinal Limited, England & Wales
Filarc Welding Limited, England & Wales
Arcos Welding Products Limited, England & Wales
Bilston Wire Mill Limited, England & Wales
Hobart Overseas Holdings Limited
Exelvia Netherlands B.V
Mr.S.K.Bhattacharyya (Until 3lst January, 2003)
Mr.G.Hariharan (Appointed on 7th January, 2003)

34
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

b) Transactions and outstanding balances with Related Parties : Rs'OOO

Key Management
Subsidiaiy[l(ii)] Common Control [l(iii)] Personnel [2] Total
Nature of Transaction 31st December, 31st December, 31st December, 31st December,
2002 2001 2002 2001 2002 2001 2002 2001
Purchase of goods 17,088 12,899 13,491 4,998 30,579 17,897
Sale of goods 82 — 10,401 1,170 10,483 1,170
Royalty Expense 513 338 513 338
Expenses recharged by subsidiary 530 216 530 216
Expenses recharged to subsidiary 746 622 746 622
Guarantees outstanding in favour of subsidiary 6,878 7,415 6,878 7,415
Remuneration 2,104 5,606 2,104 5,606
Recovery of expenses 620 — 620 —
Rent paid for residential flat 438 329 438 329
Outstanding payables (net) 342 — 643 185 985 185
Outstanding receivables (net) 320 3,922 15,000 3,922 15,320
The particulars given in 24(a) above have been identified on the basis of information available with the Company.
31st December, 2002 31st December, 2001
Rs.'OOO Rs.'OOO
Note 25. Taxation
Sch. 18 Tax provision for earlier years 24,000
Deferred Tax Credit 54,333 25,242
Tax provision of earlier years written back 1,900
30,333 27,142
Note 26. The Company has taken various residential and office premises under operating lease or leave & licence
Sch. 18 agreements. These are generally not non-cancellable and range between 11 months and 3 years and generally
have no specific obligations for renewal. Lease payments are recognised in the statement of Profit and Loss
Account under Rent in Schedule 16.

Note 27. Sales are net of quantity discounts and incentives.

Sch. 18
Note 28. The contract of the Managing Director expired on 31st January, 2003 and was not renewed. The Company
Sch. 18 has appointed a wholetime director with effect from 7th January, 2003, which appointment is subject to the
approval of the shareholders.

Note 29. In the last quarter of 2002, the Company provided an aggregate amount of Rs. 79 million in respect of
Sch. 18 disputed sales tax demands relating to earlier years and additional pension and gratuity liabilities.

35
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

Note 30. Additional Information as required under Part IV of Schedule VI to the Companies Act, 1956.
Sch. 18 Balance Sheet Abstract and Company's General Business Profile :

I. Registration Details
Registration No. 4|5|2|5|1| State Code
Balance Sheet Date J |QJ2
Date Month Year
II. Capital raised during the year (Amount in Rs. Thousands)
Public Issue Rights Issue

Bonus Issue Private Placement

N
3
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities Total Assets*
5|0|1|6|0|4| 5|0|1|6|0|4|
* Net of Current Liabilities & Provisions
* Includes Deferred Tax Asset (Net) and
Sources of funds debit balance in Profit and Loss Account

Paid-up Capital Reserves & Surplus

1|5|3|9|3|0| 1|1|0|5|9|0
Secured Loans Unsecured Loans
2|3|7|0|8|4|
Application of funds
Net Fixed Assets Investments
4|7|3|2|6|5| 5|2|7|1|
Net Current Assets* Misc. Expenditure

* Includes Deferred Tax Asset (Net)

Accumulated Losses
6l*-••-•7 '| 9 l 8l- --- 3
J 1 !

36
 Esab India Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

IV. Performance of Company (Amount in Rs. Thousands)

Turnover * Total Expenditure

| l [ 4 |l I 2 | 8 I 8 I 8
* includes other income
+/- Profit/Loss Before Tax +/- Profit/Loss After Tax
iRTelsjoTs niHl|6|l|7|2|
Earnings per Share Dividend Rate %

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)
Item Code |8|3|l|l|l|o|.|0|o|
(ITC Code)
Product Description W|E|L|D|I |N|G| | E | L | E | C | T | R | O | D | E | S
Item Code
(ITC Code)
Product Description A|R|C| |W|E|L|D|IIN MA C|H|I|N|E|S|

Item Code
(ITC Code)
Product Description C | O | P | P | E [ R | |C|O|A|T|E|D| N I | R | E | S |
Note 31. With effect from 1st April, 2001 the Company changed its financial year from fiscal to calendar year.
Sch. 18 Consequently, the previous accounting period is for nine months as against twelve months of the current
year. Therefor corresponding figures for the previous period are not comparable with those of current year.
Note 32. The previous period's figures have been regrouped or reclassified wherever necessary.
Sch. 18
Signatures to Schedules 1 to 18 which form an integral part of the accounts.
For and on behalf of the Board of Directors

H. P. R. Mullan Chairman
G Hariharan Wholetime Director
N. H. Mirza J.Templeman \
Directors
A. Banerjee T.Mitra S. N. Talwar
Company Secretary
Mumbai, 8th March, 2003

37
Esab India Limited

Cash Flow Statement

for the Year Ended 31 st December, 2002
12 Months to 9 Months to
31st December, 2002 31st December, 2001
Rs.'OOO Rs.'OOO
A. CASH FLOW FROM OPERATING ACTIVITIES :
Net Loss before Tax (146,505) (78,760)
Voluntary Separation Compensation and Related Payments 26,193 14,826
Loss / (Profit) on Sale of Fixed Assets (Net) 3,817 (590)
Fixed Assets written off 4,105 3,968
Fixed Assets written off - Extraordinary Item 8,568
Sale of fixed assets written off in earlier years (1,778)
Diminution in the value of Investment 1,928 5,796
Unrealised Exchange Differences 932 (411)
Depreciation 42,079 30,587
Interest - net 25,921 20,536
Provision for Doubtful Debts 18,365 31,477
Operating Profit before Working Capital Changes (24,943) 35,997
Trade and Other Receivables (15,014) 61,696
Inventories 122,282 (6,720)
Trade Payables (24,137) 11,290
Cash Generated from Operations 58,188 102,263
Voluntary Separation Compensation and Related Payments (22,576) (14,915)
Direct Taxes Paid - Net (291) (3,251)
Net Cash from Operating Activities [A] 35,321 84,097
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (15,303) (59,940)
Sale of Fixed Assets 2,048 1,462
Sale of Fixed Assets written off in earlier years 1,778
Interest Received 506 180
Net Cash used in Investing Activities [B] (10,971) (58,298)
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Borrowings (7,691) 30,312
Dividend Paid (467) (37,736)
Tax on Distributable Profits (3,925)
Interest Paid (25,794) (19,638)
Net Cash used in Financing Activities [C] (33,952) (30,987)
NETINCREASE/(DECREASE)INCASHANDCASHEQUIVALENTS [A+B+C] (9,602) (5,188)
CASH AND CASH EQUIVALENTS AS AT 1st JANUARY, 2002 60,438 65,626
CASH AND CASH EQUIVALENTS AS AT 31st DECEMBER, 2002 50,836 60,438
Notes to the Cash Flow Statement :
i) Cash and Cash Equivalents include:
(a) Cash and Bank balances other than those mentioned in (b) below, 43,562 52,070
(b) Cash and Bank balances not available for use by the Company 7,274 8,368
50,836 60,438
Cash and Bank balances not available for use by the Company include margin money, unclaimed dividend/interest etc. and an amount
held in escrow,
ii) The above cash flow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard - 3 on Cash Flow
Statements issued by the Institute of Chartered Accountants of India
iii) Previous period's figures have been regrouped or reclassified wherever necessary.
In terms of our report of even date For and on behalf of the Board of Directors
For Lovelock & Lewes
Chartered Accountants H. P. R. Mullan Chairman
G. Hariharan Wholetime Director
Vasant Gujarathi A. Banerjee
Partner Company Secretary N. H. Mirza J.Templeman
T. Mitra S. N. Talwar Directors
Mumbai, 8th March, 2003 Mumbai, 8th March, 2003

38

Auditors' Report to the Board of Directors of Esab India Limited
We have audited the attached consolidated Balance
Sheet of Esab India Limited (the Company) and
its subsidiary as at December 31, 2002, the
consolidated Profit and Loss Account for the year
ended on that date annexed thereto, and the
consolidated Cash Flow Statement for the year
ended on that date which we have signed under
reference to this report. These consolidated
financial statements are the responsibility of the
management of the Company. Our responsibility
is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with
auditing standards generally accepted in India.
Those Standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the financial statements are prepared, in
all material respects, in accordance with an
identified financial reporting framework and are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting
the amounts and disclosures in the financial
statements. An audit also includes assessing the
accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audit and the
report of the other auditor provide a reasonable
basis for our opinion.
We did not audit the financial statements of
Flotech Welding & Cutting Systems Limited
whose financial statements reflect total assets of
Rs. 18.159 million as at December 31. 2002 and
total revenues of Rs.15.666 million for the year
ended on that date. These financial statements have
been audited by other auditors whose unqualified
report has been furnished to us, and our opinion,
insofar as it relates to the amounts included in
respect of this subsidiary, is based solely on the
report of the other auditors.
We report that the consolidated f i n a n c i a l
statements have been prepared by the Company
in accordance with the requirements of Accounting
Standard 21, Consolidated Financial Statements,
Esab India Limited (Consolidated)
issued by the Institute of Chartered Accountants
of India and on the basis of the separate audited
financial statements of Esab India Limited and its
subsidiary included in the aforesaid consolidation.
During the year, the Company has paid to the
former Managing Director, remuneration
amounting to Rs.6.026 million, which in the
absence of profits, is in excess of the limit specified
under Schedule XIII of the Companies Act, 1956
by Rs.3.922 million. Consequently, the excess
remuneration of Rs.3.922 million has been
credited to the Profit and Loss Account and is
recoverable from him (Refer Note 13 B of
Schedule J8 of the audited accounts of Esab India
Limited).
On the basis of the information and explanations
given to us and on the consideration of the separate
audit reports on the individual audited financial
statements of Esab India Limited and its subsidiary,
subject to our comments in paragraph (5) above.
in our opinion, the financial statements give a true
and fair view in conformity with accounting
principles generally accepted in India:
a) in the case of the consolidated Balance
Sheet, of the consolidated state of affairs
of Esab India Limited and its subsidiary as
at December 31, 2002;
b) in the case of the consolidated Profit and
Loss Account, of the consolidated results
of operations of Esab India Limited and its
subsidiary for the year ended on that date;
and
c) in the case of the consolidated Cash Flow
Statement, of the consolidated cash flows
of Esab India Limited and its subsidiary
for the year ended on that date.
For LOVELOCK & LEWES
Chartered Accountants
Vasant Gujarathi
Partner
Mumbai, March 8. 2003
39
Esab India Limited (Consolidated)

Consolidated Balance Sheet

as at 31 st December, 2002
31st December, 2001
Schedule Rs.'OOO Rs.'OOO Rs.'OOO
SOURCES OF FUNDS
SHAREHOLDERS'FUNDS
SHARE CAPITAL 1 153,930 153,930
RESERVES AND SURPLUS 2 110,590 157,784
264,520 311,714
MINORITY INTEREST 3 877 1,033
LOAN FUNDS
SECURED LOANS 4 242,413 130,511
UNSECURED LOANS 5 - 1 20.000
242,413 250,5 1 1
507,810 563,258
APPLICATION OF FUNDS
FIXED ASSETS 7
Gross Block 743,664 745,300
Less: Depreciation 266,474 237,335
Net Block 477,190 507,965
Capital Work-in-progress including Advances 1,089 6,821
478,279 514,786
CURRENT ASSETS. LOANS AND ADVANCES
Inventories 6 131,659 256,558
Sundry Debtors 8 123,559 111,889
Cash and Bank Balances 9 51,434 62,103
Loans and Advances 10 44,336 77,805
350,988 508,355
LESS:
CURRENT LIABILITIES AND PROVISIONS
Liabilities 11 451,548 474,210
Provisions 12 6,553
—
458,101 474,210
NET CURRENT ASSETS (107,113) 34,145
DEFERRED TAX (Refer Note 10 of Schedule 18)
- Asset 136,324 76.149
- Liability (67,664) (61,822)
68,660 14,327
PROFIT AND LOSS ACCOUNT 13 67,984
—
507,810 563.258
Notes to Accounts 18
The Schedules referred to above form an integral part of the Balance Sheet
In terms of our report of even date For and on behalf of the Board of Directors
For Lovelock & Lewes H.P.R.Mullan Chairman
Chartered Accountants G. Hariharan Wholelime Director
Vasant G ujarathi A. Banerjee N.H-Mirza J.Templeman i
Partner Company Secretary T.Mitra S.N.Talwar / Directors
Mumbai. 8th March. 2003 Mumbai, 8th March, 2003

40
 Esab India Limited (Consolidated)

Consolidated Profit and Loss Account

for the year ended 31 st December, 2002
l
12 Months (o > M o n t h s u>
31st December. 2002 3 I si December. 2001
Schedule Rs.'OOO Rs.'OOO

INCOME
Sales (Gross) 1,415,858 994,833
Less : Excise Duty 164,641 1 1 6,493
Sales (Net) 1,251,217 878,340
Other Income 14 16,525 16,058
1,267,742 894,398
EXPENDITURE
Materials 15 846,407 553,345
Manufacturing, Selling and Administrative Expenses 16 471,597 339,330
Interest 17 26,690 2 1 , 1 98
• Depreciation 42,522 30,891
1,387,216 944,764
LOSS BEFORE EXTRAORDINARY ITEMS AND TAXES (119,474) (50,366)
Extraordinary items :
Voluntary Separation Compensation and related payments 26,193 14,826
Fixed Assets written off 8.568
—
LOSS BEFORE TAXATION (145,667) (73,760)
Taxation (Refer Notes 10 and 14 of Schedule 18) 30,333 27.142
LOSS AFTER TAXATION (115,334) (46,618)
Minority Interest 156 114
LOSS AFTER MINORITY INTEREST (115,178)
_ (46,504)
Balance brought forward from previous year 30,9 1 8
AVAILABLE FOR APPROPRIATION (115,178) (15,586)
APPROPRIATIONS _
General Reserve (15,586)
_
Balance carried to Balance Sheet (115,178)
(115,178) (15.586)

Earnings per share : (Refer Note 1 1 of Schedule I K I

Basic Rs (7.48) Rs (3.02)
Diluted Rs (7.48) Rs (3.02)
Notes to Accounts 18

The Schedules referred to above form an integral part of the Profit and Loss Account
In terms of our report of even date For and on behalf of the Board 01f Directors
For Lovelock & Lewes H. P. R. Mullan ("Iniii'iiKin
Chartered Accountants G. Hariharari Wh <iSetinic Director
VasantGujarathi A.Banerjee N.H.Mirza J.TempIeman »
Partner Companv Secretary T.Mitra S.N.Talwar 1 Direi'toi'fi

Muinbai. 8th March. 2003 Mumbai, 8th March. 2003

41
Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31 st December, 2002

31st December, 2001

Rs.'OOO Rs.'OOO

1. SHARE CAPITAL
Authorised:
17,000,000 Equity Shares of Rs. 10 each 170,000 170,000
3,000.000 Unclassified Shares of Rs. 10 each 30,000 30,000
200,000 200.000

Issued and subscribed:

15,393,020 Equity Shares of Rs.K) each fully paid up
- Of the above. 999,000 shares were allotted as fully paid
up pursuant to a Scheme of Amalgamation 153,930 153,930

2. RESERVES AND SURPLUS

Amalgamation Reserve
As per last Balance Sheet 10,000 10,000
Securities Premium Account
As per last Balance Sheet 93,190 93,190
Special Capital Incentive Subsidy
As per last Balance Sheet 2,000 2,000
Investment Allowance Reserve Account
As per last Balance Sheet 5,400 5,400
General Reserve
As per last Balance Sheet 47,194 80,000
Deferred Tax Liability as at start of the period (10,915)
Goodwill written off (6,305)
Loss Transferred from Profit and Loss Account (15,586)
47,194 47,194
Less : Debit Balance in Profit and Loss Account 47,194
(as per centra-Schedule 13) 47,194
110,590 157,784

42
 Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31st December, 2002
31st December, 2001
Rs.'OOO Rs.'OOO

3. MINORITY INTEREST
As per last Balance Sheet 1,033 1.147
Transferred from Profit and Loss Account (156) (114)
877 1,033
4. SECURED LOANS
Term Loans from Banks/Institutions 100,000 75,000
Cash Credits from Banks 28,589 19,954
Working Capital Demand Loans from Banks 113,300 35,300
Interest Accrued and Due 524 257
242,413 130,511

Notes :
The Term Loans are secured by hypothecation of certain movable assets (excluding slocks and debts) at manufacturing plants.

Cash Credit and Working Capital Demand Loans from Banks are secured by hypothecation of stocks and debts in the case of Esab India
Limited and by hypothecation of stocks, debtors and plant & machinery and mortgage of immovable property in the case of Flotcch
Welding & Cutting Systems Limited.

The Term Loans include amounts repayable within one year of Rs. 34.2 m i l l i o n (previous period Rs.25.0 m i l l i o n ) .

5. UNSECURED LOANS
Short Term Loans and Advances :
Commercial Paper [Maximum amount during the year
Rs. 140.0 million (previous period Rs. 120.0 million)] 120,000

6. INVENTORIES
Raw and Packing Materials 54,706 58,010
Work-in-Process 29,965 27,039
Finished Goods 42,794 165,751
Stores and Spare Parts 4,194 5.758
131,659 256,558

43
 Schedules to Consolidated Balance Sheet and Profit and Loss Account
31st December, 2002
Ic
to

7. FIXED ASSETS
Rs.'OOO
1
s-^
n
o
GROSS BLOCK AT COST DEPRECIATION NET BLOCK
Type of Assets 1st January. Additions Deductions 31st December, 1st January, For the Deductions 31st December, 31st December, 31st December.
2002 2002 2002 Year 2002 2002 2001

Land Freehold 40,912 — — 40,912 — 40 912 40.912

Land Leasehold 18.261 — — 18,261 7,650 180 — 7,830 10,43! 10.611

Building 137,362 3,306 954 139,714 27,586 4,412 260 31,738 107,976 109,776

Plant & Machinery 516,057 18,255 18,802 515,510 192,786 35,291 11,787 216,290 299,220 323,271

Furniture & Fixtures 16,373 180 3,360 13,193 5,308 1,123 1,117 5,314 7,879 1 1 ,065

Motor Vehicles 16,335 — 261 16,074 4,005 1,516 219 5,302 10,772 12,330

Current Year 745,300 21,741 23,377 743,664 237.335 42,522 13,383 266.474 477,190 507,965

Previous Period 690.864 87,592 33.156 745,300 226,191 30.891 19,747 237,335

Capital Work in Prog ress including Advances 1.089 6.821

478,279 514.786
 Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31st December, 2002
i l s l December, 2001
Rs/000 Rs.'OOO

8. SUNDRY DEBTORS (UNSECURED)

Over six months -
Considered Good 15,313 32,924
Considered Doubtful 21,802 32,550
Others, Considered Good 108,246 78.965
145,361 144.439
Less: Provision for Doubtful Debts 21.802 _ J-S2.550
123.559 _ 111.889
9. CASH AND BANK BALANCES
Cash on hand 458 409
Cheques on hand and remittances in transit 39,945 37,219
Balances with Scheduled Banks on Current Account: 1.0,219 22,532
Margin money with banks 812 ! ,943
51,434 62,103
10. LOANS AND ADVANCES
Secured
Vehicle Loans to employees 1,503 1,488
(Secured against hypothecation of vehicles)
Unsecured, considered good
Advances recoverable in cash or in kind or for value to be received 40,514 57,411
Advance tax payments less provision for Income-tax — 16,419
Balances with Customs, Port Trust. Excise, etc. 2,319 2,487
44,336 77T805
11. CURRENT LIABILITIES
Sundry Creditors (Refer Note 7 of Schedule 18) 348,324 422,391
Customers' Credit Balances 29,903 35,656
Other Liabilities 70,995 12,863
Unclaimed Dividends* 1,269 1,736
Interest accrued and not due 1,057 1,564
451,548 474,210

* There is no amount due and outstanding to be credited to Investor Education and Protection Fund

45
Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31st December, 2002
3 I si December, 2001
Rs.'OOO Rs.'OOO
12. PROVISIONS
Provision lor Income-tax less advance tax payments 6,553 —
6,553 —

13. PROFIT AND LOSS ACCOUNT

Debit Balance in Profit and Loss Account 115,178
Less : As per Contra in General Reserve (Schedule 2,» 47,194 -
67,984

14. OTHER INCOME

Scrap Sales 7,386 8,780
Less : Excise Duty 1,044 6,342 1,063 7,717
Profit: on sale of fixed assets (net) - 590
_
Sale of fixed assets written off in earlier years 1,778
Provisions for liabilities no longer required written back 1,026 574
Miscellaneous 7,379 7,177
16,525 16,058

15. MATERIALS
A, Raw & Packing Materials Consumed 600,363 496,102
Purchases of Finished Goods 126,013 87,146
726,376 583,248
B. Decrease / (Increase) in Finished Goods &
Work-in-Process
Opening Stock
Finished Goods 165,751 140,098
Work-in-Process 27,039 22,789
192,790 162,887
Closing Stock
Finished Goods 42,794 165,751
Work-in-Process 29,965 27,039
72,759 192,790
120,031 (29,903)
846,407 553,345

46
 Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31 st December, 2002
i I si December. 2001
Rs.'OOO Rs.'OOO
16. MANUFACTURING, SELLING AN!) ADMINISTRATIVE EXPENSES
Salaries, Wages and Bonus 97,136 84,635
Contributions lo Provident and Other Funds 35,350 1 2.434
Workmen and Staff Wei fare Expenses 12,959 12.765
Consumption of Stores and Spare parts 13,974 5,778
Power and Fuel 49,002 33,968
Repairs:
Buildings 5,833 8.857
Plant & Machinery 5,809 7.730
Others 7,435 5,208
Rent 15,477 9,460
Rates and Taxes 61,926 5,363
Exeise Duty (19,681) 2,944
Insurance 3,371 3,389
Provision for Doubtful Debts 21,268 32.058
Less : Writebaek of provisions, no longer required (2,903) 18,365 (539) 31,519
Bad Debts written off 29,113 3,673
Less : Provision 29,113 3,673
Transport and Freight 18,784 6,684
Communication Costs 16,109 18.699
Travelling, Conveyance and Motor Car Expenses 38,466 30,150
Special Discounts and Commissions 6,912 6,792
_
Loss on sale of fixed assets (net) 3,817
Fixed Assets written off 4,129 3,968
Advertising 1,519 5,214
_
Sundry balances written off 3,250
Miscellaneous Expenses 71,655 43,773
471,597 339,330

17. INTEREST
On Fixed Loans 8,814 6.680
On Other Loans 18,413 14.790
27,227 21,470
Less : Interest income [tax deducted at source Rs. 0.11 537 272
million (Previous period Rs. 0.04 million)]
26,690 198

47
Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31st December, 2002
18. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
Basis of Consolidation
The Consolidated Financial Statements of Esab India Limited and the Subsidiary, Flotech Welding & Cutting
Systems Limited are prepared to comply in all material aspects with generally accepted accounting principles
in India and applicable Accounting Standards issued by the Institute of Chartered Accountants of India.
Note 2. Accounting Policies
Sch, 18
a) Fixed assets are stated at cost and in the case of projects include identifiable incidental and installation
expenses and interest on funds borrowed in order to bring the assets into use,
b) Depreciation for the year is provided (except in the case of leasehold land, the cost of which is
amortised over the lease period) on the straight line method at the rates and in the manner specified in
Schedule XIV of the Companies Act, 1956.
c) Inventories of raw and packing materials are valued at the lower of cost and net realisable value on a
First-In-First-Out basis. Work-in-process and finished goods are valued at the lower of cost and net
realisable value. Costs are generally calculated at standards adjusted to actuals and in the case of
manufactured inventories include cost of conversion and other costs incurred in bringing the inventories
to their present location and condition. Inventories of stores and spare parts are valued at cost.
d) Voluntary Separation Compensation and related payments including payments made in instalments are
charged to the Profit and Loss Account during the year in which they are incurred .
e) Revenue from the sale of goods is recognised on despatch to customer. Sales are net of trade discounts,
rebates etc.
f) The liabilities for gratuity, pension and leave salary for Esab India Limited are assessed actuarially. For
Flotech Welding & Cutting Systems Limited, provision for gratuity is made as per The Payment of
Gratuity Act, 1972 and liability for leave salary is made on unavailed accumulated leave balance of
employees on the basis of their current salaries.
g) Foreign currency transactions arc accounted at the exchange rates prevailing on the date of the relevant
transaction. Foreign currency monetary assets and liabilities are restated at rates ruling at the year end.
Exchange differences relating to the liability incurred for the purchase of fixed assets are adjusted in
the cost of the assets. Other exchange differences are dealt with in the Profit and Loss Account.
h) The excise duty in respect of closing inventory of finished goods is included as part of inventory. The
amount of CENVAT credits in respect of materials consumed for sales is deducted from the cost of
materials consumed.

i) Current; tax is determined on the basis of the amount of tax payable on taxable income for the year.
Deferred tax is calculated at the current statutory income tax rate and is recognised on timing differences
between taxable income and accounting income that originate in one period and are capable of reversal in

48
 Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31st December, 2002
one or more subsequent periods. Deferred tax assets are recognised and carried forward only to the extent
that there is reasonable certainty that sufficient future taxable income will be available against which such
deferred lax assets can be realised.

jj The accounting policies adopted for segment reporting are in line with the accounting policies adopted in the
consolidated financial statements.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating
activities of the segment. Revenue and expenses which relate to the enterprise as a whole and are not
allocahleto segments on a reasonable basis, have been included under the heading "Other common expenses".
31st December, 31st December.
2002 2001
Rs.'000 Rs.'OOO
Note 3. Estimated amount of contracts remaining to be executed 14,548 9,956
Sch. 18 on capital account and not provided for (net of Advances)

Note 4. Contingent Liabilities :

Sch. 18 Fo]. disputed taxes an d duties * 225,867 73,023
Bank Guarantees 1,549 1,197
* Interest and penalty, if arty, payable on contingent l i a b i l i t y
relating to sales tax and excise duty demands are presently
not aseertainable.

Note 5. Auditors' Remuneration :

Sch. 18 Audit fees 823 517
Tax Audit and Tax Accounts 319 —
Certification 56 85
Other Professional Services 544 294
Reimbursement of out of pocket expenses 34 16
Note 6. Net difference in foreign exchange debited to Profit and Loss Account is Rs.2.63 million (previous period
Sciv 18
Rs.0.50 million).
Note 7. Sundry Creditors include Rs.3.3 m i l l i o n advance payment for sale of a portion of excess vacant land at the
Sch. 18 Khanlah factory. West Bengal which is held in escrow .
Note 8. Loans and Advances include the following amounts due from a Director:
a) Rs.Nil (previous period Rs. 15.00 million), towards security deposit, for use of residential accommodation
provided by the Company, maximum amount due during the year. Rs. 15.00 million (previous period Rs. 15.00
million).
b) Rs.3.922 million (previous period Rs.Nil) recoverable from the Managing Director being the remuneration
paid in excess of the limit specified under Schedule XI11 of the Companies Act. 1956, maximum amount due
during the year Rs 3.922 million (previous period Rs. Nil).

49
Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

3! si December,. 2002

Note 9. Information about Consolidated Business Segments :

Sch. 18 Included in each category of business are:-
Consumables : Welding electrodes. Copper coated wires and Welding fluxes
Equipment : Welding machines and Cutting equipment
Rs.'OOO
PARTICULARS CONSUMABLES . EQUIPMENT TOTAL
3 1st December, 31 si December, 3 1st December, 3 1 st December 31st December, 3 1 st December,
2002 20(11 2002 200 1 2002 200 i
REVENUE
External sales (Gross) 1,021,441 684,882 394,409 309,95 1 1,415,858 994.833
Segment results 45,740 I3,9!7 (25,048) (7,194) 20,692 6,723
Less: Interest (Net) 26,690 21,198
Other common expenses 113,476 35,891
Extraordinary expenses 26,193 23.394
Total Loss before tax (145,667) (73,760)
Capital Employed
Segment Assets 519,263 650,5 1 1 250,258 265,897 769,521 916.408
Common Assets 196,070 182,882
Total Assets 965,591 1 ,099,290
Segment Liabilities 189,469 256,087 96,119 122.167 285,588 378.254
Common Liabilities 482,590 408,289
Total Liabilities 768,178 786,543
Segment Capital Employed 329,794 394,424 154,139 143,730 483,933 538.154
Common Capital Employed (286,520) (225,407)
Total Capital Employed 197,413 312.747
Segment Capital Expenditure 13,379 73,848 7,231 5,978 20,610 79,826
Common Capital Expenditure 1,1.31 7,766
Total Capital Expenditure 21,741 87,592
Segment Depreciation 31,022 21,796 7,131 4,800 38,153 26,596
Common Depreciation 4,369 4,295
Total Depreciation 42,522 30,891
Segment non cash expenditure 3,876 26,184 16,467 9,303 20,343 35,487
Common non cash expenditure 4,987 8,568
Total Non cash expenditure 25,330 44,055

Notes :
1 ) The Business Segment is the primary segment.
2) Segments have been identified and reported taking into account the nature of products and services, the
differing risks and returns, the organisation structure and the internal financial reporting systems.

50
 Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31st December, 2002

Note 10. Deferred taxation

Sell. 18 .11st December. 2001
Rs/000 Rs.'OOO Rs.'OOO Rs.'OOQ
Deferred 'lax Assel -
Unabsorbed Losses * 30,170 17,975
Unabsorbed Depreciation * 59,033 34.178
Technical Know-how fee (debited to — 21
Profit and Loss Account but deductible
for tax over six equal annual instalments)
Voluntary Separation Compensation and 14,310 9,458
related payments (debited to Profit and Loss Account
but deductible for tax over five equal annual instalments)
Provision (or doubtful debts 7,816 11,238
Amounts disallowed under Section 43B of
the Income-tax Act, 1961 24,249 2,378
Provision ibr royalty 746 136,324 901 76,149
Deferred Tax Liability -
Excess of net block over written down value as
per the provisions of Income-tax Act, 1961 (67,664) (61,822)
68,660 14,327
* In the opinion of the management, the Company will have sufficient taxable profits to recoup Unabsorbed
losses and depreciation in subsequent periods
Note 11. Earnings per Share :-
Sch. 18
31st December, 2002 31 st December, 2001
Basic Earnings per Share Rs. (7.48) Rs. (3.02)
Diluted Earnings per Share Rs. (7.48) Rs. (3.02)
Nominal value per Share Rs. 10.00 Rs. 10.00

Earnings per share are calculated by dividing the loss attributable to the Equity Shareholders by the weighted
average number of Equity Shares outstanding during the year. The numbers used in calculating basic and
diluted earnings per share are :
31st December, 2002 31 st December. 2001
'OOOs ' 'OOOs

Loss after Minority Interest Rs. (115,178) Rs. (46,504)

Weighted average number of shares outstanding
during the year : Nos. 15,393 Nos. 15.393
Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31 st December, 2002
Note 12. The consolidated financial statements have been prepared in accordance with Accounting Standard 21
Sch, 18 (AS 21) "Consolidated Financial Statements" issued by the Institute of Chartered Accountants oflndia.These
statements have been prepared using uniform accounting policies except for gratuity and leave salary
{refer note 2 (f) },
Name of the Subsidiary : Flotech Welding & Cutting Systems Limited
Country of Incorporation : India
% age holding as at 31st December, 2002 : 85.71%
Note 13. Related Party Disclosures
Sch. 18 a) Names of Related Parties and description of Relationship
1) Parties where control exists
i) Esab Holdings Limited Substantial Interest (Holds 37.31 % of the paid equity
share capital of Esab India Limited as at
31st December, 2002). Charter Overseas Holdings
Limited, the Holding Company of Esab Holdings
Limited is a subsidiary of Charter pic, the ultimate
Holding Company,
ii) Other related parties in the Charter pic
Group where common control exists EsabAB, Sweden
Esab Cutting Systems GmbH, Germany
The Esab Group Inc., USA
Esab SA Industriae Comercio, Brazil
Conarco Alambresy Soldaduras S.A.. Argentina
Esab Asia/Pacific Pte Limited, Singapore
Howden Power Limited, Northern Ireland
Howden Sirocco SA, France
Burton Corblin SA, France
Ventilatoren Sirocco Howden BV, Netherlands
Turbowerke Meissen Howden GmbH, Germany
Voith Howden GmbH, Germany
Howden Power A/S. Denmark
Howden Talleres Sanchez Luengo SA, Spain
Howden Buffalo Inc., USA
Howden Hua Engineering Co Limited, China
Howden African Holdings Limited, South Africa
Howden Food Equipment Inc., USA
Howden Airdynamics Inc., USA
Western Design Howden Inc., USA
Bauer Howden Inc., USA
HD Engineering Limited. Hong Kong
Esab Group (UK) Limited, England & Wales
Esab Automation Limited, England & Wales
Esab Group (Ireland) Limited, Ireland
ESAB Limited, England & Wales
ESAB Pensions Limited, England & Wales
Murex Welding Products Limited, England & Wales
Murex Limited, England & Wales-
Hancock Cutting Machines Limited, England & Wales
Brinal Limited, England & Wales
Filarc Welding Limited, England & Wales
Arcos Welding Products Limited, England & Wales
Bilston Wire Mill Limited. England & Wales
Hobart Overseas Holdings Limited
Exelvia Netherlands B. V

52
 Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31st December, 2002
2) Key Management Personnel
Managing Director Mr.S.K.Bhattacharyya (Until 31st Jammry, 2003.1
Whole-time Director Mr.G.Hariharan (Appointed on 7th January, 2()03i

b) Transactions and outstanding balances with Related Parties : Rs. '000

Key Management
Common Control |I(ii)| Personnel [2| Total
Nature of Transaction 3 1st December, 31st December, 3 1st December,
2002 2001 2002 2001 2002 2001

Purchase of goods 14,396 5,480 14,396 5,480

Sale of goods 10,401 1,170 10,401 1,170

Royalty Expense 642 338 642 338

Remuneration 2,104 5.606 2,104 5.606

Recovery of expenses 620 _ 620 -

Rent paid for residential flat 438 329 438 329

Outstanding payables (net) 1,011 497 1,011 497

Outstanding receivables (net) 3,922 15,000 3,922 15,000

The particulars given in 13(a) above have been identified on the basis of information available with the Company.

53
Esab India Limited (Consolidated)

Schedules to Consolidated Balance Sheet and Profit and Loss Account

31 st December, 2002
3 1st December, 2001

Rs.'000 Rs.'OOO
Note 14, Taxation
Sch. 18
Tax provision for earlier years 24,000

Deferred Tax Credit 54,333 25,242

Tax provision of earlier years written hack 1,900

30,333 27,142

Notec 15. The Company has taken various residential and office premises under operating lease or leave & licence
' c T' agreements. These are generally not non-cancellable and range between 11 months and 3 years and generally
have no specific obligations for renewal. Lease payments are recognised in the statement of Profit and Loss
Account under Rent in Schedule 16.

Note 16. Sales are net of quantity discounts and incentives .

Sch. 18
Note 17. In the last quarter of 2002, the Company provided an aggregate amount of Rs 79 mi lion in respect of
Sch. 18
disputed sales tax demands relating to earlier years and additional pension and gratuity liabilities.

Note 18. With effect from 1st April. 2001. the Company and its subsidiary have changed their financial year from
" c 1- fiscal to calendar year. Consequently, the previous accounting; period is for a period of 9 months as against
12 monthsof the current year. Therefor, corresponding figures for the previous period are not comparable
with those of the current year.

Note 19. Previous period's figures have been regrouped or reclassified wherever necessary.
Seh. 18

Signatures to Schedules 1 to 18 which form an integral part of the accounts.

For and on behalf of the Board of Directors

H. P. R. Mullan Chairman
G. Hariharan Whole time Director
N. H. Mirza J.TempIeman \
Directors
A. Banerjee T. Mitra S. N. Talwar
Company Secretary
Mumbai, 8th March. 2003

54
 Esab India Limited (Consolidated)

Consolidated Cash Flow Statement

for the Year Ended 31 st December, 2002
12 Months to
31st December, 2002
Ks.'OOO
A. CASH FLOW FROM OPERATING ACTIVITIES :
Net Loss before Tax (145,667) (75.760)
Voluntary Separation Compensation and
Related Payments 26.193 14.826
Loss / (Profit) on Sale of Fixed Assets ( Net) 3.817 (590)
Fixed Assets written off 4,129 3.968
Fixed Assets written off - Extraordinary Item 8.568
Sale of fixed assets written off in earlier years (1.778) -
Unrealised Exchange Differences 932 (41 1 »
Depreciation 42,522 30. 89 1
Interest - net 26,690 2.1,198
Provision for Doubtful Debts 18,365 31,519
Operating Profit before Working Capita! Changes (24,797) 36,209
Trade and Other Receivables (14,599) 62,1 19
Inventories 124,899 (6,610)
Trade Payables (25.420) 12,291
Cash Generated from Operations 60.083 104,009
Voluntary Separation Compensation and
Related Payments (22,576) ( 14,916)
Direct Taxes Paid - Net (1,028) (3,347)
Net Cash from Operating Activities |A| 36,479 85.746
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (16,008! (59,940)
Sale of Fixed Assets 2,048 1 .462
Sale of Fixed Assets written off in earlier years 1,778 „
Interest Received 537 ~) ~! ->
Net Cash used in Investing Activities |B] (11,645) (5H.206)
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Borrowings (8,580) '2'), 541
Dividend Paid (467) (37,7361
Tax on Distributable Profits - (3,925)
Interest Paid (26,456) (20.480)
Net Cash used in Financing Activities [C (35,503) (32.600)
NEITNCREASBADECREASE) IN CASH ANDCASH EQUIVALENTS [ A+B+C | (10,669) (5,060)
CASH AND CASH EQUIVALENTS AS AC ! st J A N U A R Y . 2002 62,103 67,163
CASH AND CASH EQUIVALENTS AS AT 3 1 st DECEMBER, 2002 51.434 62,103
Notes:
i) Cash and Cash E-quivalents include:
(a) Cash and Bank balances other than those mentioned in (b) below. 44,160 52.31 1
(b) Cash arid Bank balances not available for use by the Company 7,274 9.792
51,434 62,103
Cash and Bank balances not available for use by (he Company include margin money, unclaimed dividend/interest etc. and an amount
held in escrow.
ii) The above cash flow statement has been prepared under the 'Indirect Method" as set out in the Accounting Standard-3 on Cash Flow
Statement issued by the institute of Chartered Accountants of India,
iii) Previous period's figures have been regrouped or reclassif led wherever necessary.

Jn terms of our report of even date For and on behalf of the Board of Directors
For Lovelock & Lewes „ „ „ - „ ..
„. . . H. P. R. Mullan Chairman
Chartered Accountants ,„ ., „„ , .
I*. ¥¥
Hariharan Wholetmie Director
Vasant Gujarathi A. Banerjee N, H> Mirza J.Templeman \
Partner Company Secretary T. Mitra S. N. Talwar *
Mumbai. 8th March, 2003 Murnbai. 8th March, 2003

55
Esab India Limited

Statement pursuant to Section 212 of the Companies Act, 1956

relating to Subsidiary Company
FLOTECH WELDING & CUTTING SYSTEMS LIMITED
1 Financial year of the Subsidiary Company : 31st December, 2002
2 Shares of the Subsidiary Company held by Esab India
Limited on the above date
(a) Number and Face Value : 1,200,000 Equity Shares of
Rs. 10 fully paid-up.
(b) Extent of holding : 85.71%
3 Net aggregate amount of Profit/(Losses) of the Subsidiary
Company so far as they concern the members of Esab
India Limited:
(a) not dealt with in the Accounts of Esab India Limited
for the year ended 31st December, 2002
(except to the extent dealt with in (b) below) :
(i) for the Subsidiary's financial year ended
31st December, 2002- Rs. '000 : (933)
(ii) for the previous financial years of the Subsidiary
since it became the holding Company's
Subsidiary-Rs. '000 : 2,155
(b) dealt with in the Accounts of Esab India Limited for
the year ended 31st December, 2002 (being dividend received) :
(i) for the Subsidiary's financial year ended
31st December, 2002 : NIL
(ii) for the previous financial years of the
Subsidiary since it became the holding
Company's Subsidiary : 2,400

For and on behalf of the Board of Directors

H. P. R. Mullan Chairman
GHariharan Wholetime Director
A. Banerjee N.H.Mirza J.Templeman l
Company Secretary T.Mitra S.N.Talwar * Directors

Mumbai, 8th March, 2003 Murnbai, 8th March, 2003

56
 Flotech Welding & Cutting Systems Limited

Directors' Report
Your Directors herewith present their Fifteenth Annual DIRECTORS
Report together with the audited accounts for the year
Mr. S.K. Bhattacharyya resigned as a Director and
ended 31st December, 2002.
Chairman of the Board of Directors of the Company
FINANCIAL RESULTS with effect from 7th January, 2003.

12 months 9 months Mr. H.P.R.Mullan was appointed as a non-retiring Director

to 31 Dec to 31 Dec as well as Chairman of the Board of Directors with effect
2002 2001
from 7th January, 2003 pursuant to Article 110 and Article
(Rs OOOs) (Rs OOOs)
144 of the Company's Articles of Association.

Profit before taxes, 123 170 Mr. G Banerjee retires by rotation and being eligible has
interest and depreciation
offered himself for re-appointment.
Interest 769 662
AUDITORS
Depreciation 443 304
S.N. Gogate & Company, Chartered Accountants, the
(Loss) before and after tax (1,089) (796)
retiring auditors, being eligible, have offered themselves
Profit & Loss balance (6,763) (5,967) for re-appointment to hold office until the conclusion of
brought forward the Sixteenth Annual General Meeting.
Profit & Loss balance (7,852) (6,763)
DIRECTORS' RESPONSIBILITY STATEMENT
carried forward
To the best of their knowledge and belief and according
The depressed state of the capital goods sector resulted
to the information and explanations obtained by them,
in a 6% decline in your Company's turnover on an
your Directors make the following statement in terms
annualised basis over the previous period and a loss for
of Section 217 (2AA) of the Companies Act, 1956:
the year under review. Many major customers deferred
their capital purchase requirements. However, various 1. that in the preparation of the annual accounts for
cost cutting measures, coupled with focused marketing the year ended 31st December, 2002, the applicable
efforts, enabled your Company to contain its losses. accounting standards have been followed;
Considering the business opportunities likely to emerge 2. that the accounting policies as mentioned in Note 1,
in the foreseeable future and the economic situation Schedule 14 of the Annual Accounts have been
prevalent in the country, your Directors approach the selected and applied consistently and judgements
current year with cautious optimism. In view of the loss and estimates that are reasonable and prudent made
sustained by the Company your Directors do not so as to give a true and fair view of the state of
recommend any dividend for the year. affairs of the Company at the end of the financial

57
Flotech Welding & Cutting Systems Limited

year on 31st December, 2002 and of the loss of the
Company for that year;
3. that proper and sufficient care has been taken for
the maintenance of adequate accounting records in
accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud
and other irregularities;
4. that the annual accounts for the year ended 31st
December, 2002 have been prepared on a going
concern basis.
CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE
Energy Conservation measures taken included
improvements in the methodology of testing products,
and better monitoring of compressor use. These
measures resulted in energy savings with resultant
savings in costs. Improved operational methods and
processes are to be introduced in order to reduce energy
consumption further.
efforts, the "CNC" cutting machines have been upgraded,
and a number of electrical and mechanical components
of the "CNC" flame cutting machines have been
indigenised.
The technology in respect of gas cutting machines, which
was imported in 1998, has been fully absorbed.
The Company is exploring the possibility of exporting
its products. Information relating to foreign exchange
earnings and expenditure is provided at Schedule 14 to
the Accounts of the Company.
EMPLOYEES
None of the employees received remuneration of
Rs. 200,000 or more per month.
APPRECIATION
Your Directors record their appreciation for the support
given to your Company by the State Bank of India, Esab
Hancock GmbH and Esab India Limited

The requirement to provide energy consumption data is

not applicable.
On behalf of the Board of Directors

Research and Development was conducted into product For FLOTECH WELDING & CUTTING
SYSTEMS LIMITED
development, technology upgradation, and the
development of testing facilities. Research and
development is proposed into new product development,
and further weight and cost reductions.
H. P. R. Mullan
Efforts to adapt technology in order to upgrade the Chairman
Company's products are ongoing. As a result of these Mumbai, 7th March, 2003

58

Auditors' Report to the Members of
Flotech Welding & Cutting Systems Limited
We have audited the attached Balance Sheet of Flotech
Welding & Cutting Systems Limited as at 31 st December,
2002 and the Profit and Loss Account of the Company
for the year ended on that date annexed thereto, both of
which we have signed under reference to this report and
are in agreement with the books of account. These
financial statements are the responsibility of the
Company's management. Our responsibility is to express
an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with auditing
standards generally accepted in India. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
1. As required by the Manufacturing and Other
Companies (Auditor's Report) Order, 1988, issued
by the Company Law Board in terms of Section
227 (4A) of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said order.
2. Further to our comments in the Annexure referred
to in paragraph 1 above, we report that:
a. we have obtained all the information and
explanations which to the best of our
knowledge and belief were necessary for the
purpose of our audit;
b. in our opinion, proper books of account as
required by law have been kept by the Company
Flotech Welding & Cutting Systems Limited
so far as appears from our examination of the
books;
c. the Balance Sheet and Profit and Loss Account
dealt with by this report are in agreement with
the books of account;
d. in our opinion the Balance Sheet and the Profit
and Loss Account dealt with by this report are
in compliance with the mandatory Accounting
Standards referred to in sub-section (3C) of
Section 211 of the Companies Act, 1956, to
the extent applicable;
e. as per the information and explanations given
to us, none of the directors of the Company is
disqualified from being appointed as a director
under clause (g) of sub-section (1) of Section
274 of the Companies Act, 1956;
f. in our opinion and to the best of our information
and according to the explanations given to us,
the said accounts read together with the notes
thereon, give the information required by the
Companies Act, 1956 in the manner so required
and give a true and fair view :-
i) in the case of the Balance Sheet of the
state of affairs of the Company as at 31st
December, 2002; and
ii) in the case of the Profit and Loss Account,
of the Loss of the Company for the year
ended on that date.
S. N. GOGATE & CO.
Place : Mumbai S.N. GOGATE
Dated : 7th March, 2003 Chartered Accountant
59
Flotech Welding & Cutting Systems Limited
Annexure to the Auditors' Report
The Annexure to the Auditors' Report (referred to in
paragraph 1 of our report of even date on the accounts
for the year ended 31st December, 2002 of Flotech
Welding & Cutting Systems Limited ).
Further we report that :
INTERNAL CONTROLS
1. There are adequate internal control procedures
commensurate with the size of the Company and
the nature of its business for the purchase of
stores, raw materials, components, plant and
machinery, equipment, other assets and for the sale
of goods.
2. Service Activities :
The Company has a reasonable system of
authorisation at proper levels and an adequate
system of internal control and job allocation of man
hours commensurate with the size of the Company
and the nature of its business related to service
assignments.
3. In our opinion the Company has an internal audit
system commensurate with the size and nature of
its business.
FIXED ASSETS
4. The Company has maintained proper records
showing full particulars including quantitative
details and situation of Fixed Assets. All the assets
have been physically verified by the management
during the year, the discrepancies noticed during
the physical verification of fixed assets as
compared to the book records have been properly
dealt with in the books of account.
5. None of the Fixed Assets has been revalued during
the year.
60
INVENTORIES
6. The stocks of finished goods, spare parts and raw
materials have been physically verified by the
management at reasonable intervals. In our opinion,
the frequency of verification is reasonable.
7. In our opinion the procedures for physical
verification of stocks followed by the management
is reasonable and adequate in relation to the size of
the Company and the nature of its business.
8. Discrepancies noticed during the physical
verification of stocks as compared to the book
records have been properly dealt with in the books
of account.
9. In our opinion the valuation of stocks is fair and
proper in accordance with normally accepted
accounting principles and is on the same basis as in
earlier years.
10. As explained to us, the Company has a regular
procedure for the determination of unserviceable
or damaged stores, raw materials and finished
goods. Adequate provision has been made in the
accounts for the loss arising on the items so
determined.
11. There are no sales of scrap or by-products during
the year.
12. The Central Government has not prescribed the
maintenance of cost records under Section 209 (1)
(d) of the Companies Act, 1956 for any of the
products of the Company.
13. Service Activities:
The Company's service activities involve the use
of technical manpower only and hence the question

of having a system of recording receipts, issues
and consumption of raw materials and issues of
stores does not arise.
LOANS AND ADVANCES
14. The Company has not taken any loans, secured or
unsecured from companies, firms or other parties
listed in the Register maintained under Section 301
of the Companies Act, 1956 and/or from
companies under the same management as defined
under sub-section (IB) of Section 370 of the
Companies Act, 1956.
15. The Company has not given any loans to any
companies or other parties listed in the registers
maintained under Sections 301 and 370 (1C) of
the Companies Act, 1956.
16. The Company has not given any loans and/or
advances in the nature of loans.
RELATED PARTIES
17. There have been no transactions of purchase of
goods and materials made in pursuance of contracts
or arrangements which would be required to be
entered in the register maintained under Section 301
of the Companies Act, 1956. There are sale
transactions in pursuance of contracts or
arrangements entered in the register maintained
under Section 301 of the Companies Act, 1956 and
aggregating during the year to Rs. 50,0007- or more
in respect of each party. No comparison with the
prevailing market prices was possible due to the
specialised nature of such transactions.
FIXED DEPOSITS
18. The Company has not accepted any deposits from
the public attracting the provisions of Section 58A
of the Companies Act, 1956, and the rules framed
thereunder.
Flotech Welding & Cutting Systems Limited
STAFF WELFARE
19. According to the records of the Company, the
Company has been regular in depositing the dues
under the Employees' Provident Fund and
Miscellaneous Provisions Act, 1952 and the
Employees' State Insurance Schemes with the
appropriate authorities.
20. During the course of our examination of the books
of account, we have not come across any personal
expenses which have been charged to the Profit
and Loss Account other than those payable under
contractual obligations or in accordance with
generally accepted business practices.
TAXATION
21. There are no undisputed amounts payable in respect
of Income Tax, Wealth Tax, Sales Tax, Customs
Duty and Excise Duty which remained outstanding
as at 31 st December, 2002 for a period of more
than six months from the date they became payable.
SICK INDUSTRIAL COMPANY
22. The Company is not a Sick Industrial Company
within the meaning of Section 3 (1) (o) of the Sick
Industrial Companies (Special Provisions) Act, 1985
(SICA). The accumulated losses of the Company
have resulted in the erosion of more than fifty per
cent of its net worth; but, the Company is a
registered Small Scale Industrial Undertaking and
hence the provisions of SICA do not apply.
S. N. GOGATE & CO.
Place: Mumbai S.N. GOGATE
Dated : 7th March, 2003 Chartered Accountant
61
Flotech Welding & Cutting Systems Limited

BALANCE SHEET
as at 31 st December, 2002

Schedule 31st December, 2001

Rs. '000 Rs. '000 Rs. '000
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
SHARE CAPITAL 1 14,000 14,000
RESERVES & SURPLUS - -
14,000 14,000
LOAN FUNDS
SECURED LOANS 2 5,329 6,218
19,329 20,218

APPLICATION OF FUNDS
FIXED ASSETS 4
Gross Block 10,180 9,865
Less : Depreciation 5,166 5,090
Net Block 5,014 4,775

CURRENT ASSETS, LOANS AND ADVANCES

Inventories 3 6,571 9,188
Sundry Debtors 5 2,961 1,880
Cash & Bank Balances 6 598 1,665
Loans & Advances 7 3,015 2,578
13,145 15,311
LESS:
CURRENT LIABILITIES AND PROVISIONS
Liabilities 8 5,871 5,236
Provisions 9 811 1,395
6,682 6,631
NET CURRENT ASSETS 6,463 8,680
PROFIT AND LOSS ACCOUNT
Net Loss as per Profit and Loss Account 7,852 6,763

19,329 20,218
Notes to Accounts 14

The Schedules referred to above form an integral part of the Balance Sheet.
As per our report of even date attached For and on behalf of the Board of Directors
S. N. GOGATE & Co. H. P. R. Mullan Chairman
S.N.GOGATE
Chartered Accountant G. Banerjee Director

Mumbai, 7th March, 2003 Mumbai, 7th March, 2003

62
 Flotech Welding & Cutting Systems Limited

PROFIT AND LOSS ACCOUNT

for the year ended on 31 st December, 2002

Schedule 12 Months to 9 Months to

31st December, 2002 31st December, 2001
Ks. '000 Rs. '000

INCOME
Sales (Gross) 17,474 13,946
Less : Excise Duty 2,217 1,752
Sales (Net) 15,257 12,194
Other Income 10 409 278
15,666 12,472

EXPENDITURE
Material Cost 11 11,109 8,237
Manufacturing, Selling & Administrative Expenses 12 4,434 4,065
Interest 13 769 662
Depreciation 443 304
16,755 13,268

LOSS BEFORE AND AFTER TAXATION (1,089) (796)

Add : Balance brought forward from the previous year (6,763) (5,967)

NET LOSS CARRIED TO BALANCE SHEET (7,852) (6,763)

Notes to Accounts 14

The Schedules referred to above form an integral part of the Profit and Loss Account.
As per our report of even date attached For and on behalf of the Board of Directors

S. N. GOGATE & CO. H. P. R. Mullan Chairman

S.N.GOGATE
Chartered Accountant G. Banerjee Director

Mumbai, 7th March, 2003 Mumbai, 7th March, 2003

63
Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

31st December, 2001

Rs. '000 Rs. '000

1. SHARE CAPITAL
Authorised :
1,400,000 Equity Shares of Rs. 10/- each 14,000 14,000

Issued, Subscribed and Paid-up

1,400,000 Equity Shares of Rs. 10/- each
fully subscribed and paid-up. [1,200,000
Equity Shares are held by Esab India Limited
and 200,000 Equity Shares are held by Esab
Hancock, GmbH, Germany] 14,000 14,000

2. SECURED LOANS
From State Bank of India
- Cash Credit secured by hypothecation of
stocks, debtors and plant & machinery and
mortgage of immovable property 5,329 6,218

3. INVENTORIES
Materials & Components 3,738 6,140
Work In Process 2,833 3,048
6,571 9,188

64
 Schedules to Balance Sheet and Profit and Loss Account
31st December, 2002

4. FIXED ASSETS
Rs.'000

GROSS BLOCK AT COST DEPRECIATION NET BLOCK

Type of Assets 1st January, Additions Deductions 31st December, 1st January, For the Deductions 31st December, 31st December, 31st December,
2002 2002 2002 Year 2002 2002 2001

Land 355 — — 355 — — — — 355 355

Building 4,467 _ _ 4,467 1,840 149 — 1,989 2,478 2,627

Plant & Machinery 4,356 706 324 4,738 2,813 250 317 2,746 1,992 1,543 !
Furniture & Fixtures 687 — 67 620 437 44 50 431 189 250

Current Year 9,865 706 391 10,180 5,090 443 367 5,166 5,014 4,775

?
Previous Period 9,865 — — 9,865 4,786 304 — 5,090

OS
in
Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

31st December, 2001

Rs. '000 Rs. '000

5. SUNDRY DEBTORS (UNSECURED)

Outstanding for a period exceeding six months
Considered good
Considered doubtful 534 534
534 534
Others, considered good . 2,961 1,880
3,495 2,414
Less : Provision for doubtful debts 534 534
2,961 1,880

6. CASH AND BANK BALANCES

Cash on hand 6 48
Balance with Scheduled Banks :
In fixed deposits as margin money 387 1,361
Current Accounts 205 256
598 1,665

7. LOANS AND ADVANCES

( Unsecured, considered good )
Advances recoverable in cash or in kind or for value to be received 569 863
Advance Tax including Tax Deducted at Source 2,193 1,456
Deposits 253 259
3,015 2,578

66
 Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

31st December, 2001

Rs. '000 Rs. '000 Rs. '000 Rs. '000

8. CURRENT LIABILITIES
Sundry Creditors (Refer Note 9 of Schedule 14) 5,555 3,812
Customers' credit balances 21 1,232
Government dues 215 112
Other Liabilities 80 80
5,871 5,236

9. PROVISIONS
For Expenses 811 1,395
811 1,395

10. OTHER INCOME

Miscellaneous Receipts 370 263
Liabilities no longer required written back 39 15
409 278

11. MATERIAL COST

A. Materials Consumed 10,894 7,961
B. Decrease/(Increase) in Stock
Closing Stock : (Work In Process) 2,833 3,048
Opening Stock : (Work In Process) 3,048 3,324
Decrease/increase) in Stock 215 276
11,109 8,237

67
Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

as at 31st December, 2002

31st December, 2001

Rs. '000 Rs. '000

12. MANUFACTURING, SELLING AND ADMINISTRATIVE EXPENSES

Salaries and Wages 1,928 1,311
Contribution to Provident and other funds 124 86
Staff Welfare 161 135
Power & Fuel 360 273
Repairs & Maintenance
Plant & Machinery 31 32
Others 22 34
Rates, Taxes & Insurance 146 93
Excise Duty 121 2
Travelling, Conveyance & Vehicle Expenses 701 720
Professional Fees 115 106
Bank Charges 100 44
Postage, Telegram and Telephone 205 263
Commissions & Discounts on sales 634
Fixed Assets written off 24
Transport & Octroi Charges 78 94
Provision for Doubtful Debts 42
Other Expenses 318 196
4,434 4,065

13. INTEREST
For Working Capital facility 800 754
Less : Interest income
Bank Interest 31 92
[Tax Deducted at Source Rs. Nil (Previous Year Rs. Nil)]
769 662

68
 Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002
14. NOTES FORMING PART OF THE ACCOUNTS
Note 1. Accounting Policies
Sch. 14 j^ accounts are prepared on the historical cost convention and materially comply with the mandatory
Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956. The significant
accounting policies followed by the Company are as follows:
1.1 Sales are inclusive of Excise Duty.
1.2 Depreciation has been provided on the basis of the straight line method at the rates specified in
Schedule XIV of the Companies Act, 1956.
1.3 Inventories
Inventories of raw materials and components are valued at the lower of cost and net realisable value on
a First-In-First-Out basis. Work-in-Process is valued at the lower of cost and net realisable value. In
case of Work-in-Process appropriate overheads are added to cost. Finished goods are valued at the
lower of cost and net realisable value.
Cost comprises cost of purchases, cost of conversion and other costs incurred in bringing the inventories
to their present location and condition. Excise duty, CENVAT and sales tax rebates are deducted from
purchases to determine the cost on an 'exclusive basis'.
1.4 Provision for Gratuity is computed and full liability is provided as per The Payment of Gratuity Act,
1972.
1.5 Current tax is determined on the basis of the amount of tax payable on the taxable income for the
period. Deferred tax is calculated at the current statutory income tax rate and is recognised on the
timing differences between taxable income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax assets are recognised and carried
forward only to the extent that there is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
1.6 Foreign currency transactions are accounted at the rate prevailing on the date of the transaction. Foreign
currency monetary assets and liabilities are restated at rates ruling at the year end. Other exchange
differences are dealt with in the Profit and Loss Account.
31st December, 2002 31st December, 2001
Rs. '000 Rs. '000
Note 2. Capital Commitments
Estimated amount of contracts remaining to be
executed on capital account and not provided for — 479
Note 3. Contingent Liabilities not provided for
3.1 Guarantees given by bank on behalf of the Company 1,549 1,197
3.2 For disputed sales tax matters 2 2
3.3 For disputed excise duty matters 187 313
3.4 For disputed service tax matters 54 —
3.5 Disputed income tax liability 4,214 4,214

69
Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

Note 4.1 Capacity, Production, Stock and Value : Rs. '000

Sch. 14
Description Units Opening Stock Capacity Production Sales Closing Stock
1st January, 2002 Licensed Installed 31st December, 2002
_ Qty. Value Qty. Qty. Qty. Qty. Value Qty. Value

Cross Carriage
Cutting Machines :-

Large Nos 4 4 5,570

(3) (3) (8,268)
Small Nos 830 830 34 34 1,427
(830) (830) (26) (26) (1,123)
Spares - 10,477
(-) (4,555)
830 830 38 38 17,474
Previous Period (830) (830) (29) (29) (13,946)

* Licensed and Installed capacities are / were not applicable.

Note 4.2 Material and Components Consumed :

Sch. 14
31st December, 2002 31st December, 2001
Rs. '000 Rs. '000
Components 10,894 7,961
10,894 7,961

Note 4.3 Value of Imports calculated on C.I.F. basis :

Sch. 14
Components 3,725 3,702
3,725 3,702

Note 4.4 Value of Imported and Indigenous Materials and Components Consumed :
Sch. 14
Value Rs. '000 % age of Total Consumption
31st December, 2002 31st December, 2001 31st December, 2002 31st December, 2001

Imported 7,384 5,015 68.0 63.0

Indigenous 3,510 2,946 32.0 37.0

10,894 7,961 100.0 100.0

70
 Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002
31st December, 2001
Rs. '000 Rs. '000

Note 5. Expenditure in Foreign Currency : Nfl Ml

Sch. 14
Note 6. Earnings in Foreign Exchange : Nil
Sch. 14
Note 7. Auditors' Remuneration :
Sch. 14 (Included in Professional Fees)
Audit Fees 23 17
Other professional services 19 14
Out-of-pocket expenses 5
42 36

Note 8. Net difference in foreign exchange debited to Profit and Loss Account is Rs. 0.06 million.
Sch. 14 (Previous year credited to Profit and Loss Account is Rs. 0.01 million)
Note 9. a) Sundry Creditors include Rs. 0.90 million outstanding to Small Scale Industrial Undertakings and
Sch. 14 Rs. 4.66 million to other creditors.
b) Small Scale Industrial Undertakings to whom amounts are outstanding for more than 30 days :
Chaitanya Enterprises
FHP India
Hydrpteck Engg. Company
Indranath Industries
Mahamaya Metal Products Private Limited
Pioneer Industrial Instruments
Shree Durga Engineering
c) The above information has been compiled in respect of parties to the extent they could be identified as
Small Scale Industrial Undertakings on the basis of information available with the Company.
Note 10. The Company has computed the amount of deferred taxation as per the mandatory Accounting Standard
Sch. 14 22 "Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India. On
the grounds of prudence, the Company has not accounted for cumulative net deferred tax asset of
Rs. 2.56 million as at 31st December, 2002 and Rs. 0.38 million during the year.
Note 11. Balance Sheet Abstract and Company's General Business Profile
Sch. 14
I. Registration Details
Registration No. \4 \ 1 \ 2\ 0\9 \
Balance Sheet Date 3
State Code m
Date Month

II. Capital raised during the year (Amount in Rs. Thousand )

Public Issue | N[ I \L \ Rights Issue
Bonus Issue | N| I |L | Private Placement \N \l \L

71
Flotech Welding & Cutting Systems Limited

Schedules to Balance Sheet and Profit and Loss Account

31st December, 2002

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand)

Total Liabilities | 1 | 9\3 \ 2 \9 \ Total Assets
Sources of Funds
Paid-up Capital 1 J 4 I oToI 0 Reserves & Surplus
Secured Loans \5T3\2\9\ Unsecured Loans
Application of Funds
Net Fixed Assets 5 0 1 4 Investments
Net Current Assets 6|4 6 3 Misc. Expenditure

Accumulated Losses I7 I 8 I5 I 2

FV. Performance of Company

Turnover * | f|5|6 | 6 | 6 Total Expenditure 6 7 5 5
* Includes Other Income
+/- Profit/Loss +/- Profit/Loss
Before Tax After Tax - 1 0 8 9
Earnings per Share Dividend Rate %

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)
Item Code
Product Description C | U | T | T | I |N|G| |E|Q|U|I | P | M | E | N | T
Item Code
Product Description
Item Code
Product Description
Note 12. With effect from 1st April, 2001 the Company changed its financial year from fiscal to calendar year.
Sch. 14 Consequently, the previous accounting period is for nine months as against twelve months of the current
year, and corresponding figures for the previous period are not comparable with those of current year.
Note 13. Previous year's figures have been regrouped or reclassified, wherever necessary.
Sch. 14 Signatures to Schedules 1 to 14 which form an integral part of the Accounts.
As per our report of even date attached For and on behalf of the Board of Directors
S. N. GOGATE & CO. H. P. R. Mullan Chairman
S.N.GOGATE
Chartered Accountant G. Banerjee Director
Mumbai, 7th March, 2003 Mumbai, 7th March, 2003

72
 ESAB INDIA LIMITED
Registered office : Lloyds Centre Point, 2nd Floor, 1096-A, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025
ATTENDANCE SLIP
16th Annual General Meeting on Thursday, 12th June, 2003

Name of the Shareholder DP.Id/Cl.Id./Reg.Folio No.

I certify that I am a registered shareholder of the Company

I hereby record my presence at the Annual General Meeting of the Company to be held on Thursday, 12th June, 2003 at
Bombay House Auditorium, Bombay House, Homi Mody Street, Mumbai - 400 023 at 4.00 p. m. (I.S.T.)

Proxy's name in Block Letters Member's/Proxy's Signature

NOTES:
1. This Meeting is of Members only and you are requested not to bring with you any person who is not a Member.
2. Shareholders/Proxyholders are requested to bring the attendance slips with them when they come to the Meeting
and hand them over at the entrance after affixing their signatures on them.
3. If it is intended to appoint a proxy, the form of proxy should be completed and deposited at the Office of the
Company's Registrars and Share Transfer Agents, Messrs. Computech Sharecap Limited at least 48 hours before
the Meeting.
4. ATTENDANCESLIPSOFSHAREHOIJDERSNOTAT1ENDJNGTHEMEETINGWIIXNOTBEACCFJPTED.

CutHere

ESAB INDIA LIMITED

Registered office : Lloyds Centre Point, 2nd Floor, 1096-A, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025.

Proxy Form

Mr./Mrs./Miss DP.Id/CI.Id./Reg. Folio No.

I/We
of. in the district of
being a member/members of the above named Company hereby appoint
: of.
in the district of or failing him of
in the district of.
as my/our proxy to vote for me/us on my/our behalf at the 16th Annual General Meeting of the Company to be held on
Thursday, 12th June, 2003 at 4.00 p.m at Bombay House Auditorium, Bombay House, Homi Mody Street, Mumbai - 400 023
and at any adjournment thereof.

Rs. 1
Signature, Revenue
Stamp

Note : This form in order to be effective should be duly stamped, completed and signed and must be deposited at the
Company's Registrars and Share Transfer Agents, Messrs. Computech Sharecap Limited, 147, Mahatma Gandhi
Road, Opp. Jehangir Art Gallery, Fort, Mumbai - 400 023, not less than 48 hours before the time for holding the
meeting. The proxy need not be a member of the Company.