Engineers India

Dear Shareholders,
 
 On behalf of the Board of Directors, it is my pleasure and also a
 privilege to extend a warm welcome to all of you at the 38th Annual
 General Meeting of Engineers India Limited. I am sure that all of you
 have received the Directors Report and Audited Statement of Accounts
 for the year ended March 2003 and with your permission, AI take them as
 read.
 
 Let me begin by briefly reporting to you on the economic & business
 environment in 2002-2003 and the performance of your company during
 this fiscal year.
 
 ECONOMIC ENVIRONMENT
 
 The Indian economy witnessed subdued growth of 4.3 per cent during
 2002-2003, suffering a sharp decline from 5.7 per cent in the previous
 year. Growth slowed down mainly due to the impact of poor, imbalanced
 and below and normal monsoon on the agriculture sector which recorded a
 decline of 3.2 per cent against a growth of 5.7 per cent in the
 previous year. However, the industrial and services sectors posted
 growth rates of 6.1 per cent and 7.1 per cent respect5ively. Industrial
 recovery was primarily driven by the manufacturing sector. This was
 accompanied by moderate inflation, orderly currency market and
 comfortable foreign exchange reserves.
 
 The global economy during 2002-2003 continued to witness sluggish
 growth as in the previous year largely due to the run-up to the Iraq
 war along with the near-global geopolitical unrest and significantly
 difficult economic conditions in the developing countries.
 
 The Indian economy has displayed considerable strength and resilience
 and the prospects for sustained growth are favorable.
 
 CORE BUSINESS SCENARIO
 
 For the national oil and gas industry, the year 2002-2003 was the first
 year of operation in the near fully deregulated environment. Initial
 uncertainties in the MDPM (Market Determined Price Mechanism) scenario
 couled with foreseen competition in the oil industry resulted decline
 in investment in the infrastructure.
 
 Globally, volatility continued to be the main feature of the
 international oil markets. In the lead-up to the hostilities in Iraq,
 the war premium that was added to the price of crude oil enabled
 refiners, who had been through an extra-ordinarily tough time in 2002,
 to begin to recoup some of their returns. The start of 2003 has seen
 refining margins rise and it is expected that downstream sector
 investments would be initiated which were near insignificant last year.
 
 CORPORATE PERFORMANCE
 
 In spite of the qualitative shifts in the domestic business scenario of
 your company and the difficult situation in the global oil industry,
 your Company posted a sterling performance during 2002-2003
 demonstrating its capability and preparedness to meet the challenges
 posed by the changing business scenario both in the domestic and
 international markets.
 
 Financial Highlights
 
 Your company posted a record turnover of Rs.8183 million during
 2002-2003 which included foreign exchange earnings of about Rs.500
 million. While this is an impressive growth of 52 per cent over last
 year's turnover of Rs.5370 million, the operating profit (net of other
 income) also increased significantly to Rs.702 million from Rs.425
 million in 2001-2002. The Earnings Per Share of your Company was a
 robust Rs.11.43 during the reporting year. The Directors have
 recommended a dividend of 40% of the paid up capital of the Company as
 on 31st March 2003.
 
 Business Secured
 
 In the fiscal year 2002-2003, your Company booked new orders worth
 Rs.7480 million. This included Rs.4074 million of order received from
 projects to be executed on Lump sum Tumkey basis. The important
 assignments secured by your Company include IOCL's Panipat Refinery
 Expansion project, the green Fuel & Emission Control project, the Green
 Fuel & Emission Control project of HPCL and several
 revamp/modification/modernization works share in the refinery business
 for EPC work with the award of the turnkey contract for N11 & N12 Well
 Platforms, Submarine Pipelines and Platform Modification Project from
 ONGC. This is considered a major achievement for your Company as it
 will help in undertaking turnkey execution of offshore platform jobs in
 the coming years.
 
 Other salient assignments secured by your Company during the year
 include Dahej-Vijaypur Pipeline project and the expansion of the
 Petrochemical Complex at Pata of GAIL, the CNG Expansion Programme
 (Phase-III) of IGL, etc.
 
 Overseas, your Company was successful in securing a number of
 consultancy assignments including modernization of Instrumentation in
 MAA Refinery Kuwait; FEED for Ras Laffan Topsides Berths, Qatar,
 Engineering Package for new Liquid Sulphur Sump of GASCO and Value
 Engineering for BUNDUQ in Abu Dhabi and Managing Contractors Services
 for a Olenfin's Complex and Aromatics Project in Iran.
 
 Quality Management System
 
 The quality management system in respect of our services have been
 assessed and upgraded to ISO 9001-2000 version by our certification
 agency IRQS. Thus, the company has in place adequate system of internal
 control and documented procedures covering all financial and technical
 functions.
 
 Significant Initiatives
 
 To overcome the challenging environment, the company has launched
 several focused initiatives such as cost reduction, resource
 optimization, extensive use of information technology and new HR
 processes. All these initiatives have contributed to sharpening the
 competitive strengths of the Company.
 
 Human Resources
 
 EIL has taken major initiatives in Human Resources Development as
 Manpower is the main asset of the Company. Manpower rationalization
 through VRS coupled with Multi-skilling training has helped EIL to
 improve the productivity substantially.
 
 Overseas Business
 
 Company has given thrust to secure more overseas assignments
 particularly in Iran, Middle East, South East Asia, Algeria, Sudan,
 Etc. For this EIL has set up engineering offices in Abu Dhabi (U.A.E)
 and Doha (Qatar). Also Marketing Office in Australia has been opened.
 These efforts have resulted in major successes in securing important
 assignments.
 
 Engineering & Project Management
 
 To improve the operational efficiency of Engineering & Project
 Management, the core activity of your Company, the IT infrastructure
 both in terms of hardware & networking facility as well as connectivity
 was strengthened. This would enable your company to evolve and operate
 as 24/7 virtual organization in the coming years.
 
 Diversification
 
 Considering the large business potential in areas like highways &
 bridges, intelligent buildings, urban development, water resources,
 etc., your company has diversified into these areas. Our broad strategy
 has been to leverage existing core competency in engineering,
 construction and project management to secure in the areas.
 
 LSTK Jobs
 
 The company has successfully met the challenge posed by a growing
 preference in the oil& gas industry for implementing projects on Lumsum
 Turnkey mode of contracting and roughly 60% of its turnover during the
 year came from LSTK projects.
 
 Quality & Customer Focus
 
 Consequent to up gradation of Quality Management System to ISO
 9001-2000 version, Quality Policy has been revised to reflect
 management's commitment to comply with standard's requirement and
 continually improve the effectiveness of the Quality management System.
 Due to quality initiatives like training. Feed back, Monitoring of
 Customer's perception and continuous improvement in processes and
 products, increased productivity is achieved.
 
 Cost Control & Monitoring
 
 Effective cost reduction measures have been adopted including reduction
 of support staff through VRS, low cost outsourcing, better cost
 control, etc.
 
 FUTURE OUTLOOK
 
 While the Indian economy is expected to grow at a much higher rate in
 the current t fiscal (2003-2004) structural and working environment
 changes are expected to continue in 2003-2004 and beyond in the
 national oil and gas sector. With installed petroleum refining capacity
 in excess of domestic demand of petroleum products in India, new
 investments, driven by fuel specification up gradation and brown field
 revamp for enhancing operational efficiency and refining margins will
 continue in the near future.
 
 With the bagging of the N11/12 offshore platform your Company has
 further strengthened its position as a LSTK contractor, your company is
 now better positioned to secure more business as EPC contractor and
 engineering consultant for providing services for the massive Mumbai
 High Redevelopment Project of ONGC.
 
 In the gas segment of the oil and gas industry, there is an emerging
 trend of increasing displacement of liquid fuels by natural gas, as it
 is more environmentally benign. The share of natural gas in the
 country's total energy consumption is projected to increase to 14 per
 cent by 2010-2011. Growth in the natural gas industry, interalia,
 implies organizing gas industry, interalia, implies organizing gas
 supplier, development of pipeline networks, strorage and
 regassificaiton facilities. This along with the proposed development of
 a National Gas Grid and transportation of regassifed LNG to end use
 consumers offers new business opportunities to your company from
 national and global major companies.
 
 Overseas, while your company has expanded operations to South-East Asia
 and is also exploring opportunities in Africa and Australia, the
 principal share of business emanates from the Middle east. A large
 number of projects in the hydrocarbon sector are planned in Iran and
 project opportunities are likely to materialize consequent to the
 political stabilization in Iraq.
 
 ACKNOWLEDGEMENTS
 
 In conclusion, I would like to thank the Government of India in general
 and the Ministry of Petroleum and Natural Gas, in particular, for their
 continued support and guidance extended to your company. All the same
 time your company has also gained considerably from the professional
 advice of my eminent colleagues on the Board of Directors. I am indeed
 grateful to them for their continued advice and counsel.
 
 Over and above, we Arbitrator grateful to you, our shareholders, for
 the trust you have reposed in us. I must also place on record my
 sincere thanks to all customers and associates, vendors and contractors
 within the country and abroad for their continued support without which
 this performance of your company could not have been achieved.
 
 Finally, I wish to place on record deep appreciation for the valuable
 services and cooperation extended by all the employees and am confident
 that they will continue to contribute their best towards achieving
 still better performance of your company in the coming years.
 
 Thank you, Ladies and Gentlemen, and my best wishes to all of you.
 
 M.K. Dalal
 
 Chairman & Managing Director