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Bharat Seats Ltd.

BSE: 523229 Sector: Auto
NSE: N.A. ISIN Code: INE415D01024
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VOLUME 21185
52-Week high 264.00
52-Week low 50.30
P/E 33.94
Mkt Cap.(Rs cr) 732
Buy Price 233.50
Buy Qty 188.00
Sell Price 0.00
Sell Qty 0.00
OPEN 234.00
CLOSE 232.60
VOLUME 21185
52-Week high 264.00
52-Week low 50.30
P/E 33.94
Mkt Cap.(Rs cr) 732
Buy Price 233.50
Buy Qty 188.00
Sell Price 0.00
Sell Qty 0.00

Bharat Seats Ltd. (BHARATSEATS) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the 30th Annual Report together with theAudited Accounts for the year ended 31st March 2017.

FINANCIAL RESULTS Rupees in lakhs
PARTICULARS 2016-2017 2015-2016
GROSS REVENUE FROM OPERATIONS 93260.18 79313.69
OTHER INCOME 207.95 219.88
PROFIT BEFORE FINANCIAL CHARGES & DEPRECIATION 3839.45 3175.44
LESS: FINANCE COSTS 447.12 537.96
PROFIT BEFORE DEPRECIATION & TAXATION 3392.33 2637.48
LESS:
A) DEPRECIATION 1710.34 1653.45
B) PROVISION FOR TAXATION
- CURRENT TAX(NET OF MAT CREDIT ENTITLEMENT) 352.15 231.30
- DEFERRED TAX 112.53 31.13
NET PROFIT AFTER TAX 1217.31 721.60
ADD: OTHER COMPREHENSIVE INCOME NET OF TAXES (7.59) (6.04)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1209.72 715.56
TRANSFER TO GENERAL RESERVE - -
BALANCE CARRIED FORWARD TO BALANCE SHEET 1217.31 721.60

FINANCIAL HIGHLIGHTS AND OPERATIONS

The gross revenue from operations and other income for the financial year under reviewwas Rs. 93468.13 lakhs as against Rs 79533.57 lakhs for the previous financial yeari.e. an increase by 17.52%.The profit before finance costs depreciation and taxation isRs. 3839.45 lakhs for the financial year under review as against Rs 3175.44 lakhs for theprevious financial year i.e. increase by 21%. The profit after tax increased to Rs.1217.31 lakhs as compared to Rs. 721.60 lakhs for the previous financial year i.e.increase by 69%. Total comprehensive income for the year increased to Rs.1209.72 lakhs ascompared to Rs.715.56 lakhs for the previous financial year i.e. increase by 69%. This ismainly due to increase in volumes and other cost saving measures taken by the Company.

DIVIDEND

Your Directors are pleased to recommend for the approval of the shareholders adividend of 45% (Re 0.90/- per equity share) for the financial year ended31.03.2017.

AWARDS AND RECOGNITION

Your Company has received the following awards :

1. Certificate for Yield Improvement

2. Shield for Overall Performance at the Vendor Conference of Maruti Suzuki IndiaLimited held in Singapore recently.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as stipulated under Regulation 34 of the SEBI(Listing Obligations And Disclosure Requirements) Regulations 2015 is presented in aseparate section forming part of the Annual Report.

CREDIT RATING

ICRA has assigned its Short Term credit rating of A2 and Long term Credit rating ofBBB indicating the outlook on the long term rating as "Stable".

RELATED PARTY TRANSACTIONS

All contracts/ transactions entered into by the Company during the financial year withrelated parties were in the ordinary course of business and on arm's length basis. TheRelated Party Transactions Policy as approved by the Board is uploaded on the Company'swebsite at the weblink:http://www.bharatseats.com/investors/ Policy on Related PartyTransactions.

The information relating to particulars of contracts or arrangements with relatedparties referred to in sub section (1) of section 188 of the Companies Act 2013 in FormAOC-2 is annexed as Annexure I forming part of this Report.

DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATES COMPANIES

None of the Companies has become or ceased to be become Subsidiary Joint Venture orAssociate Company during 2016-17.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3)( m) of the Companies Act 2013 readwith Rule 8(3) of Companies(Accounts) Rules 2014 is annexed hereto as Annexure IIforming part of this Report.

BOARD ANNUAL EVALUATION

In compliance with the Companies Act 2013 and SEBI (Listing Obligations And DisclosureRequirements) Regulations 2015 and guidance note dt. 5th January 2017 performanceevaluation was carried out of the Board its Committees and individual Directorsincluding the Chairman of the Board.

Nomination & Remuneration Committee reviewed the evaluation criteria for the Boardits Committees Executive and non-executive Directors and Chairman of the Companyconsidering qualification expertise attributes and various parameters based on whichevaluation of the Board has been carried out by the Company.

A separate meeting of the independent directors was convened which reviewed theperformance of the Board(as a whole) Committees of the Board the non- independentdirectors and the Chairman.

The evaluation of Independent Directors was carried out by the entire Board.

This exercise was carried out through structured evaluation process covering variousaspects of the Board such as composition of the Board/ Committees experiencecompetencies performance of specific duties etc. Separate exercise was carried out toevaluate the performance of individual directors including Board Chairman who wereevaluated on the parameters such as attendance contribution at the meeting independentjudgment etc. and was found to be satisfactory.

INDIAN ACCOUNTING STANDARDS (IND-AS)

Your Company has adopted Indian Accounting Standards(Ind-AS) with effect from 1-04-2016pursuant to Ministry of Corporate Affairs Notification of theCompanies(Indian AccountingStandards) Rules 2016.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

DIRECTORS:

During the year under review on the recommendation of the Nomination and RemunerationCommittee and as recommended by the Board Mr. Rohit Relan was re appointed as ManagingDirector of the Company for a period of five years w.e.f. 1.10.16 to 30.09.2021 intheAnnual General meeting held on 20th July 2016. During the year Mr. Narinder DevRelan Founder Chairman of your Company passed away on 2nd June 2016 leaving behind hisrich legacy and values. His principles will continue to inspire us for the future growthof the Company. After his sad demise Mr. Rohit Relan was unanimously appointed asChairman in the Board meeting held on 20th July 2016. On the recommendation of theNomination and Remuneration Committee and as recommended by the Board Mrs. Sharda Relan(DIN: 00252181) was appointed as Additional Director w.e.f. 20th July 2016 who shallhold office upto the date of the ensuing Annual general meeting. The Company has receivedrequisite notice in writing from the member proposing the candidature of Mrs. Sharda Relanfor the office of Director. The Board recommend the appointment of Mrs. Sharda Relan.

In accordance with the Articles of Association of the Company and relevant provisionsof the Companies Act 2013 Mr. Ajay Relan (DIN:00257584) and Mr. Venkat RamanChalla (DIN:07093663) shall retire at the ensuing Annual General Meeting and beingeligible have offered themselves for re-appointment.

The Board recommends their re-appointment.

During the year Mr. Yoichi Kojima Nominee Director - Suzuki Motor Corporation Japanresigned w.e.f. close of business hours on 20th July 2016. The Board placed on record itsappreciation for the valuable services rendered by Mr. Kojima during his association withyour Company. During the year Mr. Akio Sano Nominee Director - Suzuki Motor CorporationJapan was appointed as an Additional Director w.e.f. 21st July 2016. He resigned w.e.f.close of business hours on 19th January 2017. The Board placed on record its appreciationfor the valuable services rendered by Mr. Akio Sano during his association with yourCompany.

Mr. Toshiya Miki Nominee Director - Suzuki Motor Corporation Japan was appointed asan Additional Director w.e.f. 20th January 2017 who shall hold office upto the date ofthe ensuing Annual general meeting. The Company has received requisite notice in writingfrom the member proposing the candidature of Mr. Toshiya Miki for the office of Director.The Board recommend the appointment of Mr. Toshiya Miki.

The Company has received declaration from all the Independent Directors confirming thatthey meet the criteria of Independence as prescribed under Section 149(6) of the CompaniesAct 2013 read with the schedules and rules made thereunder as well as SEBI(ListingObligations And Disclosure Requirements) Regulations 2015.

KEY MANAGERIAL PERSONNEL(KMP):

Mr. Rohit Relan Chairman cum Managing Director Mr. T. J. Chacko Director(Operations) Mr. Sanjeev Kumar CFO and Ms. Ritu Bakshi Company Secretary continue tobe the KMPs of the Company in terms of Section 203 of the Companies Act 2013 read withthe Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014.

Mr. T. J. Chacko Wholetime Director designated as Director (Operations) was appointedfrom 1.12.2014 to 30.11.17. On the recommendation of the Nomination and RemunerationCommittee the Board in its meeting held on 18th July 2017 recommends the reappointment of Mr. Chacko as a wholetime Director for another period of two years from1.12.2017 to 30.11.2019. A brief resume and other details as required under the Act andListing Regulations are provided in the Notice of the 30th Annual General meeting of theCompany.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements as set out by the Regulators/ applicablelaws.

The report on Corporate Governance as stipulated under SEBI (Listing Obligations AndDisclosure Requirements) Regulations 2015 been included in this Annual Report as separatesection alongwith the Auditors' Certificate.

DETAILS OF DEPOSIT AS PROVIDED UNDER CHAPTER V OF THE COMPANIES ACT 2013

Your Company has not accepted any deposits under Chapter V of the Companies Act 2013.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGISTRARS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE

None

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIALSTATEMENTS

The Directors had laid down internal financial controls to be followed by the Companyand such policies and procedures adopted by the Company for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information. The Audit Committee evaluates the internal financialcontrol system periodically.

LISTING

The Equity shares of the Company are listed at Bombay Stock Exchange. The Company haspaid listing fees due to the Stock Exchange.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy recommended by the Audit Committee and approved by the Board isuploaded on the Company's website at the weblink:http://www.bharatseats.com/investors/Corporate Social responsibility Policy The CorporateSocial Responsibility Report as provided in Companies(Corporate Social ResponsibilityPolicy) Rules 2014 is annexed hereto as Annexure III.

EXTRACT OF ANNUAL RETURN

Pursuant to sub section (3) of Section 92 and Sub section (3)(a) of Section 134 of theCompanies Act 2013 read with Rule 12 of Companies(Management And Administration)Rules2014 the extract of Annual return as on 31st March 2017 is annexed hereto as AnnexureIV.

MEETINGS OF THE BOARD

Four meetings of the Board of Directors were held during the financial year. Forfurther details please refer the Report on Corporate Governance to this Annual Report.

AUDIT COMMITTEE

The Audit Committee comprises of Independent Non-executive Directors namely Mr. G. N.Mehra ChairmanMr. P. K. Lahiri and Mr. Ravindra Gupta.

Powers and Role of the Audit Committee are included in the Corporate Governance Report.All the recommendations made by the Audit Committee were accepted by the Board.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors confirm that :

(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed and no material departures have been made from the same.

(b) Appropriate accounting policies have been selected and applied consistently andjudgments and estimates made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2017 and of the Profit orLoss of the Company for the year ending 31st March 2017;

(c) Proper and maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (d) The annual accounts have beenprepared on a going concern basis.

(e) Internal financial controls to be followed by the Company have been laid down andthat such internal financial controls are adequate and were operating effectively.

(f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF EMPLOYEES

Disclosure as required under Sub Rule 2 of Rule 5 of Companies (Appointment AndRemuneration of Managerial Personnel) Rules 2014 is annexed hereto as Annexure V.

The ratio of the remuneration of each Director to the median employees' remunerationand others detail in terms of Sub Section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as part of the report to Annexure VI.

COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FORDETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR AND OTHERMATTERS AS PROVIDED UNDER SUB SECTION(3) OF SECTION OF THE COMPANIES ACT 2013

The Company has formulated a Nomination And Remuneration Policy which is annexed aspart of the report as Annexure VII. Other details are provided in Corporate GovernanceReport.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186.

None

RISK MANAGEMENT

The Company has in place the Risk Management Policy to identify and assess the key riskareas and monitor the same.

The Board periodically reviews the risks and suggests steps to be taken to control therisks.

VIGIL MECHANISM care has been taken for the The Company has in place an establishedWhistle Blower Policy. The Audit Committee and the Board periodically reviews the policyand its implementation. The purpose of this policy s to provide a framework to promoteresponsible whistle blowing by employees. The Whistle Blower Policy may be accessed at theCompany's website at weblink:http://www. bharatseats. com/investors/policies/WhistleBlower Policy.pdf

HUMAN RESOURCES

Our relations with the employees are very cordial. Your Directors would like to placeon record their appreciation of the commitment and efficient services rendered by allemployees of the Company without whose wholehearted efforts the overall satisfactoryperformance of the Company would not have been possible.

AUDITORS AND AUDITORS' REPORT

(a) Statutory Auditors

As per Section 139 of the Companies Act 2013 read with the Companies(Audit andAuditors) Rules 2014 the term of M/s S.S. Kothari Mehta & Co. Chartered Accountants(Firm Registration No. 000756N) expires at the conclusion of the ensuing Annual GeneralMeeting of the Company.

TheBoardofDirectorsoftheCompanyattheirmeeting held on 18th July 2017 on therecommendation of the Audit Committee have made its recommendation for appointment of M/sS.R. Batliboi & Co. LLP Chartered Accountants as the Statutory Auditors of theCompany for a consecutive term of five years i.e from the conclusion of the 30th AnnualGeneral Meeting (AGM) till the conclusion of 35th AGM for approval of the members. Theabovesaid forms part of the Notice of the 30th Annual General meeting of the Company. TheCompany has received a written consent and a certificate from M/s S.R. Batliboi & Co.LLP Chartered Accountants (ICAI Firm Regn. No. 301003E/ E300005) that they satisfy thecriteria provided under section 141 of the Act and that the appointment if made shall bein accordance with the applicable provisions of the Act and the rules framed thereunder.The Report given by M/s S.S. Kothari Mehta & Co. Statutory Auditors on the financialstatement of the Company for the year ended 31st March 2017 is part of the Annual Report.There has been no qualification reservation or adverse remark or disclaimer in theirReport. During the year under review the Auditors had not reported any matter undersection 143(12) of the Act i.e. no detail is required to be disclosed under section134(3)(ca) of the Act.

M/s S.S. Kothari Mehta & Co. over many years have maintained the highest level ofgovernance ethical standards and quality in their audit. The Board place on record itsappreciation for the services rendered by M/s S.S. Kothari Mehta & Co. as theStatutory Auditors of the Company.

(b) Secretarial Auditors

The Secretarial Audit was carried out by Ms. Nidhi Chawla Practising Company Secretaryfor the Financial year: 2016-17. The report of Secretarial Auditor for the financial year2016-17 is annexed herewith marked as Annexure VIII to this Report.

The Secretarial Audit Report does not contain any qualification reservation adverseremark or disclaimer.

To conduct the Secretarial Audit of the Company for the Financial year: 2017-18 andonwards the Board in their meeting held on 18th July 2017 has appointed Mr R.S.Bhatia Company Secretary in Practice (Membership Number: FCS: 2599) as Secretarialauditors of the Company.

The Board place on record its appreciation for the services rendered by Ms. NidhiChawla as the Secretarial Auditors of the Company.

SAFETY

The Company has appointed a CFT team which meets at regular intervals and carries outinternal audit periodically to identify the safety shortcomings and remedial measures torectify the same. Regular guidance from MSIL advisor is sought to strengthen the fire andsafety measures Environment Health and Safety (E.H.S) Training is imparted to theemployees.

ENVIRONMENT

The Company is committed to the protection of environment and is not involved in anytype of activity hazardous to environment. It strictly adheres to the provisions ofenvironmental laws. There is no trade effluent generated by the Company which may causepollution.

Our Company is an ISO14001 certified company.

DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirementof the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act2013.

The following is the summary of the complaints received and disposed off during thefinancial year: 2016-17: a) No. of complaints received : NIL b) No. of Complaints disposedoff: NIL

ACKNOWLEDGEMENTS

The Directors place on record their deep appreciation of the valuable assistance andco-operation extended to the Company by Suzuki Motor Corporation Japan Maruti SuzukiIndia Ltd. Suzuki Motorcycle India Pvt. Ltd. Toyo Seat Co. Ltd. Japan Houwa Kogyo CoLtd Japan I NOAC Corporation Japan HDFC Bank Ltd. State Bank of India (afteracquisition of State Bank of Travancore by State Bank of India) Bank of Tokyo- MitsubishiUFJ Ltd. Yes Bank Ltd. IDBI Bank Ltd. various departments of Central Government andHaryana State Government. The directors convey their deep appreciation to each and everyemployee for her/ his efficient service commitment and collective team work.

Your support as shareholders is greatly valued.

Your Directors thank you and look forward to the future with confidence.

For and on behalf of the Board
BHARAT SEATS LIMITED
ROHIT RELAN
Chairman cum
Managing Director
Place : New Delhi
Dated : 18th July 2017

ANNEXURE I

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) ofthe Companies(Accounts) Rules 2014)

Form for disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arms length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm's lengthbasis: -NONE -

Name(s) of the related party Nature of relationship Nature of contracts/ arrangements/ transactions Duration of the contracts/ arrangements/ transactions Salient terms of the con- tracts or ar- rangements or transactions including the value if any Justification for entering into such contracts or arrange- ments or transactions Date(s) of approval by the Board Amount paid as advances if any: Date on which the special resolution was passed in general meeting as required under first proviso to section 188
NONE

2. Details of material contracts or arrangement or transactions at arm's lengthbasis:

Name(s) of the related party Nature of relationship Nature of contracts/ arrangements/ transactions Duration of the contracts/ arrangements/ transactions Salient terms of the contracts or arrangements or transactions including the value if any Date(s) of approval by the Board Amount paid as advances if any: Date on which the special resolution was passed in general meeting as required uder first proviso to section 188
1. Maruti Suzuki India Limited Associate Company Sale Purchase or Supply of Goods Materials Ongoing transactions Upto a max.of Rs.1200 crores per annum 15.04.2016 NIL 27.12.2014
2. Maruti Suzuki Associate Sale of tooling Ongoing Upto a max.of 15.04.2016 NIL 27.12.2014
India Limited Company job charges transactions Rs.50 crores per
annum
3. Maruti Suzuki India Limited Associate Company Payment of Lease Rent Ongoing transactions Upto a max.of Rs.50 lakhs per annum 15.04.2016 NIL 27.12.2014
4. Maruti Suzuki India Limited Associate Company Purchase of Electricity Ongoing transactions Upto a max.of Rs.30 crores per annum 15.04.2016 NIL 27.12.2014
5. Sharda Motor Industries Limited Associate Company Purchase of Goods materials Ongoing transactions Upto a max.of Rs.500 crores per annum 15.04.2016 NIL 27.12.2014
6. Sharda Motor Industries Limited Associate Company Purchase of Tooling job charges Ongoing transactions Upto a max.of Rs.100 crores per annum 15.04.2016 NIL 27.12.2014

ANNEXURE II

Information pursuant to Section 134(3) of the Companies Act 2013 read with Rule 8 ofthe Companies (Accounts) Rules 2014 forming part of Board of Directors' Report for theyear ended 31st March 2017.

(A) CONSERVATION OF ENERGY

(i) the steps taken or impact on conservation of energy

The following steps have been implemented to save electricity: Gurgaon Plant :

VFD type air compressor provided in place of normal air compressor Electricity Saving24908 KWH / Year.

Auto timers provided in carpet punching machine to switch off machine during Idle time.Saving 8200 KWH /Year.

Inverter type individual air conditioners provided in place of package Airconditioners saving 18396 kwh / Year.

Manesar Plant :

PU heat exchanger temperature reduced power saving 4800 KWH / Year. Auto timerprovided in air cooling system to switch off during lunch time Saving 4300 KWH / Year. PUline air leakage stopped in mould power saving 7200 KWH / Year. Air compressor pressuresetting reduced power saving 7200 KWH / Year. (ii) the steps taken by the Company forutilising alternate sources of energy.

We have installed 200 KW solar power plant at the Manesar plant.

This Solar plant is an alternate power source which will generate approx. 200000KWH/ year starting from 2017-18.

(iii) the capital investment on energy conservation equipments.

Capital investment on Solar Plant is approx. Rs 100.70 Lacs.

(B) TECHNOLOGY ABSORPTION I. RESEARCH AND DEVELOPMENT (R&D)

1) Specific areas in which Research & Development work is carried out by yourcompany is : a) in developing seating systems for sedan and SUV segment. b) Mouldedfloor carpets. c) Extrusion components for vehicle roof & windshield installation allfor Maruti Suzuki India Limited. d) In developing the Seats and the complete frameassembly for Suzuki Motorcycle India Private Ltd. Currently your R&D department hasslew of new products development & refresh models on the anvil for the launch incoming 3 years.

The R&D department has successfully launched refresh models for the seating systemand started its supply for previously launched premium segment model "S- Cross"with Iso-fix & Top Tether system ahead of new norms for child seat safety. The similarsystems as add-on are launched for Alto in export market.

Besides this R&D department has launched many minor programs termed as"Refresh" in current platforms like wagon R and Ertiga.

Besides seating business your R&D has launched seating system forflagshipmodel ofSuzuki Motorcycle's highest selling Suzuki Access and Extrusion parts for newly launchedIgnis from Maruti Suzuki.

Your R&D was awarded at the recent vendor meet of Suzuki motor-cycle for ValueAnalysis & Value Engineering project that was aimed at reducing the cost of process.

Your R&D has launched many initiatives for development of its People & productslike Virtual Product Test System (Computer Aided Engineering / CAE)- To make R&D teammore equipped with latest technology that will help design the product with confidenceyour R&D has invested in Virtual testing facility with latest software like LS Dyna& Hyper-mesh. This technology will help bolster the confidence of engineers doing theproduct design before huge investment is committed for making proto & doing physicaltesting. This will save money on tooling modifications post launch as well as ensurequality of the product before start of production.

Benchmarking activity - For finding better features in terms of design Process. Thiswill help improve the yield reduce quality rejection.

War Room review system - Mechanism of flawless new product launch with cross functionalteam. This will ensure smooth launch of new product.

Proto room - for validation & verification of design concept while the product isin development phase. This will ensure flawless launch of product.

Such initiatives will continue to bolster people development & deployment of newtechnologies.

On Technology transfer your company is engaging international players in the similarfield like Toyo seats from Japan for seating system design INOAC from Japan for extrusionproduct line Houwa Kogyo Co.Ltd. for carpet technology etc.

Technology Transfer -

New technologies that your R&D is working on is high tensile steel stamping &welding called Cold Metal Transfer (CMT). This new technology is being employed to reduceweight of product which in turn will improve fuel efficiency of the vehicle as a greeninitiative.

Experts from these reputed organisation frequently visit our production facility forKaizen initiatives R&D for people training etc.

All above initiatives demonstrates urge of your company to continue thrust on productinnovation.

2) Benefits derived as the result of above R&D

Your R&D has launched many initiatives for development of its People & productslike – Benchmarking activity – For finding better feature in terms of design Process / War Room Initiative for review mechanism of new product launch Proto room Forvalidation & verification of design concepts etc.

Such initiatives will continue to bolster people development deployment oftechnologies etc.

3) R&D FUTURE PLANS

To make R&D team more equipped with latest technologythat will help sign theproduct with confidenceyour R&D is investing in Virtual testing facility with latestsoftware like LS Dyna & Hypermesh. This technology will help bolster the confidence ofengineers doing the product design before huge investment is committed for making proto& doing physical testing. a) People development. b) Process based approach to launchnew products which will improve efficiency as wellof . quality of product c) Upgradationof facility to facilitate people to do innovation in product as well as productdevelopment processes.

For the initiative #a above your company is engaging international players in thesimilar field for technology transfer.

International players pioneer in this product line like Toyo Seats from Japan forseating system design INOAC from Japan for extrusion product line etc.

Experts from these reputed organisation frequently visit our production facility forKaizen initiatives R&D for people training etc.

For initiative # b stated above your company is engaged in putting a lot of thrust ondigitisation of product development process internal product quality standards partquality standards For initiative # c above your company is engaged in adding newfacilities Benchmarking room Proto room are the initiatives covered under that.

Test facility upgradation is another such activity underway for continuous improvement.

All above initiatives demonstrates urge of your company to continue thrust on productinnovation.

4) R&D EXPENDITURE

Your Company is undertaking Research and Development activities for development ofvarieties of new products tooling and testing fixtures as per the requirement of esteemedcustomer besides internal initiatives as stated which has resulted in capital & otherexpenditures as follows :

a) Capital Rs. 173.12 lakhs
b) Recurring Rs. 238.35 lakhs
c) Total Rs. 411.47 lakhs
d) Total R&D expenditure as a percentage of total turnover 0.44%

II. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION

(i) Efforts made towards Technology absorption

Bharat Seats Limited is continuously undertaking product development / improvement forexisting as well as new products with the help of inhouse resources as well as throughtechnical assistance from technical collaborators. For this purpose experts from ToyoSeats Japan and NOAC I Corporation Japan had frequent visits to your Company to givespecial training on designing the process of new type of seats extruded products and alsoto add new product type seat mechanism.

(ii) Benefits derived like Product improvement. Cost reduction product development orimport substitution. a. Process based approach to manufacture has improved efficiency andquality of product. b. Inhouse deployment of technologies has reduced the cost ofproduction. c. Flexible lines have been installed by your Company to meet the requirementof new models in a very short lead time.

(iii) In case of imported technology technology imported during the last three yearsreckoned from the beginning of the financial year

DETAILS OF TECHNOLOGY IMPORTED YEAR OF IMPORT HAS TECHNOLOGY BEEN FULLY ABSORBED
(a) (b) (c)
- For continuous improvement 2014-2015 Yes
- For manufacture of moulded carpets and seating system for four wheelers Yes
- For Manufacture of Two Wheeler Seat Assemblies Yes
- For Manufacture of extruded components for automobiles Yes
- For continuous improvement 2015-2016 Yes
- For manufacture of moulded carpets and seating system for four wheelers Yes
- For Manufacture of Two Wheeler Seat Assemblies Yes
- For Manufacture of extruded components for automobiles. Yes
- For continuous improvement 2016-2017 Yes
- For manufacture of moulded carpets for four wheelers Carpet with Sound absorption technology – In Transition phase of absorption
- For manufacture of seating system for four wheelers Yes
- For manufacture of Two Wheeler Seat Assemblies Yes
- For manufacture of extruded components for automobiles Yes

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO

In terms of actual inflows and actual outflows

Foreign exchange outflow on account of import of Capital Goods and raw materialsamounted to Rs.1496.64 lakhs (Rs. 762.49 lakhs). Other expenditure in foreign currencyrelating to travelling training and technical fees amounted to Rs..286.21 lakhs (Rs.534.64 lakhs). Remittances in foreign currency on account of dividend amounted to Rs.41.85 lakhs (Rs. 41.85 lakhs).

(Figures in bracket pertain to last year)

ANNEXURE V

DISCLOSURE AS REQUIRED UNDER SUB RULE 2 OF RULE 5 OF COMPANIES(APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL)RULES 2014

EMPLOYED FOR FULL FINANCIAL YEAR : 2016-2017 :

NAME DESIGNATION & NATURE OF DUTIES REMUNERATION GROSS (RS.) QUALIFICATIONS DATE OF COMMENCEMENT OF EMPLOYMENT TOTAL EXPERIENCE AGE IN YEARS LAST EMPLOYMENT PERCENTAGE EQUITY
MR. ROHIT RELAN CHAIRMAN CUM MANAGING DIRECTOR Rs. 11936358/- B.COM(HONS.) F.C.A. OWNER/ PRESIDENT MANAGEMENT PROGRAMME FROM HARVARD BUSINESS SCHOOL 6.3.1986 38 YRS 61 YEARS M/S S.P. MARWAH & CO. CHARTERED ACCOUNTANTS 0.99%
Mr. ROHIT KAPUR BUSINESS HEAD Rs.6835940/- B.E(Production Engineering& Management) 05-Jan-15 24 yrs 47 yrs Lear Corporation -
DILIP KUMAR MITHULALJI BOGAWAT V.P. (R&D) Rs.5073044 B.E( Mech) 20-Aug-14 26 YRS 48 YRS Faurecia Interior Technical Centre
T J CHACKO DIRECTOR (Operations) Rs.4975378 B.E( Mech) 18-Nov-97 45 yrs 72 yrs VXL INDIA LIMITED
RAJAT BHANDARI SR. V.P. (Strategic Planning) Rs.4168399 FCA & CS 01-Oct-08 29 yrs 53 yrs FEDERAL MOGUL GOETZE INDIA LTD. 0.01%
SUNIL BHATIA A.V.P. (Operations) Gurgaon Rs.3491322 PGD(Die & Mould ) PGD (Operation Management) 20-Oct-14 32 yrs 54 yrs Omax Auto Ltd.
SUDHANSHU MISRA G.M. (R&D) Rs.3164428 Diploma( Tool & Die Making) B. Tech ( Mech) & MBA 09-Mar-15 20 yrs 45 yrs Omax Auto Ltd.
M SHARIQ QURESHI A.V.P. (Operations) Manesar Rs.2984787 PGPM- Dual specialization in "Operation Research & International Business" 22-Mar-10 27 yrs 50 yrs RICO AUTO INDUSTRIES LTD.

EMPLOYED FOR PART OF FINANCIAL YEAR : 2016-2017 :

NAME DESIGNATION & NATURE OF DUTIES REMUNERATION GROSS (RS.) QUALIFICATIONS DATE OF COMMENCEMENT OF EMPLOYMENT TOTAL EXPERIENCE AGE IN YEARS LAST EMPLOYMENT PERCENTAGE EQUITY
JAGDISH CHHABRA V.P.(Purchase & SCM) Rs. 1430992/- M.Sc(Mathematics)& MBA ( Operation Management) 05-Dec-16 24 YRS 46 YRS Mindarika Pvt. Ltd -
HARI DAS NAIR V.P.(HR) Rs.650462/- Master in Personal Management & Industrial Relations 16-Jan-17 20 yrs 52 yrs MICR Electronics Ltd. -

NOTES:

1. REMUNERATION INCLUDES PERQUISITES AND COMPANY'S CONTRIBUTION TO PROVIDENT FUND

2. THE NATURE OF EMPLOYMENT OF MR. ROHIT RELAN IS CONTRACTUAL. FOR THE REST OFEMPLOYEES IT IS OTHER THAN CONTRACTUAL.

3. MR. ROHIT RELAN IS RELATED TO MRS SHARDA RELAN DIRECTOR AND MR. AJAY RELANDIRECTOR OF THE COMPANY. OTHER THAN MR ROHIT RELAN NONE OF THE ABOVE MENTIONED EMPLOYEE/DIRECTOR IS RELATIVE OF ANY OTHER DIRECTOR/ MANAGER.

ANNEXURE VI

THE RATIO OF THE REMUNERATION OF EACH DIRECTOR TO THE MEDIAN EMPLOYEES' REMUNERATIONAND OTHERS DETAIL IN TERMS OF SUB SECTION 12 OF SECTION 197 OF THE COMPANIES ACT 2013READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014

1. The ratio of the remuneration of each director to the median remuneration ofthe employees of the company for the financial year:

Sr. No. Particulars Ratio to the median remuneration (times)
i) Mr. Rohit Relan Chairman cum Managing Director 42.05
ii) Mr. T. J. Chacko Director (Operations) 17.53

2. The percentage increase in remuneration of each Director Chief Financial OfficerCompany Secretary or Manager if any in the financial year

Sr. No. Particulars Percentage Increase
i) Mr. Rohit Relan Chairman cum Managing Director 15%
ii) Mr. T. J. Chacko Director (Operations) 8%
iii) Mr. Sanjeev Kumar Chief Financial Officer 12%
iv) Ms. Ritu Bakshi Company Secretary 12%

3. The percentage increase/ decrease in the median remuneration of employees in thefinancial year is 22 %.

4. Total number of permanent employees on the rolls of company as on March 31st 2017 is382.

5. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration.

Particulars Non-Managerial Managerial
% Average increase in salaries during 2016-17 9% 8%

6. Affirmation that the Remuneration is as per the remuneration policy of the company .

ANNEXURE VII

NOMINATION AND REMUNERATION POLICYOF BHARAT SEATS LIMITED

The Nomination and Remuneration Policy has been formulated by the Nomination andRemuneration Committee and approved by the Board of Directors.

Objective:

To apprise and assure Board Members through Nomination and Remuneration Committee(hereinafter referred as Committee) regarding availabilityofframeworkforconductingcompanybusinessefficientlyby ensuring Availability of requisiteTalent Reasonable and SufficientRemuneration for retaining the Talent TransparentPerformance Evaluation and Reward System to Create High Performance Culture

Effective Date:

Policy is effective from FY 2014-15

Applicability:

All employees in service of M/s Bharat Seats Limited including Directors KeyManagement Personnel and Senior Management Personnel

Agenda before Nomination & Remuneration Committee:

Whereas the Overall Company Performance is put up to the Committee for its input andreview.

Whereas the Brief Profile Credentials and other details reflecting competence to carryout company business in Committee for its review efficient

Whereas the Remuneration Policy is put up to the Committee for its input if any toensure that suitable remuneration is provided to employees to Retain and Attract Talent inthe organization

Disclosure in Board's Report:

Appointment remuneration/ Increase in the Remuneration of Directors on Board

Employee Strength on Permanent Rolls of the Company

Relation in Company Performance & Remuneration Increase

Affirmation that remuneration has been paid in accordance with RemunerationPolicy

Details of Employees was in receipt of remuneration for that year which in aggregatewas not less than Rupees Sixty lac

Details of employees if employed for part year and drawing salary not less than RupeesFive Lac per Month

Miscellaneous:

Board of Directors on its own and/or as per the recommendations of Committee can amendthe policy as and when deemed fit

Any changes in Performance Evaluation Remuneration Attracting Retaining andNurturing Talent Policy shall be brought to notice of Committee as and when required

Performance Evaluation Policy

All employees are covered under following basic principles guiding the policy &process thereof:

Basic Principles:

Objective and Transparent Performance Evaluation

Alignment of Company Objectives and Individual Performance

Suitably Rewarding High Performance

Creating Performance Oriented Culture

Process of Performance Evaluation:

Company Objectives are defined on YOY basis in line with long term goals

All department and individual KRA are defined in line with Company Objectives

All employees up to Jr. Management level i.e. below Manager are evaluated on annualbasis based on Management by Objective

Manager and above level employees are evaluated on Quarterly basis against pre definedKRA

Final evaluation of each employee in the organization is done in March of every year

Each individual is appraised on individual performance and competence (level specific)on a 1 to 5 point scale(where 1 is lowest)

KRA for next Performance Year are finalized

Each individual is appraised at three levels to ensure correct evaluation

Outcome of Performance Evaluation Exercise

Career Plan for each position

Training needs of incumbent

Remuneration Enhancement

Potential employee for future growth

Performance Oriented Culture

Remuneration Policy

Remuneration is based upon Level Responsibilities of the position and Performance ofincumbent

Remuneration is generally kept on 70 percentile of the market i.e. Tier 1 automotivecompanies to retain the talent and keep them motivated to establish high standards ofindividual performance

Remuneration is divided into two parts i.e. Fixed Cost and Variable Pay where Variablepay is ranging from 7 to 15% of Cost to Company (CTC) in various levels however it may goup to 20% in case of Director on Board

Variable Pay is further divided into two parts

Company Performance Pay

Individual Performance Pay

Payment of Variable Pay is dependent on Company Performance and Individual Performanceagainst pre defined objectives

Variable Pay depending on Company Performance varies from 20% to 50% of total Variablepay depending upon level of employee

All Statutory benefits are extended to employees

Attracting Retaining and Nurturing Talent Policy Attracting Talent

New Position availability is based on sanctioned strength/ replacement looking at threeyears rolling organization structure

Competence Based Hiring for all positions

Job related

Behavioral

Internal & External Sourcing for each position

Minimum Three rounds of personal meeting/ panel interview takes place for Manager &above level positions

Each member evaluate the interviewee on prescribed format against position specificcompetence

Manager & above level positions are finalized with involvement of MD essentially

Retention & Nurturing of Talent

Fair Remuneration & other employee related policies

Transparent Performance Evaluation and Rewards System

Defined Career path and Development Opportunities for all without bias

Individual Competence enhancement through Training

Involvement in Improvements and Change on regular basis

Open Door Policy for employees