Bharat Seats Ltd Management Discussions

According to the World GDP Ranking 2025 list, India is ranked as the fifth largest economy globally. In the upcoming years, India will be one of the fastest growing economies in the world and rising consumption and investments, both domestic and foreign, will contribute to the nations growth.

The auto industry continues its upward trajectory due to performance driven by healthy demand, infrastructure investments, supportive Government policies and continued emphasis on sustainable mobility. There was a rise in exports reflecting strong global demand. Sound economic policies and positive market sentiment helped in maintaining growth in this sector.

All segments of auto industry are expected to continue with the growth momentum in financial year 2025-26, building on the robust performance of recent years due to stable macroeconomic conditions, proactive Government policies and infrastructure spending by the government. Auto sector demand is expected especially in rural and semi urban regions which would be a tailwind for auto sector demand.

Overall, the Automobile industry will closely monitor macroeconomic factors and global geopolitics, which will determine the key demand conditions and supply chain dynamics going forward.

Electric vehicles has shown a reasonable growth. Recent policy interventions of Government of India including Electric Mobility Promotion Scheme(EMPS) followed by the PM E Drive and PM e-Sewa schemes coupled with EV launches by several manufacturers has provided the necessary momentum for the adoption of electric vehicles in the country.

INDUSTRY STRUCTURE AND DEVELOPMENT

The automobile industry significantly contributes to the Indian economy, impacting GDP, manufacturing, employment, and exports. Its a major driver of economic growth, with a substantial share in Indias overall GDP and manufacturing sector.

The growing popularity of electric vehicles have called for semiconductor technologies advancement in the automotive industry , one that would make the space smarter and energy efficient. Semiconductor companies are starting to turn their focus to Indias automotive market, where chip content is growing at an attractive rate.

Maruti Suzuki India Limited is the bellwether of the Indian passenger vehicle industry and for the financial year 2024-25 the Company achieved its highest ever sales. Affordability and practicality are the hallmarks of Maruti Suzuki vehicles, making them a popular choice among car buyers. The company has built a strong reputation for manufacturing vehicles that are not only affordable in terms of their purchase price but also in terms of their maintenance costs.

Through collaboration with the Government of India, trade alliances and technological advancements, India aims to unlock the full potential of auto component industry where all components are 100% Made in India, establishing a global manufacturing powerhouse and a force to be reckoned with.

The National Manufacturing Mission and the emphasis on Clean Tech Manufacturing will to provide a much needed boost to the industrys localization efforts.

The introduction of BharatTradeNet and the Export Promotion Mission will help integrate Indias auto component sector into global supply chains.

OPPORTUNITIES AND THREATS

The governments policies and incentives are strengthening Indias auto manufacturing sector and driving the transition to cleaner mobility solutions. There has been growth in exports driven by demand of global models being manufactured from India. The focus on MSMEs, innovation, exports and supply chain resilience will provide a strong impetus to the auto component industry. Further, the proposals for personal Income Tax will put more money in the hands of people thus fuelling consumption leading to economic growth.

SEGMENT WISE/ PRODUCT WISE PERFORMANCE

The Company is currently operating primarily under a single business segment manufacturing complete seating systems and interior components for passenger Cars as well as Utility Vehicles.

RESEARCH.DEVELOPMENT(R&D)

R&D team is backbone of any business house irrespective of segment. This is the team that works on products packed with advanced technologies and processes, conceiving the product and preparing it to be commercialised. The Company is working on the following different product portfolios:

a) Seating System design & development for passenger cars

b) NVH components like floor carpet, wheel housing cover, CNG Cover, dash insulation etc. for passenger car

c) Extrusion for molding roof as well as windshield for passenger car

d) Seating system design & development for 2-Wheelers.

- Besides all above program, the Company s R&D team is also engaged in Value Engineering and Value analysis (VA-VE) in process, creating design and development standard for each commodity, developing expertise knowledge in fabric lay-outing called "nesting" to increase yield, etc. for value addition. Your Company in pursuit of continuous improvement has decided to:

• Develop in-house capability of development of 980 Mpa steel parts besides 590 Mpa steel part

• Create your Companys R&D standard for new technologies that have been launched first time

• Process standards for various processes that are carried out at your Company viz Foaming, Assembly, etc. RISK AND CONCERNS

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

BUSINESS RISK

The automotive industry faces significant business risks including supply chain disruptions, labour shortages, regulatory challenges, emissions targets, political instability, economic uncertainty and technological and market shifts.

FINANCIAL RISK

There are several financial risks, including slow sales growth, increased competition , the potential for new tariffs, and economic uncertainty.

The companys sales and margins are subject to the market factors that affect Maruti Suzuki India Ltd. and Suzuki Motorcycle India Private Ltd. Any disruption of supply chain, availability of raw material could potentially impact its financial position and earnings.

The Company is exposed to the risks associated with fluctuations in foreign currency rates, import duties and taxes.p>

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 assessed, and adequate steps are taken from time to time to mitigate them successfully.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls to ensure that transactions are properly authorized, recorded, and reported, apart from safeguarding its assets. The internal control system is supplemented by well-documented policies, guidelines and procedures and reviews carried out by the Companys internal audit function, which submits reports periodically to the Management and the Audit Committee of the Board.

Your Company has a favourable work environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity.

DISCLOSURE OF ACCOUNTING TREATMENT

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

HUMAN RESOURCES/ INDUSTRIAL RELATIONS

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 so that every employee excels and grows along with Companys growth.

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

In addition to timely delivery and quality, your Companys utmost focus is on the safety of its workforce.

Health, Safety and the Environment remain 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, ensuring a safe workplace for employees. The total number of permanent employees on the rolls of Company as on 31st March 2025 are 462.

FINANCIAL PERFORMANCE

The Company continued its focus on lean operations and cost optimization through several measures.

The details of the financial performance of the company appear in the Balance Sheet, Profit & Loss Account and other financial statements forming part of this Annual report. For financial highlights please refer to the heading

FINANCIAL RESULTS of the Boards Report.

KEY FINANCIAL RATIOS

Changes in key financial ratios are as under:

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

# Interest coverage ratio has reduced and Debt Equity ratio has increased due to additional loan taken & increase in finance charges on lease liabilities

## Return on net worth has been calculated on PAT and shareholders fund

There is an upwards trend, compared to last year due to an overall upswing in sales primarily due to more off-take by MSIL.

DISCLAIMER

Statements in this Report, particularly those which relate to Management Discussion and Analysis as explained in the Corporate Governance Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.