Bharat Seats Ltd Management Discussions.

The global economic activity has shown signs of rebound and world over as the impact of COVID-19 pandemic diminishes, several other global uncertainties have influenced the economic activity. Global supply chain was significantly impacted in 2021 from factors like shortage of semiconductors, surge in oil and energy prices, availability of shipping containers resulting in high transportation costs, steep increase in input costs and availability of key commodities. The global macroeconomic uncertainties have further increased due to geo-political conflict between Russia and Ukraine.

However, Indias current macroeconomic situation is better than what it was earlier mainly due to strong economic fundamentals and domestic consumption. The country will need to be watchful due to prevailing global uncertainties and situation prevailing in many Asian countries. The Indian market also witnessed an impact due to shortage of semiconductors, non-availability of essential commodities, steep increase of inputs costs etc. The Indian market in many ways is also influenced by Government policies and regulations notified from time to time. Favorable government policies support and impetus to the industrial growth. Other enabling factors in the growth of the industry include domestic market demand, FDI, JVs, and competitive strategies by the corporations.

The Indian automotive industry has entered the year with a positive outlook, and it hopes to reach pre-pandemic levels of sales. The industry looks to build on a solid foundation laid in 2021 amid the semiconductor shortage and uncertainty due to the Omicron variant. Large-scale digitization, the rapid recovery of the economy, and learnings from the past two years of the pandemic are expected to come in handy as demand continues to remain resilient – notably in the passenger vehicle segment. Several automobile manufacturers are open to incorporating new technologies, especially in electric mobility, which is expected to result in numerous launches in both four- and two-wheeler in 2022. Adoption of automation and robotics in recent times has helped the industry to significantly improve quality, productivity, delivery outcomes and reduce costs. It has also been observed that global demand for India-made auto components and the focus on electric vehicles has resulted in several opportunities that the component manufacturers can harness.

Although there has been an increased demand for used cars as customers look for more affordablemeans of personal transport during the pandemic, the setting up of scrappage centers and inspection and certification facilities would cause the withdrawal of vehicles that are not roadworthy, thereby adding to the market demand of new vehicles. The underlying demand for Passenger Vehicles appears robust, partly helped by the increased need for personal mobility due to the covid-19 pandemic. However, the effect of sharp rise in fuel prices may have dampening effect on the demand of passenger vehicles in 2022-23. As the supply situation of electronic components continues to be unpredictable, it might have some impact on the production volume in FY 2022-23 as well. Demand is growing but the costs of transition to Electric Vehicle (EV) are significant. These changes are giving rise to intense competition that is undermining existing brand strategies and have given huge new opportunities for both existing Original Equipment Manufacturer (OEM) and new brands alike. Despite these head winds, there is a huge opportunity in EVs that most of the OEMs are seizing strongly.

Innovation is continuing at a strong pace, investment in new capacity, particularly for EVs is soaring and the customer demand is increasing. Despite the pressure, the outlook for the industry is positive. Our main customer, Maruti Suzuki

India Limited has exported record units in FY 2021-22, the highest in any financial year. This demonstrates Maruti Suzukis commitment to the Government of Indias Make-in-India initiative. These export numbers reflect Indias manufacturing potential and the acceptance of India-manufactured vehicles, all over the world.

Due to shortage of semi-conductors the demand from our customer also changed several times, which your Company met with dedicated efforts of whole team. Our team managed to run supply chain without any disruption. Bharat Seats Limited (BSL) works keeping customer focus in mind, performance goal of firsttime right - every time right, use innovative and continuous improvement methodologies, encourage KAIZEN activities etc. Your Companys goal is to achieve zero defects with implementation of comprehensive excellence across all locations and functions. Customers demands and expectations are increasing year on year and our endeavor is to exceed those expectations by encouraging teamwork, passion for excellence, increased focus on execution and responsiveness within our employees. Employees are and continue to remain our most valuable assets. We will continue to invest in our employees to further build up the capability and enhance competency to achieve improved business results.


The automotive industry hopes for a smooth ride after a bumpy 2021. In a decade when India is eying the electronic vehicle eco system, the budget of R&D will further enhance its development and localization.

The flow of FDI has shown a sharp spike in FY 2021-22. The uptick in FDI coincides with an increase in capex by domestic players.

In FY 2021-22, the government approved the ‘Production linked incentive(PLI) scheme for automobile and auto component industry. The focus of PLI scheme is on emerging industry capabilities as it aims to push forward Indias transition to clean energy along with accelerating the countrys share in the global automotive trade. The PLI scheme will incentivize cost efficient manufacturing of high value advanced automotive technology vehicles. According to recently released reports by credit rating agency ICRA, the PLI scheme will not only boost localization, but also accelerate investments towards developing a local EV eco system and has the potential to make India an export hub in the global auto supply chain.

Governments intervention to boost this industry has come at a time when the global economy is facing an acute shortage of semiconductors due to severe disruptions. The comprehensive interventions by the government will aid in the establishment of an ecosystem that boosts semiconductor production in India.


The rapidly globalizing world is opening newer opportunities for the automobile industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient,

Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt change via systematic R&D. India is emerging as the worlds hub of choice when it comes to manufacturing quality auto components. The industry has over 600 manufacturers who exceed the worlds most stringent quality standard.

Our business association with Hayashi Telempu and Toyota Boshoku is adding to capability enhance and growth. Through these associations we can build further capability of our teams and introduce enhanced features in the products that we manufacture thus providing value added solutions to our customers. Additionally, we have plans to introduce new products with the support of our technology partners thereby enhancing BSL product portfolio. These associations will also prepare BSL for future technology readiness such as NVH requirement for Hybrid and Electric Vehicles. There is need for sustainable development of the industry, considering the challenges on the front of energy security, concern for the environment and reducing carbon footprint. With India declaring to achieve carbon neutrality 2070, the Automotive sector, together with all other verticals of the industry will have to work in unison towards the realization of this national goal.


The Company is currently operating primarily 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,

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 successfully developed first time 4-layer Carpet (with Ethylene-Vinyl Acetate EVA as a sound barrier) that successfully qualified MSIL stringent testing requirements.

- Our product is capable to meet specifications for both Sound Transmission Loss (STL) and Sound Absorption Coefficient (SAC).

- In order to Enhance Product Development Capabilities, your Company has upgraded engineering set up with FEA (Finite Element Analysis) softwares. Skilled professionals are operating these softwares.

- Your company has correlated the Simulation Test data for homologation tests. This will help in predicting the design robustness without physically making and testing the sample. This will save significant time and cost.

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

- As a technological upgradation, your Company has gone ahead to implement Robotic Water Jet Trimming. This will facilitate faster sample development and support production of low volume variants that were earlier made using manual trimming tools..


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.

The worldwide supply chain continues to be affected by challenges related to COVID-19 pandemic, shortage of semiconductors and volatility in energy prices. Organization needs to reimagine and manage its supplychaindifferentlyto ensure business continuity and growth.


The companys sales and margins are subject to the market factors that affect Maruti Suzuki India Ltd. and Suzuki Motorcycle India Private Ltd. The Company is exposed to the risks associated with fluctuations in foreign currency in the price of various inputs including raw material supplies and under- rates,importdutiesandtaxes,fluctuation 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 assessed, and adequate steps are taken from time to time to mitigate them successfully.


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 favorable work environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity.


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 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 safety of its workforce. As we continue to face the COVID-19 pandemic, our commitment towards safeguarding the health of our people, and efforts to safety at our workplaces has been in greater focus.

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, ensuring a safe workplace for employees. Total number of permanent employees on the rolls of Company as on 31st March 2022 are 376.


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 several measures. The Company was further taking cost control measures in order to mitigate loss of production due to the shortage of semi-conductor chips and covid impact.

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. Ratios Unit 2021-2022 2020-2021 % change
1 Debtors Turnover Times 8.46 9.23 -8.34%
2 Inventory Turnover Times 19.78 21.79 -7.85%
3 Interest Coverage Ratio* Times 9.59 6.76 41.75%
4 Current Ratio Times 1.03 0.87 18.39%
5 Debt Equity Ratio Times 0.29 0.29 -
6 Operating Profit Margin** % 2.42 1.99 21.59%
7 Net Profit Margin % 1.46 0.88 65.91%
8 Return on Net worth % 9.37 4.12 127.40%

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


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.