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Welspun India Ltd.

BSE: 514162 Sector: Industrials
NSE: WELSPUNIND ISIN Code: INE192B01031
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VOLUME 16892
52-Week high 82.50
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P/E 20.64
Mkt Cap.(Rs cr) 6,304
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OPEN 61.55
CLOSE 62.70
VOLUME 16892
52-Week high 82.50
52-Week low 48.90
P/E 20.64
Mkt Cap.(Rs cr) 6,304
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Welspun India Ltd. (WELSPUNIND) - Director Report

Company director report

to Shareholders

Your Directors take pleasure in presenting the Thirty First Annual Report together withthe audited accounts of the Company for the financial year ended 31 March 2018.

1. FINANCIAL SUMMARY / HIGHLIGHTS

(Rs. in Lakhs)

Particulars 2017-18 2016-17
Income 55558 52342
Profit before Interest and Depreciation 6483 5741
Finance Charges 22 36
Gross Profit 6461 5705
Provision for Depreciation (1009) (1027)
Profit before exceptional and prior period items and tax 5452 4678
Exceptional items 188 911
Profit before Tax from continuing operations 5264 3767
Provision for Tax (1549) (1081)
Net Profit After Tax 3715 2686

The financials of the Company are required to be prepared under IND AS a new set ofAccounting Standards. The financials for the previous financial year have also beenrestated in line with the requirements of IND AS. Accordingly the figures may not becomparable with the financials prepared under the then prevailing accounting standards.

2. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There were no events to report that has happened subsequent to the date of thefinancial statements.

3. CHANGE IN THE NATURE OF BUSINESS IF ANY

There has been no material change in the nature of business during the period underreview.

4. DIVIDEND

The Board of Directors has recommended a dividend of

1/- per equity share of 10/- each ( 10%) at its meeting held on 30 May 2018resulting in an estimated outflow of about 185.57 lakhs (Inclusive of dividenddistribution tax) for approval of the shareholders at the Annual General Meeting. Theproposed dividend takes into consideration current and anticipated future resourcerequirements of the business.

5. IND AS STANDARDS

Your Company had adopted IND AS with effect from 1 April 2017 pursuant to thenotification dated February 15 2015 under Section 133 of the Companies Act 2013 issuedby the Ministry of Corporate Affairs notifying the Companies (Indian Accounting Standard)Rules 2015. Your Company has published IND AS Financials for the year ended 31 March2018 along with comparable financials for the year ended 31 March 2017 together withopening statement of Assets and Liabilities as on 1 April 2016.

The quarterly results published by the Company during the financial year 2017-18 werealso based on IND AS. These have been published in newspapers and also made available inthe Company's website www.esabindia.com and the website of the stock exchanges where theshares of the Company are listed.

6. TRANSFERS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act 2013 ("the Act")read with the Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 ("The Rules") all unpaid or unclaimeddividends are required to be transferred by the Company to the Investor Education andProtection Fund (IEPF) established by the Central Government after completion of sevenyears. Further according to the Rules the shares in respect of which dividend has notbeen paid or claimed by the Members for seven consecutive years or more shall also betransferred to the dematerialized account created by the IEPF authority.

The Company had sent individual notices and also advertised in the newspapers seekingaction from the Members who have not claimed their dividends for seven consecutive yearsor more. Accordingly the Company has transferred such unpaid or unclaimed dividends andcorresponding shares up to and including the Second Interim Dividend 2010.

Members/claimants whose shares unclaimed dividends have been transferred to the IEPFDemat Account of the Fund as the case may be may claim the shares or apply for refund bymaking an application to the IEPF Authority in Form IEPF-5 (available onhttp:www.iepf.gov.in) along with requisite fee as decided by IEPF Authority from time totime. The Member / Claimant can file only one consolidated claim in a Financial year asper the IEPF Rules.

The Company will be transferring the unclaimed amounts from Interim Dividend 2011 andalso the corresponding shares on or before 26 August 2018. Members are requested toensure that they claim the dividends before they are transferred to the said fund. Duedates for transfer of Unclaimed Dividend to IEPF are provided elsewhere in the noticecalling the Annual General Meeting.

Details of shares / shareholders in respect of which dividend has not been claimed areprovided on our website www.esabindia.com. Shareholders are encouraged to verify theirrecords and claim their dividends of the preceding seven years if not claimed.

7. BOARD MEETINGS

The Board of Directors met 5 times during the financial year 2017-18. The Meetings wereheld on 25 May 3 August and

9 November of 2017 and on the 7 of February and 20 of March 2018.

8. DIRECTORS & KEY MANAGERIAL PERSONNEL

The Board of Directors of the Company has six members. Mr Daniel A Pryor is the nomineeof ESAB Holdings Limited and a non-retiring Director in terms of the provisions of theArticles of Association.

Mr Rohit Gambhir is the Managing Director of the Company. He was appointed for a periodof five years with effect from 1 November 2013.

There are four Non-executive and Independent Directors on the Board of the Company.

In accordance with the provisions of Article 129 of the Company's Articles ofAssociation Mr Rohit Gambhir retires by rotation at the forthcoming Annual GeneralMeeting and being eligible has offered himself for re-appointment. The details asrequired under Regulation 36 (3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 regarding Mr Rohit Gambhir are published as part of theNotice calling the Annual General Meeting.

Key Managerial Personnel

As stipulated under Section 203 of the Companies Act Mr Rohit Gambhir ManagingDirector Mr B Mohan Vice-President Finance & Chief Financial Officer and Mr SVenkatakrishnan Company Secretary have been designated as the Key Managerial Personnel ofthe Company.

Mr B Mohan Chief Financial Officer joined the Company on 1 February 2005 and Mr SVenkatakrishnan Company Secretary joined the Company on 10 March 2006.

9. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

As required under Section 149 (7) of the Companies Act 2013 all the IndependentDirectors on the Board of the Company have individually issued the stipulated annualdeclaration confirming that they meet all the criteria of independence as stipulated underthe Act.

10.COMMITTEES OF THE COMPANY

A. AUDIT COMMITTEE

The Company's Audit Committee consists of three Independent Directors and oneNon-executive Director. Mr K Vaidyanathan is the Chairman of the said Committee. MrVikram Tandon Mr Sudhir Chand and Mr Daniel A Pryor are the other members of the saidCommittee. The said Committee met four times on 25 of May 3 of August 9 of November2017 and 7 of February 2018. The constitution and the terms of reference of the Committeeare in line with the requirements of Section 177 of the Companies Act. There were nooccasions during the year where the Board of Directors did not accept the recommendationsof the Audit Committee.

B. NOMINATION AND REMUNERATION

COMMITTEE

The Company's Nomination and Remuneration Committee consists of three IndependentDirectors and one Non-Executive Director. Mr K Vaidyanathan is the Chairman of the saidCommittee while Mr Sudhir Chand & Ms Sabitha Rao Independent Directors and Mr DanielA Pryor Chairman of the Board are the other Members of the Committee.

The said Committee met twice during the financial year 2017-18 on the 25 of May 2017and the 20 of March 2018. The said Committee lays down the policy on remuneration statingtherein the attributes required for the Managing Director Independent Directors and KeyManagerial Personnel. The said policy also states the modus operandi for determining theremuneration for the above referred personnel. The remuneration policy of the Company canbe viewed on the Company's website www.esabindia.com. The above are in compliance withSection 178 (4) of the Companies Act 2013 and Regulation 19 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

C. STAKEHOLDERS RELATIONSHIP COMMITTEE

The Company's Stakeholders Relationship Committee consists of two IndependentDirectors one Non-executive Director and the Managing Director. Mr Vikram Tandon is theChairman of the Committee Mr Sudhir Chand Independent Director Mr Daniel A PryorChairman of the Board and Mr Rohit Gambhir Managing Director are the other Members of theCommittee.

The Committee met four times during the year on 25 May 3 August 9 November 2017 andon 7 of February 2018. The Committee and the conduct of its business are in compliancewith Section 178(5) of the Companies Act 2013 and Regulation 20 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

D. CORPORATE SOCIAL RESPONSIBILITY

COMMITTEE

The Company's Corporate Social Responsibility Committee consists of one IndependentDirector one Non-executive Director and the Managing Director. Ms Sabitha Rao is theChairperson of the said Committee. Mr Daniel A Pryor Chairman of the Board and Mr RohitGambhir Managing Director are the other Members of the said Committee. The Committee mettwice during the financial year on the 25 of May and on the 9 of November 2017.

The Committee lays down the Policy on Corporate Social Responsibility stating there inthe strategy objectives funding & allocation for the CSR projects implementationstrategy and steps involved in achieving the CSR objectives. The Policy on CorporateSocial Responsibility of the Company can be viewed on the Company's websitewww.esabindia.com. The formation of the Committee and its terms of reference are in linewith the requirements of Section 135 (1) of the Companies Act 2013.

E. RISK MANAGEMENT COMMITTEE

The Company has a Risk Management Committee as stipulated by the Companies Act 2013and Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Company's Risk Management Committee consists of Mr Daniel A PryorChairman of the Board Mr Rohit Gambhir Managing Director and Mr B Mohan Vice PresidentFinance & Chief Financial Officer of the Company.

The said Committee met twice on the 3 of August 2017 and on the 7 February 2018.

The said Committee lays down the Policy on Risk Management stating therein theobjectives and purpose of the said policy. The main objective of this policy is to ensuresustainable business growth with stability and to promote a pro-active approach inreporting evaluating and resolving those risks which are material in nature and areassociated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on material risk related issues.

The Risk Management Policy of the Company can be viewed on the Company's websitewww.esabindia.com.

11.VIGIL MECHANISM

The Company has set up a whistleblower policy which can be viewed on the Company'swebsite www.esabindia.com. In terms of the said policy the Directors and employees aregiven direct access to the Chairman of the Audit Committee to report on allegedwrongdoings. The said policy has been made available at the Offices / Plants of theCompany at conspicuous places to enable the employees to report concerns if any directlyto the Chairman of the Board and to the Chairman of the Audit Committee. Employees whojoin the Company newly are apprised of the availability of the said policy as a part oftheir induction schedule.

The above is in compliance of Section 177 (9) & (10) of the Companies Act 2013 andin terms of Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

12. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement as per therequirements of Section 134 (5) of the Companies Act 2013.

1. In the preparation of the annual accounts for the financial year ended 31 March2018 the applicable accounting standards have been followed;

2. The Directors have selected such accounting policies listed in Note 2.1 to the Notesto the Financial Statements and applied consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of the affairsof the Company at the end of the financial year on 31 March 2018 and of the Profit of theCompany for that year;

3. The Directors have taken proper and sufficient care of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;

4. The Directors have prepared the annual accounts for the year ended 31 March 2018 ona going concern basis;

5. The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

6. The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

13. MANAGEMENT DISCUSSION AND ANALYSIS ECONOMIC & BUSINESS ENVIRONMENT

The financial year under review continued to be challenging and eventful in terms ofthe business environment. The Government introduced a significant change in terms ofintroduction of Goods and Services Tax. Despite teething troubles in the GSTinfrastructure low level of preparedness in some segments and multiple changes in theprocedural aspects of the law this change is expected to help the organized sector withbetter compliance levels overall. While the economy reportedly grew between 6.5-7% duringthe financial year key indicators relevant to manufacturing segment including Index ofIndustrial Production (IIP) continued to indicate volatilities with anemic growth for mostof the financial year with some revival during the last quarter of the year.

Steel prices continued to increase during the year reportedly driven by increases ininput costs. There were limited options in terms of alternate sourcing through imports inview of tariff barriers. Offsets through price increases on finished goods continued to belimited due to market conditions.

The Investment cycle in the economy was weak for most part of the year with nosignificant capacity additions in key customer segments the Company deals with.

OUTLOOK OPPORTUNITIES AND THREATS

The last quarter of the financial year witnessed a few positives with growth in volumesin some segments. There are some references to mild recovery in the capital goods segment.A significantly weakening rupee with surge in fuel costs are likely to pose challenges inthe current fiscal year. Steel price trends could have a strong impact on the prospects asit has been on a rising curve for a prolonged period of time.

We continue to see threats arising from excess capacities in the market and competitionfrom Tier II players in the Industry.

14. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company's internal controls are evaluated by Management and tested by our Auditors.Additionally the Company is subjected to reviews applicable for Subsidiaries of USheadquartered entities. The Company continues to list and evaluate key controls andprocess to an extent leveraging on the work done as part of its global reportingrequirements. The Audit Committee reviews key findings and follow up actions at itsmeetings. The scope and coverage of internal audits are aligned to have coverage in termsof key controls and locations. The endeavor is to align to the requirements of InternalControl on Financial Reporting (ICFR) framework while leveraging on work done as part ofglobal reporting requirements. Management testing through independent audit teams followedby external testing were done during the year. The scope of work of Internal Auditorsincludes review of controls on accounting financial reporting statutory and othercompliances and operational areas in addition to reviews relating to efficiency andeconomy in operations.

Our efforts on the above lines are expected to ensure compliance with the requirementsof Internal Controls on Financial Reporting.

15.FINANCIAL PERFORMANCE OF THE COMPANY

A. INCOME AND EXPENDITURE

The Company's revenue from Operations (Net) grew by about 13% despite the difficultbackdrop with growth from traded items at about 28% during the year.

The Company enhanced its range of product offerings with the introduction of newproducts. The Company also had steady volumes in terms of exports to related partyentities primarily in South East Asian markets.

Service income grew by 70% though on a small base with increases in activity onR&D support shared services and related activities undertaken for related partyentities based outside of India. We continue to see some potential on this with theresultant foreign exchange earnings helping in offset exchange risks on imports.

Other income fell by 15% with the impact of lower interest rates on income from debtand liquid funds. Materials costs as a percentage to sales were comparable with theprevious year after adjustment for Excise duty on Sales.

Overheads including employee costs were lower at 27% of Net Sales and Service Income asagainst 34% in the previous accounting period. The key variances were primarily on accountof;

- Employee benefit expenses were higher by 15% on a comparable basis driven byrecruitments primarily on global support functions wage inflation and higher retirementbenefits costs on funding due to reduction in interest rates.

- Higher costs on transportation outwards in line with changes in terms of trade andcustomer mix.

- Reduction in Excise duty on Sales with the introduction of GST effective July 12017.

The Company has continued to provide for Depreciation at useful lives and rates alignedto the erstwhile Schedule XIV of the Companies Act 1956 based on a technical evaluationof useful life of assets.

Profit from continuing businesses before exceptional items was higher by 17% over theprevious year with the impact of sales growth and control on costs.

B. BALANCE SHEET

A crisis ridden banking sector together with short term GST transition drivendisruptions to trade posed significant liquidity challenges for Industry during the year.Your Company continued to have a strong Balance Sheet despite the challenges and ended theyear debt free and well positioned for headwinds and growth requirements.

Working capital was reviewed through the year and measures taken to monitor progressand corrective actions for any adverse variances.

The Company had lent a sum of INR 400 Million to a related party entity in India onterms which were benchmarked with market rates and arms' length terms. Cash and Cashequivalents that were invested in debt and liquid funds grew about 12% after adjusting forthe loan amount.

Capital Expenditure was about $ 1690 lakhs as against $ 1394 lakhs in the precedingyear. The capital expenditure was primarily on productivity improvements capacityenhancements and upgrading IT systems. As part of a global deal your Company acquired thewelding wires business from Sandvik Asia Private limited in the last quarter of FY2017-18. No tangible assets are involved in this transaction for the Company.

Inventories were higher by about 16% in value terms in line with volumes growth.Inventory in terms of days to sales was comparable with the previous financial year.

Trade receivables were marginally higher due to change in customer mix.

16. SUBSIDIARY / JOINT VENTURE / ASSOCIATE COMPANY

The Company does not have any subsidiary joint venture or an associate company.

17.HOLDING COMPANY

Colfax Corporation is a diversified industrial technology Company that provides air& gas handling and fabrication technology products and services. Colfax Corporationholds 73.72% of equity shares of your Company through ESAB Holdings Limited UK andExelvia Group India BV Netherlands which are its indirect wholly-owned subsidiaries.

18. EXTRACT OF THE ANNUAL RETURN

The Extract of the Annual Return in form MGT - 9 of the Company made up as on theFinancial Year ended 31 March 2018 is attached by way of Annexure 1. This is also madeavailable in the website of the Company www.esabindia.com. Those interested may visit ourwebsite and see the details of MGT - 9.

19. STATUTORY AUDITORS

M/s. S R Batliboi & Associates LLP Chennai (Firm Regn No.101049W / E300004) wereappointed by the shareholders at the Annual General Meeting held on 7 August 2015 as theStatutory Auditors of the Company for a period of five years in compliance with Section139 (1). Their appointment as statutory auditor was informed to the Registrar of Companiesthrough Form ADT-1 dated 14 August 2015 vide SRN S39001086.

This is the fourth consecutive year out of the five years that they have beenappointed. Their remuneration would be fixed in line with the recommendation of the auditcommittee and as duly approved by the Board of Directors.

M/s. S R Batliboi & Associates LLP Chartered Accountants have vide their letterdated April 17 2018 given their written consent to continue as the Statutory Auditors ofthe Company and have also issued a certificate that the appointment if made shall be inaccordance with the conditions and that they satisfy the criteria provided under therelevant section and Chapter X of the Companies Act read with Companies (Audit andAuditors) Rules 2014.

The Statutory Auditors have issued a clean report on the financials of the Company andhave not issued any qualifications for the financial year ended 31 March 2018.

20. SECRETARIAL AUDIT

In terms of Section 204 (1) of the Companies Act 2013 the Company has appointed M/s.V Mahesh & Associates Chennai to do the secretarial audit of the Company for thefinancial year 1 April 2017 to 31 March 2018. Their appointment was informed to theRegistrar of Companies Chennai vide SRN G46103248 form MGT-14 dated 15 June 2017.

M/s. V Mahesh & Associates have now completed their secretarial audit and haveissued their certificate as per the prescribed format in MR-3 to the shareholders of theCompany which is annexed to this Report as Annexure - 2. They have no observationsin their report and have confirmed that the Company has proper board processes and acompliance mechanism in place. They have also affirmed that the Company has complied withthe relevant statutes rules and regulations and secretarial standards as applicable.

21. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

The information required under Section 134 (3) (m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is given in the Annexure - 3 andforms part of this Report.

22. DETAILS RELATING TO DEPOSITS

The Company has not accepted any deposits during the period under review as envisagedunder Section 73 74 & 76 of the Companies Act 2013.

23. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review there have been no significant and material orders passedby any regulators / courts / tribunals that could impact the going concern status and thecompany's operations in future.

24. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Company had lent a sum of INR 400 Million to a related party entity viz. HowdenSolyvent India Private Limited on terms which were benchmarked with market rates and on anarms' length basis under Section 186 of the Companies Act 2013 during the year underreview.

The Board of Directors from time to time has authorized the Company to invest thesurplus funds of the Company in deposits with Bank and investments in debt funds liquidfunds and fixed maturity plans with mutual funds for a tenor not exceeding 100 days. Theinvestments are made in liquid and debt funds .The Company has earned an income of aroundRs.688 lakhs for the period 1 April 2017 to 31 March 2018 in the form of dividends andprofit on redemption of investments. The Company has not given any guarantees other thanbank guarantees in the normal course of business to meet contractual obligations.

25. RISK MANAGEMENT POLICY

In compliance with the requirements of Section 134 (n) of the Companies Act 2013 andas required under Regulation 21 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has constituted a Risk Management Committeeconsisting of Mr Daniel A Pryor as the Chairman and Mr Rohit Gambhir Managing Directorand Mr B Mohan Chief Financial Officer as the Members of the Committee. The saidCommittee lays down the procedures to identify risks and the mitigation procedures andadopted a policy in this regard. The Board of Directors defines the roles andresponsibilities of the Committee. The policy on Risk Management has been hosted in theCompany's website www.esabindia.com. The said committee updates the Board of Directors ona periodical basis on the material risks faced by the Company and the measures taken bythe Company to mitigate the said risks.

26. CORPORATE SOCIAL RESPONSIBILITY

As required under Section 134 (o) read with Section 135 (1) of the Companies Act 2013the Company has constituted a Corporate Social Responsibility Committee. The Committee hasMs Sabitha Rao as the Chairperson Mr Daniel A Pryor and Mr Rohit Gambhir as the Membersof the said Committee. The Committee formulated a policy on CSR and the Board of Directorsapproved the same. The policy as required under Section 135 (4) (a) of the Companies Act2013 has been uploaded on the Company's website www.esabindia.com. The Company promoteseducation on safe welding practices especially in smaller towns through deployment ofconsultants to work with welders. The Company is also in talks with certain vocationaltraining institutions where it could contribute by way of education on welding throughdeployment of personnel and also through contributions in the form of Equipment and/ orwelding consumables.

The Company's policy on CSR envisages expenditure in areas falling within the purviewof Schedule VII of the Companies Act 2013. The annual report on CSR activities isenclosed by way of Annexure - 4 to this report.

The Company has expended about $ 4.30 lakhs during the financial year towards its CSRinitiatives.

27. RELATED PARTY TRANSACTIONS

As required under Section 188 of the Companies Act 2013 and Regulation 23 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the company placesbefore the audit committee the list of related parties from whom they buy raw materials orfinished goods to whom the Company extends services or exports goods. The details of thebasis of pricing and the margins on such transactions are also tabled. The Audit Committeeaccords its omnibus approval for such related party transactions on an annual basis. Theupdates on the transactions with the related parties are placed before the audit committeeon a quarterly basis. The details are also placed before the Board of Directors for itsinformation.

As required under Regulation 23 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formulated a policy on related partytransactions and the same was approved by the Audit Committee and the Board of Directors.The said policy has been uploaded on the company's website www.esabindia.com.

All the transactions with the related parties entered into during the period underreview have been in the ordinary course of business and at arms' length basis. There havebeen no material related party transactions entered into during this period. However theCompany obtained an approval from the Shareholders through a postal ballot - ordinaryresolution dated 23 March 2018 for the related party transaction with EWAC Alloys Limiteda fellow subsidiary. The details of related party transactions pursuant to Clause (h) ofsub-section (3) of Section 134 of the Act is enclosed in form no. AOC 2 as Annexure -5.

28. FORMAL ANNUAL EVALUATION

As required under Section 134 (p) of the Companies Act 2013 and Regulation 17 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board ofDirectors had already approved the evaluation criteria for evaluating the performance ofthe Board of Directors its committees and the performance of Independent Directors.Accordingly as required under Schedule IV of the Companies Act 2013 and Regulation 17 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theIndependent Directors at their separate meeting held on 7 February 2018 evaluated theperformance of the non-independent Directors and the Board as a whole. They also reviewedthe performance of the Chairman of the Company and also assessed the quality quantity andtimeliness of flow of information between the Company Management and the Board that wasnecessary for the Board to effectively and reasonably perform their duties.

Also as required under Regulation 17 (10) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board assessed the performance of the IndependentDirectors as per the criteria laid down and has recommended their continuation on theBoard of the Company at its meeting. The Board of Directors assessed the performance ofthe individual directors on the Board based on parameters such as relevant experience andskills ability and willingness to speak up focus on shareholder value creation highgovernance standards knowledge of business processes and procedures followed opennessof discussion / integrity relationship with management impact on key managementdecisions etc. The Members of the Committee of audit nomination & remunerationstakeholders relationship and corporate social responsibility committee were also assessedon the above parameters and also in the context of the committee's effectiveness vis-a-visthe Act and the listing regulations.

29. COST AUDITOR

As required under Section 148 of the Companies Act 2013 the Board of Directors at itsmeeting held on 30 May 2018 have appointed M/s.Geeyes & Co. Cost Accountants withinthe meaning of Cost & Works Accountants Act 1959 and holding a valid certificate ofpractice No.000044 as the Cost Auditor for conducting the Cost Audit for the financialyear 2018-2019. The Audit Committee recommended the appointment subject to the complianceof the requirements stipulated in the relevant notifications issued by Ministry ofCorporate Affairs.

The Company has received a letter dated April 18 2018 from the Cost Auditor statingthat the appointment if made will be within the limit prescribed under the Act.

The relevant Form CRA2 for appointment of Cost auditor for the financial year 2017-18was filed with the Registrar of Companies on 12 June 2017 vide SRN G45824513.

The cost audit report issued by the Cost Auditor for the financial year ended 31 March2017 was filed with the Registrar of Companies vide form CRA-4 dated 5 September 2017vide SRN G52072808.

30. RATIO OF REMUNERATION TO EACH DIRECTOR

As required under Section 197 (12) and Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the details of ratio of remuneration toeach Director to the median employee remuneration are as given below:

A. Executive Director

Ratio of remuneration paid to Mr Rohit Gambhir Managing Director vs the medianemployee is: 24:1 (23:1 for the year ended 31.3.2017).

Non-executive Independent Director

Ratio of remuneration paid to Mr Vikram Tandon Non-executive Independent Director vsthe median employee is: 0.88:1 (0.77:1 for the year ended 31.3.2017) Ratio of remunerationpaid to Mr Sudhir Chand Non-executive Independent Director vs the median employee is:0.93:1 (0.83:1 for the year ended 31.3.2017)

Ratio of remuneration paid to Mr K Vaidyanathan Non-executive Independent Director vsthe median employee is: 0.99:1 (0.88:1 for the year ended 31.3.2017) Ratio of remunerationpaid to Ms Sabitha Rao Non-executive Independent Director vs the median employee is:0.85:1 (0.78:1 for the year ended 31.3.2017) B. The percentage increase in the medianremuneration of employees in the financial year was 7.2%.

C. The number of non-unionised employees in the rolls of the Company as at 31 March2018 is 426 (371 as on 31 March 2017).

D. Average percentile increase made in salaries of employees other than KMP incomparison to the percentile increase in the remuneration of KMP and the justificationthereof.

The average percentile increase in salaries of employees other than KMP is 7.9% whilethat of KMPs is 7.7%. Justification thereof: Compensation revisions take into accountperformance metrics on sales operating profits and working capital apart from specificelements attributable to various functions within the organization. Despite difficultiesin the operating environment we exceeded the budget in all the three metrics. Taking intoaccount the consideration the rate of inflation it was decided to consider an averageincrease of 7.5%. This increase also includes a higher percentage of increase that hasbeen considered for junior / middle level employees who have been considered forpromotion.

E. The key parameters for any variable component of remuneration availed by theDirectors.

Variable Component to Mr Rohit Gambhir - This is linked to various parametersfinancial and non-financial. Key elements include sales operating profit workingcapital implementation of business systems.

Variable Component to Independent Directors - Is based on the roles andresponsibilities and their contribution to the Company in their respective capacities. TheCommission is individually determined based on their varying commitments of time andeffort to the Board and to its committees.

The Board of Directors would like to affirm that the remuneration paid to the Executiveand Non-executive Directors and the Key Managerial Personnel is in line with theRemuneration Policy of the Company.

As required under the provisions of Section 197 (12) of the Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended the name and other particulars of the employee is set out in the Annexure- 6 to this Report. Further as required under Companies (Appointment and

Remuneration of Managerial Personnel) Rules 2014 rule 5 sub-rule (2) the names of Top10 employees in terms of the remuneration drawn is given in Annexure - 6.

As at the end of March 2018 the Company had 734 employees as against 660 at the end of31 March 2017. The Company believes in providing a working environment that is focused onthe customers teamwork continuous improvement innovation and a competitive environmentwhere employees strive to improve value for shareholders.

31. FINANCE

The Company's relationships with its Bankers viz. AXIS Bank Ltd. and HDFC Bank Ltd.continued to be cordial during the year. The Company would like to thank its Bankers fortheir support.

32. ENVIRONMENT HEALTH AND SAFETY

The Company continued its commitment to industrial safety and environment protectionand all its factories have obtained its OHSAS 18001 certification. Periodical audits aredone by external and internal agencies to assess the continued levels of EHS efficiency ofeach of these plants and the OHSAS certification given is renewed after every such audit.The Company is also networked with the Group on EHS initiatives and works closely withthem on initiatives and actions concerning EHS.

Cautionary Statement

Certain statements in this Directors' Report may constitute "forward lookingstatements" within the meaning of applicable laws and regulations. Actual results maydiffer materially from those either expressed or implied in this Report.

33. LISTING WITH STOCK EXCHANGES

The Company's equity shares are listed with a) BSE Limited and b) National StockExchange of India Limited. The annual fee for both the exchanges have been paid promptlyfor the year 2017-2018. Pursuant to the requirements of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the company had executed fresh listingagreements with BSE Limited and National Stock Exchange of India Limited on 9 November2015.

The Company had 11556 shareholders as at the end of the year 31 March 2018. 98.60% ofthe shares are held in dematerialized form.

As required under Regulation 39 (4) Read with Schedule VI of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the details of the sharesissued by the Company consequent to amalgamation of erstwhile Maharashtra Weldaids Limitedwith the Company in 1994 the details of the physical shares which remains unclaimed andtransferred to the Unclaimed Suspense Account and the reconciliation of the shares claimedby shareholders during the year 2017-2018 and the shares outstanding in the suspenseaccount as on 31.3.2018 is given below:

Sl. No. Details No. of shareholders No. of equity shares
1. Aggregate number of shareholders and the outstanding shares lying in the unclaimed suspense account at the beginning of the year i.e. as on 1.4.2017 126 9465
2. Number of Sharehold- ers who approached the Company during the year 1 50
3. Number of sharehold- ers to whom shares were transferred from the unclaimed sus- pense account during the year 1 50
4. No. of shares trans- ferred to Investor Edu- cation and Protection Fund 60 4705
5. Aggregate Number of shareholders and the outstanding shares lying in the unclaimed Suspense Account at the end of the year i.e. 31.3.2018 66 4710

66 Shareholders holding 4710 equity shares constituting about 0.03% of shares have notmade their claim from the Company on the shares outstanding in the Unclaimed SuspenseAccount of ESAB India Limited. The voting rights for these shares shall remain frozenuntil these are claimed by the rightful owners.

34. CORPORATE GOVERNANCE

In terms of Chapter IV Regulation 15 Read with Schedule II of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a Corporate Governance Reportis made part of this Annual report.

A certificate from the Statutory Auditors of the Company regarding compliance of theconditions stipulated for Corporate Governance as required under Clause E of Schedule Vread with Regulation 34 (3) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is attached to this report.

The declaration by the Managing Director addressed to the Members of the Companypursuant to Clause D of Schedule V Read with Regulation 34 (3) Chapter IV of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 regarding adherence tothe Code of Conduct by the Members of the Board and by the Members of the SeniorManagement Personnel of the Company is also attached to this Report.

35. POLICY ON PREVENTION OF SEXUALHARASSMENT OF WOMEN AT WORK PLACE ACT

The Company has also adopted the mandatory policy on Sexual Harassment of Women atWorkplace (Prevention Prohibition & Redressal) Act 2013. Employees have beensensitized on the provisions of this enactment and the Company has also constituted aninternal complaints committee with effect from 30 October 2013 to deal with complaintsif any under the said Act. The Committee meets as and when requirement arises. TheCompany believes in providing safe working place for the Women in the Company and adequateprotection are given for them to carry out their duties without fear or favour. There wereno complaints received during the year to report under the said statute. As required underSection 21 of Chapter VIII of the said Act the Committee has submitted its annual reportin the prescribed format to the designated authority within the stipulated period.

36. SECRETARIAL STANDARDS

As on 31 March 2018 all the applicable Secretarial Standards which have been notifiedhave been complied with by the Company.

A certificate of compliances issued by the Secretarial Auditor M/s. V Mahesh &Associates dated 20 April 2018 is enclosed as Annexure - 2 and forms part of thisReport.

37. ISSUE OF SHARES

The Company during the year under review has not issued any SWEAT equity shares orshares with differential rights or under Employee stock option scheme nor did it buy backany of its shares.

38. ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the confidence reposed andcontinued support extended by its customers suppliers and shareholders.

Your Board would like to place on record its sincere appreciation to the employees forhaving played a very significant part in the Company's operations till date.

For and on behalf of the Board of Directors
Daniel A Pryor
Chairman
30 May 2018