GICS Industry : Machinery l Sub Industry : Industrial Machinery l Website : www.adorwelding.

com

Ador Welding Ltd.

Key Stock Indicators

NSE Ticker : ADORWELD CMP (as on 10 Dec 2010—Rs/share): 191.8 Shares outstanding (mn) : 13.6
Bloomberg Ticker : AWL:IN 52-week range up to 10 Dec 2010 (Rs)(H/L): 233.65/166.85 Free Float (%) : 43.6
Face value / Share: 10.0 Market Cap as on 10 Dec 2010 (Rs mn): 2,608 Average daily volumes (12 months) : 85,667
Div. Yield (%): 3.0 Enterprise Value as on 10 Nov 2010 (Rs mn): 2,478 Beta (2 year) : 0.86
Div. Yield (%): 0.0

Ador Welding Limited (AWL), previously known as Advani Oerlikon Ltd, was incorporated on
October 22, 1951. The company is primarily engaged in the manufacturing of welding products, Key Financial Indicators
power equipment and providing technologies & services. The company has five manufacturing Mar-08 Mar-09 Mar-10
plants for the production and supply of welding and cutting consumables, power sources and
accessories. Revenue (Rs mn) 2,710.9 2,272.7 2,674.0
EBITDA ma rgins (%) 16.9 15.5 17.5
KEY HIGHLIGHTS PAT (Rs mn) 225.6 121.6 256.0
PAT ma rgins (%) 8.3 5.4 9.6
AWL diversifying into newer areas
Gea ring (x) - - -
AWL is working on many new projects in the areas of nuclear power, more efficient and reliable EPS (Rs /s ha re) 16.6 8.9 18.8
steel construction for the infrastructure sector and modern production lines for shipyards and PE (x) 8.4 9.0 10.2
offshore fabrication yards. This is in-line with its strategy to widen its product portfolio and
improve its earnings potential.
P/BV (x) 1.5 0.8 1.8
RoCE (%) 27.0 17.1 26.2
Decline in export due to financial crisis in gulf countries RoE (%) 18.7 9.5 18.4
EV/EBITDA (x) 4.0 2.9 5.3
Overall exports contributed around 9% of its revenue for FY10. AWL exports mainly to oil producing
n.m. : Not meaningful
Gulf countries like UAE, OMAN, Saudi Arabia, Qatar, Bahrain and Kuwait. During FY10, AWL’s
export declined by 24% on account of gulf financial crisis.
Shareholding (As on September 30, 2010)
KEY RISKS
DII Others
11% 33%
• Intensifying competition in its areas of operation especially from international players.
FII
• Fluctuations in steel prices and currency exchange rates. 0%

Stock Performances vis-à-vis market

Returns (%)
YTD 1-m 3-m 12-m
ADORWELD 10 -15 -17 -8
NIFTY 9 -8 2 13 Promoters
56%
Note:
1) YTD returns are since April 1, 2010 to Dec 10, 2010. Indexed price chart
2) 1-m, 3-m and 12-m returns are up to Dec 10, 2010.
(index) ('000)
140 3000
120 2500
100
2000
80
1500
60
1000
40
20 500

0 0
Jul-10
Feb-10

Sep-10
Jan-10
Dec-09

Jun-10
May-10

Aug-10
Apr-10

Oct-10
Nov-10
Mar-10

Volumes (RHS) ADORWELD NIFTY

CRISIL COMPANY REPORT | 1

 Ador Welding Ltd.
BACKGROUND

AWL, previously known as Advani Oerlikon Ltd, was incorporated on October 22, 1951, by J B Advani & Co and the Oerlikon-Buhrle group, Switzerland. The company is
engaged in the manufacturing of welding products, power equipment and providing technologies & services.

AWL is equipped with five manufacturing plants for the production and supply of welding and cutting consumables, power sources and accessories and having wide range
of sales and distribution network, the company is one of the major players in the Indian welding industry.

COMPETITIVE POSITION

Peer Comparison
Ador Welding Ltd. Esab India Ltd. H E G Ltd.
Mar-10 Dec-09 Mar-10
Revenue (Rs mn) 2,674.0 4,251.0 11,332.6
EBITDA ma rgins (%) 17.5 24.6 30.6
PAT (Rs mn) 256.0 661.8 1,710.6
PAT ma rgins (%) 9.6 15.6 15.1
Gea ring (x) - 0.0 0.9
EPS (Rs /s ha re) 18.8 40.1 33.7
PE (x) 10.2 13.5 7.5
P/BV (x) 1.8 4.2 1.4
RoCE (%) 26.2 58.6 18.5
RoE (%) 18.4 40.6 20.6
EV/EBITDA (x) 5.3 7.3 5.2
n.m: Not meaningful

FINANCIAL PROFILE Key Financial Indicators

Robust domestic demand improves top-line and profitability in FY10 Units Mar-08 Mar-09 Mar-10
Revenue Rs mi l l i on 2,710.9 2,272.7 2,674.0
Top line of the company rose by 17% in FY10 Y-o-Y due to increase in domestic
business from its two segments – Consumables, Equipments and project EBITDA ma rgi ns Per cent 16.9 15.5 17.5
engineering. The improvement in demand scenario also caused an increase in the PAT Rs mi l l i on 225.6 121.6 256.0
EBITDA margins of AWL rising from 15.5 % in FY09 to 17.5 % in FY10.
PAT margi ns Per cent 8.3 5.4 9.6
Revenue growth Per cent -2.6 -16.2 17.7
EBITDA growth Per cent -0.6 -23.3 32.9
PAT growth Per cent -29.3 -46.1 110.5
Geari ng Ti mes 0.0 0.0 0.0
RoCE Per cent 27.0 17.1 26.2
RoE Per cent 18.7 9.5 18.4
INDUSTRY PROFILE

Construction (erection and commissioning)

The construction (erection and commissioning) sector comprises infrastructure and industrial construction. Infrastructure construction incorporates design and
construction of roads, bridges, canals, dams, ports and airports, while industrial construction includes construction activities in key industries such as automobiles, textiles,
petrochemicals, and oil and gas. In construction (erection and commissioning) sector, demand is determined by expected investments in the sector. The increase in
investments has been driven primarily by the roads and power sector, followed by irrigation and urban infrastructure.

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Ador Welding Ltd.
ANNUAL RESULTS

Income Statement Balance sheet

(Rs million ) Mar-08 Mar-09 Mar-10 (Rs million ) Mar-08 Mar-09 Mar-10
Net Sales 2,693.9 2,255.3 2,659.1 Equity share capital 136.0 136.0 136.0
Operating Income 2,710.9 2,272.7 2,674.0 Reserves and surplus 1,120.0 1,178.0 1,338.8
Tangible net worth 1,256.0 1,313.9 1,474.8
EBITDA 459.4 352.2 468.0 Deferred tax liablity:|asset| -2.8 12.2 9.4
EBITDA Margin 16.9 15.5 17.5 Long-term debt 0.0 0.0 0.0
Short-term-debt 0.0 0.0 0.0
Depreciation 119.2 132.9 131.2 Total debt 0.0 0.0 0.0
Interest 28.8 9.0 8.1 Current liabilities 224.4 264.8 235.0
Other Income 13.3 5.5 32.5 Total provisions 175.2 104.3 132.7
Total liabilities 1,652.8 1,695.2 1,851.9
PBT 310.6 214.2 361.6 Gross block 1,709.9 1,807.5 1,929.0
PAT 225.6 121.6 256.0 Net fixed assets 849.7 923.3 822.5
Investments 40.0 0.0 110.7
PAT Margin 8.3 5.4 9.6 Current assets 763.1 771.9 918.5
Receivables 229.6 130.7 262.7
No. of shares (Mn No.) 13.6 13.6 13.6 Inventories 336.2 358.1 379.9
Cash 64.0 74.8 130.2
Earnings per share (EPS) 16.6 8.9 18.8 Total assets 1,652.8 1,695.2 1,851.7

Cash flow Ratio

(Rs million ) Mar-08 Mar-09 Mar-10 Mar-08 Mar-09 Mar-10
Pre-tax profit 324.7 215.8 361.2 Revenue growth (%) -2.6 -16.2 17.7
Total tax paid -87.6 -77.5 -108.5 EBITDA growth(%) -0.6 -23.3 32.9
Depreciation 119.2 132.9 131.2 PAT growth(%) -29.3 -46.1 110.5
Change in working capital -116.3 -28.6 -92.5
EBITDA margins(%) 16.9 15.5 17.5
Cash flow from operating activities 240.0 242.6 291.4 Tax rate (%) 28.2 36.2 30.0
Capital Expenditure -262.4 -206.5 -30.4 PAT margins (%) 8.3 5.4 9.6
Investments and others 183.0 40.0 -110.7
Dividend payout (%) 48.2 44.7 31.9
Cash flow from investing activities -79.4 -166.5 -141.1 Return on Equity (%) 18.7 9.5 18.4
Equity raised/(repaid) 0.0 0.0 0.0 Return on capital employed (%) 27.0 17.1 26.2
Debt raised/(repaid) 0.0 0.0 0.0
Dividend (incl. tax) -127.3 -63.6 -95.1 Gearing (x) 0.0 0.0 0.0
Others (incl extraordinaries) -14.0 -1.6 0.4 Interest coverage (x) 15.9 39.0 57.7
Debt/EBITDA (x) 0.0 0.0 0.0
Cash flow from financing activities -141.3 -65.2 -94.7
Change in cash position 19.3 10.9 55.6 Asset turnover (x) 1.7 1.3 1.4
Opening cash 44.8 64.0 74.8 Current ratio (x) 1.9 2.1 2.8
Closing cash 64.0 74.8 130.2 Gross current assets (days) 99 117 124
n.m : Not meaningful;

QUARTERLY RESULTS

Profit and loss account

(Rs million) Sep-10 % of Rev Sep-09 % of Rev Jun-10 % of Rev Sep-10 % of Rev Sep-09 % of Rev
No of Months 3 3 3 6 6
Revenue 7,606.3 100.0 6,434.3 100.0 5,854.3 100.0 13,460.6 100.0 11,351.5 100.0
EBITDA 1,434.5 18.9 1,178.0 18.3 922.0 15.7 2,356.5 17.5 1,940.5 17.1
Interes t 13.8 0.2 12.8 0.2 12.1 0.2 25.9 0.2 27.3 0.2
Depreci a tion 310.4 4.1 309.7 4.8 292.4 5.0 602.8 4.5 613.0 5.4
PBT 1,110.3 14.6 855.5 13.3 617.5 10.5 1,727.8 12.8 1,300.3 11.5
PAT 791.6 10.4 605.7 9.4 449.1 7.7 1,240.7 9.2 916.2 8.1

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Ador Welding Ltd.
FOCUS CHARTS & TABLES

Rs mn Quarterly sales & y-o-y growth Per cent

Rs mn Quarterly PAT & y-o-y growth Per cent
1,000 30 120 7,000
900 25
100 6,000
800 20
700 15 5,000
600 10 80 4,000
500 5 60 3,000
400 0
40 2,000
300 -5
200 -10 1,000
20 0
100 -15
0 -20 0 -1,000

Dec-07

Jun-08
Sep-08
Dec-08

Jun-09
Sep-09
Dec-09

Jun-10
Sep-10
Mar-08

Mar-09

Mar-10
Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

Jun-10
Mar-08

Sep-08

Mar-09

Sep-09

Mar-10

Sep-10
Sales Sales growth y-o-y (RHS) Net Profit Net profit growth y-o-y (RHS)

Rs/share EPS Per cent Movement in operating and net margins

9 25
8
7 20
6
15
5
4 10
3
2 5
1
0
0

Sep-08

Sep-09

Sep-10
Dec-07

Dec-08

Dec-09
Jun-08

Jun-09

Jun-10
Mar-08

Mar-09

Mar-10
Dec-07

Dec-08

Dec-09
Jun-08

Jun-09

Jun-10
Sep-08

Sep-09

Sep-10
Mar-08

Mar-09

Mar-10

OPM NPM

Shareholding Pattern (Per cent) Board of Directors

Dec 2009 Mar 2010 Jun 2010 Sep 2010 Director Name Designation
Promoter 56.3 56.3 56.3 56.4 Aruna Bha gwa ns i ngh Adva ni (Ms .) Executive Cha i rpers on
FII 0.2 0.2 0.2 0.2 Vippen Sa reen (Mr.) Non-Executive Director
DII 10.9 10.7 11.1 11.0 Ra ma n Kuma r Togna tta (Mr.) Ma na ging Di rector
Others 32.6 32.8 32.4 32.4 Ani l Ha ri s h (Mr.) Non-Executive Director
Deep As hda La l va ni (Mr.) Promoter-Director
Ma noj Kuma r Ma da ngopa l Non-Executive Director
Adi tya Ta ra cha nd Ma l ka ni (Mr.) Promoter-Director
Ra vi n Ajit Mi rcha nda ni (Mr.) Promoter-Director
Ninotchka Ma lka ni Na gpa l (Ms .) Director
Ra kes h Na ra in Sa pru (Mr.) Non-Executive Director
Kunwa r Digvija y Ma hendra Non-Executive Director
Singh (Mr.)
Piyus h Ka mles h Kuma r Gupta (Mr.) Non-Executive Director

Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).

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CRISIL COMPANY REPORT | 4