Bharat Seats Ltd Management Discussions.



The growth of domestic automobile market is dependent on the growth of the economy, Government policies and initiatives, increase in individual income levels and most importantly on customer sentiments. The Union Budget 2020 - 21 reflected focus and Governments commitment to expenditure on road transport, development of infrastructure, construction of highways and express ways. The Ministry of Road Transport and Highways is planning to develop around 60,000 Km of roads in the next five years. This ongoing ever expanding network of roads and increased connectivity of urban and rural would definitely provide an impetus to the automobile sector. In addition, the Government had been seriously considering the policy for vehicle life and very recently enunciated the long overdue voluntary vehicle scrap age framework. All of these factors are likely to boost demand for new vehicles and in turn benefit to the auto component sector.

In the beginning of FY 2020 - 2021 the COVID - 19 pandemic dampened the auto sector due to nationwide lock down and the first quarter of the fiscal was a complete wash out. However policy measures taken by the Government and Reserve Bank of India helped the economy in minimizing the impact of crisis. The auto sector bounced back much faster than anybody had expected soon after the lockdown was lifted. The complete auto industry, through agility, flexibility and financial discipline, displayed remarkable resilience and has comeback strongly with the unlocking of the economy. The performance of the industry during the festive season had been heartening and the recovery sustained during the remaining months of the year. Increased focus by the auto industry on localization, cost optimization, increased productivity, focus on training and development, health and safety, quality etc. augur well towards making the autocomponent industry a self-reliant one.

Despite concerns of another wave of pandemic, the industry is cautiously optimistic about the prospects of the Indian economy and the automotive sector for FY2021-22. Increased visibility and commitment to new program timelines from OEMs is a key industry expectation, at an organizational level, focus on employee productivity and organization structure consolidation will be the key thrust areas.

Growth of Automobile sector in India in 2021-22 is dependent on management of COVID-19 pandemic along with sustenance in economic activities. Though this may have some negative growth impact in the short term, the medium and long-term prospects for automobile production appears to be good, due to several factors such as low level of vehicle ownership, rapid urbanization, development of road infrastructure and focus on rural development. The vehicle scrapage policy is expected to further boost the demand. Other economic measures like rationalizing the GST rates on automobiles, increase in direct incentives on exports and signing of bilateral treaties with other countries are needed. We hope the Government will look into these aspects also. The government has expressed that manufacturing sector would grow annually in double digits going forward. The industry looks forward to innovative government policies for enhancing manufacturing competitiveness and increased affordability for the customers of passenger and commercial vehicles.

The growth of the automotive sector is expected to contribute more to your Companys sales and profits. We at the Company are fully geared to meet the likely robust demand for seating products and systems.


National Automotive Testing and R&D Infrastructure Project (NAT Rip), is a fully Government of India funded project. This is the largest and one of the most significant initiatives in Automotive sector so far. The project aims at creating core global competencies in automotive sector in India by facilitating seamless integration of Indian Automotive industry with the world, through setting up state-of-the-art, four green field automotive testing, homologation and R&D infrastructure facilities and up-gradation of existing facilities with new technology and equipment.

The Government is encouraging introduction of electric vehicles in the market by ramping up incentives. The "Go Electric" campaign launched by the Government of India aims at reducing the import dependence of fossil fuels as well as ensuring cleaner and greener future. The Pan India level campaign would help create wide awareness amongst consumers and boost the confidence of electric vehicle (EV) manufacturers. Special policy measures such as slashing GST on EVs, exemption on EV purchase loans, custom duty exemption on certain EV parts and so on would go a long way in enhancing production and sale of EVs.

The recent initiative of the Government on vehicle scrapage and policy framework is expected to further boost the automotive sector and propel growth.


The Indian auto-components industry has experienced healthy growth over the last few years.

Auto-components industry account for 2.3% of Indias Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly. A stable government framework, increased purchasing power, large domestic market, and an ever-increasing development in infrastructure have made India a favorable destination for investment. BSL is a dedicated supplier to Maruti Suzuki India Limited (MSIL) and is engaged in developing complete seating systems for passenger Cars as well as Utility Vehicles, Molded Floor Carpets, Extrusion Components for vehicle roof and windshield. Your Company has entered into a technical collaboration with Hayashi Telempu for NVH (Noise, Vibration and Harshness) components for supply to Indian customers. BSL also develops and manufactures complete seat assembly and welded frames for two wheelers for Suzuki Motor Cycle India Pvt. Ltd.

COVID-19 brought in fresh challenges to the economy but customers trust remained unchanged and top 5 models of passenger vehicles sold in 2020-21 are from Maruti Suzuki in FY20-21. The COVID-19 pandemic started to show receding trend from the second half of 2020-21.

BSLs performance for the full year FY 2020-21 is to be seen in the context of COVID-19 related disruption. There was overall decline in sales volume of car seat sets by 3.9% during 2020-2021, as compared to previous year.

In April/May 2021 second wave of COVID-19 pandemic caused partial lockdown in some of the states to curtail the spread of COVID. The business recovery post the second wave is facing certain global headwinds on supply of certain critical components including shortage of semiconductors.

The industry is cautiously optimistic about the prospects of the Indian economy and the automotive sector for FY 202122. While increased visibility and commitment to new program timelines from OEMs is a key industry expectation, at an organizational level, focus on employee productivity and structural consolidation will be the key thrust areas.

In summary, though some uncertainty in the automotive sector in the short term is evident, in the medium to long term the growth prospects appear to be very encouraging for the automobile manufacturers and thereby auto component manufacturing industry as a whole.


The Company is operating under single business segment manufacturing complete seating systems for passenger Cars as well as Utility Vehicles.


The rapid globalization is opening new opportunities for the automobile industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe, and reliable mode of transportation. Over the next decade, this will lead to new verticals and opportunities for auto-component manufacturers, who would need to adapt change via systematic R&D.

- Your Company has upgraded engineering set up with FEA (Finite Element Analysis) softwares & skilled professionals are dedicated to the task.

- Your Company has invested in upgrading the design workstations to enhance the performance.

- Your company has enhanced testing and validation competency. Test Lab is re-accredited National Accreditation Board for Testing and Calibration Laboratories (NABL) certification.

- Dedicated Program Management Team is involved that acts as SPOC (Single Point of Contact) between Customers and other CFT (Cross Functional Team) members. Program Management team shall support the launch activities and ensure the customer timelines are smoothly met.

- Your company is upgrading with latest digitization technology to design & manufacture Master Trim Templates.

- As a technological upgradation, your Company is going ahead with Robotic Water Jet Trimming. This will facilitate faster sample development.

- Your Company is creating advanced Testing facilities for NVH products in house.


The Company is exposed to external and internal risks associated with the business.


The operations of the Company are directly dependent on the growth of the Indian automotive industry.

"Make in India" is a major national program of the Government of India. This is designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best in class manufacturing infrastructure in the country. Automotive sector plays a very important role in this initiative and is well supported by the Government. Impact of COVID-19, increase in price of automobiles due to increasing commodity prices and inflation affect and influence the demand. The medium to long term outlook for the automotive sector remains positive, with increasing preference for personal mobility across the globe amidst pandemic. This was witnessed post the lock down and the auto industry bounced back much faster than expected.


The companys sales and margins are subject to the market factors that affect Maruti Suzuki and Suzuki Motorcycle India Private Ltd. The Company is exposed to the risks associated with fluctuations in foreign currency rates, import duties and taxes, fluctuation in the price of various inputs including raw material supplies and under-utilized capacity. Your Company reviews forward exchange contracts/ derivative contracts on a regular basis to analyze foreign exchange exposure and confirms that the Company has a Risk Management policy, with a clause on foreign exchange risk management in place.

Both the operational and financial risks are constantly measured and adequate steps are taken from time to time to mitigate them successfully.


Your Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, reported and recorded correctly. Further internal audit covers all the areas e.g. Finance, Production, IT, HR, Purchase, Statutory Compliance etc. and regular audits are conducted by InternalAuditors. TheAudit observations are periodically reviewed by the Audit Committee of the Board of Directors and necessary directions are issued, wherever required.


The Company has complied with all the provisions of the accounting standards in accordance with Section 133 of the Companies Act, 2013.


Your Company believes that employees are key for our success, have immense knowledge and power of innovation. Your Company aims to create an environment where every employee can contribute to the companys performance, excel and grow in their respective jobs. Our focus is to recruit employees with right skills and talent, raise competency through training and development, recognize and reward leadership and performance. Several measures are implemented to retain the talent within the organization. At each location, the work force goes through a mandatory training plan including the vision, mission and company values which forms a base for treating everybody with dignity and respect. To further strengthen and motivate our employees, several initiatives are taken on a continuous basis to foster teamwork, trust and communication across the organization. Employees are encouraged to have a passion for excellence and focus on the customer with a performance goal of doing things right first time and every time. Your Company provides challenging and fulfilling opportunities to maximize employee potential.

Your Company ensures quality at our suppliers and service providers by horizontal deployment of learnings and training at our supplier partners.

Health, Safety and Environment remains our top priority. Periodic audits are carried out both internally as well as through external agencies to identify gaps and to define action items for continuous improvement.

Total number of permanent employees on the rolls of company as on March 31st 2021 are 339.


In the year under review, there was a rise in expenditure on account of strengthening of R&D Department and Business development. The Company continued its focus on lean operations and cost optimization through a number of measures.

The details of the financial performance of the company are appearing in the Balance Sheet, Profit & Loss Account and other financial statements forming part of this Annual report. For financial highlights please refer heading FINANCIAL RESULTS of Boards Report.


Changes in key financial ratios are as under:

Sr. No. Ratios Unit 2020-2021 2019-2020 % change
1 Debtors Turnover Times 9.23 10.33 10.65
2 Inventory Turnover Times 21.79 27.72 21.39
3 Interest Coverage Ratio* Times 6.76 11.76 3.79
4 Current Ratio Times 0.87 0.70 24.28
5 Debt Equity Ratio Times 0.29 0.30 3.33
6 Operating Profit Margin** % 1.99 2.62 24.04
7 Net Profit Margin % 0.88 2.13 58.69
8 Return on Net worth % 4.12 11.05 62.71

*Earnings before interest, depreciation, tax and amortization (EBIDTA) has been considered for coverage ratio. "Operating profit is earning before interest and tax (EBIT)

There is a declining trend, compared to last year due to:

1. An overall reduction in sales primarily due to lower off take by MSIL in the face of Covid Pandemic.

2. High spurt in raw material prices, which has taken place across the whole of automotive industry.


Statements in the Management Discussion and Analysis describing the companys objective, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable laws and regulations. The actual results could differ materially from those expressed or implied. The important factors that may affect the companys operations include demand & supply situation, input prices and their availability, change in Government policies/ regulations, tax laws and other statute. Therefore, all concerned should bear all above factors in mind.