Harita Seating Systems Ltd Directors Report.

The Directors have pleasure in presenting the twenty third annual report and the audited accounts for the year ended 31st March 2019.

1. FINANCIAL HIGHLIGHTS

(? in lakhs)
Particulars Year ended 31.3.2019 Year ended 31.3.2018
Sales and other income 49,102.23 45,470.08
Profit before financial costs, depreciation and amortization expenses 4,022.15 4,748.42
Less : Finance costs 178.37 111.17
Depreciation 938.54 719.13
Profit before tax 2,905.24 3,918.12
Less : Provision for:
Income tax 538.01 740.34
Deferred tax 185.86 (66.12)
Tax relating to earlier years (20.63) 164.03
Profit after tax 2,202.00 3079.87
Other Comprehensive Income 88.92 6.42
Total Comprehensive income for the year 2,290.92 3,086.29
Appropriations:
First interim Dividend paid 233.07 155.38
Second interim Dividend paid 233.07 310.76
Balance carried to Balance Sheet 1,824.78 2,620.15
Total 2,290.92 3,086.29

2. DIVIDEND

The Board of Directors of the Company (the Board) at its meeting held on 6th February 2019, declared a first interim dividend of ? 3.00 per share (30%) for the year 2018-19 absorbing a sum of ? 2.33 cr. The same was paid to the shareholders on 19th February 2019.

The Board at its meeting held on 26th March 2019 declared a second interim dividend of ? 3.00 per share (30%) for the year 2018-19 absorbing a sum of ? 2.33 cr. The same was paid to the shareholders on 8th April 2019.

Thus, the total amount of both dividends for the year ended 31st March 2019 aggregated to ? 6.00 per share (60%) thereby absorbing a sum of ? 4.66 cr on 77,69,040 equity shares of face value of ? 10/- each.

The Company has set-off its dividend distribution tax payable under Section 115-O(1A) of the Income Tax Act, 1961 against the dividend distribution tax paid by its subsidiary Company viz., Harita Fehrer Limited on its dividend declared.

The board does not recommend any further dividend for the year under consideration.

3. SCHEME OF ARRANGEMENT

The Board at their meeting held on 14th February 2019 approved a draft Composite Scheme of Amalgamation amongst Harita Limited ("Transferor Company 1"), Harita Venu Private Limited ("Transferor Company 2"), Harita Cheema Private Limited ("Transferor Company 3"), Harita Financial Services Limited ("Transferor Company 4"), Harita Seating Systems Limited ("Transferor Company 5") and Minda Industries Limited ("Transferee Company") and their respective shareholders ("Scheme").

The aforesaid Scheme under Section 230 to 232 of the Companies Act, 2013, inter-alia, provides for the following:

(i) Amalgamation of the Transferor Company

1, Transferor Company

2, Transferor Company

3 and Transferor Company

4 (collectively referred as "Transferor Companies") with the Transferee Company; and

(ii) Amalgamation of the Transferor Company

5 with the Transferee Company.

In consideration for amalgamation, the shareholders of the Transferor Companies and the Transferor Company 5 (at the option exercised by the shareholder) shall receive equity shares or non-convertible redeemable preference shares of the Transferee Company for the proposed Scheme.

The Scheme is subject to necessary statutory and regulatory approvals under applicable laws and the approval of the shareholders, creditors and others.

The "Appointed Date" for the Scheme, if approved will be 1st April 2019.

4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Company provides complete seating solutions for driver and cabin seating for commercial vehicles, tractors and construction equipment, as well as passenger seats for buses across all segments and has established itself as a leader in these segments in the country.

INDUSTRY STRUCTURE AND DEVELOPMENTS

In 2018-19, the economy grew by 6.8% (revised series) as against 6.9% (revised series) previous year.

The following table highlights the segment wise industry sales in vehicle units for the year 2018-19.

Category 2018-19 2017-18 Variance
(in Nos) (in Nos) (in %)
Medium and Heavy Commercial Vehicles (M & H CV) 4,39,164 3,84,408 14.2
Light Commercial Vehicles (LCV) 6,67,883 5,69,010 17.4
Buses - M & H CV 47,707 47,827 (0.3)
Tractors 8,93,495 7,90,673 13.0

[ Source: SIAM, CRISIL, internal estimates]

The Company registered sales at ? 477.60 Cr in 2018-19 as against ? 444.28 Cr in 2017-18. During the year, efficiency in supply chain was improved through inter-plant coordination, horizontal deployment of lean and other improvement initiatives across all plants.

These initiatives, along with the implementation of various other cost reduction projects across functions have enabled the Company to post a profit before tax of ? 29.05 Cr in 2018-19.

OPPORTUNITIES AND THREATS

The Company has initiated new product development activities to maintain the leadership position in the tractor segment in the domestic market and grow the export market. The Company continues to strengthen its position in export markets and has won significant new orders from overseas customer. The supplies are scheduled in 2019-20. The Company also has developed high end pneumatic and mechanical suspension seats as platform product offerings. It continues to actively seek orders from global OEMs in the current year. As a leader in the bus passenger seats with a wide range of seats, the Company has further strengthened its position with new product launches in North India. The market has well responded to these new launches and the Company is gaining market share in this region.

A significant competitive threat is the entry of overseas manufacturers and the Indian bus body builders getting into seat manufacturing. The Company continues to invest in strengthening the design and testing capabilities to retain the market leadership status.

The Company aims to take advantage of the growing Tractor industry by offering platform products to leading tractor OEMs and thereby looks forward to win a large share of domestic sales. With respect to the CV OEMs, the Company is taking steps to retain the sales growth by expanding customer base and increasing share of business in existing domestic customers.

PRODUCT-WISE PERFORMANCE

During the year, the Company posted a growth of 9% in overall sales. The Companys sales grew in the commercial vehicle segment and in the bus passenger seats better than the market growth. Export sales grew by 15% in current products and new products customers. In the case of domestic tractor segment, the Company catered to the existing base of customers and experienced 9% growth. The Company positively looks forward to improve new product development lead time and effectively establish growth in domestic tractor market in 2019-20.

AWARDS & RECOGNITION

The Company received the award for "Supplier of the Year" from TAFE during the year. Further, the Company performance was recognised by John Deere with an award of "Partner" level recognition at their Global Vendor Conference.

BUSINESS OUTLOOK AND OVERVIEW

Indian economy is expected to grow at 6.5%-7.1% in 2019-20. The M&HCV segment is expected to grow at 6% and LCV >3.5T segment at 7%. Bus segment is also expected to grow at 4% and tractor segment at 2% in 2019-20 (based on SIAM, CRISIL and internal estimates).

RISKS AND CONCERNS

The Indian commercial vehicle industry has strong correlation with the agricultural growth, infrastructure development and the mining industry and is cyclical. The Companys presence across the segments of auto industry will largely mitigate the segment specific risks. The Company plans to develop additional products to maintain its growth plans. The Company has also put in place initiatives to improve product quality to support the growth plans.

The Rupee has depreciated sharply in the last year against the US dollar. There may not be a major change in 2019-20, nor any further depreciation. The Company will continue to take suitable forex cover to mitigate the risk in foreign exchange fluctuations.

RISK MANAGEMENT POLICY

The Board has established a Risk Minimization Policy which formalizes the Companys approach to overview and manage material business risks. The policy is implemented through a top down and bottom up approach identifying, assessing, monitoring and managing key risks across the Companys business units. Risks and effectiveness of their management are internally reviewed and reported regularly to the Board. The management has reported to the Board that the Companys risk management and internal compliance and control systems are operating efficiently and effectively in all material respects. The Board is satisfied that there are adequate systems and procedures in place to identify, assess, monitor and manage risks. The Audit Committee also reviews reports by Members of the management team and recommends suitable action. Risk Minimization Policy has been approved by the Board.

OPERATIONS REVIEW

a. Manufacturing:

The Company has continued its focus on having best manufacturing processes and facilities. It has also imparted training to key employees in an effort to reskill people and upgrade the manufacturing processes, apart from improvements in the facility by means of automation. Further improvements of Lean Manufacturing / Flow Management initiatives will help the Company in containing manufacturing costs.

The Companys initiatives to introduce new refresh ideas in existing products was well received by leading customers both in OEM and aftermarket segment.

b. Quality:

The Company continues to take steps to improve further the quality of its products. The Final Product Audit (FPA) initiative taken by the Company has brought appreciation from customers. The quality system at the factories aims at achieving total customer satisfaction through its focus on improving product quality. Consistently, the Company has been achieving improved Quality levels at the customer-end, both in their line and warranty quality.

The Companys plants are certified for IATF 16949. In addition, the Quality laboratory as well as the R&D test facility at the Company is certified by National Accreditation Board for Testing and Calibration Laboratories (NABL) for conformance to ISO/IEC 17025. 100% employee participation in the Companys improvement programmes like suggestion schemes, quality control circle projects, supervisory improvement team projects, cross functional team projects and task force team projects continued successfully for the 18th year in succession.

c. Focus on Vendor Development:

The Company continued its vendor development initiative through Visionary Small and Medium Enterprise programme.

INTERNAL CONTROL AND THEIR ADEQUACY

The Company has a proper and adequate internal control system to ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized and recorded. Information provided to management is reliable and timely. The Company ensures adherence to all statutes.

INTERNAL FINANCIAL CONTROL

The Company has an established internal financial control framework including internal controls over financial reporting, operating controls and anti-fraud framework. The framework is reviewed regularly by the management and tested by internal audit team and presented to the audit committee. Based on the periodical testing, the framework is strengthened, from time to time, to ensure adequacy and effectiveness of Internal Financial Controls.

KEY FINANCIAL RATIOS

Particulars Unit of Measurement Standalone Consolidated
2017-18 2018-19 2017-18 2018-19
Interest
Coverage Ratio Times 36.25 17.29 58.43 20.42
Debt Equity Ratio % 14.60% 23.65% 14.50% 17.76%
Operating
Profit Margin % 8.86% 6.28% 6.45% 7.96%
Net Profit Margin % 8.62% 5.92% 7.82% 6.13%
Return on Net worth % 30.08% 18.35% 36.04% 24.80%

Profit before tax in 2018-19 was ? 29.05 Cr as against previous years ? 39.18 Cr, resulting in change in profit related ratios.

Working capital borrowing has increased during the year which has impacted the Interest coverage and Debt equity ratios.

HUMAN RESOURCE DEVELOPMENT

The Company has achieved a good financial performance, through the concerted and goal-aligned efforts by employees across the hierarchy. The Company places on record its deep appreciation for the exemplary contribution of the employees at all levels.

The Company continued to induct fresh talent. The Company has upgraded the training needs identification based on the role requirements and gaps in this identification are closed by providing training to improve employee competencies. The Companys industrial relations continue to be cordial.

As of 31st March 2019, the Company had 358 employees on its rolls.

CAUTIONARY STATEMENT

Statements in the management discussion and analysis report describing the Companys objectives, projections, estimates, expectations may be forward looking statements within the meaning of applicable Securities Laws and Regulations. Actual results could differ materially from those expressed and implied. Important factors that could make a difference to the Companys operations include, among other things, economic conditions affecting the demand, supply and price conditions in the markets in which the Company operates, changes in government regulations, tax laws and other statutes and incidental factors.

5. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 (the Act, 2013) with respect to Directors Responsibility Statement, it is hereby stated that -

i. in the preparation of annual accounts for the financial year ended 31st March 2019, the applicable Accounting Standards had been followed along with proper explanation relating to material departures if any;

ii. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit of the Company for the year under review;

iii. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors had prepared the annual accounts for the financial year ended 31st March 2019 on a "going concern basis";

v. that the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

vi. that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR activities have already been textured into the Companys value system through Srinivasan Services Trust (SST), established in 1996 with the vision of building self-reliant rural community. Over 23 years of service, SST has played a pivotal role in changing lives of people in rural India by creating self-reliant communities that are models of sustainable development. The Company is eligible to spend on their ongoing projects / programs, falling within the CSR activities specified under the Act, 2013 as mandated by the Ministry of Corporate Affairs for carrying out the CSR activities.

The Committee formulated and recommended a CSR policy in terms of Section 135 of the Act, 2013 along with a list of projects / programmes to be undertaken for CSR spending in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014. Based on the recommendation of the CSR Committee, the Board has approved the projects / programmes carried out as CSR activities by SST, constituting more than 2% of the average net profits of the Company, made during the three immediately preceding financial years, towards CSR spending for the financial year 2018-19 amounting to ? 52 Lakhs.

Presently, SST is working in 5,000 villages spread across Tamil Nadu, Karnataka, Maharashtra, Himachal Pradesh and Andhra Pradesh covering a population of about 31 lakhs and 7 lakh families. SST has focussed on the areas of economic development, health care, education, environment and infrastructure in around 3000 villages so far. SST will focus in the other 2000 villages also, so that all the areas are covered in the next 3 years.

As required under Section 135 of the Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual Report on CSR, containing the particulars of the projects / programmes approved and recommended by CSR Committee and approved by the Board for the financial year 2018-19 are given by way of Annexure IV attached to this Report.

7. FINANCIAL PERFORMANCE AND POSITION OF THE SUBSIDIARY COMPANY

As on the date of this report, Harita Fehrer Limited, Chennai (HFRL) is the only subsidiary of the Company.

HFRL is a material un-listed Indian subsidiary in terms of Regulation 24 read with Regulation 16(1)(c) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), as the total turnover of the subsidiary exceeds 10% of the consolidated turnover of the Company.

During the year, HFRL achieved a turnover of ? 548.80 cr and earned a profit after tax of ? 23.33 cr (before Other comprehensive Income). HFRL declared two interim dividends for the year ended 31st March 2019 aggregating to ? 5.00 per share (50%) on 2,00,98,040 equity shares of ? 10/- each absorbing a sum of ? 12.12 cr including dividend distribution tax.

8. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of the Act, 2013 read with the Companies (Accounts) Rules, 2014 and Regulation 33 of the Listing Regulations along with a separate statement containing the salient features of the financial performance of the subsidiary. The audited consolidated financial statements together with Auditors Report form part of the Annual Report.

The audited financial statements in respect of the subsidiary Company will be made available to the shareholders, on receipt of a request from any shareholder and it has also been placed on the website of the Company. This will also be available for inspection by the shareholders at the registered office during the business hours. The consolidated profit after tax of the Company and its subsidiary amounted to ? 40.23 cr for the financial year 2018-19 as compared to ? 49.13 cr in the previous year.

9. DIRECTORS & KEY MANAGERIAL PERSONNEL Independent Directors (IDs)

All IDs hold office for a fixed term and are not liable to retire by rotation.

At the Annual General Meeting (AGM) held on 6th August 2014, M/s H Lakshmanan, S I Jaffar Ali and C N Prasad were appointed as IDs for the first term of five consecutive years from the conclusion of the Eighteenth AGM and to receive remuneration by way of fees, reimbursement of expenses for participation in the meetings of the Board and / or Committees and profit related commission in terms of applicable provisions of the Act, 2013 as determined by the Board from time to time.

At the AGM of the Company held on 13th August 2018, Mr L Bhadri and Ms Sasikala Varadachari were appointed as IDs for the second term of three consecutive years effective 13th October 2018 and 22nd March 2019 respectively. Subject to the approval of Nomination and Remuneration Committee and Board, M/s H Lakshmanan, S I Jaffar Ali and C N Prasad are proposed to be re-appointed for the second term of three consecutive years from 6th August 2019 as IDs of the Company in terms of Section 149 of the Act, 2013 on the same terms of appointment and remuneration by way of fees and profit related commission, if any, subject to approval of Shareholders through Postal Ballot. On appointment, each ID has acknowledged the terms of appointment as set out in their letter of appointment. The terms cover inter alia, the duties, rights of access to information, disclosure of their interest / concern, dealing in Companys shares, remuneration and expenses, insurance and indemnity. The IDs are provided with copies of the Companys policies and charters of various committees of the Board.

In accordance with Section 149(7) of the Act 2013, all IDs have declared that they meet the criteria of independence as provided under Section 149 (6) of the Act, 2013 and Regulation 25 of the Listing Regulations.

The detailed terms of appointment of IDs is disclosed on the Companys website in the following link www.haritaseating.com/PDF/HSSL-TermsofAppointmentofIDs.pdf

Separate meeting of Independent Directors:

During the year under review, a separate meeting of IDs was held on 20th March, 2019 and all the Independent Directors were present at the Meeting.

Based on the set of questionnaires complete feedback on Non-Independent Directors and details of various activities undertaken by the Company were provided to IDs to facilitate for their review / evaluation.

a) Non-Independent Directors (Non-IDs)

IDs used various criteria and methodology practiced in Industry, prescribed by NRC for evaluation of Mr Martin Grammer Non-ID, Chairman of the Board and the Board as a whole. IDs evaluated the performance of Mr Martin Grammer individually, through a set of questionnaires. They reviewed his interaction during the board meetings and strategic inputs given by him to improve the risk management, internal controls and contribution to the Companys growth.

IDs were satisfied fully with the performance of Mr Martin Grammer.

b) Chairman

The IDs reviewed the performance of Chairman of the Board after taking in to account his performance and bench marked the achievement of the Company with industry under the stewardship of Chairman.

The IDs also placed on record, their appreciation of Chairmans visionary leadership, setting tone, pace and opportunity for positive change and passion for constant improvement and admired the high standards of integrity and probity, quality and adequacy of leadership of Chairman and his versatile performance.

The IDs also endorsed that the Chairman is a very accomplished leader and is exceptionally well informed about the state of economy.

c) Board

IDs also evaluated Boards composition, size, mix of skills and experience, its meeting sequence, effectiveness of discussion, decision making, follow up action, so as to improve governance and enhance personal effectiveness of Directors. The evaluation process focused on Board Dynamics and upon evaluation, IDs concluded that the Board is well balanced in terms of diversity of experience with expert in each domain viz., Banking, Finance, Operations, Legal, Administration and International economy. The Company has a Board with wide range of expertise in all aspects of business.

The IDs unanimously evaluated the prerequisites of the Board viz., formulation of strategy, acquisition & allocation of overall resources, setting up policies, directorss election process and cohesiveness on key issues and satisfied themselves that they were adequate.

They were satisfied with the Companys performance in all fronts and finally concluded that the Board operates with global best practices.

IDs have also ensured that the skills / expertise / competence of the Board of Directors are in line with the Companys business requirement to enable it to function effectively.

d) Quality, Quantity and Timeliness of flow of Information between the Company, Management and the Board

All IDs have expressed their overall satisfaction with the support received from the management and the excellent work done by the management during the last year and also relationship between the top management and Board is smooth and seamless.

Directors appointment / re-appointment

In terms of the provisions of sub-section (6) read with explanation to Section 152 of the Act, 2013, two-thirds of the total number of directors i.e., excluding IDs, are liable to retire by rotation and out of which, one-third is liable to retire by rotation at every Annual General Meeting.

Mr Martin Grammer, Director is liable to retire by rotation at the AGM, and being eligible, offers himself for re-appointment.

The Directors have recommended his reappointment. A brief resume of the Director proposed to be re-appointed and other relevant information have been furnished in the Notice of AGM. Appropriate resolution for his reappointment is being placed for approval of the shareholders at the AGM.

Key Managerial Personnel (KMP)

In terms of Section 2(51) and Section 203 of the Act, 2013, Mr A G Giridharan, President & CEO, Mr S Jagannathan, Chief Financial Officer and Ms N Iswarya Lakshmi, Company Secretary are KMPs of the Company.

Nomination and Remuneration Policy

NRC reviews the composition of the Board, to ensure an appropriate mix of abilities, experience and diversity to serve the interests of all shareholders and the Company.

Nomination and Remuneration Policy was approved by the Board at its meeting held on 22nd September, 2014 and amended from time-to-time in terms of Section 178 of the Act, 2013. The objective of such policy shall be to attract, retain and motivate executive management and devise remuneration structure to link to Companys strategic long term goals, appropriateness, relevance and risk appetite. NRC will identify, ascertain the integrity, qualification, appropriate expertise and experience, having regard to the skills that the candidate will bring to the Board / Company, whenever the need arises for appointment of Directors / KMP.

Criteria for performance evaluation, disclosures on the remuneration of directors, criteria of making payments to non-executive directors have been disclosed as part of Corporate Governance Report attached herewith.

Evaluation of Directors and Committees

In terms of Section 134 of the Act, 2013 and the Corporate Governance requirements as prescribed under the Listing Regulations, the Board reviewed and evaluated all Directors (excluding the Director being evaluated) and various Committees viz., Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders Relationship Committee, based on the evaluation criteria laid down by the NRC i.e., through a set of questionnaires.

Directors

The performance of all Directors were assessed against a range of criteria such as contribution to the development of business strategy and performance of the Company, understanding the major risks affecting the Company, clear direction to the management and contribution to the Board cohesion. The performance evaluation has been done by the entire Board of Directors, except the Director concerned being evaluated.

The Board noted that all Directors have understood the opportunities and risks to the Companys strategy and are supportive to the direction articulated by the management team towards consistent improvement.

On the basis of the report of performance evaluation of directors, the Board noted and recorded that all the directors should extend and continue their term of appointment as Directors / Independent Directors, as the case may be.

Committees

Board delegates specific mandates to its Committees, to optimize Directors skills and talents besides complying with key regulatory aspects.

- Audit Committee for overseeing financial Reporting;

- Risk Management Committee for overseeing the risk management framework;

- Nomination and Remuneration Committee for selecting and compensating Directors / KMPs / SMPs;

- Stakeholders Relationship Committee for redressing investors grievances; and

- Corporate Social Responsibility Committee for overseeing CSR initiatives and inclusive growth.

The performance of each Committee was evaluated by the Board after seeking inputs from its Members on the basis of specific terms of reference, its charter, time spent by the Committees in considering key issues, quality of information received, major recommendations / action plans and work of each Committee. The Board is satisfied with overall effectiveness and decision making of all Committees. The Board reviewed each Committees terms of reference to ensure that the Companys existing practices remain appropriate.

Recommendations from each Committee were considered and approved by the Board prior to its implementation, wherever necessary and there were no items where the board had not accepted any recommendation of any committee of the board in the relevant financial year. Details of Committees, its charter, functions are provided in the Corporate Governance Report attached to this Report.

Number of board meetings held

The number of Board meetings held during the financial year 2018-19 is provided as part of Corporate Governance Report prepared in terms of the Listing Regulations.

10. AUDITORS

Statutory Auditors

The Company at its twenty first AGM held on 9th August 2017 appointed M/s Raghavan, Chaudhuri & Narayanan, Chartered Accountants, Bengaluru, having Firm

Registration No. 007761S allotted by The Institute of Chartered Accountants of India, as statutory auditors of the Company to hold office, for the first term of five consecutive years, from the conclusion of the said AGM, at such remuneration in addition to applicable taxes, out of pocket expenses, travelling and other expenses as may be mutually agreed between the Board of Directors of the Company and the Auditors.

The Statutory Auditors will continue to hold office for the 3rd year in the first term of five consecutive years, from the conclusion of this AGM. The Company has obtained necessary certificate under Section 141 of the Act, 2013 conveying their eligibility for being statutory auditors of the Company for the year 2019-20. The Auditors Report for the financial year 2018-19 does not contain any qualification, reservation or adverse remark and the same is attached with the annual financial statements.

Secretarial Auditor

As require under Section 204 of the Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company is required to appoint a Secretarial Auditor for auditing secretarial and related records of the Company.

The Secretarial Audit Report for the year 2018-19 given by Ms B Chandra, Practicing Company Secretary, Chennai is attached to this report. The Secretarial Audit Report does not contain any qualification, reservation or other remarks. The Board at its meeting held on 8th May, 2019 has re-appointed Ms B Chandra, Practising Company Secretary, Chennai as Secretarial Auditor for carrying out the secretarial audit for the financial year 2019-20.

11. CORPORATE GOVERNANCE

The Company has been practicing the principles of good governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under SEBI LODR Regulations, 2015 forms part of this Annual Report.

The CEO & CFO of the Company have certified to the board on financial statements and other matters in accordance with Regulation 17 (8) of the Listing Regulations pertaining to CEO/CFO certification for the financial year ended 31st March 2019.

12. POLICY ON VIGIL MECHANISM

The Company has adopted a Policy on Vigil Mechanism in accordance with the provisions of Act, 2013 and Regulation 22 of the Listing Regulations, which provides a formal mechanism for all Directors, Employees and other Stakeholders of the Company to report to the management, their genuine concerns or grievances about unethical behaviour, actual or suspected fraud and any violation of the Companys Code of Business Conduct and Ethics.

The Code also provides a direct access to the Chairman of the Audit Committee to make protective disclosures to the management about grievances or violation of the Companys Code. The Board at its meeting held on 8th May 2019 made certain amendments to the Whistle Blower Policy for reporting any allegations of material nature on any leakage of Unpublished Price Sensitive Information.

The Policy is disclosed on the Companys website with the following link www.haritaseating.com/PDF/WhistleBlowerPolicy.pdf

13. PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Section 76 of the Act, 2013, for the year ended 31st March 2019.

14. STATUTORY STATEMENTS

Information on conservation of energy, technology absorption, foreign exchange, etc.

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure I to this report, in terms of the requirements of Section 134(3)(m) of the Act, 2013 read with the Companies (Accounts) Rules 2014.

Material changes and commitments

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

Significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company

There are no significant and material orders passed by the Regulators or Courts or Tribunals, which would impact the going concern status of the Company and its future operations.

Annual Return

Extract of the Annual Return in prescribed form is given as Annexure-II to this Report, in terms of the requirements of Section 134(3)(a) of the Act, 2013 read with the Companies (Accounts) Rules, 2014.

The same is available on the companys website in the following link http://www.haritaseating.com/PDF/Annual_Return_2018-19.pdf

Employees remuneration

Details of employees receiving the remuneration in excess of the limits prescribed under Section 197 of the Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as a statement and given in Annexure III. In terms of first proviso to Section 136(1) of the Act, 2013 the Annual Report, excluding the aforesaid annexure is being sent to the shareholders of the Company. The annexure is available for inspection at the Registered Office of the Company during business hours and any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company.

Comparative analysis of remuneration paid

A comparative analysis of remuneration paid to Directors and employees with the Companys performance is given as Annexure V to this report.

Details of material related party transactions

Details of material related party transactions under Section 188 of the Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, are given in Annexure VI to this report in the prescribed form.

Details of loans / guarantees / investments made

During the year under review, the Company had not granted any loans or guarantees covered under Section 186 of the Act 2013.

Please refer note no.3 to Notes on accounts for the financial year 2018-19, for details of investments made by the Company.

Reporting of fraud

The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Act, 2013.

Disclosure in terms of Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has Internal Complaints Committees as required under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, there were no cases filed pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

15. ACKNOWLEDGEMENT

The Directors acknowledge the support and cooperation received from the promoters, Harita Group and Mr Martin Grammer. The Directors thank the customers, suppliers, financial institutions and bankers for their valuable support and assistance.

The Directors wish to place on record their appreciation of the sincere efforts of all the employees of the Company during the year under review.

The Directors also thank the shareholders for their continued faith in the Company.

For and on behalf of the Board
Chennai H Lakshmanan
8th May 2019 Chairman