Your Directors' take pleasure in presenting the Thirty Sixth Annual
Report together with the audited accounts of the Company for the financial year ended 31
March 2023.
1. FINANCIAL SUMMARY / HIGHLIGHTS
(Rs. in Lakhs)
Particulars |
2022-23 |
2021-22 |
Total Revenue |
1,09,860 |
90,098 |
Profit before Interest expense |
|
|
and Depreciation |
19,448 |
12,518 |
Provision for Depreciation |
(1,188) |
(1,133) |
Finance cost |
(31) |
(29) |
Profit before exceptional and |
|
|
prior period items and tax |
18,229 |
11,356 |
Exceptional items |
|
|
Profit before Tax from |
|
|
continuing Operations |
18,229 |
11,356 |
Provision for Tax |
(4,661) |
(2,925) |
Net Profit After Tax |
13,568 |
8,431 |
The financials of the Company for the year under review as also the
financial statements of the previous year are prepared under IND AS.
2. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There were no reportable events subsequent to the date of the financial
statements.
3. CHANGE IN THE NATURE OF BUSINESS, IF ANY
There has been no material change in the nature of business during the
period under review.
4. DIVIDEND
The shareholders at the Annual General Meeting held on 11th
August 2022 had approved a Final Dividend of $ 20/-per equity share of $ 10/- each (200%)
for the financial year 2021-22 resulting in a cash outflow of about $ 30.79 crores and the
same was paid on 26 August 2022.
During the Financial Year 2022-23, the Board of Directors had approved
two Interim Dividends as detailed below. i) First interim dividend of $ 30/- per equity
share of
$ 10/- each (300%) at its meeting held on 11th November 2022
resulting in a cash outflow of about
$ 46.18 crores, which was paid on 9th December 2022; and ii)
Second interim dividend of $ 28/- per equity share of
$ 10/- each (280%) at its meeting held on 10th February 2023
resulting in a total cash outflow of about $ 43.10 crores, which was paid on 10th
March 2023.
In addition to the above two interim dividends for the financial year
2022-23, the Board has proposed a final dividend of $ 20/- per equity share of $ 10/- each
(200%) for the financial year 2022-23, which is subject to approval of the shareholders at
the ensuing Annual General Meeting to be held on 10th August 2023.
5. IND AS STANDARDS
Your Company had adopted IND AS in pursuance of Section 133 of the
Companies Act, 2013 and in compliance with the Companies (Indian Accounting Standard)
Rules, 2015. The financials for the current financial year ended 31st March
2023 and the comparative figures for the last financial year ended 31st March
2022 have been prepared and published based on such IND AS standards. The quarterly
results are also published by the Company based on IND AS. These have been published in
newspapers and also made available in the Company's website https://
esabindia.com/in/ind_en/investor-relationship/paper-advertisements/ and the website of the
stock exchanges where the shares of the Company are listed.
6. TRANSFER 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, Audit, Transfer and Refund) Rules, 2016 ("The Rules"), all unpaid
or unclaimed dividends are required to be transferred by the Company to the Investor
Education and Protection Fund (IEPF) established by the Central Government, after
completion of seven years from the date of transfer of unpaid / unclaimed dividend to
Unpaid Dividend account. Further, according to the Rules, the shares in respect of which
dividend has not been paid or claimed by the Members for seven consecutive years or more
shall also be transferred to the dematerialized account created by the IEPF authority.
The Company had sent individual notices and also advertised in the
newspapers seeking action from the Members who have not claimed their dividends for seven
consecutive years or more. Accordingly, the Company had transferred the unpaid or
unclaimed dividends and corresponding shares pertaining to Final Dividend 2014-15 on 11th
October 2022 and 13th October 2022 respectively. Members/claimants whose
shares, unclaimed dividend, have been transferred to the IEPF Demat Account of the Fund,
as the case may be, may claim the shares or apply for refund by making an application to
the IEPF Authority in Form IEPF-5 (available on https: www.iepf.gov.in) along with
requisite fee as prescribed by IEPF Authority from time to time. The Member / Claimant can
file only one consolidated claim in a financial year as per the IEPF Rules. Due dates for
transfer of Unclaimed Dividend to IEPF are provided elsewhere in the notice calling the
Annual General Meeting. Details of shares / shareholders in respect of which dividends
have not been claimed, are provided on our website at https:/
/esabindia.com/in/ind_en/investor-relationship/statement-of-unclaimed-dividends/. The
shareholders are encouraged to verify their records and claim their dividends of all the
preceding seven years, if not claimed.
7. BOARD MEETINGS
The Board of Directors met 5 times during the financial year 2022-23.
The Meetings were held on 27 May, 12 August, 11 November of 2022, 10 February and 23 March
2023.
8. DIRECTORS & KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company has six members. Mr. Kevin
Johnson is the nominee of ESAB Holdings Limited and a non-retiring Director in terms of
the Articles of Association and Chairman of the Board.
Mr. Rohit Gambhir is the Managing Director of the Company. He was
initially appointed for a period of five years with effect from 1st November
2013. He was then subsequently reappointed for a further term of 5 years from 1st
November 2018 till 31st October 2023. The Board of Directors at their meeting
held on 23rd March 2023, has approved and recommended re-appointment of Mr.
Rohit Gambhir as Managing Director for a further period of five years from 1st November
2023 to 31st October 2028 for the approval of the shareholders.
In accordance with the provisions of Article 129 of the Company's
Articles of Association, Mr. Rohit Gambhir retires by rotation at the forthcoming Annual
General Meeting and being eligible, has offered himself for re-appointment.
The details as required under Regulation 36 (3) of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 regarding re-appointment of Mr.
Rohit Gambhir are published as part of the Notice convening the Annual General Meeting.
One of our Independent Directors, Late Sabitha Rao, passed away on 31st
December 2022. The Board at its meeting held on 10th February 2023, had paid
homage to late Sabitha Rao, by observing One Minute Silence (OMS). The Company has also
intimated about the sudden demise of late Sabitha Rao to the Stock Exchanges.
The Board of Directors at its meeting held on 23rd March
2023 has appointed Ms. Cauvery Dharmaraj (DIN: 02917088) as an Additional Director in the
capacity of Independent Director of the Company for a period of five years from 23rd
March 2023 to 22nd March 2028. The Company has obtained approval of the
shareholders through Postal Ballot on 3rd May 2023, for appointment of Ms.
Cauvery Dharmaraj as Independent Director for a period of five years from 23rd
March 2023 to 22nd March 2028. Pursuant to appointment of Ms. Cauvery Dharmaraj
as Independent Director on the Board on 23rd March 2023, the composition of the
Board comprise of the following members as on the date of this report.
S. No |
Name of the Director |
Designation |
1 |
Kevin Johnson |
Chairman |
2 |
Rohit Gambhir |
Managing Director |
3 |
K Vaidyanathan |
Independent Director |
4 |
Vikram Tandon |
Independent Director |
5 |
Sudhir Chand |
Independent Director |
6 |
Cauvery Dharmaraj |
Independent Director |
Key Managerial Personnel
In compliance with Section 203 of the Companies Act, 2013, Mr Rohit
Gambhir, Managing Director, Mr. B. Mohan, Vice-President Finance & Chief Financial
Officer, and Mr. G Balaji, Company Secretary have been designated as the Key Managerial
Personnel of the Company.
Mr. B Mohan was appointed as Chief Financial Officer of the Company
effective from 1st February 2005 and Mr. G Balaji was appointed as Company
Secretary effective from 25th March 2022.
9. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
As required under Section 149 (6) and (7) of the Companies Act, 2013
all the Independent Directors on the Board of the Company have individually issued the
stipulated annual declaration confirming that they meet all the criteria of independence
as stipulated under the Act. Further, the Independent Directors have completed their KYC
confirmation on the MCA website and have also uploaded their profile in the Indian
Institute of Corporate Affairs before the stipulated date. All the Directors except Ms.
Cauvery Dharmaraj, Independent Director, are exempted from undergoing the mandatory online
tests based on their quantum and areas of experience. Ms. Cauvery Dharmaraj shall clear
the online proficiency self-assessment test in accordance with the Sub rule 4 of Rule 6 of
Companies (Appointment and Qualification of Directors) Rules, 2014.
10.COMMITTEES OF THE COMPANY A. AUDIT COMMITTEE
The Company's Audit Committee consists of three Independent Directors
and one Non-executive Director. Mr. K Vaidyanathan, is the Chairman of the said Committee.
Mr. Vikram Tandon, Mr. Sudhir Chand and Mr. Kevin Johnson are the other members of the
Committee.
The said Committee met 4 times during the financial year 2022-23, on 27th
May, 12th August, 11th November 2022 and 10th February
2023. The constitution and the terms of reference of the Committee are in line with the
requirements of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015.
There were no occasions during the year where the Board of Directors
did not accept the recommendations of the Audit Committee.
B. NOMINATION AND REMUNERATION
COMMITTEE
The Company's Nomination and Remuneration Committee consists of three
Independent Directors and one Non-Executive Director. Mr. K Vaidyanathan is the Chairman
of the said Committee. Mr. Sudhir Chand, Independent Director, Mr. Kevin Johnson, Chairman
of the Board and Ms. Cauvery Dharmaraj, Independent Director (with effect from 23rd
March 2023) are the other members of the Nomination and Remuneration Committee.
This Committee met once during the financial year 2022-23 on 23rd
March of 2023.
This Committee lays down the policy on remuneration stating therein the
attributes required for the Managing Director, Independent Directors and Key Managerial
Personnel. The said policy also states the modus operandi for determining the remuneration
of the KMP's and senior management. The remuneration policy of the Company can be viewed
on the Company's website https://esabindia.com/in/ind_en/
investor-relationship/policies/remuneration-policy/ The said committee is constituted in
compliance with Section 178 (4) of the Companies Act, 2013 and Regulation 19 of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015.
C. STAKEHOLDERS RELATIONSHIP
COMMITTEE
The Company's Stakeholders Relationship Committee consists of two
Independent Directors, one Non-executive Director and the Managing Director. Mr. Vikram
Tandon is the Chairman of the Committee, Mr Sudhir Chand, Independent Director, Mr. Kevin
Johnson, Chairman of the Board and Mr. Rohit Gambhir, Managing Director are the Members of
the Committee.
The Committee met four times during the year on 27th May, 12th
August, 11th November of 2022 and on 10th February 2023.
The composition of the said Committee and the matters being placed
before the Committee are in compliance with Section 178(5) of the Companies Act 2013 and
Regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015.
D. CORPORATE SOCIAL RESPONSIBILITY
COMMITTEE
The Company's Corporate Social Responsibility Committee consists of one
Independent Director, one Non-executive Director and the Managing Director. Ms. Cauvery
Dharmaraj was co-opted to the said Committee as the Chairperson with effect from 23rd
March 2023 after the sudden demise of Late Sabitha Rao who was the Chairperson of the
Committee. Mr. Kevin Johnson, Chairman of the Board, Mr. Rohit Gambhir, Managing Director
are the other members of the said Committee.
The Committee met twice during the financial year 2022-23 on 27th
May 2022 and on 10th February 2023.
The Committee lays down the Policy on Corporate Social Responsibility
stating therein the strategy, objectives, funding & allocation for the CSR projects,
implementation, strategy and steps involved in achieving the CSR objectives. The Policy on
Corporate Social Responsibility was revised by the Board of Directors at their meeting
held on 10th February 2023. The budget allocation for CSR Projects for the year
2022-23 can be viewed on the Company's website https://
esabindia.com/in/ind_en/investor-relationship/policies/
policy-on-corporate-social-responsibility-revised-on-10th-february-2023/ The formation of
the Committee and its terms of reference are in line with the requirements of Section 135
(1) of the Companies Act, 2013. The CSR Report which is attached as annexure to this
report is in compliance with the Companies (Corporate Social Responsibility Policy)
Amendment Rules, 2021.
E. RISK MANAGEMENT COMMITTEE
The Company has a Risk Management Committee as stipulated by the
Companies Act, 2013 and Regulation 21 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015. The Company's Risk Management
Committee consists of Mr. Kevin Johnson, Chairman of the Board, Mr. Rohit Gambhir,
Managing Director, Mr. Sudhir Chand, Independent Director and Mr. B Mohan, Vice President
Finance & Chief Financial Officer of the Company. A Risk Management Committee is
mandatory for the Company since it is part of the Top 500 Companies in terms of market
capitalization.
As per Regulation 21 of SEBI (Listing Obligations and Disclosure
Requirements) Regulations 2015, the meetings of the risk management committee shall be
conducted in such a manner that on a continuous basis not more than one hundred and eighty
days shall elapse between any two consecutive meetings. Accordingly, the said Committee
met twice during the financial year on 28th July 2022 and on 20th January
2023.
The said Committee lays down the Policy on Risk Management. The main
objective of this policy is to ensure sustainable business growth with stability and to
promote a pro-active approach in reporting, evaluating and mitigating those risks which
are material in nature and are associated with the business. In order to achieve the key
objective, the policy establishes a structured and disciplined approach to Risk
Management.
The Risk Management Policy of the Company can be viewed on the
Company's website https://esabindia.com/in/ind_en/
investor-relationship/policies/risk-management-policy/
11.VIGIL MECHANISM
The Company has set up a whistleblower policy which can be viewed on
the Company's website https://esabindia.com/
in/ind_en/investor-relationship/policies/whistle-blowing-policy/ In terms of the said
policy the Directors and employees are given direct access to the Chairman of the Audit
Committee to report on alleged wrong doings. The said policy has been made available at
the Offices / Plants of the Company at conspicuous places to enable the employees to
report concerns, if any, directly to the Chairman of the Board and to the Chairman of the
Audit Committee. Employees who join the Company newly are apprised of the availability of
the said policy as a part of their induction schedule.
Based on an internal review, the Company had updated the whistle blower
policy, and this was approved by the Board of Directors at its meeting held on 10th
February 2022. The same can be viewed from the website of the Company viz. https://
esabindia.com/in/ind_en/investor-relationship/policies/whistle-blowing-policy/.
The above complies with the requirements of Section 177 (9) & (10)
of the Companies Act, 2013 and in terms of Regulation 22 of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015. The Company did not receive any complaints
under the whistle blower policy during the year under review.
12. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief, and according to the
information and explanations obtained by them, your Directors make the following
statements as per the requirements of Section 134 (5) of the Companies Act, 2013.
1. In the preparation of the annual accounts for the financial year
ended 31st March 2023 the applicable accounting standards have been followed.
2. The Directors have selected such accounting policies listed in Note
2.2 to the Notes to the Financial Statements and applied consistently and made judgments
and estimates that are reasonable and prudent so as to give a true and fair view of the
state of the affairs of the Company at the end of the financial year as on 31st
March 2023 and of the Profit of the Company for that year;
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of this Act,
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
4. The Directors have prepared the annual accounts for the year ended
31st March 2023 on a going concern basis;
5. The Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and were
operating effectively; and
6. The Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
13. There were no instances of fraud reported by the auditors of the
Company under sub- section 12 of Section 143 of the Companies Act, 2013.
14. MANAGEMENT DISCUSSION AND ANALYSIS A. ECONOMIC & BUSINESS
ENVIRONMENT
Amidst global uncertainties driven by economic and geopolitical
factors, expectations were of moderate growth with concerns on Inflation adding to the
weak sentiments. Despite some degree of resilience, India was expected to grow at a much
slower pace despite base effect and unwinding in the economy post-covid.
A sustained and global increase in Interest rates to counter inflation
did dampen the growth prospects for the year and posed challenges in the working capital
cycle.
Volatilities in some of the commodities and minerals were quite strong
and this demanded a high level of flexibility and agility in supply chain and sales
functions.
Aided by new products, improved product mix and some softening in input
costs, your Company went on to achieve strong growth in Revenues and Profits.
B. OUTLOOK, OPPORTUNITIES AND THREATS
We continue to see short term resilience and a steady trend during the
ongoing financial year.
Macro-economic factors including global headwinds are likely to pose
risks on the prospects for the ongoing financial year. Financing costs, volatilities in
energy costs and input costs, inflation, geopolitical developments remain key factors with
strong potential impact on the performance metrics of the Company.
The Company continues to look for opportunities in growing the
addressable markets through new products and rationalization of products in current
portfolio. Service revenue streams continue to grow and we see opportunities to grow
revenues from recharges on global services provided out of India.
The Company recognizes threats in the macro-economic environment,
potential shifts in technology and potential downsides on working capital and margins in
the event of continuing measures to contain inflation with monetary policy changes.
15. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY
The Management evaluates the Company's internal controls periodically
considering local and global trends as also specific business-related developments.
Independent Internal Auditors are engaged by the Company to test efficacy of controls in
terms of design and operating effectiveness and to work with independent internal auditors
to test these and identify areas for improvement. As the Company is a Subsidiary of a US
listed entity, it is subjected to reviews applicable for Subsidiaries of US headquartered
entities. The Company continues to list and evaluate key controls and process to an extent
leveraging on the work done as part of its global reporting requirements. Key findings and
actions taken to implement or remediate the same are reviewed by the Audit Committee
periodically at its meetings. The scope and coverage of internal audits are aligned to
have coverage in terms of key controls and locations. The endeavor is to align to the
requirements of Internal Control on Financial Reporting (ICFR) framework while leveraging
on work done as part of global reporting requirements. Management testing through
independent audit teams followed by external testing were done during the year.
The scope of work of Internal Auditors includes review of controls on
accounting, operational controls, financial reporting, statutory and other compliances,
and operational areas in addition to reviews relating to efficiency and economy in
operations.
Our continuing efforts on the above lines are expected to ensure
compliance with the requirements of Internal Controls on Financial Reporting.
16.FINANCIAL PERFORMANCE OF THE COMPANY A. INCOME AND EXPENDITURE
The Company's revenue from contract with customers grew by 21.7 %. The
growth was driven by gain in market share as well as through continuing introductions of
new products in welding consumables and equipment.
The Company saw steady trends on its activities and revenues from
services to related party entities.
Other income increased by about 66.67% primarily on account of indirect
tax related refunds and asset disposal gains offset partly by lower interest income and
absence of foreign exchange gains in 2022-23.
Materials costs as a percentage to sales was comparable to previous
year despite price increases.
Overheads including employee costs were higher by 9.75% over the
previous year. The increase was driven by the growth in revenues and partly due to the
base effect of 2021-22 which was affected partly by lockdowns. Inflationary impact was
felt on overheads in addition to payroll costs.
The Company has continued to provide for Depreciation at useful lives
based on a technical evaluation of useful life of assets.
Profit before tax was higher by 60.52% over the previous year with the
impact of higher contributions from revenue growth.
B. BALANCE SHEET
Shareholders' funds were at $ 260.27 Crores at the end of the year as
against $ 244.22 Crores at the end of the previous year. The Company had paid dividends of
$ 120.07 Crores during the financial year.
Disruptions in supply chain were witnessed during most part of the year
driven by geo-political developments and consequential increases in costs and lead times.
Higher interest rates led to additional stress on collection cycles. As in the past,
working capital continued to be an area of intense focus through the year. Accounts
Receivable and Inventory were better in terms of days sales as compared to the preceding
financial year.
Capital Expenditure including capital work in progress was at $ 31.91
Crores as against $ 11.14 Crores in the preceding year. Capital expenditure was primarily
on Buildings for Global R&D, refurbishments on existing lines, productivity
improvements, marginal capacity enhancements, and upgrading IT systems.
Cash and equivalents were at $ 33.44 Crores at the end of the year as
against $ 21.20 Crores at the end of the previous year. Investments in short term and debt
funds were at
$ 0.15 Crore as against $ 31.01 Crores at the end of the previous year,
the reduction being driven by dividend payments during the year. The Company is well
positioned to ride through short term volatilities in working capital by virtue of its
debt free position and cash flows.
17. SUBSIDIARY / JOINT VENTURE / ASSOCIATE
COMPANY
The Company does not have any subsidiary, joint venture, or associate
company.
18.HOLDING COMPANY
With effect from 4th April 2022, ESAB Corporation, Delaware,
USA, is the ultimate parent company of ESAB India Limited.
19. ANNUAL RETURN
Pursuant to sub-section (3) of Section 92 of the Companies Act 2013,
your Company has placed a copy of the annual return for the financial year 2022-23 on its
website and it can be viewed from the company's website viz. https://
esabindia.com/in/ind_en/investor-relationship/annual-returns/.
20. STATUTORY AUDITORS
M/s. S R Batliboi & Associates, LLP, Chennai (Firm Regn No.101049W
/ E300004) was re-appointed for a period of four years by the shareholders at the Annual
General Meeting held on 28th August 2020 as the Statutory Auditors of the
Company in compliance with Section 139 (1) of the Companies Act, 2013. The details of
remuneration of the statutory auditors with break-up of fee paid to S R Batliboi &
Associates and its network firms as required by the provisions of amended SEBI (LODR)
Regulations for the financial year 2022-23 is given as part of the Corporate Governance
Report.
Their remuneration is fixed in line with the recommendations of the
audit committee and as duly approved by the Board of Directors.
The Statutory Auditors have issued a clean report on the financials of
the Company and have not issued any qualifications for the financial year ended 31st
March 2023. Members may please take note of the changes in the requirements with respect
to the report of the Auditors including specific references to key audit matters.
21. 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 the financial year 1st April 2022 to 31st March 2023.
Their appointment was informed to the Registrar of Companies, Chennai vide SRN F05957014
form MGT-14 dated 13th June 2022.
M/s. V Mahesh & Associates have now completed their secretarial
audit and have issued their certificate dated 17th May 2023 as per the
prescribed format in MR-3 to the shareholders of the Company, which is annexed to this
Report as Annexure-2.
They have two observations in their report. i) The Composition of CSR
Committee as required under Section 135 of the Companies Act 2013, could not be maintained
between 31st December 2022 and 22nd March 2023 due to the untimely
& sudden demise of Ms. Sabitha Rao, Independent Director & Chairperson of CSR
Committee. During the intervening period, it was observed that a CSR Committee Meeting was
held on 10th February 2023 to review CSR activities and the same was ratified
by the Board in its Board Meeting held on the same day. Subsequently, the CSR Committee
has been reconstituted as required under Section 135 of the Companies Act, 2013 consequent
to the appointment of Ms. Cauvery Dharmaraj on 23rd March 2023; In response to
the above observation, the Board explained that the lack of composition of CSR Committee
from 31st December 2022 to 22nd March 2023 was unexpected due to
sudden demise of Sabitha Rao, past member of CSR Committee and a meeting of CSR Committee
was held during the said intervening period. The Company has remediated this by appointing
Ms. Cauvery Dharmaraj as Independent Director and Chairperson of the CSR Committee. ii)
During the Audit Period, it was observed that the Company has submitted the disclosures of
Related Party Transactions to Stock Exchanges as required under Regulation 23(9) of SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 however the same could
not be maintained in legible format in the website of the Company due to technical snags
& glitches. On being informed, the same has been corrected and maintained in the
website without any technical snags. In response to the above observation, the Company has
taken immediate steps to upload the legible copy of the RPT on the website of the Company
and the same has been complied with.
Barring the above, the Secretarial Auditors have confirmed that the
Company has proper board processes and a compliance mechanism in place. They have also
affirmed that the Company has complied with the relevant statutes, rules and regulations
and secretarial standards, as applicable.
22. CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE OUTGO
The information required under Section 134(3)(m) of the Companies Act,
2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in the Annexure
- 1 and forms part of this Report.
23. DETAILS RELATING TO DEPOSITS
The Company has not accepted any deposits during the period under
review as envisaged under Section 73, 74 & 76 of the Companies Act, 2013. There have
been additional filing requirements introduced with respect to liabilities not in the
nature of deposits. The necessary form DPT 3 has been filed for the financial year 2021-22
on 6th June 2022 vide SRN No. F04564613.
24. SIGNIFICANT & MATERIAL ORDERS PASSED
BY THE REGULATORS
During the year under review, there have been no significant and
material orders passed by any regulators / courts / tribunals that could impact the going
concern status and the company's operations in future.
25. PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS
The Company had not lent any loan to any related party as envisaged
under Section 186 of the Companies Act, 2013 during the year under review.
The Board of Directors from time to time has authorized the Company to
invest the surplus funds of the Company in deposits with Bank and investments in debt
funds, liquid funds and fixed maturity plans with mutual funds for a tenor not exceeding
100 days.
The investments are made in debt funds and liquid funds. The Company
has earned an income of around $ 98.12 Lakhs from investment in mutual funds for the
period 1 April 2022 to 31 March 2023. The Company has not given any guarantees other than
bank guarantees in the normal course of business to meet its contractual obligations.
26. RISK MANAGEMENT POLICY
In compliance with the requirements of Section 134(3)(n) of the
Companies Act, 2013 and as required under Regulation 21 of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 the Company has constituted a Risk
Management Committee consisting of Mr. Kevin Johnson, as the Chairman, Mr. Rohit Gambhir,
Managing Director, Mr. Sudhir Chand, Independent Director and Mr. B Mohan, Chief Financial
Officer as the Members of the Committee. The said Committee lays down the procedures to
identify risks and the mitigation procedures and adopted a policy in this regard. The
Board of Directors defines the roles and responsibilities of the Committee.
The said committee updates the Board of Directors on a periodical basis
on the material risks faced by the Company and the measures taken by the Company to
mitigate the said risks. The Committee analyzed various risks including those arising from
COVID 19, cyber security aspects and remote access control and other different controls
necessary to be established with executives working from home. They suggested the actions
to be taken to mitigate these risks which went a long way in the Company successfully
managing all the risks. The Ministry of Home Affairs (MHA) had also during the pandemic
had issued various guidelines for the plants to follow and the Company had complied with
all these MHA guidelines to ensure that all the risks associated with the COVID 19
pandemic were adequately being addressed.
27. CORPORATE SOCIAL RESPONSIBILITY
As required under Section 134 (3) (o) read with Section 135 (1) of the
Companies Act, 2013, the Company has constituted a Corporate Social Responsibility
Committee. The Committee had Ms. Sabitha Rao as the Chairperson of the said committee. She
passed away on 31st December 2022. After her demise, the Company has appointed
Ms. Cauvery Dharmaraj, as the Chairperson with effect from 23rd March 2023. Her
appointment was also approved by the shareholders of the Company via Postal Ballot on 3rd
May 2023. Mr. Kevin Johnson, Chairman of the Board and Mr. Rohit Gambhir, Managing
Director are the other members of the said Committee.
The Committee formulated a policy on CSR and the Board of Directors
approved the same. The policy as required under Section 135 (4) (a) of the Companies Act,
2013 has been uploaded on the Company's website https://esabindia.com/
in/ind_en/investor-relationship/policies/policy-on-corporate-social-responsibility-revised-on-10th-february-2023/.
As part of CSR initiatives, the Company has been involved in promoting and educating safe
welding practices including usage of all personal protective equipment during the process
of welding to ensure total safety of the welders, especially at smaller towns through
deployment of duly trained resources. The Company had also tied up with certain vocational
institutions for educating the welders in Tier II and Tier III cities on welding through
deployment of personnel.
During the year under review, the Company had the eligible 2% spend of
$ 1,92,95,000/- in addition to the carried forward unspent amount of $ 68,21,675/-
aggregating to
$ 2,61,16,675/-. The Board approved various CSR projects with the total
CSR liability of $ 2,61,16,675/- during the financial year 2022-23.
During the financial year 2022-23, the Company had budgeted an amount
of $ 1,32,01,925/- towards "safe welding practices - ongoing project 2020-21"
and against which the Company had spent an amount $ 1,10,61,456/-leaving an unspent amount
of $ 21,40,469/-. This unspent amount of $ 21,40,469/- was transferred to a separate bank
account titled CSR Unspent account 2022-23 on 28th April 2023.
During the financial year 2022-23, the Company had also spent excess
amount of $ 4,76,082/- in respect of certain CSR projects.
As against the total budget of $ 2,61,16,675/-, the Company had spent
an amount of $ 2,44,52,288/- leaving a balance of $ 16,64,387/- which includes an excess
spent of
$ 4,76,082/-.
The unspent amount of $ 21,40,469/- which was transferred to a separate
bank account titled CSR Unspent account 2022-23 will be spent during the financial year
2023-24. The Company's policy on CSR envisages expenditure in areas falling within the
purview of Schedule VII of the Companies Act, 2013. The annual report on CSR activities is
enclosed by way of Annexure - 3 to this report.
28. 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 places before the audit committee the list of related parties from whom they buy
raw materials or finished goods, to whom the Company extends services or exports goods.
The details of the basis of pricing and the margins on such transactions are also tabled.
The Audit Committee accords its omnibus approval for such related party transactions on an
annual basis. The updates on the transactions with the related parties are placed before
the audit committee on a quarterly basis. The details are also placed before the Board of
Directors for its information.
As required under Regulation 23 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 the Company has formulated a policy on related
party transactions 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 https://
esabindia.com/in/ind_en/investor-relationship/policies/policy-on-related-party-transaction/
All the transactions with the related parties entered into during the period under review
have been in the ordinary course of business and at arms' length basis. There have been no
material related party transactions entered into during this period.
The details of related party transactions pursuant to Clause (h) of
sub-section (3) of Section 134 of the Act, is enclosed in form no. AOC 2 as Annexure -
4.
29. FORMAL ANNUAL EVALUATION
As required under Section 134 (3) (p) of the Companies Act, 2013 and
Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015, the Board of Directors had already approved the evaluation criteria for evaluating
the performance of the 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 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, the Independent Directors at their separate meeting held on 23rd March
2023 evaluated the performance of the non-independent Directors and the Board as a whole.
They also reviewed the performance of the Chairman of the Company and also assessed the
quality, quantity, and timeliness of flow of information between the Company Management
and the Board that was necessary for the Board to effectively and reasonably perform their
duties.
Also as required under Regulation 17 (10) of SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the Board assessed the performance of the
Independent Directors as per the criteria laid down and has recommended their continuation
on the Board of the Company at its meeting held on 25th May 2023.
As required under the said regulations, the Board of Directors assessed
the performance of the individual directors on the Board based on parameters such as,
relevant experience and skills, ability, and willingness to speak up, focus on shareholder
value creation, high governance standards, knowledge of business, processes and procedures
followed, openness of discussion / integrity, relationship with management, impact on key
management decisions etc. The Members of the Committees of Audit, Nomination &
Remuneration, Stakeholders Relationship, Corporate Social Responsibility, and Risk
Management Committee, were also assessed on the above parameters and also in the context
of the committee's effectiveness vis-a-vis the Act and the listing regulations.
The Independent Directors fulfilled the independence criteria as
specified under the above regulations and the Companies Act, 2013. The Board was satisfied
with the evaluation results which reflected the overall engagement and the effectiveness
of the Board and its committees. The Independent Directors also updated their current
profiles by paying up the relevant fees in the website of the Ministry of Corporate
Affairs on Independent Directors for a period of five years from 2020-21. Ms. Cauvery's
profile is updated in the Independent Directors data bank with effect from 13th
March 2023. All the Independent Directors possess the necessary experience and expertise
and are exempted from taking up the online assessment test of the Ministry except Ms.
Cauvery Dharmaraj who will undertake the online proficiency self-assessment test as per
Sub rule 4 of Rule 6 of Companies (Appointment and Qualification of Directors) Rules,
2014.
30. COST AUDITOR
As required under Section 148 of the Companies Act, 2013 the Board of
Directors at its meeting held on 25th May 2023 has appointed M/s. Geeyes &
Co., Cost Accountants within the meaning of Cost & Works Accountants Act, 1959 and
holding a valid certificate of practice No.000044 as the Cost Auditor for conducting the
Cost Audit for the financial year 2023-24. The Audit Committee recommended the appointment
subject to the compliance of the requirements stipulated in the relevant notifications
issued by Ministry of Corporate Affairs.
The Company has received a letter dated 8th May 2023 from
the Cost Auditor stating that the appointment, if made, will be within the limit
prescribed under the Act.
The relevant Form CRA 2 for appointment of Cost auditor for the
financial year 2022-23 was filed with the Registrar of Companies on 10th June
2022 vide SRN F05493135. The cost audit report issued by the Cost Auditor for the
financial year ended 31 March 2022 was filed with the Registrar of Companies vide form CRA
- 4 dated 9 September 2022 vide SRN F24293169.
31. RATIO OF REMUNERATION TO EACH
DIRECTOR
As required under Section 197 (12) of the Companies Act, 2013 and Rule
5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
details of ratio of remuneration of each 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 median employee is 26:1 (26:1 for the year ended 31 March 2022).
B. The percentage increase in remuneration of CFO and CS in the
financial year 2022-23 was 8.1 % and 8.1% respectively.
C. The percentage increase in the median remuneration of employees in
the financial year 2022-23 was 7.8%. D. The number of eligible permanent employees in the
rolls of the Company as on 31 March 2023 is 554 (557 as on 31 March 2022).
E. Average percentile increase made in salaries of employees other than
KMP in comparison to the percentile increase in the remuneration of KMP and the
justification thereof.
The average percentile increases in salaries of employees other than
KMP proposed was 8.24% while that of KMPs was 8.10%.
As at the end of March 2023 the Company had 829 employees as against
822 at the end of 31 March 2022. The Company believes in providing a working environment
that is focused on the customers, teamwork, continuous improvement, innovation and a
competitive environment where employees strive to improve value for shareholders.
The Board of Directors would like to affirm that the remuneration paid
to the Executive and Non-executive Directors and the Key Managerial Personnel is in line
with the Remuneration Policy of the Company. As required under the provisions of Section
197 (12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 as amended, the name and other
particulars of the top ten employees is set out in the Annexure - 5 to this Report
in terms of remuneration drawn.
In terms of Section 136(1) of the Companies Act, 2013 the Annual report
excluding the aforesaid annexure is now being sent. The annexure is available for
inspection at the Registered Office of the Company and any shareholder interested in
obtaining a copy of the said annexure may write to the Company Secretary at the Registered
Office of the Company.
32. FINANCE
The Company's relationship 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 for their support.
33. ENVIRONMENT, HEALTH AND SAFETY
The Company continued its commitment to industrial safety and
environment protection and all its factories have obtained its ISO 14001 and OHSAS 18001
certification. Periodical audits are done by external and internal agencies to assess the
continued levels of EHS efficiency of each 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 with them on initiatives and actions concerning EHS.
During the year under review, the Company's Plants at Ambattur and Nagpur won global
recognition for EHS initiatives.
Cautionary Statement
Certain statements in this Directors' Report may constitute
"forward looking statements" within the meaning of applicable laws and
regulations. Actual results may differ materially from those either expressed or implied
in this Report.
34. LISTING WITH STOCK EXCHANGES
The Company's equity shares are listed with a) BSE Limited and b)
National Stock Exchange of India Limited. The annual fees for both the exchanges have been
paid promptly for the year 2023-24. Pursuant to the requirements of SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the company had executed fresh
listing agreements with BSE Limited and National Stock Exchange of India Limited on 9th
November 2015.
The Company had 18,401 shareholders as at the end of the year 31st
March 2023. 99.19% of the shares are held in dematerialized form.
The Company is part of the Top 500 Companies by way of Market
capitalization. The Company has adopted a dividend policy, formed a Risk Management
Committee and have also prepared a Business Responsibility and Sustainability Report for
the year under review. The dividend distribution policy is available in the Company's
website link https:// esabindia.com/in/ind_en/investor-relationship/policies/
dividend-distribution-policy/ As required under Regulation 39 (4) Read with Schedule VI of
the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and
Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations 2015, the details of the shares issued by the Company consequent
to amalgamation of erstwhile Maharashtra Weldaids Limited with the Company in 1994, the
details of the physical shares which remains unclaimed and transferred to the Unclaimed
Suspense Account and the reconciliation of the shares claimed by shareholders during the
year 2022-23 and the shares outstanding in the suspense account as on 31st
March, 2023 is given below:
Sl. |
Details |
No. of |
No. of |
No. |
|
shareholders |
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 1.4.2022 |
43 |
3,010 |
2. |
Number of shareholders who
approached the Company during the year |
2 |
200 |
3. |
Number of shareholders to
whom shares were transferred from the Unclaimed Suspense Account during the year |
2 |
200 |
4. |
Number of shares transferred
to Investor Education and Protection Fund |
2 |
150 |
5. |
Aggregate number of
shareholders and the outstanding shares lying in the unclaimed Suspense Account at the end
of the year i.e. 31.3.2023 |
39 |
2,660 |
39 shareholders holding 2,660 equity shares constituting about 0.017%
of shares have not made their claim from the Company on the shares outstanding in the
Unclaimed Suspense Account of ESAB India Limited. The voting rights for these shares shall
remain frozen until these are claimed by the rightful owners.
35. CORPORATE GOVERNANCE
In terms of Chapter IV Regulation 15 Read with Schedule II of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 a Corporate Governance
Report is made part of this Annual report.
A certificate from the Secretarial Auditors of the Company regarding
compliance of the conditions stipulated for Corporate Governance as required under Clause
E of Schedule V read 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 Company pursuant 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 to the Code of Conduct by the Members of the Board and by the Members of the
Senior Management Personnel of the Company is also attached to this Report.
36. POLICY ON PREVENTION OF SEXUAL
HARASSMENT OF WOMEN AT WORKPLACE ACT
The Company has also adopted the mandatory policy on Sexual Harassment
of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Employees have
been sensitized on the provisions of this enactment and the Company has also constituted
an Internal Complaints Committee with effect from 30th October 2013 to deal with
complaints, if any, under the said Act. The Committee also has an independent external NGO
representative as one of its members. The Committee meets as and when requirement arises.
The Company believes in providing safe working place for the Women in the Company and
adequate protection are given for them to carry out their duties without fear or favour.
All the employees of the Company as a part of induction are sensitized about the
provisions of the said Act.
As required under Section 21 of Chapter VIII of the said Act, the
Committee has submitted its annual report in the prescribed format to the designated
authority within the stipulated period.
37. SECRETARIAL STANDARDS
As on 31st March 2023 all the applicable Secretarial
Standards which have been notified have been complied with by the Company.
A certificate of compliances issued by the Secretarial Auditor M/s. V
Mahesh & Associates dated 17th May 2023 is enclosed as Annexure - 2
and forms part of this Report.
38. ISSUE OF SHARES
The Company during the year under review has not issued any SWEAT
equity shares or shares with differential rights or under Employee stock option scheme nor
did it buy back any of its shares.
39. ACKNOWLEDGEMENTS
Your Directors' place on record their appreciation for the confidence
reposed and continued support extended by its customers, suppliers and shareholders.
Your Board would like to place on record, its sincere appreciation to
the employees for having played a very significant part in the Company's operations till
date and more so in a difficult year that we went through.
For and on behalf of the Board of Directors
|
Kevin Johnson |
Chennai |
Chairman |
25 May, 2023 |
|
|