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ADOR W E L D I W G L I M I T E D

i i ' • t

.** * ^ "f I

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Welding Wisdom -the wide basesupportingthe competitive spiritAfter consolidating its knowledge base throughplanned investments in plants, technology alliances,manpower skills and networking, Ador Welding Ltd.today is fully receptive and responsive to any stimulusto its competitive spirit. Gained through extensiveexposure to industry needs, Ador Welding's wide-basedwelding wisdom has made the Company extremelyreceptive and sensitive to information, equipping it withthe "soft power" that is strengthening its competitiveedge, both as a market leader and as an organisation.

Compulsions of a fast-paced globalised economy,imposes upon the Company, the need to respondeffectively and competitively every time, to frequentand various kinds of challenges. By being receptive toevery kind of demand in industry and business life, AdorWelding displays its capacity to be proactive, nomatter what the asking is.

Demands ranging from as insignificant as a query froma workshop in a small township to finding solutions tofulfill critical welding parameters in an oil rig, areresponded to with all the required resources at theCompany's command, Be it welding technology orservice warranty, metallurgy or welding chemistry,supply chain management or employee's code ofconduct, Ador has a wide-based open 'dish' for fullreceptiveness and understanding -- it is a soft powerthat comes from sustaining years of leadership withwelding wisdom.

ADOR WELDING LIMITED

53rdAnnual Report

Board of Directors & Corporate Management Team

Distribution of Revenue

Financial Ratios and Funds Flow

Innovations / New Developments 5-7

Directors' Report & its Annexures 8-26

Auditor's Report and its Annexure 27-29

Balance Sheet, Profit and Loss Account 30-31

Cash Flow Statement 32-33

Schedules, Notes to Accounts and Annexure I 34-51

Balance Sheet Abstract and Company's General Business Profile 52

WELDING

ADOR WELDING LIMITED

53rdAnnual Report

Ms. A. B. AdvaniExecutive Chairman

Mr. V. G. KuttyManaging Director

Mrs. R. T. MalkaniDirector

Ms. R. LalvaniDirector

Mrs. N. Malkani NagpalDirector

Mr. G. L. MirchandaniDirector

Mr. J. N. HindujaDirector

Mr. R. R. VoraDirector

Mr. Anil HarishDirector

Mr. M. K. MaheshwariDirector

CorporateManagement TeamMr. C. Venugopa!Mr. Raman KumarMr. R. A. BijlaniMr. K. N. SubramanianMr. A. AnantharamanMr. V. B. TamboliMr. D. J. Joshi

Company SecretaryMr. V. M, Bhide

Registered &Head OfficeAdor House,6, K. Dubash Marg,Fort, Mumbai - 400 023.Tel.: 22842525,22872548Fax: 2287 3083

Websitehttp://www.adorwelding.com

BankersBank of BarodaHDFC Bank

AuditorsDalai & Shah, Mumbai

SolicitorsNanu Hormasjee & Co.,Mumbai

Registrar &Share Transfer AgentSHAREX DYNAMIC (India)Pvt. Ltd.Head Office17/B, Dena Bank Bldg., 2nd floor,Horniman Circle, Fort,Mumbai - 400 001.Tel. :22702485,2264 1376Fax : 2264 1349

Branch OfficeUnit No. 1, Luthra Industrial Premises,Andheri Kurla Road, Safed Pool,Andheri (E),Mumbai - 400 072.Tel. : 2851 5606/44Fax : 2851 2885

ADOR WELDING LIMITED

53rdAnnual Report. 2QQ5-Q6.

(Excluding surplus on sale of property and long-term investments)

(Rs. in lacs)

52% Cost of Goods Sold 12830(54%)

9% Employee Expenses 2298tf\o/ \ n ocn\

0% Interest & Finance Charges -11'"<>" (39)

6% Manufacturing Expenses 1488(7%) (1429)

Administrative/12 /o Selling Expenses 2991(15%) M

3% Depreciation 629(3%) (651)

3% Tax (Net) 832(1%) (180)

10% Dividends Dividend Tax 2326(6%) (1240)

5% Retained Profit 1101(5%) I923)

(Figures in bracket indicate Previous Year)

ADOR WELDING LIMITED

53rdAnnual Report

DESCRIPTION

ROI (%)

Sales to Capital Employed Ratio (Times)

Profit to Sales (%)

Working Capital Turnover Ratio (Times)

Inventory Turnover Ratio (Times)

Debtors Turnover Ratio (No. of Days)

Current Ratio (Times)

Debt Equity Ratio (Times)

2005-06

38.89

2.35

16.57

4.08

5.56

15

1.81

NA*

2004-05

31.93

2.28

13.78

3.71

6.07

53

1.92

NA*

*SINCE NO DEBT

DESCRIPTION

Sources of FundsProfit after Tax

Depreciation (Including additional depreciation)

Disinvestments Proceeds (Net)

Fixed Assets (Net)

TotalApplication of FundsFixed Assets (Net)

Investments in Bonds, etc. (Net)

Repayment of Borrowings (Net)

Working Capital (Net)

Dividend

Dividend Tax

Total

(Rs. In lacs)

2005-06 2004-05 !

4,020629

4,649

1,538174

6112,040286

4,649

2,7931,760

250

4,803

1,553

2,0091,088153

4,803

>3rdAnnual Report

ADOR WELDING LIMITED

ELECTRODES (

Tenalloy 60NX (AWS A/ SFA 5.5 E8018 G)The electrode has been specially developed for overseasas well as the Indian Navy's requirement of excellenttoughness at sub zero temperatures i.e. minus 40° C, minus50°C and minus 60° C, in positional welding with AC powersources. It is welder friendly and is ideally used for weldinghigh yield strength (> 450 MPa) steels, weather resistantsteels of equivalent grades, critical and highly restrainedjoints.

Cromoten STC (AWS A/SFA 5.5 E8018 B2)A vacuum-packed, 1.2Cr/0.5Mo electrode, it has excellentcreep strength and heat resistance up to 550° C. Thesuperior mechanical properties of the electrode surpassAWS requirements including impact properties at minus18° C. It is especially used for welding creep-resistant steels(1 Cr. 0.5 Mo) where stringent classification requirements aredemanded.

SPIA OMo3 (AWS A/SFA 5.11 ENiCrMoS)Unlike most electrodes of this class SPIA OMo3 has excellentuser-friendly characteristics. Approved in the overseas

market for cladding and overlay applications, theelectrode yields weld deposits that are resistant to creep,hot-cracking and stress-corrosion cracking.

Superinox 3A (AWS A/SFA 5.4 E 308-16)This vacuum-packed electrode in the S.S. range, can beconveniently used without re-drying. Superinox 3A hasexcellent welding characteristics in all positions and is idealfor welding of austenitic stainless steels like AISI types 301,302, 304 and 308,

WIRES (Automig FC 71T-5 (AWS A/SFA 5.20 E 71T-5H4 / E71T-5MH4)With superb mechanical properties and sound radiographyquality welds, Automig FC 71T-5 enables welded joints thatare totally crack-resistant and tough. It is suitable for weldingstructural and boiler quality steels with minimum UTS up to52Kg/mm2. Weld beads have excellent finish.

Automelt FC 41ONX (AWS A/SFA 5.23 F9P6-EC-F1 -Fl)This is a low alloy basic type flux-cored wire for SAW, usedwith Automelt B41 flux. This typical combination is mostsuitable for welding fine grain structural steels.

FLUXES (Automelt A61 (AWS A/SFA 5.17 F7AO-EL8 / F7A2/P2-EM12K)Developed for high speed butt welding applications, thisMn-Si type active flux is used with ELS and EMI 2K wires, andhas a high current carrying capacity. It is best suited forsingle and multi wire welding at high speeds.

WELDING

New Product Offerings from our Technology

SUPERCHALLENGER 2x300 (DOUBLE-OPERATOR, ENGINE-DRIVEN WELDING SET)This is a dual-operator, engine-driven, brushless typeWelding Generator. It offers the facility of two weldersoperating simultaneously from a single welding set, eachwith a capacity of 300 Amps @ 40% duty cycle. The setalso offers the facility of a single welder operating the setwith an enhanced capacity of 600 Amps@ 40% dutycycle. The use of double operator welding sets for cross-country pipeline welding is becoming more and morepopular with pipeline contractors.

SUPERCHALLENGER 400/500K4 (WITH COLD STARTARRANGEMENTS FOR LOW OPERATING TEMPERATURES)SUPERCHALLENGER 400/500K4 is an engine-driven WeldingGenerator with a diesel engine of the air-cooled typeinstead of the water-cooled version. Welding sets with air-cooled engines are preferred over water-cooled enginesfor special operating conditions such as high altitude andlow ambient temperatures. These sets deliver 400 Ampsand 500 Amps at 60 duty cycle and are used mainly forhighway road construction projects in high altitude areasand locations.

SUPERCHALLENGER S E R I E S ENGINE DRIVEN SILENTWELDING SETS CONFORMING TO CPCB NORMS (SC300 / SC400 / SC 500)These engine-driven Welding Sets operate in the weldingcurrent range of 300 Amps, 400 Amps, 500 Amps andmeet the stringent requirement of noise level of 75 dBA at1 metre distance as per the Central Pollution Control Board(CPCB) norms. The main unit assembly of the engine andwelding generator is housed in an acoustic canopy whichreduces the noise level to 75 dBA measured at 1 metrefrom the set. The sets are available in skid-mounted and2-wheel trolley mounted versions.

POWERCON MULTI 600An energy-efficient, multi process outfit of 600 Ampscapacity, the Powercon Multi 600 provides welding currentof 600 Amps at 60% duty cycle and 465 Amps at 100%duty cycle for multiple welding processes like SMAW, GMAW,FCAW, GTAW, GOUGING and for cutting processes too, It isbasically a CC/CV power source with all the controlsrequired in meeting the characteristic parameters of theseprocesses.It is an ideal outfit for heavy duty, multi process applicationssuch as fabrication of heavy structures by GMAW / FCAW /SMAW processes. Attractive features include remote controlunit and multiple protection against high voltage, lowvoltage, single phasing and overheating etc.

THYRISTORISED SAW WELDING OUTFITS : MAESTRO 600(T) /800(T)/1000(T)/1200(T)These thyristor-based SAW welding power sources of 600 A,800 A, 1 000 A and 1 200 Amps rating have specificadvantages : stepless variation of welding voltage andcurrent, reduced effect of input voltage variation for setwelding parameters as well as the facility of setting both,welding voltage and current through remote control units.Maestro outfits are available with trolley-mounted andboom-mounted welding heads.

minimal site work. It is a PLC controlled system and easy tooperate.

POWER GENERATOR SETSPOWER GENERATING SETS FROM 1 5 KVA TO 1 25 KVA(MODELS : POWERGEN T-l 5 / T-30 / T-40 / T-60 / T- 75 / T-l 25)These power generator sets meet the Central PollutionControl Board (CPCB) norms for noise level and engineexhaust emission imposed by Board from January 2005.

The set is enclosed in a weatherproof acoustic canopy withfire resistant lining. The design of the power alternator is ofthe brushless type requiring little maintenance. The set iscapable of starting higher capacity induction motors dueto its specially designed excitation winding in the alternatorand automatic voltage regulator. An optional feature, themicrocontroller based AUTO MAINS FAILURE control panelenables automatic changeover from mains to generatoror vice versa. All the models are environmental-friendly andself-contained with a fuel tank and coolant storage withinthe set.

FUEL FIRED CREMATORThese cremators are so designed that they can operate on3 different fuels - LPG, CNG or Diesel or a combination ofany of the two fuels. It weighs far lesser than an electriccremator and does not require any special foundation orstructure. The entire cremator is shop-assembled, requiring

WASTE MANAGEMENT SYSTEMSINDUSTRIAL / HAZARDOUS WASTE INCINERATORS - SOLID /LIQUID / GAS (CONCEPT TO COMMISSIONING)• Industrial / Hazardous Waste Management Systems as per

CPCB norms.

• Solid Hazardous Waste Incinerator, complete with materialhandling and feeding system, microprocessor controlledincineration, Waste heat recovery system, multi stage gascleaning system.

• Liquid Waste Incinerator, complete with air/steam assistedliquid atomization system, microprocessor controlledincineration, Waste heat recovery system, multi stage gascleaning system.

• Solid / Liquid Waste Incinerator, complete with air/steamassisted liquid atomization system, microprocessorcontrolled incineration, Waste heat recovery system, multistage gas cleaning system.

• Gas Incinerator, complete with preheater/ heatrecuperator, microprocessor controlled incineration,Waste heat recovery system, multi stage gas cleaningsystem.

EFFLUENT TREATMENT PLANTSINDUSTRIAL WASTE WATER TREATMENT (CONCEPT TOCOMMISSIONING)Basic functions of waste water treatment is the same aswater treatment up to the primary stage but different fromthe secondary stage. In water treatment we conclude theprocess with destroying the bacteria, but in waste watertreatment we use, promote and process with the bacteria.

Two types of treatment available :

• Aerobic treatment - Aerobic bacteria is promoted byincorporation of atmospheric oxygen.

• Anaerobic treatment - Where bacteria is developed inthe absence of sunlight and oxygen.

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Annual ReportADOR WELDING LIMITED 2005-06

DIRECTORS' REPORT

To,

The Members,

The Directors have pleasure in presenting the Fifty-Third Annual Report of the Company and the Audited Statementof Accounts for the year ended 31st March 2006.

1.0 FINANCIAL PERFORMANCE

(Rs. in Crores)

Sr.No.

1.1

1.2

1.3

1,4

1.5

1.6

1.7

1.8

KEY FINANCIAL INDICATORS

Sales & other Income '(Net of Excise Duties,Discounts & Incentives)

Surplus on sale of Investments / Properties

Profit before Interest and Depreciation

Profit before Tax

Provision for Tax (Net of deferred tax)

Profit for the year

Capital Expenditure

Capital work in progress

For the year ended31st March, 2006

244.84

5.77

54.54

48.36

8.16

40.20

14.22

5.08

For the year ended31st March, 2005

198.70

16.57

46.91

28.92

1.00

27.93

5.73

0.30

2.0 DIVIDEND AND RESERVES

2.1 The Board of Directors had declared anInterim Dividend of 50% (i.e. @ Rs. 5/- perequity share) for the year 2005-06 at itsMeeting held on Friday 28th October, 2005.The Interim Dividend was paid to thoseShareholders and Beneficial Owners whosenames appeared in the Company's Registerof Members as on the Record Date i.e. onMonday, 14th November, 2005 in respect ofshareholding held both in Physical andDematerialised form respectively.

2.2 The Board of Directors has nowrecommended a Final Dividend of 50% (i.e.@ Rs. 5/~ per equity share) for the year 2005-06, subject to the approval of theshareholders. (Dividend for the year 2004-05 was declared at 30% i.e. @ Rs. 3/- perequity share)

2.3 In view of the improved financialperformance for the year 2005-06, the Boardof Directors has also recommended a

Special Dividend of 50% (i.e. @ Rs.5/- perequity share), subject to the approval of theshareholders. (Special Dividend for the year2004-05 was declared at 50% i.e. @ Rs. 5/-per equity share).

2.4 The total Dividend for the year 2005-06along with the Interim and Special Dividendworks out to Rs.15/- per share (100% + 50%= 150% of the face value of Rs.10/- each).(Dividend for the year 2004-05 was declaredat 30% + 50% = 80% i.e. @ Rs. 8/- per equityshare, inclusive of a Special Dividend of 50%i.e. @ Rs. 5/- per equity share).

2.5 The total Dividend together with Interim andSpecial Dividend with the tax on thedistributed / distributable profits will absorba sum of Rs. 23.26 crores (Rs. 12.40 crores)*from the current year's profits.

2.6 The Final Dividend for the year 2005-06 shallbe paid to those Shareholders andBeneficial Owners whose names appear onthe Register of Members as on the date ofthe Book closure for the Dividend payment.

ADOR WELDING LIMITED

53rdBiSasaaS ooiuAnnual Report

2005-06

2.7 The Board recommends the transfer ofRs.15.00 Crores (Rs. 15.00 Crores)* to theGeneral Reserve, and the balance of Rs.3.87Crores (Rs.2.09 Crores)* for retention in theProfit & Loss Account.

* Figures in bracket indicate previous year.

3.0 OPERATIONS

3.1 In the year 2005-06, the Company posted agrowth of 23% (37%)* in the operational &other income. The year ended with anoperational & other income of Rs. 244.84Crores (Rs.198,70 Crores)*. The Company'sSales and income during the year 2005-06comprised of the following:

3.1.1 Welding Consumables at Rs. 180.07Crores (Rs. 153.99 Crores)*.

3.1.2 Equipment & Project Engineering atRs. 61.53 Crores (Rs. 42.86 Crores)*

3.1.3 Other Income (Dividend etc.) atRs. 3.24 Crores (Rs. 1.86 Crores)*.

3.1.4 The Company has sold its idleproperties at Bangalore, Kalina(Mumbai) and Pimpri (Pune) resultingin a gain of Rs. 3.85 Crores.

3.1.5 The Company earned a surplus ofRs.1.92 Crores (Rs. 1.08 Crores)*, onsale of its investments in CorporateBodies.

3.2 In the year 2005-06 the turnover has grownsubstantially in value terms (with reasonablequantity growth) and the improvedeconomic scenario should give sufficientfillip for a sustaining growth in quantitativeterms also in the coming year/s.

3.3 The export income was at Rs.41.50 Crores(Rs. 33.28 Crores)*.

3.4 The manufacturing Operations atAhmednagar Plant have been shifted toChennai Plant for attaining economies ofscale in wire products.

Figures in bracket indicate previous year.

4.0 LOANS

The Company has not taken any loans duringthe year and hence does not have any loans asat the end of the financial year 2005-06.

5.0 DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the CompaniesAct, 1956, the Board of Directors of the Companyhereby confirm that:

5.1 In the preparation of the Annual Accounts,all the applicable Accounting Standardshave been followed.

5.2 The Directors have selected suchaccounting policies and applied themconsistently and made judgments andestimates that are reasonable and prudentso as.to give a true and fair view of thestate of affairs of the Company at the endof the financial year and of the profit of theCompany for that period,

5.3 The Directors have taken proper andsufficient care for the maintenance ofadequate accounting / Statutory recordsin accordance with the provisions of theCompanies Act, 1956, for safeguarding theassets of the Company and for preventing/ detecting fraud and other irregularities.

5.4 The Directors have prepared the AnnualAccounts on a going-concern basis.

6.0 TECHNOLOGY DEVELOPMENT CENTRES

The Company has two Technology DevelopmentCentres (TDC) at Bhandup (Mumbai) andChinchwad (Pune) in Maharashtra, which arerecognized by the Department of Scientific &Industrial Research, Government of India. These(TDCs) continue to pursue their goals, withrenewed vigour, in terms of innovations, up-gradations, improvements and cost reductions.These TDCs regularly interact with the market /users for improving the competitive features andperformances of the Company's products.

7.0 DIRECTORS

Mr. G. L. Mirchandani, Mrs. R.T. Malkani andMrs. N. Malkani Nagpal, Directors of theCompany, retire by rotation as per the Articles ofAssociation of the Company and are eligible forre-appointments.

The Board of Directors has received Form DD-Afrom all the above named Directors, as prescribedunder the Companies (Disqualification ofDirectors under Section 274(l)(g) of theCompanies Act, 1956) Rules, 2003, informing theCompany that they are not disqualified underSection 274(1 )(g) of the Companies Act, 1956.

;*c|££ www.sansgo.net'" '

53rd

ADOR WELDING LIMITEDS* Annual Report

2005-06

8.0 FIXED DEPOSITS

The Company has neither accepted nor renewedFixed Deposits in the current year and has repaidall its Fixed Deposits on or before maturity dates,At the end of the year, there were no FixedDeposits, which were overdue, except thoseunclaimed amounting to Rs.0.30 lac and no claimhas been lodged with the Company for the sametill the date of this report, despite regularreminders / follow-up.

9.0 INSURANCE

The properties of the Company are adequatelyinsured.

10.0 ENERGY CONSERVATION, TECHNOLOGYABSORPTION & FOREIGN EXCHANGE

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

11.0 CORPORATE GOVERNANCE

As per the Listing Agreements executed with theStock Exchanges, the Company has beenfollowing the Corporate Governance Code fromthe Financial Year 2001-02 onwards, TheCompany has successfully complied with all therequirements of the Corporate Governance asper the revised Clause 49 of the Listing Agreementand a separate Report is attached herewith tothis Report as Annexure - II.

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

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

12.0 AUDITOR'S REPORT

There are no qualifications contained in theAuditor's Report and therefore there are nofurther explanations to be provided for in thisReport.

13.0 AUDITORS

The Company's Statutory Auditors M/s, Dalai &Shah, Chartered Accountants, Mumbai, retire andare eligible for re-appointment. The Members arerequested to authorise the Board of Directors toappoint Branch Auditors for the year 2006-07.

14.0 EMPLOYEES

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

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

14.3 The manpower strength of the Companyas at the date of this report is 733.

15.0 ACKNOWLEDGEMENT

Your Directors take this opportunity to place onrecord their warm appreciation for the invaluablecontribution given and the spirit of dedicationshown by the employees at all levels during theyear. The Directors also express their deepgratitude for the business assistance, co-operationand support extended to your Company byCustomers, Distributors, Dealers, Suppliers / ServiceProviders, Bankers, various GovernmentalOrganisations / Agencies and Shareholders andlook forward to their continued support andco-operation in future also.

For and on behalf of the Board

Place : MumbaiDate . 28th April, 2006

A. B. AdvaniExecutive Chairman

ANNEXURE I - TO THE DIRECTORS' REPORTDISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO AS REQUIRED UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE BOARD OF DIRECTORS' REPORT)RULES, 1988.

A)

B)

a)

Conservation of EnergyThe Company is not covered under the list of specified industries. However, the required energy conservation measureshave already been taken to ensure optimum power consumption to the extent necessary. The Consumable Plants of theCompany have been certified by DNV for EMS 14000 Standards Compliance. All the Plants of the Company also adhereto the guidelines of the MPCB/CPCB.Technology AbsorptionThe Disclosure of particulars with respect to Absorption of Technology, Research and Development (R&D) is given belowas per prescribed format in Form B:

FORM BResearch and Development (R&D)1.0 Specific areas in which R&D carried out by the Company

1.1 Manual Metal Arc Welding Electrodes and Consumables(a) Special Purpose Electrodes for critical applications.(b) Welding Fluxes for special / critical applications.

1.2 New range of Welding Equipment

1.3 Welding Automation Products and Systems.

2.0 Benefits derived as a result of above R&D2.1 Customised application oriented products.2.2 Import substitution of products.2.3 Updation in product quality.2.4 Development of new products.2.5 Cost reduction in the existing range of products.2.6 Enlarged choices for customers in Welding Consumables and Equipment2.7 Standardization of input materials.

3.0 Future Plan of Action3.1 Continuous updating of the existing equipment and consumable ranges and technologies.3.2 Introduce product features to meet customers' specific needs.3.3 Introduce new product and manufacturing process technologies of international standards.3.4 Continuously improve the performance efficiency of existing products.3.5 Continue to work on reduction of cost of products and develop customized products for domestic

and overseas markets.

4.0 Expenditure on R&D4.1 Capital4.2 Recurring

4.3 Total

Rs. 0.09 Crore (Rs. 0.46 Crore)*Rs. 1.07 Crores (Rs. 1.05 Crores)*

Rs. 1.16 Crores (Rs. 1.51 Crores)*

0.48' (0.77%)*4.4 Total R&D expenditure as a percentage of total Turnover* Figures in bracket indicate previous year.

b) Technology Absorption, Adaptation and Innovation1.0 Efforts in brief made towards the technology absorption, adaptation and innovations.

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

Benefits derived as a result of the above effortThe Company's above efforts have resulted in several benefits - i.e. product improvement & developmentfor giving user-friendly products to the customers and substitution of imported products by indigenousproducts.Technology imported during the last 5 years: NIL

C) Foreign Exchange Earnings and OutgoThe information in foreign exchange earnings and outgo is given below:

Foreign exchange earnings: Rs. 39.97 Crores (Rs. 31.48 Crores)*Foreign exchange outgo: Rs. 22.80 Crores (Rs. 13.49 Crores)** Figures in bracket indicate previous year.

2.0

3.0

11

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

ANNEXURE II - TO THE DIRECTORS' REPORT

CORPORATE GOVERNANCE REPORT

The detailed Report on Corporate Governance as per the format prescribed by SEBI and incorporated in Clause49 of the Listing Agreement is set out below. In this report, we confirm the compliance of the Corporate Governancecriteria as required under clause 49 of the Listing Agreement.

A) MANDATORY REQUIREMENTS

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

The Company believes that sound corporate practices based on transparency, accountability and highlevel of integrity in the functioning of the Company, is essential for the long term enhancement of theshareholders / stakeholders value and interest. The Company believes that its actions must result inenhancing corporate performance by maximizing shareholders / stakeholders value and also result inmotivated work force. We, as a Company, have always focused on good Corporate Governancepractices, which is a key driver of sustainable corporate growth and long-term value creation for ourshareholders.

2) Board of Directors

Composition and Number of Meetings held:

The strength of the Board of Directors is ten (10) as of 31st March, 2006 consisting of two (2) Executive/Whole-time Directors and eight (8) Non-Executive Directors.

The Meetings of the Board of Directors are normally held at the Registered Office of the Company inMumbai. The Meetings are scheduled well in advance and the notice of each Board Meeting is given inwriting to each Director about 8 to 10 weeks before the scheduled date of the Meeting, The Board meetsgenerally once in a quarter to review the quarterly performance and financial results.

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

During the year 2005-06, 4 (four) Board Meetings were held i.e. on 27th April 2005, 27th July 2005, 28thOctober 2005, and 20th January 2006.

The composition of the Board, attendance at the Board Meetings held during the year and at the lastAnnual General Meeting, number of Directorships in other Companies and Memberships of committeesacross various Companies in which the Director is a Member / Chairman are given below:

Sf.No.

1

2

3

4

5

Name of the Director

Ms. A. B. Advani

Mr. VG.Kutty

Mrs. R. T. Malkani

Ms. R. Lalvani

Mrs.N. Malkani Nagpal

Category ofDirectorship

Executive

Executive

Non-Executive

Non-Executive

Non-Executive

Financial Year 2005 - 06Attendance at

BoardMeetings

3

4

4

4

4

Last AGMheld on 20thJune, 2005

Present

Present

Present

Present

Present

As on March 31, 2006

No. of otherDirector-ships #

3

—

2

2

3

Committee PositionsNo. of

Memberships

—

-

1

1

2

Chairman

-

—

-

1

—

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

Sr.No.

6

7

8

9

10

Name of the Director

Mr. G. L Mirchandani

Mr. J. Hinduja

Mr. R.R.Vora

Mr, Anil Harish

Mr. M.K. Maheshwari

Category ofDirectorship

Independent &Non-Executive

Independent &Non-Executive

Independent &Non-Executive

Independent &Non-Executive

Independent &Non-Executive

Financial Year 2005 - 06Attendance at

BoardMeetings

3

2

2

3

4

Last AGMheld on 20thJune, 2005

Present

Absent

Present

Present

Present

As on March 31, 2006

No. of otherDirector-ships #

10

5

3

29

13

Committee Positions @No. of

Memberships

1

_

1

7

5

Chairman

_

_

1

2

—

• Excludes Directorships in Foreign Companies and Charitable Companies but includes Directorships inPrivate Limited Companies,

@ Excluding Membership of Remuneration Committee,

None of the Directors is a Member of more than 10 (ten) Board Committees or a Chairman of more than5 (five) such Committees as required under the clause 49 of the Listing Agreement. The same is alsoevidenced from the above table.

None of the above-referred Independent Directors have any material pecuniary relationship or transactionswith the Company, its Promoters or with its Management, which would affect the independence orjudgement of the Directors. The Company has also not entered into any materially significant transactionswith its Promoters, Directors or their relatives or with the Management etc. that may have potential conflictwith the interest of the Company at large.The following information is generally provided to the Board of Directors• Annual operating plans and budgets and any updates thereon• Capital budgets and any updates thereon• Quarterly unaudited results of the Company and its operating divisions or business segments.• Minutes of Meetings of Audit Committee and other Committees of the Board• The information on recruitment and remuneration of senior officers just below the Board level.• Show cause, demand, prosecution notices and penalty notices, which are materially important.• Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.• Any material default in financial obligations to and by the Company, or substantial non-payment for

goods sold by the Company.• Any issue, which involves possible public or product liability claims of substantial nature, including any

judgement or order which, may have passed strictures on the conduct of the Company or taken anadverse view regarding another enterprise that can have negative implications on the Company.

• Details of any joint venture or Collaboration Agreement.• Transactions that involve substantial payment towards Goodwill, Brand Equity or Intellectual Property.• Significant labour problems and their proposed solutions. Any significant development in Human

Resources / Industrial Relations front like signing of wage agreement, implementation of VoluntaryRetirement Scheme etc.

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

13

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

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

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

• Risk assessment of the business.

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

Code of Conduct:

The Board of Directors has laid down / adopted a Code of Conduct for all the Board Members and SeniorManagement of the Company. The Code of Conduct has also been posted onto the website of the Company• www.adorwelding.com.AII the Board Members and Senior Management personnel have affirmed compliancewith the Code of Conduct for the year 2005 - 06.

3) Audit Committee

Broad Terms of Reference:

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

In order to effectively discharge their responsibility, the Audit Committee Members have been empowered:• To investigate any activity within its terms of reference.

• To seek information from any employee of the Company.

• To obtain outside legal or other professional advice.

• To secure attendance of the outsiders with relevant expertise, if it considers necessary.• To invite Statutory / Internal Auditors.

Composition, Number of Meetings and Attendance:

During the financial year 2005-06 under review, 4 (four) Audit Committee Meetings were held on 26th April2005, 26th July 2005, 27th October 2005 and 19th January 2006.

Mrs. N. Malkani Nagpal was the Chairman of the Audit Committee till 26th October, 2005. Mrs. N. MalkaniNagpal is a Non-Executive Director and has done her Master Degree in Business Administration (MBA).

On 28th October, 2005 the Audit Committee was reconstituted by the Board of Directors by inducting Mr. AnilHarish & Mr. M.K. Maheshwarl in place of Mrs. R.T. Malkani & Ms. R. Lalvani. The newly constituted AuditCommittee elected Mr. M.K. Maheshwari as its Chairman for its Meeting held on 19th January, 2006.

Mr. M.K. Maheswari is an independent Non-Executive Director & is a second-generation entrepreneur withinterests in the Information Technology, Marketing, Pharmaceutical and Chemical Industries. He is a graduatefrom the Bombay University with a major in Chemistry and has done his post graduation in IndustrialManagement.

The Audit Committee in its Meeting held on 28th April, 2006, elected Mr. Anil Harish as its Chairman, in place ofMr. M. K. Maheshwari.

Mr. Anil Harish, aged 51 years, is an Independent Non-Executive Director. He has done his Masters at Law(USA). He is an Advocate & Income Tax Consultant by profession and a Director on the Board of manyeminent Companies. His area of expertise is Corporate Taxation.

The Board of Directors at its Meeting held on 28th April, 2006, reconstituted the Audit Committee by inductingMs. R. Lalvani in place of Mrs. N. Malkani Nagpal.

14

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

Ms. R. Lalvani, aged 34 years, is a Commerce Graduate and has done her Master of Business Administration(MBA) from UK. She has been associated with the Company for over 8 years and has been on the Board ofDirectors since 1996. Her area of expertise is International Marketing.The Company Secretary acts as the Secretary of the Audit Committee.It is the prerogative of the Audit Committee to invite Senior Executives, whom it considers appropriate to bepresent at the Meeting. Almost in all the Audit Committee Meetings, Senior Executives and Auditors of theCompany were invited.The composition of the Audit Committee and attendance at its meetings is given hereunder:

Sr.No.

1

2

3

4

5

6

Name of theDirector Member

Mr. Anil Harish

Mr. M.K. Maheshwari

Mrs. N. Malkani Nagpal

Ms. R. Lalvani

Mr. R.R. Vora

Mrs. R. T. Malkani

Position

Chairman

Ex - Chairman

Ex - Chairman& Ex-Member #

Member * #

Member

Member *

Category

Independent & Non - Executive Director

Independent & Non - Executive Director

Non - Executive Director

Non - Executive Director

Independent & Non - Executive Director

Non - Executive Director

Attendance duringthe year 2005-06

-

1

4

3

3

3

* till 28th October, 2005.# Since 28th April, 2006.

The Minutes of each of the Audit Committee Meeting are placed before the Board of Directors and discussedin the Board Meeting.

4) Remuneration / Compensation Policy for Directors

The Remuneration Committee is a Non Mandatory requirement under the Listing Agreement and since theremuneration / compensation payable to the Executive / Non-Executive Directors of the Company is decidedby the Board of Directors and subsequently approved by the Shareholders, the Board of Directors hasdecided not to have a Remuneration Committee.

The Executive and Non-Executive Directors of the Company are remunerated / compensated in the followingmanner,

Remuneration to Executive Directors:The remuneration of the Whole-time / Executive Director(s) is decided by the Board of Directors based on thecriteria such as industry benchmarks, the Company's performance vis-d-vis the Industry performance / trackrecord of the Whole-time / Executive Director(s) and the same is reported to the Board of Directors. TheCompany pays remuneration by way of salary, perquisites and allowances (fixed component) to all its Whole-time / Executive Directors and commission (variable component) to Whole-time / Executive Directors at amaximum of 1% of the net profits of the Company as specifically computed for this purpose as per theprovisions of the Companies Act 1956 (as amended from time to time). Annual increments are decided by theBoard of Directors within the salary scale approved by the Shareholders at the Annual General Meeting andare effective as per their individual Agreements. These remunerations are approved by the Shareholders.

Compensation to Non-Executive Directors:The Non-Executive Directors are paid a Commission upto a maximum of 1% of the net profits of the Companyas specifically computed for this purpose as per the provision of the Companies Act 1956 (as amended fromtime to time). The Non-Executive Directors were also paid a sitting fee of Rs.4,000/- for attending every meetingof the Board of Directors, and Rs.3,000/- for attending every meeting of the Board Committee. Thesecompensations are approved by the Shareholders.

WELDING

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

The Board of Directors has decided to revise the Sitting Fees payable to the Non-Executive Directors as perthe following details, effective April, 2006.

Sr.No.

1

2

3

Type of Meeting

Board

Audit Committee

Shareholders/Investors Grievance Committee

Revised Fees per Meeting

Rs.l 0,0007-

Rs. 8,0007-

Rs, 5,0007-

The details of the remuneration paid / payable to all the Directors during the year 2005-06 is given below:-

(Amt. Rs. In lacs)

Sr.No.

1

2

34

567

89

10

Name of the Director

Ms. A. B. Advani

Mr. V. G. Kutty

Mrs. R. T. Malkani

Ms. R. Lalvani

Mrs. N. Malkani Nagpal

Mr. G. L. Mirchandani

Mr. J. Hinduja

Mr. R. R. Vora

Mr. Anil Harish

Mr. M. K, Maheshwari

Salary &Allowances

48.50

56.33—

——

—

—

——

—

Benefits(perquisites)

0.813.64

—

——

—

—

——

—

Commission

45.23

45.23

5.66

5.66

5.66

5.66

5.65

5.65

5.65

5.65

Sirring Fees

—

—

0.43

0.43

0.43

0.12

0.08

0.17

0.12

0.19

Total

94.54

105.20

6.09

6.096.09

5.785.73

5,825.77

5.84

Notes :

• The Agreement with the Executive Chairman & the Managing Director is for a period of five years. Either partyto the Agreement is entitled to terminate the Agreement by giving notice as mentioned in their respectiveagreements to the other party.

• According to the Articles of Association of the Company all the Directors except the Managing Director retireby rotation.

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

5) Shareholders / Investors' Grievance Committee

Functions of the Committee:

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

The status on various complaints received and replied is reported to the Board of Directors as an Agenda item.

Composition, Number of Meetings and Attendance:

During the financial year 2005 - 06 under review, 4 (four) Shareholders/ Investors Grievance CommitteeMeetings were held on 26th April 2005, 26th July 2005, 27th October 2005 and 19th January 2006,

Ms. R. Lalvani is the Chairman of the Shareholders/ Investors Grievance Committee. Ms. R, Lalvani is a Non-Executive Director and has done her Master Degree in Business Administration (MBA).

ADOR VA/ELDIIMG LIMITED

53rdAnnual Report

2005-06

The composition of the Shareholders / Investors Grievance Committee and attendance at its Meeting is givenhereunder:

Sr. No.

1

2

3

Name of the Director PositionMember

Ms. R. Lalvani Chairman

Mrs. R. I Malkani Member

Mrs. N. Malkani Nagpal Member

Category

Non - Executive Director

Non - Executive Director

Non - Executive Director

Attendance duringthe year 2005-06

4

4

4

The Minutes of each of the Shareholders / Investors' Grievance Committee Meeting are placed before theBoard of Directors and discussed in the Board Meeting.Compliance Officer:Mr. V M. Bhide, the Company Secretary, has been designated by the Board of Directors as the Compliance Officer.Details of shareholder's complaints received & replied and the status on pending share transfers is givenbelow:

The total number of complaints received and replied to the satisfaction of the shareholders during the year2005 - 06 were 25.

There were no outstanding complaint/s as on 31st March, 2006.There are no pending share transfers in physical as well as in demat category. All the requests received upto31st March, 2006 for share transfers have been processed by the Registrar & Share Transfer Agent of theCompany.The Statement of Directors Shareholding is as under:

6)

Sr. No.

1

2

3

4

5

6

7

8

9

10

Name of the Director

Ms. A. B. Advani

Mr. V. G.Kutty

Mrs. R. T. Malkani

Ms. R. Lalvani

Mrs. N. Malkani Nagpal

Mr. G. L. Mirchandani

Mr. J, Hinduja

Mr. R, R. Vora

Mr. Anil Harish

Mr. M. K. Maheshwari

Shareholding (in Nos.)As on 31/03/2006

91,480

-

48,750

1,995

2,69,400

_

-

-

2,000

-

As on 28/04/2006

91,480

-

48,750

1,995

2,69,400

_

-

-

2,000

-

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

Sr. No.

1

2

3

Financial Year Date Location

2002-03 Olst August, 2003 Walchand Hirachand Hall, Mumbc

2003-04 29th July, 2004 Walchand Hirachand Hall, Mumbc

2004-05 20th June, 2005 Y.B. Chavan Auditorium, Mumbai

Time

il 10.30 a.m

]j 12.00 Noon

11.00 a.m.

T™"*1!

17

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

• All special resolutions moved at the last Annual General Meeting were passed by a show of hands unanimouslyby all the Members present at the Meeting and no special resolution was put through postal ballot.

Dividend History:

Sr.No.

A

1

2

3

4

5

6

7

Year

B2005-06

2004-05

2003-04

2002-03

2001-02

2000-01

1999-00

Div.%

C

150*

80#

25

25

22

20

15

Type

DInterim,Final &Special

Final &Special

Final

Final

Final

Final

Interim

DividendOutflow

(Amt. Rs.in lacs)

E

2,039.77

1,087.88

339.96

339.96

348.22

316,57

237.42

DividendTax

Outflow(Amt. Rs.in lacs)

F286.08

152.57

43.56

43.56

.

32.29

26.12

Total(Amt. Rs.in lacs)

(E+F) = G

2,325.85

1,240.45

383.52

383.52

348.22

348.86

263.54

PAT(Amt. Rs.in lacs.)

H

4,020.37

2,792.50

881.56

836.51

691.01

548.44

502.95

% of Div. to PAT

G/H X 100 = 1

57.85

44.42

43,50

45.85

50.39

63.61

52,40

* Includes Interim @ 50%, Final @ 50% & Special @ 50%. Final & Special Dividend is subject to the approval of Members.# includes Final @ 30% & Special @ 50%

7) Corporate Social Responsibilities

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

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

8) Disclosures

Materially significant related party transactions:

During the year 2005 - 06 under review, there were no materially significant related party transactions with itsPromoters, Directors or the Management, their subsidiaries or relatives etc. that had a potential conflict withthe interest of the Company at large.

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

The Company has complied with all the rules and regulations prescribed by the Stock Exchanges, SEBI and allother statutory authorities relating to the capital markets during the last three years. No penalties or strictureshave been imposed by them on the Company.

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

9) Means of Communication

Halt-yearly / Quarterly Financial Results - sent to eachShareholders residence

In which Newspapers Quarterly / Half Yearly / Annual Resultswere normally Published

Any website, where results or official news are displayed

The presentation made to the institutional investors or to analysts

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

No

Business Standard - EnglishMumbai Sakal - Marathi

www.adorwelding.com &www.sebi.gov.in

Yes, whenever required

Yes

10) General Shareholder Information

Annual General Meeting:

Day, Date and Time

Venue

Thursday 22nd June, 2006 at 12.00 noon

Walchand Hirachand Hall, Indian Merchants' Chamber,Churchgate, Mumbai 400 020.

Financial Year

Book Closure Date

Dividend Payment Date

Olst April, 2005 - 31st March, 2006

Saturday, 10th June, 2006 to Thursday,(both days inclusive)

22nd June, 2006

Tuesday 27th June, 2006 onwards

Financial Calendar for theyear 2006 - 07

Financial Reporting for the quarter ending June 2006 -by the end of July 2006

Financial Reporting for the quarter ending September 2006 -by the end of October 2006

Financial Reporting for the quarter ending December 2006 -by the end of January 2007

Financial Reporting for the year ending March 2007 -by the end of May 2007,

Listing:

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

Name of the Stock Exchange

The Stock Exchange (BSE), Mumbai

The National Stock Exchange (NSE), Mumbai

Stock Code

517041

ADORWELD

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

Market Price Data of the Company :

High / Low during each month of the Financial Year 2005 - 06 is given hereunder

Month

April 2005

May, 2005

June, 2005

July, 2005

August, 2005

September, 2005

October, 2005

November, 2005

December, 2005

January, 2006

February, 2006

March, 2006

High

148.30

177.50

198.00

250.00

309.00

300.00

270.35

439.00

452.25

426.95

415.00

446.50

Low

90.70

134.10

161.10

185.40

224.95

249.15

208.50

280.10

374.00

375.05

356.15

376.00

No. of Shares

21,10,494

30,07,044

14,66,395

10,12,133

8,55,023

3,41,008

2,56,149

15,10,786

7,86,124

3,56,192

2,24,596

4,73,815

No. of Trades

16,083

25,905

13,707

10,866

9,019

3,671

2,797

18,112

12,404

7,144

4,282

7,262

Source - The Stock Exchange, Mumbai (BSE)

Performance in comparison to broad based Indices such as BSE Sensex:

500

450

400

350

300

250

200

150

100

50

0

-i12000

a a an

"a

I I I

10000

8000

6000

4000

2000

High

Low

Bse index

Apr-OS May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06

Share Transfer System:

The name of the Registrar and Share Transfer Agents (R&TA) of the Company is 'M/s. Sharex Dynamic

(India) Pvt.Ltd.'

The share transfer for both physical and electronic (demat) segment is handled by the Company's Registrar

and Share Transfer Agent (R&TA) M/s. Sharex Dynamic (India) Pvt. Ltd., at the following addresses:

Head Office:

17/B, Dena Bank Building,2nd Floor, Horniman Circle,Fort, Mumbai - 400 001,Maharashtra, India

Branch Office:

Unit No.l, Luthra Industrial Premises,Andheri Kurla Roaa, Safed Pool,Andheri (E),Mumbai - 400 072Maharashtra, India

Shares lodged for transfer at the R&TA of the Company are normally processed within a period of 15 days fromthe date of lodgement, provided the documents are clear in all respects. All requests for dematerialisation ofshares are processed and the confirmation is given to the depositories within 15 days. The Company Secretaryand a couple of Senior Executives of the Company are empowered to approve the share transfers. Grievancesand other miscellaneous correspondence on change of address, mandates, etc. received from Members aregenerally processed either by the Investors Service Department or by R&TA of the Company within 7 workingdays.

Distribution of shareholding as on 31st March, 2006 :

Nominal Value

of Shares

10 to 10000

10001 to 20000

20001 to 30000

30001 to 40000

40001 to 50000

50001 to 100000

100001 and above

Total

Physical Segment

Shareholders

Number

6,575

28

11

01

22

6,619

Percent

99.33

0.42

0.17

0.00

0.02

0.03

0.03

100.00

Amount

Rupees

1,09,73,860

4,29,420

2,58,500

0

47,250

1,18,120

16,56,900

1,34,84,050

Percent

81.38

3.18

1.92

0.00

0.35

0.88

12.29

100.00

Electronic Segment

Shareholders

Number

8,013

181

57

21

33

38

68

8,411

Percent

95.27

2.15

0,68

0.25

0.39

0.45

0.81

100.00

Amount

Rupees

1,38,66,760

26,67,370

14,77,760

7,54,160

15,05,500

26,62,350

9,95,66,720

12,25,00,620

Percent

11.32

2.18

1.21

0,62

1,23

2.17

81,27

100.00

Shareholding pattern (category wise) as on 31st March, 2006:

Category

Promoters

Mutual Funds

BanksFinancial Institutions

Fll's

NRIs / OCBsPrivate Corporate Bodies

Resident Individuals & othersClearing Members

Total

No. of shares held76,02,534

94,560954

13,5104,61,302

6,78,839

11,55,922

35,72,100

18,7461,35,98,467

% of total shareholding

55.910.700.010.103.394.998.50

26.270.13

100.00

£11:

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

Demaferialisation of shares and Liquidity:

• About 90.08% of the shares of the Company have been dematerialized as on 31st March, 2006.

• Trading in shares of ADOR WELDING LIMITED is permitted only in dematerialised form with effect from 08th May, 2000.

Statutory Compliance:During the year the Company has complied with all the applicable provisions, filed all returns, forms etc. andfurnished all the relevant particulars as required under the Companies Act, 1956 and allied acts/rules, theSecurities and Exchange Board of India's (SEBI) Regulations and the Listing Agreements.Outstanding GDR / ADR / Warrants or any convertible instruments, conversion date and its impact on equity:

NilPlant Locations:

The Company has the following manufacturing plants:

Bhandup PlantLai Bahadur Shastri Marg,Bhandup (W), Mumbai - 400 078.MAHARASHTRA, INDIA

Chennai PlantMelakottaiyur via Vandalur,Chennai - 600 048.TAMIL NADU, INDIA

Chincnwad PlantAkurdi,Chinchwad, Pune - 411 019.MAHARASHTRA, INDIA

Pimpri PlantPlot No. 54 & 55,F-ll Block, MIDC Pimpri,Pune 411 018. MAHARASHTRA, INDIA.

Raipur PlantBilaspur Road, Industrial Estate,Raipur - 493 221.CHATTISGARH, INDIA

Silvassa PlantSurvey No. 59/11/-I, Khanvel Road,Opp. Gulf Oil, Masat, Silvassa - 396 230U. I OF DADRA & NAGAR HAVELI, INDIA

Address for Correspondence :ADOR WELDING LIMITEDAdor House, 6 K. Dubash Marg,Fort, Mumbai - 400 023.MAHARASHTRA, INDIA.

B) NON MANDATORY REQUIREMENTS• Chairman of the Board:

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

• Remuneration Committee:The Company does not have Remuneration Committee.

• Shareholder Rights:As the Company's financial results are published in English newspaper having a wide circulation all over Indiaand in a Marathi newspaper widely circulated in Mumbai (Maharashtra), the same are not sent to theshareholders of the Company, individually. The Company's Quarterly / Half Yearly / Annual Audited Results arealso posted on to the Company's website and also on to the SEBI's Website under EDIFAR. (The same is alsomentioned under item number 9 of Mandatory Requirements).

• Audit Qualifications:There are no qualifications in the Auditor's Report.

• Training of Board Members:The necessary training will be provided to the Board Members as and when required.

• Mechanism to evaluating Non-Executive Board Members :The Board does not feel the necessity of evaluating the performance of its Non-Executive Members as of now.

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

22

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

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

As the Chief Executive Officer / Managing Director of Ador Welding Limited and as required pursuant to Clause 49 I (D)(ii)of the Listing Agreement, I hereby declare and certify that all the Board Members and Senior Management personnelof Ador Welding Limited have affirmed compliance with the Code of Conduct adopted by the Company for the year2005-06.

For ADOR WELDING LIMITED

VG.KuttyChief Executive Officer / Managing Director

AUDITOR'S CERTIFICATE ON CLAUSE 49 COMPLIANCE

The MembersAdor Welding LimitedAdor House,6,K. Dubash Marg,Fort, Mumbai - 400 023

We have reviewed the records concerning the Company's compliance of conditions of Corporate Governanceas stipulated in Clause 49 of the Listing Agreement entered into, by the Company with the Stock Exchanges ofIndia, for the financial year ended 31st March, 2006.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examinationwas limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance ofthe conditions of the Corporate Governance. It is neither an audit not an expression of opinion on the financialstatements of the Company.

We have conducted our review on the basis of the relevant records and documents maintained by the Companyand furnished to us for the review, and the information & explanations given to us by the Company.

Based on such a review, and to the best of our information & according to the explanations, given to us, in ouropinion, the Company has complied with the conditions of Corporate Governance, as stipulated in Clause 49 ofthe said Listing Agreements.

We further state that, such compliance is neither an assurance as to the future viability of the Company, nor as tothe efficiency or effectiveness with which the management has conducted the affairs of the Company,

Mumbai : 28th April, 2006

For and on behalf ofDALAL & SHAH

Chartered Accountants

Ashish DalaiPartner

Membership No. 33596

23

ANNEXURE III - TO THE DIRECTORS' REPORT

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

1.0 INDUSTRY STRUCTURE AND DEVELOPMENT

1.1 Users of welding productsManufacturing and infrastructure industries thatfabricate structures predominantly desire toimprove weld productivity and reliability. They areable to achieve this by switching over tocontinuous welding processes for some of theirfabrication jobs. These processes also enablefabricators improve the reliability of the finishedproducts, This trend, which is prevalent in thetransportation, gas and oil sectors, fabrication ofstructures for power station, mines and manyothers, is increasing every year. This leads toincrease in demand for welding consumables andequipment required for the continuous weldingprocesses. Ador Welding Limited (AWL) hasvisualised the growing demand and establishedadditional capacities particularly for welding wiresand consumables that are required for theseprocesses. Welding equipment required for theseprocesses are already available and have beenupgraded with the latest state of the arttechnology by AWL

1.2 Manufacturers of welding productsThere has been no significant change in thestructure of the welding products manufacturingindustry in India. There continues to be a mix ofnational, international and regional playerssupplying welding products to fabricators in India.Some high end welding products such as Robotsand Special Purpose Machines for large volumerepetitive welding, are being imported by endusers. AWL also helps customers meet theserequirements through their Agency division,

Users in India as well as overseas are increasinglyconcerned about the pollution in the environmentand give preference to manufacturers whopossess Environment Management SystemsCertification. AWL has obtained ISO 14001: 2004certification for its multi location consumablesplants and the other manufacturers are expectedto follow.

1.3 Project Engineering

Apart from the fact that AWL is the largestproducer and seller of welding products in India,the Company is also in the business for providingEngineering solutions in the following areas.

(a) Welding Automation Products and Systems:

With the industrial growth, modernisation andexpansion of manufacturing facilities toglobal standards, lot of investments areexpected in automation welding processesfor higher productivity with consistent qualityoutputs, The Company has been providingengineering solutions through the ProjectEngineering Division and has established andproven credentials in the field over the last35 years.This business is poised to grow alongwith the growth of the major manufacturingindustries who are already using theengineering solutions that have beenprovided by AWL.

(b) Environmental Engineering Solutions :These solutions cover the business areas ofFlares, Cremators, Incinerators and WasteManagement Systems. As the country's lawshave become more stringent onenvironmental protection, the Company isstepping into environmental engineeringsolutions and the Management feels that thiswill be one of the future growth areas.

(c) Power Generating Sets:

The country is facing acute shortage ofpower for domestic, industrial andinfrastructure usages. The Company hasbeen in the business of designing, developingand marketing of rotary type welding setscoupled with diesel engines. The Companysaw an opportunity to exploit thesecapabilities for manufacturing and sellingpower generating sets with the existingresources. As a result, the Company is initiallylaunching Power Generating Sets from 15KVA to 125 KVA, to cater to the needs of thesmall and medium users of power. This isanother growth opportunity area and theCompany expects to be a significant playerin the next 3 - 5 years in this segment,

2.0 OPPORTUNITIES & THREATS2.1 The industrial growth being witnessed in the

country means large contracts for our customersin the manufacturing and infrastructure sectors.The demand for welding products from thesecustomers is expected to increase substantially.

2.2 A part of the Foreign Direct Investment (FDI) thatcomes into the industry in India is beingchannelised into the manufacturing sector andthe recipients are increasing their manufacturingcapacities, including that of fabrication jobs.Airports, seaports and many others will beundertaking substantial modernization, renovationand up-gradation of their facilities. These activitieswill involve fabrication also and our customers willbe benefited from these activities.

2.3 Users are partnering established suppliers whoprovide welding solutions in addition to supplyingwelding products. AWL has established a Centerfor Welding Excellence (CWE) which meets theaspiration of the fabricators for enhancing the skillsof welding personnel. The Center disseminatesinformation on various products and processesthrough regular interaction with the users as wellas through structured training programmes, inaddition to offering solutions to customers on theirspecific requirements.

2.4 There are no specific new developments that willresult in risk concentration for AWL products. Wecontinue facing competition from various weldingproducts manufacturers in India, includingmanufacturers in the small scale sector. Imports ofwelding products from countries all over the worldare also expected to continue. AWL differentiatesits products and services through technology andwe are confident that customer preferences forsuperior products, technology and solutions willcontinue to be in our favour.

3.0 SEGMENTWISE PERFORMANCE

3.1 This is already detailed in the Directors' Reportunder para 3.1.

4.0 CURRENT YEAR OUTLOOK

4.1 Indian industry has had a record growth of 8% in2005 and a substantial part of the growth hascome from manufacturing activities. Largemanufacturing organizations have orders in handfor the next few years from customers in India aswell as overseas. The demand for fabrication hasincreased substantially from both the infrastructureand manufacturing sectors. Indian corporates areexpected to raise Rs. 450 billion through publicissues to fund their expansion plans. Fabricationcompanies will also be availing of this opportunityto expand their capacities as well as utilize thesame for capital expenditure.

4.2 AWL has been continuously improving the logisticsfor improving the customer service. In order tocater to the requirements of customers in remoteand far flung areas where projects are located,AWL has established sales offices and postedtrained engineers at these locations.

4.3 AWL has introduced Power Generators for meetingthe power shortages being faced by theresidential, commercial and manufacturingfacilities. The revenue from this business will growsubstantially in the next few years, since we expectthe demand to grow, in line with the acceleratedindustrial growth that is taking place in the country.

4.4 Markets outside and neighbouring India,particularly the middle east, are witnessing similargrowth, Large fabricators using specialconsumables have approved AWL products andduring the current year their purchases of weldingproducts from AWL will increase, In order to improveservice to customers in the middle east, we haveestablished an office at Sharjah AirportInternational Free Zone (SAIF) in Sharjah, UAE.Thisoffice, manned by trained personnel, will servicecustomers all over the middle east. AWL also hasplans to participate in the growth andinfrastructure development of SAARC countries likeSri Lanka, Bangaldesh, Myanmar and also in re-building Afganisthan.

5.0 RISKS AND CONCERN

(a) Business and Market risks

Although, prices of raw material used inmanufacture of welding products haveremained stable for the last few months,shortages of any metals may lead toincreased prices which, in turn, will lead toincreased cost. In a fast growing market likeIndia, more manufacturers & traders,including International players, may try toestablish themselves. This may increasecompetition and erode the market share ofestablished players. Power generatingcapacities are being enhanced substantially,yet many industries in the country continueto reel from shortage of power.This may leadto reduction in manufacturing output insome industries in the future who mayaugment their power requirements throughcaptive generating sets or external PowerGenerators.

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

(b) Management Risk

The Company has strong ManagementTeams at various functional levels withsufficient internal control systems, withemphasis on Human Resource Developmentthrough guidance, training, assessment,career development etc. for which there isa well structured system in place andtherefore the Company does not feel thatthere is any risk related to Management ofthe business.

(c) Financial Risk

The Company has a very sound financialManagement system in place and is a DEBTFREE Company with adequate resources forfuture growth and expansion. As and whenthere is a necessity, the Company can a\soresort to borrowing within the framework oflending policies of the banks and financialinstitutions,

(d) Legal and Statutory Risk

The Company has good compliance trackrecord with all legal and statutory entities atthe country, and there is a regular auditmechanism to ensure that the Companydoes not violate any of the legal or statutoryprovisions applicable to the Company /industry (whereby the Company is exposedto risk arising out of non-compliances).

(e) Environment

The business is exposed to external andinternal environmental changes such aspolitical, economic, infrastructure andtechnology related issues over which theCompany does not have any control, andtherefore the risks attached with theseexternal factors are applicable to businessof the Company like any other businesses.

6.0 INTERNAL CONTROL SYSTEMS AND THEIRADEQUACY

The Company has adequate internal controlprocedures commensurate with its size and thenature of its business. These control proceduresensure efficient use and protection of resources,compliance with established Company policies,guidelines and statutes. The Internal Controlsystems are reviewed at regular intervals throughManagement, Internal and Statutory Audits and

the same are modified or fine-tuned to blend withthe changing business needs.The Company availsthe services of professional CharteredAccountants to conduct Internal Audit. InternalAudit helps to test the adequacy, effectiveness andadherence to all internal controls laid down by theManagement and suggest improvements, if any.The Audit Committee, consisting of IndependentDirectors, reviews Internal Audit Reports and offersnecessary guidance with respect to the adequacyof the scope of the Internal Audit,

7.0 FINANCIAL PERFORMANCE

An overview of the financial performance isalready given in the Directors' Report. The AuditCommittee constituted by the Board of Directorsperiodically reviews the financial performanceand veport\ng systems. As on the date of this report,the Company is totally DEBT FREE.

8.0 MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The Company has identified the development ofHuman Resources as critical activity and hencethe Management has meticulously worked outHuman Resource policies and processes. TheCompany endeavors to attract and retain the besttalents in the industry and suitably rewards andacknowledges their performance.The Companyrecognizes the potential and performance of itsemployees, provides challenges and opportunitiesfor growth and conducts a large number oftraining programmes to develop and enhance theemployees' knowledge and skill levels and positivework attitudes.The Company continues to haveharmonious relations with all its employees at allthe locations.The number of persons employed inthe Company during the year 2005-06 were 213and the employee strength as of 31st March, 2006was 744.

Disclaimer:

The information and opinion expressed in thissection of the Annual Report may contain certainforward looking statements, which theManagement believes are true to the best of itsknowledge at the time of its preparation. TheCompany and the Management shall not be heldliable for any loss, which may arise as a result ofany action taken on the basis of the informationcontained herein.

ADOR

REPORT OF THE AUDITOR TO THE MEMBERS

We have audited the attached Balance Sheet of ADORWELDING LIMITED, as at 31st March, 2006, the annexedProfit and Loss Account for the year ended on that date,and also the Cash Flow Statement for the year endedon that date. These financial statements are theresponsibility of the Company's management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

1. We conducted our audit in accordance with theauditing standards generally accepted in India.These Standards require that we plan and performthe audit to obtain reasonable assurance whetherthe financial statements are free from any materialnnisstatement. An audit includes, examining on a testbasis, evidence supporting the amounts anddisclosures in the financial statements. An audit alsoincludes, assessing the accounting principles usedand significant estimates made by management,as well as evaluating the overall presentation of thefinancial statements. We believe that our auditprovides a reasonable basis for our opinion.

2. As required by the Companies (Auditor's Report)Order, 2003 and the Companies (Auditor's Report)(Amendment) Order, 2004 issued by the CentralGovernment in terms of Section 227(4A) of theCompanies Act, 1956, we annex hereto a Statementon the matters specified in paragraphs 4 and 5 ofthe said Order.

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

(i) We have obtained all the information andexplanations, which, to the best of ourknowledge and belief, were necessary for thepurposes of our audit;

(ii) In our opinion, proper books of account asrequired by law have been kept by theCompany so far as appears from ourexamination of the books of the Company. TheBranch Auditor's Report(s) have beenforwarded to us and have been appropriatelydealt with in this Report;

(iii) The Balance Sheet, Profit and Loss Account andCash Flow Statement dealt with by this report

are in agreement with the books of account ofthe Company;

(iv) In our opinion, the Balance Sheet, the Profit andLoss Account and the Cash Flow Statementdealt with by this report comply with theaccounting standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956;

(v) Based on the representations made by theDirectors and taken on record by the Board ofDirectors of the Company and the informationand explanations given to us, none of theDirectors is, as at 31stMarch, 2006, prima-faciedisqualified from being appointed as a Directorin terms of clause (g) of sub-section (1) ofSection 274 of the Companies Act, 1956 ;

(vi) In our opinion and to the best of ourinformation and according to the explanationsgiven to us, the said financial statements, readtogether with the notes thereon, give theinformation required by the CompaniesAct, 1956, in the manner so required andpresent a true and fair view in conformity withthe accounting principles generally acceptedin India:

(a) in the case of the Balance Sheet, of thestate of affairs of the Company as at31st March, 2006;

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

(c) in the case of the Cash Flow Statement, ofthe cash flows for the year ended on thatdate.

For and on behalf ofDALAL & SHAH

Chartered Accountants

Mumbai: 28th April, 2006

Ashish DalaiPartner

Membership No: 33596

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31st MARCH, 2006 OF ADOR WELDING LIMITED

On the basis of such checks as we consideredappropriate and in terms of the information andexplanations given to us, we state that:-i (a) The Company has generally maintained

proper records showing particulars, includingquantitative details and situation of fixedassets;

(b) As explained to us, fixed assets, according tothe practice of the Company, are physicallyverified by the management at reasonableintervals, in a phased verification-programme,which, in our opinion, is reasonable, looking tothe size of the Company and the nature of itsbusiness, According to the information andexplanations given to us, discrepanciesnoticed on physical verification have beenadjusted in the books of account;

(c) The Company has not disposed off anysubstantial part of its fixed assets so as to affectits going concern;

ii (a) As explained to us, inventories have beenphysically verified during the year by themanagement, except for inventories lying withoutside parties, which have, however, beenconfirmed by them;

(b) The procedures explained to us, which arefollowed by the management for physicalverification of inventories, are, in our opinion,reasonable and adequate in relation to thesize of the Company and the nature of itsbusiness;

(c) On the basis of our examination of theinventory records of the Company, we are ofthe opinion that, the Company is maintainingproper records of its inventory. Discrepancieswhich were noticed on physical verificationof inventory as compared to book records,have been properly dealt with in the books ofaccount;

iii (a) According to the information andexplanations given to us, the Company has,during the year, not granted any loan, securedor unsecured, to companies, firms or otherparties listed in the register maintained underSection 301 of the Companies Act 1956;

(b) According to the information andexplanations given to us, the Company has,during the year, not taken any loan, securedor unsecured, from companies, firms or other

parties listed in the register maintained underSection 301 of the Companies Act 1956;

iv In our opinion and according to the informationand explanations given to us, there are generallyadequate internal control procedurescommensurate with the size of the Company andthe nature of its business with regard to purchaseof inventory, fixed assets and for sale of goods andservices. During the course of our audit, no majorweakness in internal control, had come to ournotice;

v (a) On the basis of the audit proceduresperformed by us, and according to theinformation, explanations and representationsgiven to us, the particulars of contracts orarrangements in which directors wereinterested, and which were required to beentered in the register maintained underSection 301 of the Companies Act, 1956, havebeen so entered;

(b) In our opinion and according to theinformation and explanations given to us, thetransactions made in pursuance of contractsand arrangements entered in the registermaintained under Section 301 and exceedingthe value of rupees five lakhs in respect of anyparty during the year, we have to state that -in respect of specialized items purchased, theCompaany has not called for quotations,since, as explained to us, this would haveresulted in parting of proprietary drawings withoutsiders, which is not commercially advisablefor the Company;

vi The Company has, during the year, not acceptedany deposits from the public;

vii On the basis of the internal audit reports broadlyreviewed by us, we are of the opinion that, thecoverage of internal audit functions carried outby firms of Chartered Accountants appointed bythe management, is commensurate with the sizeof the Company and the nature of its business;

viii According to the information and explanationsgiven to us, the Central Government has notprescribed for the maintenance of cost recordsunder Section 209(1 )(d) of the Companies Act,1956 , for any of the products of the Company ;

ix (a) According to the records of the Company, ithas been generally regular in depositingundisputed statutory dues including Provident

Fund, Investor Education and Protection Fund,Employees' State Insurance, Income tax, Salestax, Wealth tax. Service Tax, Custom Duty, ExciseDuty, Cess and other Statutory Dues with theappropriate authorities;

(b) On the basis of our examination of thedocuments and records, the disputedstatutory dues on account of Excise Duty, SalesTax, Non-Agricultural Cess, Property Tax andIncome Tax which have not been depositedwith the appropriate authorities are as under:

Nature ofthe Dues

ExciseDuty

Sales Tax

Non-AgriculturalCess

Property Tax

Income Tax

Amount(Rs. in lacs)

14.39

405.85

14.28

37.03

4.05

9.74

14.30

104.05

Forum where disputeis pending

Excise DepartmentalAuthorities

Central Excise andService Tax AppellateTribunal

High Courts

Sales Tax DepartmentalAuthorities

Sales Tax Tribunal

Tahasildar Haveli (Pune)

Pune MunicipalCorporation

Commissioner of IncomeTax (Appeals)

XII

The Company has neither accumulated losses atthe end of the financial year nor has it incurredcash losses, both, in the financial year under reportand the immediately preceding financial year;

On the basis of the records examined by us andthe information and explanations given to us, theCompany has not defaulted in repayment of duesto banks. The Company has not obtained anyborrowings from any financial institution or by wayof debentures;

As explained to us, the Company has not grantedany loans or advances on the basis of security byway of pledge of shares, debentures or any othersecurities;

xiii According to the information and explanationsgiven to us, and the representations made by themanagement, the Company has not given anyguarantee for loans taken by others from any bankor financial institution;

xiv On the basis of the records examined by us andthe information and explanations given to us, theCompany has not obtained any term loans duringthe year;

xv According to the information and explanationgiven to us and on an overall examination of theFinancial Statements of the Company, we are ofthe opinion that, prima-facie, short term funds havenot been utilized for long term investments;

xvi The Company has not made any preferentialallotment of shares to parties and companiescovered in the register maintained under Section301 of the Companies Act, 1956;

xvii On the basis of the records and documentsexamined by us, the Company has not issued anydebentures during the year;

xviii The Company has not raised any money by publicissue, during the year ;

xix According to the information and explanationsgiven to us, and to the best of our knowledge andbelief, no fraud on or by the Company, has beennoticed or reported by the Company during theyear;

Looking to the nature of activities being carried on,at present, by the Company and also considering thenature of the matters referred to in the various clausesof the Companies (Auditor's Report) Order, 2003 andthe Companies (Auditor's Report) (Amendment)Order, 2004, Clauses (iii)(b),(iii)(c),(iii)(d), (iii)(f), (iii)(g),(xiii) and (xiv) of paragraph 4 of the aforesaid Order,are in our opinion, not applicable to the Company.

For and on behalf ofDALAL & SHAH

Chartered Accountants

Mumbai: 28th April, 2006

Ashish DalaiPartner

Membership No: 33596

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r . .7 Annual Report E EEADOR WELDING LIMITED

1

Triple fi/\ ~ - —tlUUO UO —

BALANCE SHEET AS AT 3 1ST MARCH, 2006(Rupees in lacs)

Schedule

SOURCES OF FUNDS:

SHAREHOLDERS' FUNDS:Share Capital AReserves and Surplus B

LOAN FUNDS:Secured Loans C

DEFERRED TAX LIABILITY (Net)

TOTAL

APPLICATION OF FUNDS:

FIXED ASSETS: DA) Gross Block

Less: Depreciation

Net BlockB) Capital Work-in-Progress,

expenditure to date

INVESTMENTS E

CURRENT ASSETS, LOANS AND ADVANCES:Inventories FSundry Debtors GCash and Bank Balances HLoans and Advances 1

Less:CURRENT LIABILITIES AND PROVISIONS:Liabilities JProvisions K

Net Current Assets

TOTAL

Notes forming part of the Accounts R

31.03.2006

1,359.858,935.13

10,294.98

88.02

10,383.00

13,072.508,574.39

4,498.11

508.19

5,006.302,230.02

2,308.721,646.221,543.801,556.77

7,055.51

2,038.941,869.89

3,908.833,146.68

10,383.00

31.03.2005

1,359.857,256.81

8,616.66

117.42

8,734.08

12,013.208,240.00

3,773.20

29.75

3,802.952,055.84

1,757.69372.29

2,989.51870.36

5,989.85

1,595.901,518.66

3,114.562,875.29

8,734.08

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

For and on behalf ofDALAL & SHAHChartered Accountants A. B. Advani

Executive ChairmanAshish Dalai V M. Bhide K. N. Subramanian V. G. Kutty'artner Company Secretary Senior General Manager Managing Director

(Finance and Accounts)Mumbai, 28th April, 2006 Mumbai, 28th April, 2006

•

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53rd__ Annual Report

ADOR WELDING LIMITED 2005-06

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006(Rupees in lacs)

ScheduleINCOME:

Sales, Services, Export Incentive, etc. LOther Income MSurplus on Sale of PropertiesSurplus on Sale of Long Term Investments

EXPENDITURE:Cost of Goods Sold NManufacturing Expenses OOther Expenses PInterest and Finance Charges QDepreciationAdditional Depreciation

Less : Finished Goods Capitalised

PROFIT FOR THE YEAR BEFORE TAXAdd/(Less):Provision for Income Tax:Current TaxDeferred Tax (Refer Note 1 5)Provision for Fringe Benefit TaxProvision for Wealth Tax

PROFIT AFTER TAXAdd/(Less):Prior period adjustments (Net)Excess / (Short) Provision of Taxes in respect of earlier years (Net)

Balance brought forward from previous yearBALANCE AVAILABLE FOR APPROPRIATIONAPPROPRIATIONS:

General ReserveInterim DividendTax paid on Interim DividendProposed Dividend (including Special Dividend @ Rs.5/- per share)Provision for tax on Proposed Dividend(including Special Dividend)

Balance carried to Balance Sheet

Weighted average number of Equity Shares outstanding during the yearNominal Value of Shares (In Rs.)

Basic and Diluted Earnings per Share including exceptional items (In Rs)Basic and Diluted Earnings per Share excluding exceptional items(net of tax) (In Rs.)Notes forming part of the Accounts R

2005-06

24,160.05324.25385.21191.94

25,061.45

12,829.931,488.065,303.44

(11.17)629.46

20,239.7214.24

20,225.484,835.97

(750.00)29.40

(90.00)(5.00)

4,020.37

0.04(16.24)

4,004.17208.64

4,212.81

1,500.00679.9295.36

1,359.85

190.72386.96

1,35,98,46710.0029.45

25.20

2004-05

19,684.42186.01

1,549.64107.86

21,527,93

10,673.501,428.974,747.17

38.60650.97

1,108.5518,647.76

12,2718,635.492,892.44

(600.00)505.06

(5.00)2,792.50

0.59(80.54)

2,712.55236.54

2,949.09

1,500.00

1,087.88

152.57208.64

1,35,98,46710.0019.95

13.17

As per our attached report of even date

For and on behalf ofDALAL & SHAHChartered Accountants

On behalf of the Board of Directors

Ashish DalaiPartner

Mumbai, 28th April, 2006

V M. BhideCompany Secretary

K. N. SubramanianSenior General Manager(Finance and Accounts)

A. B. AdvaniExecutive Chairman

V G. KuttyManaging Director

Mumbai, 28th April, 2006

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53rd

ADOR WELDING LIMITED 2005-06

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 ST MARCH, 2006

(RUPEES IN LACS)

PARTICULARS

A) Cash Flow arising from Operating Activities

Net Profit Before TaxAdd :a) Depreciation Chargeb) Additional Depreciationc) Interest and Finance Chargesd) Amount Written off against leasehold lande) Assets Written Off / discardedf) Loss on Sale of Fixed Assets

.

Deduct :a) Dividend Incomeb) Surplus on Sale of Fixed Assetsc) Surplus on Sale of Propertiesd) Interest and Finance Chargese) Interest received on Investmentsf) Profit on Sale of Long term Investments

Operating Profit before Working Capital Changes

Deduct :a) Increase in Trade and Other Receivablesb) Increase in Inventoriesc) Decrease in Trade Payables

Add :a) Decrease in Receivablesb) Decrease in Inventoriesc) Increase in Trade Payables

Cash Inflow From OperationsAdd :Prior Period AdjustmentsDeduct :Direct Tax paid

Cash Inflow in course of Operating Activities

2005-06

4,835.97

629.46——

0.6517.6311.15

658.89

5,494.86

67.75—

385.2111.17

113.53191.94

769.60

4,725.26

1 ,960.34551.03

—2,511.37

2,213.89

——

461.11461.11

2,675.00

0.04

877.48

1,797.56

2004-05

2,892.44

650.971,108.55

38.600.66

165.91—

1,964.69

4,857.13

38.585.31

1,549.64——

107.861,701.39

3,155.74

——

522.82522.82

2,632.92

373.33313.56

—686.89

3,319.81

0.59

598.93

2,721.47

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r 53rdI : : ::=: : :n;:::; r r:: : : _ _. . . Annual ReportADOR WELDING LIMITED ^ 2005-06

(RUPEES IN LACS)

PARTICULARS

B) Cash Flow arising from Investing Activities

Outflow

a) Acquisition of Fixed Assetsb) Investments in Capital Gain Bonds

Inflow ,a) Sale of Fixed Assetsb) Dividend Receivedc) Sale of Investmentsd) Redemption of Debenturese) Interest Received on Fixed Depositsf) Interest Received- on Investments

Net Cash (Outflow) in course of Investing Activities

C) Cash Flow arising from Financing Activities

Inflow

Oufflowa) Interest and Finance Charges Paidb) Dividend Paid / Transferred to Investor Education and

Protection Fundc) Dividend Tax Paid

Net Cash (Outflow) in course of Financing Activities

Net lncrease/(Decrease) in Cash/Cash Equivalents (A+B+C)Add :Balance at the beginning of the year

Cash/Cash Equivalents at the close of the year

2005-06

1,900.72400.00

2,300.72

423.6967.75

417.76—

83.68113.53

1,106.41

(1,194.31)

72.51

1,728.52247.93

2,048.96

(2,048.96)

(1,445.71)

2,989.51

1,543.80

2004-05

597.551,830.00

2,427.55

2,236.5738.58

204.80180.0049.48

—

2,709.43

281.88

88.08

334.6943.56

466.33

(466.33)

2,537.02

452.49

2,989.51

As per our attached report of even date

For and on behalf ofDALAL & SHAHChartered Accountants

On behalf of the Board of Directors

A. B. AdvaniExecutive Chairman

Ashish Dalai V. M. BhidePartner Company Secretary

Mumbai, 28th April, 2006

i __ ;ii||(j_ H ' , M, ! H*,"

K. N. SubramanianSenior General Manager(Finance and Accounts)

33 |

V. G. KuttyManaging Director

Mumbai, 28th April, 2006

[adnpj

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53rd=---.: - : . : : : :.-..: :.::::,......-.:. :: —_ Annual ReportADOR WELDING LIMITED 2005-06

SCHEDULE "A" TO "R" ATTACHED TO AND FORMING PART OF THE BALANCE SHEET AS ATAND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2006

SCHEDULE "A" - SHARE CAPITAL

Authorised:

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

Issued, Subscribed and Paid up:

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

TOTAL

TOTAL

(Rupees in lacs)

31.03.2006

3,000.00

3,000.00

1,359.85

1,359.85

31.03.2005

3,000.00

3,000.00

1,359.85

1,359.85

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

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

SCHEDULE "B" - RESERVES AND SURPLUS

General ReserveBalance as per Last AccountAdd:Transfer from Profit and Loss Account

Capital Redemption Reserve AccountBalance as per Last Account

Surplus as per Profit and Loss Account

SCHEDULE "C" - SECURED LOANS

Working Capital Loans from Banks

Refer Note 1 for details of Security.

(Rupees in lacs)

TOTAL

TOTAL

6,825.19

1,500.00

31.03.2006

8,325.19

222.98

386.96

8,935.13

31.03.2005

5,325.19

1,500.00

6,825.19

222.98

208.64

7,256.81

(Rupees in lacs)

31.03.2006

—

—

31.03.2005

—

—

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53rd-—.„...., — ,,, - _ -.. Annual Report F

2005-06 EADOR WELDING LIMITED

SCHEDULE "D" - FIXED ASSETS (Rupees in lacs)

(A) Assets

0

Land - FreeholdLand - Leasehold (a)BuildingsOwnership Premises (b)Plant and MachineryElectrical installationsFurniture, Fixtures andEquipmentsVehiclesTemporary Shed

Research andDevelopment Assets :Land FreeholdBuildingsPlant and MachineryAir Conditioners

TOTAL

Previous Year's TOTAL

(B) Capltal-Work-ln-Progress

6 R O S S B L O C K A T COST / BOOK VALUE

As At04.2005

162.26559.66

1234.49264.84

7402.22219.51

710.7945703

1 27

33.6190.49

876.150,88

12013.20

13303.78

Addi-tions/

Adjust-ments

50,90—

388.16—

773.666557

38.4394.30

2.37

_—

8.89

, -

1422,28

573.45

Deduc-tions/

Adjust-ments

5.16

2,05(0)62.82

—190.16

12.15'

20,9769,67

-

———

-

362.98

1864.03

As At31.03.2006

208.00557.61

1559.83264.84

7985.72272,93

728.25481.66

3.64

33.6!90.49

885.040.88

13072.50

12013.20

Upto31.03.2005

_

—747.10102,65

5818,04146,24

538.01197.83

1.27

—

81.74606.2?

0.83

8240.00

7495.99

D E

For theYear

_

—45.33

8.11403.57

13.90

37.7980.68

2.37

—0.87

36.84

-

629.46

650.97

P R E C I A T I O N

Deduc- Adjust- Upiotions/ merits on 31.03.2006

Adjust- accountments of

Change inMethod of

Depre-ciation

_— — —

49,69 — 742.74— — 110.76

164.21 — 6067.409.82 — 150.32

17.44 — 558.3653.91 — 224.60

— — 3.64

_ _ _- - 82.61— — 643.13— — 0.83

295.07(d ) — 8574 39

1015.5) 110855 8240.00

T O T A L

N E T B L O C K

As At31,03.2006

208.00557.61817.09154.08

1928.32122,61

169,89257,06

-

33.617.88

241 910.05

4498 11

3773.20

508.19

5006,30

As At31.03.2005

162.26559.66487.39162.19

1584 1873,27

172.78259.20

-

33.618.75

269.860.05

377320

2975

3802.95

(a) Leasehold Land includes Land Rs.43.15 lacs (Net of amortisation Rs.42.20 lacs) acquired by the Company on a co-ownership/lease basis for which conveyance deed Is yet to beexecuted. Leasehold Land also includes Rs.505.i30 lacs being cost of acquisition of 27000 square feet of Floor Space Index (FSI) rights.

(b) Includes :

(i) Rs.0.01 lac being the aggregate value of Shares in Co-operative Housing Societies,

(it) Rs.4.17 lacs for Tenements in an Association of Apartment Owners.

(c) includes amount written off on account of amortisation of leasehold land Rs.0.65 lac; (Previous year Rs. 0.66 lac)

(d) Includes Rs.0.04 lac on account of excess/(short) provision for depreciation relating to earlier years; {Previous year Rs.Nil}.

SCHEDULE "E"- INVESTMENTS (AT COST)

Face ValueRupees

Nos. Long Term Investments:1) In Government and Trust Securities:

Unquoted:

6 Years National Savings Certificates * 2,500

2) Other Investments:(A) Unquoted (Fully Paid Equity Shares)

Other than Trade :Ador Powertron Limited 10

(Rupees in lacs)

(22,58,100)

31.03.2006

0.020.02

31.03.2005

0.02

0.02

225.82

225.82

WELDING

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2005-06ADOR WELDING LIMITED

(Rupees in Lacs)

SCHEDULE "E"- INVESTMENTS (AT COST) (Contd.)

Face ValueRupees

6,100(6,100)

6,100(6,100)

6,100(6,100)

4,000

(B) Unquoted BondsOther than Trade :NABARD Capital Gains Bonds

NHB Capital Gains Bonds 2002

SIDBI Capital Gains Bonds

Rural Electrification CorporationLimited Bonds

10,000

10,000

10,000

10,000

TOTAL

* indicates deposited with Government Departments

31.03.2006

610.00

610.00

610.00

400.00

2,230.00

2,230.02

0.02

31.03.2005

610,00

610.00

610.00

—

1,830.00

2,055.84

0.02

Aggregate Value of Investments:

Unquoted Investments

TOTAL

(Rupees in Lacs)

Book Value as at

31.03.2006

2,230.02

2,230.02

31.03.2005

2,055.84

2,055.84

Market Value as at

31.03.2006

—

—

31.03.2005

—

—

Note : All the above investments have been classified by the Company as "Long Term Investments", in view ofits intention to hold the same on a long-term basis.

SCHEDULE "F" - INVENTORIES

1) Stores, Spares and Packing Materials (at or below cost)2) Stock - in - Trade (at lower of cost or net realisable value) :

a) Raw Materials and Componentsb) Goods-in-Processc) Finished Goodsd) Goods for Resale

3) Goods-in-Transit (at cost to date)

TOTAL

(Rupees in lacs)

31.03.2006

160.11

675.29553.99825.32

94.01—

2,308.72

31.03.2005

151.38

448.94404.22694.87

58.140.14

1,757.69

36 [

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Annual ReportADOR WELDING LIMITED 2005-06

SCHEDULE "G" - SUNDRY DEBTORS (UNSECURED)

A) Over Six Months:Considered good

B) Others, considered good

TOTAL

(Rupees in lacs)

31,03.2006

23.991,622.231,646.22

31.03.2005

57.43314.86

372.29

SCHEDULE "H" - CASH AND BANK BALANCES

A) Cash on handB) Balances with Scheduled Banks:

i) In Current Accountsii) In Fixed Deposits (including Fixed Deposit Receipts of

Rs.80.32 lacs; Previous year Rs. 121.35 lacs, endorsed infavour of banks as security against guarantees given)

C) Remittances-in-transit

(Rupees in lacs)

TOTAL

31.03.2006

5.93

1,107.49

250.98179.40

1,543.80

31.03.2005

4.34

951.45

1,997,3336.39

2,989.51

SCHEDULE "I" - LOANS AND ADVANCES

(UNSECURED, CONSIDERED GOOD, UNLESS OTHERWISE SPECIFIED)Loans and Advances:* To Employees

Advances recoverable in cash or in kind or for value to be receivedBalances with Central Excise, Customs and Port Trust

(Rupees in lacs)

@ Sundry Deposits

TOTAL

31.03.2006

15.771,307.17

12.59

221.24

1,556.77

31.03.2005

22.53621.44

8.17

218.22

870.36

(Rupees in lacs)

Includes due from the Officers of theCompany

Includes Rent Deposit with J. B. Advani& Co. Pvt. Ltd, a Company under thesame Management

31.03.2006

—

88.00

MaximumBalance

4.50

88.00

Maximum31.03.2005 Balance

4.50 5.00

88.00 88.00

37^

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ADOR WELDING LIMITED

53rdAnnual Report

2005-06

SCHEDULE "J" - LIABILITIES

*Sundry Creditors (Refer Note 4(a))Advance against Sales and ServicesDeposits and Advances from Distributors and Others

(Rupees in lacs)

TOTAL

31.03.2006

1,502.29368.74167.91

2,038.94

31.03.2005

584.31832.51179.08

1,595.90

'Includes :i) Rs. 135.70 lacs (Previous year Rs. 71.56 lacs) being remuneration to the

Executive Chairman, Managing Director and other Non-executive resident Indian Directorsii) Rs. 0.39 lac being unclaimed Fixed Deposits and interest thereon

SCHEDULE "K" - PROVISIONS

For Excise and Custom DutiesFor Leave EncashmentFor Provision of Taxes (net of advances)For Proposed Final Dividend (including Special Dividend)For tax on Proposed Final Dividend (including Special Dividend)

TOTAL

SCHEDULE "L" - SALES, SERVICES, EXPORT INCENTIVE, ETC.

Sales and Services (Net of usual discounts and incentives)Less: Returns, Allowances, etc.

Less: Excise Duty

Sales (Net of Excise Duty)Agency CommissionExport IncentivesWelding School fees

TOTAL

SCHEDULE "M" - OTHER INCOME

Dividends (other than Trade)Surplus on sale of Fixed Assets (Net)Excess provision written back (Net)Exchange Difference Gain (Net)Rent and CompensationInterest received on InvestmentsMiscellaneous Income

TOTAL

(Rupees in lacs)

(Rupees in lacs)

(Rupees in lacs)

31.03.2006

152.08131.9435.30

1,359.85190.72

1,869.89

31.03.2005

131.0995.5851.54

1,087.88152.57

1,518.66

2005-06

27,437.1530.89

27,406.263,453.83

23,952.4312.83

171.2423.55

24,160.05

2004-05

22,181.1818.15

22,163.032,714.57

19,448.4610.77

195.9829.21

19,684.42

2005-06

67.75—

3.821.97

15.60113.53121.58

324.25

2004-05

38.585.31

16.661.18

18.89—

105.39

186.01

«•««*»,» 38 IA-a-aril

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ADOR WELDING LIMITED

53rdAnnual Report IE

2005-06 -

SCHEDULE "N" - COST OF GOODS SOLD

Opening Stock of Raw Materials and Components

Add: Purchases (after deducting sales Rs. 42.07 lacs;Previous year Rs. 29.94 lacs)

Less : Closing Stock of Raw Materials and Components

Consumption of Raw Materials and Components

Purchase of Goods for Resale

(Increase)/Decrease in Inventories:

Opening Stock: <Finished GoodsGoods for ResaleGoods-in-Process

Closing Stock:Finished GoodsGoods for ResaleGoods-in-process

Variation in Excise Duty on inventory of FinishedGoods Stock

(Rupees in lacs)

Packing Materials consumed (after deductingsales Rs. Nil; Previous year Rs.0.43 lac)

SCHEDULE "O" - MANUFACTURING EXPENSES

Stores, Spare Parts, etc. (after deducting salesRs.1.39 lacs; Previous year Rs. Nil)

Power and Fuel

Repairs:

Machinery

Buildings

Others

Other Manufacturing Expenses

TOTAL

TOTAL

2005-06

448.94

12,123.42

12,572.36675.29

11,897.07

257.35

694.8758.14

404.22

1,157.23

825.3294.01

553.99

1,473.32

(316.09)

27.94

963.66

12,829.93

2004-05

463.59

9,344.19

9,807.78448.94

9,358.84

218.61

1,035.4355.27

364.10

1,454.80

694.8758.14

404.22

1,157.23

297.57

(67.00)

865.48

10,673.50

(Rupees in lacs)

2005-06

492.48

547.45

. 96.63

80.19

82.21

259.03189.10

1,488.06

2004-05

473.02

507.46

94.98

130.06

83.05

308.09140.40

1,428.97

WELDING

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Annual ReportADOR WELDING LIMITED 2005-06

SCHEDULE "P" - OTHER EXPENSES

Employment Costs:

Salaries, Wages, etc.Compensation to EmployeesContribution to Provident and Other FundsWelfare ExpensesDirectors' Remuneration

Administrative and Selling Expenses:

Freight, etc. (Net)Rent (Refer Note 8)Rates and TaxesInsuranceTravelling, Conveyance and Vehicle expensesDirectors' FeesAdvertisement and PublicityCommissionCash discounts and Special discountsTelephone, Postage, etc.Repairs at Administrative and Area officesMiscellaneous Expenses

Other Expenses:

Alterations to and maintenance of rented premisesDonationsBad Debts, deposits and debit balances written off (Net)Loss on sale of Fixed Assets (Net)Assets written off/discardedAmounts written off against amortisation of Leasehold Land

SCHEDULE "Q" - INTEREST AND FINANCE CHARGES

Interest — Others

Less: Received from Banks and Others (Gross)(tax deductedat source Rs.18,12 lacs; Previous year Rs.8.24 lacs)

Interest on Income Tax Refund (Net)

Finance charges and Bank charges

TOTAL

(Rupees in lacs)

TOTAL

2005-06

1,582.02104.90155.63210.48244.98

2,298.01

440.43138.0134.3930.42

687.101.97

150.6481.23

447.25145.3076.76

685.69

2,919.19

3.8815.2937.6411.1517.630.65

86.24

5,303.44

2004-05

1,214.14190.77108.14165.14174,03

1,852.22

421.22122.6224.5426.58

598.371.90

116.2176.41

333.86127.7540,98

816.91

2,707.35

2.385.22

13.43—

165.910.66

187.60

4,747.17

(Rupees in lacs)

2005-06

28.28

.83.68

—

(83.68)44.23

(11.17)

2004-05

35.23

41.26

8.22

(49.48)52.85

38.60

{Stars

40

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ADOR WELDING LIMITED

53rdAnnual Report

2005-06

SCHEDULE "R" - NOTES FORMING PART OF THE ACCOUNTS1) Secured Loans and Guarantees

i) Working Capital facilities from Banks are secured by hypothecation of stocks and other tangible movableassets of the Company, both present and future and book debts in favour of Bank of Baroda and HDFCBank.

ii) Guarantees given by banks to third parties amounting to Rs.64,97 lacs; (Previous yearRs.90.68 lacs) on behalf of the Company are subject to a first charge on stocks and book debts of theCompany.

(Rupees in lacs)

2) Contingent Liabilities not provided for

a)

b)

c)

d)

e)

f)

31.03.2006

139.99

118.05

70.82

420.24

267.15

1,045.41

31.03.2005

162.30

104.55

40.85

61.43

489,61

66.15

977.85

Claims against the Company not acknowledged as debt

Disputed income tax, etc. as the matters are in appeal(advance paid Rs. 14.00 lacs; Previous year Rs.0.50 lac)

Demand from Sales Tax Authorities - Matters under appeal(advance paid Rs. 15.46 lacs; Previous year Rs.9,21 lacs)

Disputed Excise duties as the matters are in appeal

On account of bills discounted by the Company

Bonds / Undertakings given by the Company underconcessional duty / exemption scheme to Customs Authorities

3) Estimated amount of Contracts remaining to be executed onCapital Account and not provided for (Net of advances)

4) a) Sundry Creditors in Schedule "J" to the Accounts includeRs. 200.04 lacs; (Previous year Rs.6.10 lacs) due to Small Scale Industrial Undertakings;Rs. 1,302.25 lacs; (Previous year Rs.578.21 lacs) due to other creditors. The disclosure is based onthe information available with the Company regarding the status of suppliers under the "Industries(Development and Regulation) Act, 1951".Names of Small Scale Industrial Undertakings to whom any amount is payable and outstandingfor more than 30 days : NONE

b) Overdue amounts as at 31st March, 2006 to Small Scale Industries and / or Ancillary Industrial Supplierson account of principal amounts aggregate Rs.Nil (Previous year Rs.Nil). The same is disclosed on thebasis of the information available with the Company regarding the status of Suppliers as defined under"Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993".

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

6) Revenue expenditure incurred during the year on Research and Development, through the natural heads ofaccount, amounts to Rs.107.41 lacs (including Depreciation Rs.37.71 lacs) and the Capital expenditurethereof amounts to Rs.8.89 lacs.

(Rupees in lacs)

7) A) Directors' Remuneration

SalaryContribution to Provident and Other FundsCommission

House Rent AllowanceOther Perquisites

TOTAL

2005-06

50.3024.85

135.7029.684.45

244.98

2004-05

47,8621.11

74.7128.72

1.63

174.03

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~: 53rd

ADOR WELDING LIMITED

Annual Report2005-06

B) Computation of Net Profit in accordance withSection 198(1) of the Companies Act, 1956.

Profit after Tax

Add :

a) Provision for Taxation (Net of Deferred Tax)

b) Directors' Remuneration

Less :

a) Profit on Sale of Investments

b) Capital Profit on Sale of Assets

Net Profit as per Section 198(1) of the Companies Act, 1956

Commission to the Executive Chairman

Commission to the Managing Director

Commission to the Non - Executive Indian Resident Directors @ 1%

8) Rent includes rent for land

9) Payment to Auditors

a) Audit fees (including Branch Auditors Rs.4.48 lacs;Previous year Rs.2.15 lacs)

b) Tax Audit Fees (including Branch Auditors Rs.2.24 lacs;Previous year Rs.0.54 lac)

c) Tax Matters

d) Other Certification Work (including Branch Auditors Rs 0.22 lac;Previous year Rs.Nil)

e) In other capacity(including Branch Auditors Rs Nil; Previous year Rs.Nil)

f) Reimbursement of out of pocket expenses (including BranchAuditors Rs. 0.16 lac; Previous year Rs. 0.21 lac)

10) A) Details of GIF value of Imports (including in-transit)

Raw Materials and Components

Capital Goods

Spares, etc.

Purchase of goods for resale

Others

(Rupees in lacs)

2005-06

4,020.37

815.60

244.98 1,060.58

191.94

366.23 558.17

4,522.78

45.23

45.23

45.24

(Rupees in lacs)

2005-06

86.34

14.58

4.82

0.95

0.61

3.28

0.52

992.16

928.94

70.03

95.21

2.07

2004-05

86.34

9.79

2.64

0.35

0.24

4.47

0.54

974.30

72.29

34.14

90.50

15.60

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'1 53rd

ADOR WELDING LIMITED 2005-06

/

B) Details of Expenditure in Foreign CurrencyTravellingStaff TrainingBank chargesCommissionOthers

C) Details of Earnings in Foreign ExchangeFOB Value of Exports (Net of Returns) (includes Sale of Raw Materialsand Stores & Spares Rs. 1 .39 Lacs; Previous year Rs. Nil )Commission receivedFees receivedService Charges receivedOthers

D) * Details of Dividend remitted to Non-Resident shareholdersin Foreign Currency:Number of Non-Resident ShareholdersNumber of Equity Shares heldFinancial Year ended for which dividend is remittedAmount of dividend remitted (Rs. in lacs)

* Details of Interim Dividend remitted to Non-Resident shareholdersin Foreign Currency:Number of Non-Resident ShareholdersNumber of Equity Shares heldFinancial Year ended for which interim dividend remittedAmount of interim dividend remitted (Rs. in lacs)

* excluding dividend credited to the shareholders' Non-ResidentExternal Accounts with banks in India.

11) A) Detailed information regarding Registered Capacity, Installed Capacity, ATurnover and Closing Stocks

(Rupees in

2005-06

109.0514.105.50

40.5122.91

3,978.7412.53

5.89

7712,557

2004-051.00

7712,557

2005-060.63

ctual Production.Op

Annual Annual Annual Opening Stock TurnoverPARTICULARS Registered Installed Production Quantity Rupees Quantity Rupees 6

Unit Capacity Capacity Quantity in lacs In toes

INDUSTRIAL LICENCES1) Arc Welding Electrodes MTonnes S @ 11601.99 418.16 371.84 11618.82 18008.80

(11112.58) (870,44) (535.22) (11564.86) (15064.91)2) Continuous Welding

Wires and Fluxes M.Tonnes S @ 5615.00 133.94 108.74 5526.71 4516.87(5445.88) (142.10) (79.13) (5454.04) (4095.10)

3) Welding & CuttingEquipment/Systems, S$ @ Not Not 214.29 Not 685291Spares and Accessories Enumerable Enumerable (421.08) Enumerable (4716.47)

4) Repairs and Services Charges 26.63(25.41)

5) Others Not 58.14 Not 669.60Enumerable (55.27) Enumerable (485.21)

6) Goods for Resale * Rupeesin lacs

Welding Agencies &Accessories Not

Enumerable 257.35

257.35 753.01 30074.86(218.61) (1090.70) (2438710)

Enurr

Enun

Less : Usual discounts and incentives 2668.60(2224.07)

N E T S A L E S 27406.26(22163.03)

The capacities have been combined for items 1 and 2 for 107800 M.T.(Previous year 107800 M.T.) as per Ref. No. 8c Date 2324/SIA/IMO/2001 dtd 20.1 1.2002 and ;SIA/IMO/2001dtd 15.10.2001.3365/SIA/IMO/2003 dtd 19.11.2003 for 5000 M.T,

SS The Capacity for Welding and Cutting Equipment / Systems. Spares and Accessories is Rs 50 Crore as per Ref.No.S Date 2323/SIA/IMO/2001 dtd 1 2, 10.2001@ The Installed Capacity is the same as Registered Capacity.

Opening Stock, Turnover, Closing Stock in respect of 'Goods for Resale' are included in respective categories in item no 1 to 5 above.

Note : 1. The Company's products are exempt from licencing requirements under New Industrial Policy in terms of Notification No. 477 (E) dated 25th July 1991 and F.r*02nd August 1991 The Company has registered all its products (including existing products) with Secretariat for industrial products.

2. Other Sales include flux sold during the year out of production meant for captive use.3. Figures in bracket indicate figures relating to the previous year4. Figures have been regrouped wherever necessary.

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§ 53rd^^^^^^^^^^-•^^^••-^•••-••T-;_:-- Annual ReportADOR WELDING LIMITED 2005-06

11) B)

C)

D)

E)

i) Turnover quantity is derived on the basis of opening stock plus production and purchases fortrading activity, less physical quantities of closing stock,

ii) 'Annual installed Capacity' in Note 11 (A) above is as certified by the Managing Director, andbeing a technical matter, is accepted by the Auditors as correct.

Details of Raw Materials and Components consumed (after adjusting sales Rs. 42.07 lacs ; Previous yearRs. 29.94 lacs)

Wires and Rods

Titanium Dioxide and Rutile Sand

Manganese

Metal, Nickel and Iron Powder

Others :

Electrical Components

Mechanical Fittings

Miscellaneous

Unit

M.T,

M.T.

M.T.

M.T.

TOTAL

2005-06

Qty

14,065.02

1,355.58

444.00

460.38

Rs. in lacs

4,847.36

460.01

301.04

654.76

471.87

2,642.20

2,519.83

11,897.07

2004-05

Qty

13,262.89

1,173.34

407.27

443.05

Rs. In lacs

4,938.28

355.96

280.20

548.79

395.11

1,777.29

1,063.21

9,358.84

Value of imported and indigenous Raw Materials and Components consumed andvalue of consumption

thereof to total

a)

b)

Imported

Indigenous

TOTAL

2005-06

Rs. In lacs %

1,066.64

10,830.43

11,897.07

8.97

91.03

100.00

2004-05

Rs. In lacs %

1,125.28 12.02

8,233.56 87.98

9,358.84 100.00

Value of imported and indigenous Stores and Spare-parts consumed andconsumption

thereof to total value of

a)

b)

Imported

Indigenous

TOTAL

2005-06

Rs. In lacs %

41.79

450.69

492.48

8.49

91.51

100.00

2004-05

Rs. In lacs %

53.98 11.41

419.04 88.59

473.02 100.00

12) Prior Period adjustments represent

a) Credits Relating to earlier years

b) Excess / (Short) Depreciation adjustments (Net)

TOTAL

2005-06

Rs. In lac

0.04

0.04

2004-05

Rs. In lac

0.59

0.59

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13) SEGMENT INFORMATION

A) BUSINESS SEGMENT

(Rupees in lacs)

Particulars

Segment Revenue

External Revenue

Inter Segment Revenue

Total Revenue

Segment Result before Interest and tax

Add/(Less) :

Unallocable expenses

(Net of unallocable income)

Interest and Finance charges (net)

Surplus on Sale of Properties and

Investments

Additional Depreciation

Excess/ (Short) Provision of Taxes

in respect of earlier years (net)

Prior Period Adjustments

Provision for taxes (Net of Deferred Tax)

Net Profit

Other Information

Segment Assets

Unallocated Assets

Total Assets

Segment Liabilities

Unallocated Liabilities

Total Liabilities

Capital Expenditure

Segment Capital Expenditure

Unallocated Capital Expenditure

Total Capital Expenditure

Depreciation and Amortisation

Segment Depreciation andAmortisation

Unallocated Depreciation andAmortisation

Consumables

CurrentYear

18,006.95

18,006.95

3,796.40

7,581.86

1,187.12

1,737,31

498.27

PreviousYear

15,398.62

15,398.62

2,809.44

4,617.16

1,252.15

452.80

513.70

Equipment & ProjectEngineering

CurrentYear

6,153.10

6,153.10

1,093.52

2,033.16

670.63

105.63•

99.03

PreviousYear

4,285.80

4,285.80

510.72

1,274.37

222.21

94.73

107.23

Total

CurrentYear

24,160.05

24,160.05

4,889.92

(642.27)

11.17

577.15

(16.24)

0.04

(815.60)

4,004.17

9,615,02

4,676.81

14,291.83

1,857.75

2,139.10

3,996.85

1,842.94

57.78

1,900.72

597.30

32.81

PreviousYear

19,684.42

19,684.42

3,320.16

(938.07)

(38.60)

1,657.50

(1,108.55)

(80.54)

0.59

(99.94)

2,712.55

5,891 .53

5,957.11

11,848.64

1,474.36

1,757.62

3,231.98

547.53

50.35

597.88

620.93

30.70

^ .

SANSCO SERVICES - Annual Reports Library Services - www.S

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

(Rupees in lacs)

Particulars

Additional Depreciation

Total Depreciation and Amortisation

Significant Non Cash Expenditure

Segment Significant Non CashExpenditure ,

Unallocated Significant Non CashExpenditure

Total Significant Non Cash Expenditure

Consumables

CurrentYear

17.63

PreviousYear

0.93

Equipments & ProjectEngineering

CurrentYear

—

PreviousYear

0.38

Total

CurrentYear

—

630.11

17.63

—

17.63

PreviousYear

1,108.55

1,760.18

1.31

164.60

165.91

B) GEOGRAPHICAL SEGMENT(Rupees in lacs)

Particulars

Segment Revenue

Carrying Amount of SegmentAssets

Additions to Fixed Assets andIntangible Assets

India

CurrentYear

20,181.31

12,971.36

1,900.72

PreviousYear

16,551.84

11,546.65

597.88

Outside India

CurrentYear

3,978.74

1,320.47

—

PreviousYear

3,132.58

301.99

—

Total

CurrentYear

24,160.05

14,291.83

1,900.72

PreviousYear

19,684.42

11,848.64

597.88

C) OTHER DISCLOSURES

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

2.

3.

The Company has disclosed Business Segment as the primary segment.

Types of Products and Services in each Business Segment:

Business Segment

a) Consumables

b) Equipment & ProjectEngineering

Types of Products and Services

Electrodes, Wires, Agency Items related to consumables.

Equipment, Spares, Cutting Products and Agency Itemsrelated to Equipment and Cutting Products & Design,Engineering, Procurement and commissioning of Flares,Incinerators, Furnaces, etc.

4. The Segment Revenues, Results, Assets and Liabilities include the respective amounts identifiableto each of the segment and amounts allocated on a reasonable basis.

46|_

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

14) Related Parties Disclosure

A. Relationships

B.

Relationship

Associates

Key Management Personnel

Relatives of Key ManagementPersonnel where Transactions havetaken place

Name of the Person / Company

J. B. Advani & Co. Pvt. Ltd.Ador Powertron Limited

Ms. A. B. AdvaniMr. V. G. Kutty

No Transactions have taken place during the year.

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

Transactions(Rupees in lacs)

Particulars

Sales and Services

Goods, Materials and Services

Other Income

Rent

Miscellaneous

Purchases

Goods and Agency Items

Other Expenses

Rent

Rates and Taxes

Remuneration

Finance and Investment

Sale of Investments

Rent Deposit Paid

Fixed Assets

Purchase of Fixed Assets

Associates

102.88(141.31)

2.40(2.40)

1.20(1.20)

2,034.23(1,418.78)

87.26(87.26)

4.55(0.26)

w

417.76(384.80)

—~

0.43(3.57)

Key ManagementPersonnel

c-1

H

"

(-1

(-)

M199.74

(148.85)

(15

—~

H

Relatives of KeyManagement

Personnel

c-1

M

C-l

(-,

M

M

(-1

M—

~

H

47 WILDING

SANSCO SERVICES - Annual Reports Library Services - www.sansco.

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

(Rupees in lacs)

Particulars

Sales / Advance received againstsale of Fixed Assets

Outstandings

Receivables as Sundry Debtors

Payables as Sundry 'Creditors

Rent Deposit

Associates

(65.40)

0.11(4.38)

(60,00)

88.00(88.00)

Key ManagementPersonnel

f \

90.46(46.98)

c-1

Relatives of KeyManagement

Personnel

H

™

H

15) Deterred Tax

(Rupees in lacs)

Particulars

Deferred Tax Liability on account of:

Depreciation

Capital Expenditure for Scientific Research

Deferred Tax Assets on account of:

Employee Benefits

VRS Payments

Deferred Tax Liability (Net)

As at31.03.2006

134.84

84.09

218.93

43.87

87.04

130.91

88.02

As at31.03.2005

168.13

93.62

261.75

32.11

112.22

144.33

117.42

As at01 .04.2004

547.38

171.84

719.22

31.67

65.07

96.74

622.48

16) Lease Rental Obligation(Rupees in lacs)

Particulars

Amount due within one year

Amount due from one year to five years

As at31.03.2006

36.54

31.77

As at31.03.2005

32.48

32.75

48

SANSCO SERVICES - Annual Reports Library Services -

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

17) Computation of Profit for Earnings per Share

(Rupees in lacs)

Particulars

Profit for the year after tax

Add/ (Less): Prior Period Adjustments

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

Profit Including Exceptional Items

Add: Additional Depreciation (net of taxes)

(Less): Surplus on sale of properties and investments (net of taxes)

Profit Excluding Exceptional Items

Nominal value per share in Rupees

2005-06

4,020.37

0.04

(16.24)

4,004.17

—(577.15)

3,427.02

10.00

2004-05

2,792.50

0.59

(80,54)

2,712.55

735.41

(1,657.50)

1,790.46

10.00

18) Disclosure in respect of derivative instruments

a) Derivative instruments outstanding: Nil

b) Foreign currency exposures that are not hedged by derivative instruments as at 31st March, 2006 :

Particulars

i) Debtors

ii) Creditors

iii) Other Receivables

USD

29,48,747

10,160

—

EURO

—

73,959

—

DHMS

—

—

421

19) Previous year's figures have been regrouped wherever necessary.

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

As per our attached report of even date

For and on behalf ofDALAL & SHAHChartered Accountants

On behalf of the Board of Directors

Ashish DalaiPartner

Mumbai, 28th April, 2006

V. M. BhideCompany Secretary

K. N. SubramarrianSenior General Manager(Finance and Accounts)

A. B. AdvaniExecutive Chairman

V. G. KuttyManaging Director

Mumbai, 28th April, 2006

ADOR WELDING LIMITED

53rdAnnual Report

2005-06

ANNEXURE - I

FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2006.

Statement of Significant Accounting Policies and Practices: -

I) Recognition of Income and Expenditure :-

1. Revenue / Income and Cost / Expenditure are generally accounted on accrual as they are earned orincurred.

2. Compensation paid to employees, is fully charged to the Profit and Loss Account in the year in which itis incurred.

3. Benefit on account of entitlement to import duty - free materials under Duty Entitlement PassbookScheme is accounted in the year of export as Export Incentives.

II) Fixed Assets : -

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

2. Method of Depreciation / Amortisation:

a) Depreciation for the year is provided on the written down value method at the rates and in themanner specified in the Schedule XIV of the Companies Act, 1956.

b) Cost of leasehold land is amortised over the period of lease.

3. Cost of Technical Know-how acquired is charged to the Profit and Loss Account in the year of acquisition.

III) Investments :-

Long Term Investments are stated at 'Cost'. A provision for diminution is made to recognise a decline, otherthan temporary in the value of long term investments.

IV) Valuation of Inventories :-

Inventories of Raw Materials and Components, Goods in Process, Finished Goods and Goods for Trade arestated 'at cost or net realisable value, whichever is lower'. Stores, Spare Parts and Packing Materials arestated 'at or below cost'. Goods in Transit are stated 'at cost'. Cost comprises all cost of purchase, cost ofconversion and other costs incurred in bringing the inventories to their present location and condition. Theexcise duty in respect of closing inventory of finished goods is included as part of finished goods.

Cost formula used are either 'Average Cost' or 'First in First out' as applicable. Due allowance is estimatedand made for defective and obsolete items, wherever necessary, based on the past experience of theCompany.

V) Foreign Currency Translations :-

1. Loans in foreign currency for financing imported fixed assets are converted at the appropriate exchangerates, prevailing on the date of Balance Sheet. Necessary adjustments to the loan and cost of FixedAssets acquired through such loans and depreciation are made in the accounts.

2. Balances in the form of Current Assets and Current Liabilities in foreign currency, outstanding at theclose of the year, are converted in Indian currency at the appropriate rates of exchange prevailing atthe date of the Balance Sheet. Resultant gain or loss is accounted in the Profit and Loss Account.

50

ADOR WELDING LIMITED

53rdAnnual Report

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VI) Research and Development :-

1. Revenue expenditure on Research and Development (including overheads) are charged out as expensethrough the natural heads of account in the year in which they are incurred.

2. Expenditure of a capital nature on Research & Development is debited to Fixed Assets and depreciationis provided on such assets as are depreciable.

VII) Retirement and Other Employee Related Benefits :-

1. Retirement benefit in the form of provident fund and superannuation / pension schemes whether inpursuance of any law or otherwise, is accounted on accrual basis and charged to the Profit and LossAccount of the year.

2. Provision for payments to the Employees' Gratuity Trust Fund, after taking into account the fundsavailable with the Trustees of the Gratuity Fund, is based on actuarial valuation carried out at the closeof the year. Effect of changes in any of the assumptions adopted by the actuary, are duly given effectto in the Profit and Loss Account, from year to year.

3. Provision for leave entitlement, medical expenses and leave travel allowance is accrued and providedfor at the end of each financial year.

VIII) Assets taken on Lease :-

For assets taken under operating lease, lease rentals payable are charged to Profit and Loss Account.

IX) Taxation :-

Income-tax expense comprises of Current-tax and Deferred Tax Charge or Credit. Provision for current tax ismade on the assessable income at the tax rate applicable to the relevant assessment year. The Deferred TaxAsset and Deferred Tax Liability is calculated by applying tax rate and tax laws that have been enactedsubstantively by the Balance Sheet date. Deferred Tax Assets arising mainly on account of brought forwardlosses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of itsrealisation, supported by convincing evidence. Deferred Tax Assets on account of other tinning differencesare recognised, only to the extent there is a reasonable certainty of its realisation. At each Balance Sheetdate, the carrying amount of Deferred tax Assets are reviewed to reassure realisation.

51

ADOR WELDING LIMITED

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

Registeration No.: U70100MH1951PLC008647 State Code : 11Balance Sheet Date : 31-03-2006

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

Nil NilBonus Issue Private Placement

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

IV

Total Liabilities • Total Assets10,38,300 10,38,300

Sources of FundsPaid - up Capital

1,35,985Secured Loans

NilDeferred Tax Liability (net)

8,802Application of Funds

Net Fixed Assets5,00,630

Net Current Assets3,14,668

Accumulated LossesNil

Performance of the Company (Amount in Rupees Thousands)Turnover25,06,145

Profit Before Tax4,83,597

Earning Per Share includingextra ordinary items In Rs.

29.45Earning Per Share excludingextra ordinary items In Rs.

25.20Generic Names of Three Principle Products / Services of the Company (as per monetary terms)

Reserves & Surplus8,93,513

Unsecured LoansNil

Investments2,23,002

Misc. ExpenditureNil

Total Expenditure20,22,548

Profit After Tax4,02,037

Dividend Rate %150

1) Item Code No.:PRODUCTION DESCRIPTION:

2)

3)

Item Code No.:PRODUCTION DESCRIPTION:

Item Code No.:PRODUCTION DESCRIPTION:

83112000MANUAL METAL ARC WELDING / BRAZING ELECTRODES of Manufacturefalling under ITC - broad description of CORED WIRE BASE OF METAL FORELECTRIC ARC-WELDINGCONTINUOUS WELDING ELECTRODES of Manufacture falling under ITC -broad description CORED WIRED OF BASE METAL FOR ELECTRIC ARC-WELDING83119000ARC WELDING / BRAZE-WELDING FLUXES of Manurfacture falling under ITC -broad description of OTHER, INCLUDING PARTS.85151900WELDING & CUTTING EQUIPMENT & ACCESSORIES of Manufacture fallingunder ITC - broad description OTHER

Place: MumbaiDate: 28th April, 2006

V. M. BhideCompany Secretary

On behalf of the Board of DirectorsA. B. Advani

K. N. Subramanian Executive ChairmanSenior General Manager V G, Kutty(Finance and Accounts) Managing Director

52

ADOR WELDING LIMITED

JrdAnnual Report

2005-06

NOTICE OF THE 53RD ANNUAL GENERAL MEETING

To,

The Members,ADOR WELDING LIMITED

Notice is hereby given that the Fifty Third Annual General Meeting of the Members of ADOR WELDING LIMITED willbe held at Walchand Hirachand Hall of Indian Merchants' Chamber, Churchgate, Mumbai - 400 020, Maharashtra,India on Thursday 22nd June, 2006 at 12.00 noon, to transact the following business: -

ORDINARY BUSINESS:

1. To consider and adopt the Audited Balance Sheet as at 31st March 2006 and the Profit & Loss Account of theCompany for the year ended on that date, together with the Report of Directors' and the Auditor's thereon.

2. To declare Dividend on Equity Shares.

3. To appoint a Director in place of Mr. G. L. Mirchandani, who retires by rotation and being eligible, offershimself for re-appointment.

4. To appoint a Director in place of Mrs. R. T. Malkani, who retires by rotation and being eligible, offers herself forre-appointment.

5. To appoint a Director in place of Mrs. N. Malkani Nagpal, who retires by rotation and being eligible, offersherself for re-appointment.

6. To appoint Statutory Auditors to hold office from the conclusion of this Annual General Meeting until theconclusion of the next Annual General Meeting and to fix their remuneration,

SPECIAL BUSINESS:

7. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as an OrdinaryResolution:-

Branch Auditors

"RESOLVED THAT pursuant to Section 228 and other applicable provisions of the Companies Act, 1956, theaccounts for the financial year ending 31.03.2007, pertaining to the Plants and Area / Territory / Field /Administrative Offices of the Company, be audited by Company's Auditors or such person or persons otherthan the Company's Auditors and as are qualified for appointment as Auditors under Section 226 of theCompanies Act, 1956, and that the Board of Directors, be and is hereby authorised to decide and appointsuch Branch Auditors in consultation with the Company's Statutory Auditors and fix their remuneration andother terms".

8. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as a SpecialResolution:

"RESOLVED THAT pursuant to the provisions of Section 31, 192 A and other applicable provisions, if any, of theCompanies Act, 1956, (including any statutory modification or re-enactment thereof for the time being inforce), the following Article be inserted as Article 87 A with the heading "PASSING OF THE RESOLUTION BYPOSTAL BALLOT" as set out herein below:

"87 A - PASSING OF THE RESOLUTION BY POSTAL BALLOT

Notwithstanding anything contained in the Articles of Association of the Company, the Company do adoptthe mode of passing resolution by the Members of the Company by means of a postal ballot and / or otherways as may be prescribed by the Central Government in this behalf in respect of any business that can be

WELDING

ADOR WELDING LIMITEDAnnual Report

2005-06

transacted by the Company in the General Meeting and particularly resolutions relating to such business asthe Central Government may by notification declare to be conducted only by postal ballot.

The Company shall comply with the procedures for such postal ballot and / or other ways prescribed by theCentral Government in this regard.

9. To consider and, if thought fit, to pass, with or without modification(s), the following resolution as aSpecial Resolution: -

APPOINTMENT OF RELATIVE OF A DIRECTOR TO PLACE OF PROFIT

"RESOLVED THAT the Company do hereby accord its consent and approval under Section 314 (1) and otherapplicable provisions, if any, of the Companies Act, 1956, and subject to the approval of the CentralGovernment, if required, to the appointment of Mr. Aditya I Malkani, relative of the Director of the Company,as an employee of the Company in Managerial Cadre, under the contract of service, on the terms andconditions mentioned herein below, with effect from Olst April, 2006.

Particulars

Salary (Basic)

House Rent Allowance (HRA)(50% of Basic Salary)

Supplementary Allowance

LTA / Reimbursements

Amount

Rs. 40,0007- per month in the scale of(40,000-5,000-60,000-6,000-90,000)

Rs. 20,000/- per month

Rs. 5,0007- per month

Rs. 60,0007- per annum

"RESOLVED FURTHER THAT he will also be eligible for the retiral benefits such as contributions to Provident/Gratuity/Superannuition Funds, as are applicable to the other employees in the Managerial Cadre of theCompany and he shall also be subject to all the Rules, Regulations, Rights & Duties as applicable to otheremployees in the Managerial Cadre of the Company."

"RESOLVED FURTHER THAT the Board of Directors be authorized to revise the salary on an annual basis or asand when required within the above-referred scale at its discretion."

Registered & Head Office:Ador House, 6 K. Dubash Marg,Fort, Mumbai - 400 023.Maharashtra, India

28th April, 2006

By Order of the Board

V. M. BhideCompany Secretary

NOTES:

a) A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OFHIMSELF AND SUCH PROXY NEED NOT BE A MEMBER. PROXIES IN ORDER TO BE VALID, MUST BE DULY COMPLETED,STAMPED AND SIGNED, SHOULD REACH THE COMPANY'S REGISTERED OFFICE NOT LESS THAN 48 HOURS BEFORETHE COMMENCEMENT OF THE MEETING.

b) The explanatory statement as required under Section 173(2) of the Companies Act, 1956, in respect of theSpecial Business set out above is annexed hereto.

ADOR WELDING LIMITEDAnnual Report

2005-06

nWTffira

c) Members who hold Shares in dematerialized form are requested to write their Client ID and DP ID Nos. andthose who hold shares in Physical form are requested to write their Folio No in the attendance slip for easyidentification of attendance at the Meeting.

d) The Register of Members and the Share Transfer Books of the Company will remain closed from Saturday10th June, 2006 to Thursday 22nd June, 2006 (both days inclusive) for payment of Dividend on equity shares.

e) If the Final dividend, as recommended by the Board of Directors is declared at the ensuing Annual GeneralMeeting, then the payment of such dividend will be made to those shareholders whose names appear inthe Register of Members of the Company as on the Book Closure Date i.e. Thursday 22nd June, 2006.

In respect of the shares held in electronic form (dematerialized mode), the dividend will be payable on thebasis of the details of beneficial ownership, furnished by M/s. National Securities Depository Limited (NSDL)and Central Depository Services (India) Limited (CDSL) for this purpose as at the end of business hours onFriday 09* June, 2006.

f) Members may please note that the Dividend Warrants are payable at par at the designated branches ofthe Bank printed overleaf of the Dividend Warrant for an initial period of three months only. Thereafter, theDividend Warrant on revalidation is payable only at limited branches / centers. The Members are, therefore,requested to encash Dividend Warrants within the initial validity period.

g) As per the provisions of Section 205A of the Companies Act, 1956, money transferred to unpaid dividendaccounts of the Company and remaining unpaid or unclaimed over a period of seven (7) years from thedate of such transfer shall be transferred to 'Investor Education and Protection Fund' and no claim will beentertained thereafter from the Company or the Fund.

Members are therefore requested to expeditiously put their claims for unclaimed dividends, if the same arenot received / claimed by them.

h) Members are requested to :

i) Write to the Company atleast 7 days before the date of the Meeting, in case they desire any informationas regards the Audited Accounts for the financial year ended 31st March 2006, so as to enable theCompany to keep the information ready.

ii) Bring their copy of the Annual Report and the Attendance Slip at the Annual General Meeting.

iii) Intimate to the Registrar & Transfer Agent (R&TA) of the Company immediately about any change intheir addresses, where the shares are held in electronic form, such change is to be informed to theDepository Participant (DP) and not to the Company / R&TA.

iv) Quote Registered Folio Number or DP ID/ Client ID in all the correspondence,

v) Approach the R&TA of the Company for consolidation of folios.

vi) Furnish bank account details to the R&TA / Depository Participant to prevent fraudulent encashment ofdividend warrants.

vii) Avail of Nomination facility by filling in and forwarding the nomination form to the R&TA, if not alreadydone.

viii) Send all share transfer lodgements (physical mode) / correspondence to the R&TA of the Companylocated at the following addresses upto the date of book closure: -

WELDING

ADOR WELDING LIMITED

yAnnual Report

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M/s. SHAREX DYNAMIC (INDIA) PVT. LTD.

Head Office17/B, Dena Bank Building,02nd Floor, Horniman Circle,Fort, Mumbai - 400 001.Maharashtra, India.Tel. : 22702485,2264 1376Fax : 22641349Email : sharexindia@vsnl.com

Branch OfficeUnit No. 01, Luthra Industrial Premises,Andheri Kurla Road, Sated Pool,Andheri (East), Mumbai - 400 072Maharashtra, India.Tel: 2851 6338, 2852 8087Fax: 28512885Email : sharexindia@vsnl.conn

i) As informed earlier, the trading and settlement of Company's shares through stock Exchange (s) has beenmade compulsorily in Demat (Electronic) Form, with effect from 08th May 2000. The Members are once againrequested in their own interest to demateralise their shareholding in the Company.

j) In order to provide protection against fraudulent encashment of Dividend Warrants, Shareholders holdingshares in physical form are requested to intimate the R&TA of the Company under the signature of the sole/first joint holder, the following information, to be printed on the Dividend Warrants:

i) Type of Bank Accountii) Name of the Bankiii) Name of the Branch locationiv) Bank Account Numberv) Complete address of the Bank along with PIN Code No.

k) Members holding shares in electronic form may kindly note that their Bank details as furnished by therespective Depositories to the R&TA will be printed on their Dividend Warrants as per the applicable Regulationsof the Depositories, and that the Company / R&TA will not entertain any direct request from such Membersfor deletion of / change in such Bank details. Further instructions, if any, already given by the Members inrespect of Shares held in physical form will not be automatically applicable to Dividend paid on shares heldin electronic form. Members may, therefore, give instructions regarding Bank Accounts in which they wish toreceive Dividend, directly to their Depository Participant(s)

I) Members are informed that in case of joint holders attending the Meeting, only such joint holder who ishigher in the order of names will be entitled to vote.

m) Non-Resident Indian Members are requested to inform the Company / R&TA the following immediately:

i) Change in the residential status on return to India for permanent settlement.

ii) The particulars of NRE Bank Account maintained in India with complete name and address of the Bank,if not furnished earlier.

n) Corporate Members are requested to forward a certified copy of the Board Resolution authorizing theirrepresentatives to attend and vote at the Annual General Meeting.

o) Re-appointment of Directors retiring by rotation at the ensuing Annual General Meeting:

i) Mr. G. L. Mirchandani, Director of the Company, retires by rotation and being eligible, offers himself forreappointment.

ii) Mrs. R. T. Malkdni, Director of the Company, retires by rotation and being eligible, offers herself forreappointment.

iii) Mrs. N. Malkani Nagpal, Director of the Company, retires by rotation and being eligible, offers herself forreappointment.

ADOR WELDING LIMITEDAnnual Report

2005-06

Pursuant to Clause 49 of the Listing Agreement relating to the code of Corporate Governance, the particularsof aforesaid Directors are given below:

i) Mr. G. L. Mirchandani, aged 63, is a Mechanical Engineering Graduate and has extensive entrepreneurialexperience in Consumer Durable Industry. He is the Chairman and Managing Director of MIRC ElectronicsLimited, one of the leading manufacturers and sellers of W in India and is also a Member on the Board ofvarious Companies,

The other Directorships / Memberships of Mr. G. L. Mirchandani are as follows :

Sr. No.

1

2

3

4

5

6

7

8

9

10

Name of the Company

MIRC Electronics Ltd.

Adino Research Foundation

Guviso Holdings Ltd.

Gulita Securities Ltd.

Adino Telecom Ltd.

Akasaka Electronics Ltd.

KEC International Ltd.

Blow Plast Ltd.

Shoppers' Stop Ltd.

Imercius Technologies (India) Ltd.

Board position held

Chairman & ManagingDirector

Director

Director

Director

Director

Director

Director

Director

Director

Director

Board Committee Memberships

Investor's GrievancesCommittee

—

—

—

—

—

—

—

Remuneration Committee

—

ii) Mrs. R.T. Malkani, aged 64, has done her Bachelors' Degree in Arts. She has about ten years of MarketingManagement experience in the Company and has extensive knowledge on Marketing & GeneralManagement.

The other Directorships / Memberships of Mrs. R.T. Malkani are as follows:

Sr. No.

1

2

Name of the Company

J B Advani & Co. Pvt. Ltd.

Ador Multiproducts Ltd.

Board position held

Chairman & WholeTime Director

Director

Board Committee Memberships

—

iii) Mrs. N. Malkani Nagpal, aged 35, has done her Master Degree in Business Administration with specializationin Finance. She has about ten years of Financial Management experience in the Company.

The other Directorships / Memberships of Mrs. N. Malkani Nagpal are as follows:

Sr. No.

1

2

3

Name of the Company

J B Advani & Co. Pvt. Ltd.

Ador Multiproducts Ltd.

PIEM Hotels Ltd.

Board position held

Whole-time Director

Director

Director

Board Committee Memberships

—

—

—

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ADOR WELDING LIMITEDAnnual Report

2005-06

ANNEXURE TO THE NOTICEEXPLANATORY STATEMENT

(Pursuant to the provisions of Section 173(2) of the Companies Act, 1956 in respect of item Nos. 7, 8 & 9)Item No. 7:The Company has Manufacturing Plants and Area / Territory / Field / Administrative Offices geographicallyspread all over India. In view of its diverse locations, it is proposed that the Board of Directors be authorised toappoint Branch Auditors, in consultation with the Company's Statutory Auditors, such person or persons, as arequalified for appointment as Branch Auditors under Section 226 of the Companies Act, 1956, to audit theaccounts of the Plants and Area / Territory / Field / Administrative Offices of the Company, for the financial yearending 31.03.2007 and to fix their remuneration alongwith other terms & conditions.The Ordinary Resolution, at item no. 7 is commended for passing by the Members.None of the Directors of the Company, are in any way, concerned or interested in passing of the resolution.Item No. 8:Section 192A of the Companies Act, 1956, read with Companies (Passing of Resolution by Postal Ballot) Rules,2001, requires a Public Limited Listed Company to pass resolutions through postal ballot in case of such businessas the Central Government may by notification prescribe and in case of other business, the Company can getany resolution passed by means of a postal ballot instead of transacting the business in the General Meeting ofthe Company.Presently the Articles of Association (AOA) of the Company do not have provisions relating to voting throughpostal ballot and in order to enable its shareholders to avail this facility, the AOA of the Company are proposedto be amended by incorporating the said provisions. The Resolution in respect of this item is proposed as aSpecial Resolution as per the provisions of Section 31 of the Companies Act, 1956.A copy of the present Articles of Association of the Company as well as the Draft copy as it will appear after theproposed amendment will be open for inspection by the shareholders at the Registered Office of the Companybetween 11.00 a.m. to 01.00 p.m. on any working day till the date of the 53rd Annual General Meeting.The Special Resolution, at item no. 8 is commended for passing by the Members.None of the Directors of the Company are concerned or interested in the said resolution.Item No. 9Mr. Aditya T. Malkani has been working with the Company as Management Trainee since Olst January, 2005. Hehas graduated in Arts from the Oberlin College, Oberlin, Ohio, with Major in Economics. He has done relevantcourses in Industrial Organisation, International Business and Law. He has also completed his MBA from ISB,Hyderabad. He has hands on experience of over 6 (six) years and has worked with many reputed internationalfirms.Mr. Aditya T. Malkani is the son of Mrs. R.T. Malkani, one of the Promoter Directors of the Company and hisappointment to the place of profit in the Company shall be governed by the provisions of Section 314 of theCompanies Act, 1956, and accordingly requires the consent of the Members to be accorded by a SpecialResolution. The Members are also requested to authorize the Board to sanction the payment of remuneration toMr. Aditya T. Malkani on a time scale basis at the discretion of the Management within the Employment Policiesof the Company from time to time.The Company has decided to induct him as an employee in the Managerial Cadre in order to ensure that thenext line of Management Succession gets sufficient exposure to the various Management / Organizationalfunctions.The Special Resolution at Item No. 9 is commended for passing by the Members.None of the Directors of the Company except Mrs. R.T. Malkani are, in any way, concerned or interested in thisresolution.

Registered & Head Office:Ador House, 6 K. Dubash Marg,Fort, Mumbai - 400 023.Maharashtra, India

28th April, 2006

By Order of the Board

V. M, BhideCompany Secretary

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TERRITORY OFFICES ]

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FIELD OFFICES

• Hospet » jabalpur » Jarnmu « Riband • Siliguri • Silchar • Silvassa » Sundarnagar

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sp 6. K. Dubash Marg, Fort, Mumbai-400 023