Harita Seating Systems Limited · 2019-12-06 · HARITA SEATING SYSTEMS LIMITED 3 Notice to the shareholders NOTICE is hereby given that the Ninth Annual General Meeting of the shareholders

Harita Seating Systems Limited Annual Report 2004 - 2005

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HARITA SEATING SYSTEMS LIMITED

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Financial Highlights (Rs. In lakhs)

Year ended 1999 2000 2001 2002 2003 2004 2005

Profit & Loss Account

Sales 5091.63 5983.67 6937.37 6025.27 7873.25 9202.06 11798.82

Other Income 93.67 40.95 40.47 38.45 48.71 90.81 117.93

Total Income 5185.30 6024.62 6977.84 6063.72 7921.96 9292.87 11916.75

Gross Profit before interest, depreciation & tax

658.34

751.32

778.99

490.58

730.09

894.03

987.92

Depreciation 129.32 153.11 138.30 164.11 174.99 212.76 269.39

Profit before Interest & tax 529.02 598.21 640.69 326.47 555.10 681.27 718.53

Interest 98.49 102.87 76.55 39.97 10.11 0.35 0.28

Profit before taxation 430.53 495.34 564.14 286.50 544.99 680.92 718.25

Profit after taxation 281.53 292.34 357.14 182.06 341.80 437.69 451.78

Balance Sheet

Net fixed assets 952.22 1025.52 1226.41 1172.41 1329.35 1564.07 1878.80

Investments 0.11 0.10 0.08 0.06 0.06 661.12 367.96

Net Current Assets 992.15 1202.43 1167.56 1066.82 924.23 305.29 598.89

Miscellaneous expenses 4.26 2.78 – – – – –

Total 1948.74 2230.83 2394.05 2239.29 2253.64 2530.48 2845.65

Share Capital 388.45 388.45 388.45 388.45 388.45 388.45 388.45

Reserves & Surplus 806.05 987.31 1236.89 1227.27 1464.20 1767.96 2082.72

Net Worth 1194.50 1375.76 1625.34 1615.72 1852.65 2156.41 2471.17

Loan Funds 754.24 855.07 768.71 521.02 265.25 240.10 220.04

Deferred tax liability – – – 102.55 135.74 133.97 154.44

Total 1948.74 2230.83 2394.05 2239.29 2253.64 2530.48 2845.65

Earnings per share (Rs.) 7.25 7.53 9.19 4.69 8.92 11.20 11.75

Dividend per share (Rs.) 2.50 2.50 2.50 2.50 2.50 3.00 3.20

Book value per share (Rs.) 30.64 35.35 41.84 41.59 47.69 55.51 63.62

Return on capital employed % (ROCE) 28.4 28.0 28.2 15.2 27.8 30.4 28.4

Return on net worth % (RONW) 25.6 22.8 23.8 11.2 19.7 21.8 19.5

Fixed asset turnover (No. of times) 5.42 6.05 6.16 5.02 6.29 6.36 6.85

Working capital turnover (No. of times) 5.70 5.45 5.85 5.39 7.91 14.97 26.10

Gross profit as % of total income 12.7 12.5 11.2 8.1 9.2 9.6 8.3

Profit before tax as % of total income 8.3 8.2 8.1 4.7 6.9 7.3 6.0

ROCE is profit before interest and taxation divided by average networth plus loan funds.

RONW is profit after tax divided by average networth

Fixed assets turnover is sales divided by average net fixed assets as at the end of the year.

Working capital turnover is sales divided by average net current assets as at the end of the year.


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Notice to the shareholders

NOTICE is hereby given that the Ninth Annual General Meeting of the shareholders of the company will be held at Kasturi Srinivasan Hall (Mini Hall),`The Music Academy’, New No.168 (Old No.306), TTK Road, Chennai 600 014 on Monday, the 5th September 2005 at 2.00 p.m. to transact the following business:

ORDINARY BUSINESS

1. To consider and if thought fit to pass with or without modification the following resolution as an ordinary resolution:

RESOLVED THAT the audited balance sheet as at 31st March 2005 and the profit and loss account of the company for the year ended on that date, together with the directors’ report and the auditors’ report thereon as presented to the meeting be and the same are hereby approved and adopted.


RESOLVED THAT pursuant to the recommendation of directors, a dividend of Rs. 3.20 per share absorbing a sum of Rs. 124.30 lakhs be and is hereby declared on 38,84,520 equity shares of Rs. 10/- each fully paid up comprised in the paid up equity share capital of the company viz.,Rs.388.45 lakhs, for the year ended 31st March 2005 and the same be paid to the shareholders whose names appear in the register of members of the company as at the close of 24th August 2005.


RESOLVED THAT Mr H Lakshmanan, director, who retires by rotation and being eligible for re-appointment, be and is hereby re-appointed as a director of the company.


RESOLVED THAT Mr C Narasimhan, director, who retires by rotation and being eligible for re-appointment, be and is hereby re-appointed as a director of the company.


RESOLVED THAT the retiring auditors, Messrs. Sundaram & Srinivasan, Chartered Accountants, Chennai be and are hereby re-appointed as auditors of the company to hold office from the conclusion of this meeting till the conclusion of the next annual general meeting of the company on such remuneration as may be fixed in this behalf by the board of directors of the company.

By Order of the Board

Chennai H Lakshmanan 17th June 2005 Director

Registered office: “Jayalakshmi Estates” 24, Haddows Road Chennai 600 006

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of himself and the proxy or proxies so appointed need not be a member or members as the case may be of the company. The instrument appointing the proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the registered office of the company not later than 48 hours before the time fixed for holding the meeting.

2. The register of members and the share transfer books of the company will remain closed from 25th August 2005 to 31st August 2005 both days inclusive.

3. The dividend on the equity shares as recommended by the board of directors if approved by the shareholders in the ensuing annual general meeting will be paid on 6th September 2005 to those shareholders (or their mandatees) whose names appear in the register of members of the company as at the close of 24th August 2005.

4. In terms of Section 205A read with Section 205C of the Companies Act, 1956, the dividends declared by the company which remain unclaimed for a period of seven years will be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government on the due dates. The particulars of


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due dates for transfer of such unclaimed dividends to IEPF are furnished in the report on corporate governance forming part of the annual report.

Members who have not encashed their dividend warrants are requested to make their claim by surrendering the unencashed warrants immediately to the company.

5. Members holding shares in physical form, in their own interest, are requested to dematerialise the shares to avail the benefits of electronic holding / trading.

6. Members are requested to notify to the company immediately any change in their address. Members holding shares in depository are requested to advice change of address to their depository participants.

7. As a measure of economy, copies of the annual report will not be distributed at the annual general meeting. Members are therefore requested to bring their copies of the annual report to the meeting.

8. Members are requested to affix their signature at the space provided on the attendance sheet annexed to the proxy form and hand over the slip at the entrance of the meeting hall.

9. In terms of clause 49 of the listing agreement with stock exchanges, a brief resume of directors who are proposed to be re-appointed at this meeting is given below:

I. Mr H Lakshmanan

Born on 14th August 1933, Mr H Lakshmanan is a company executive with vast experience. He joined the TVS Group in 1953. He rose to the position of executive director of Sundaram-Clayton Limited in 1982 and continues to hold the position. He has rich experience, expertise and knowledge in areas such as banking, finance, business administration and human resources.

He is the Chairman of the Audit committee, Investors Grievance Committee and Administrative Committee of the company. Details of his other directorships and membership/chairmanship of committees are given below:

Name of the company Position held Committee

membership/chairmanship TVS Motor Company Limited Director –

Harita NTI Limited Director – Anusha Investments Limited Whole time director Audit committee – Member Harita Stocks Limited Director – Sundaram Auto Components Limited Director – Auto (India) Engineering Limited Director – Sundaram Investment Limited Director – TVS Electronics Limited Director Audit committee – Member TVS Finance and Services Limited

Director Investors’ grievance committee –Member Audit committee – Member

TVS Investments Limited Director Audit committee – Chairman Harita Infoserve Inc. USA Director – Harita Infoserve Limited Director Audit committee – Chairman Sundaram Clayton Senior Officers Welfare Foundation (P) Limited

Director –

Harita Engineering Services (P) Limited Director –


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II. Mr C Narasimhan

Born on 1st August, 1941, Mr C Narasimhan is a company executive with vast experience. He started his career as a mechanical engineer in Crompton Greaves Ltd., Mumbai in the year 1963. He had a successful career spanning over 30 years, specializing in operations management, production engineering and total quality control practices. He joined the TVS Group in 1995 as president of M/s Sundaram – Clayton Ltd and continues to hold the position. He is one of the key members who were involved in the process that enabled Sundaram-Clayton Ltd to win the prestigious Deming Prize and Japan Quality Medal, the first Indian company to earn both these recognitions. He is a recipient of the “Firodia award” for outstanding contribution to Industrial Engineering.

He is a director on the boards of Anusha Investments Ltd, Auto (India) Engineering Ltd and other companies. He is a member of the TPM Club of India, Executive Committee member of Automotive Component Manufacturers Association of India and also Vice Chairman of ACMA Centre for Technology.

He is the chairman of the Audit Committee of Anusha Investments Ltd and the member of the Audit committee, Investors Grievance Committee and Administrative Committee of the company.


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Directors’ report to the shareholders

The directors herewith present the ninth annual report of the company and the audited accounts for the year ended 31st March 2005.

FINANCIAL HIGHLIGHTS

(Rs. in lakhs)

Year ended Year ended 31.3.2005 31.3.2004

Sales and other income 11916.75 9292.87

Gross profit before interest and depreciation 987.92 894.03

Interest 0.28 0.35

Depreciation 269.39 212.76

Profit before tax 718.25 680.92

Provision for taxation 266.47 243.23

Profit after tax 451.78 437.69

Add: Surplus brought forward 143.93 140.17

Tax relating to earlier years 4.71 (2.46)

Profit available for appropriation 600.42 575.40

Appropriations:

Dividend 124.30 116.54

Tax on dividend 17.43 14.93

Transfer to general reserve 300.00 300.00

Surplus in profit and loss account 158.69 143.93

DIVIDEND

The directors recommend a dividend of 32% for the year ended 31st March 2005. The dividend, if approved by the shareholders, would absorb a sum of Rs.124.30 lakhs and will be paid to all shareholders whose names stand on the register of members as at the close of 24th August 2005.

PERFORMANCE DURING THE YEAR

The year 2004-05 has been a milestone year for the company - sales crossed the Rs.100 crores mark for the first time and ended the year with Rs.117.99 crores, recording a growth of 28% over the previous year. During

the same period, profit after tax rose from Rs.437.69 lakhs to Rs.451.78 lakhs.

The financial and operational performance of the company for the year under review along with other material disclosures are furnished in the management discussion and analysis report as a separate statement in terms of clause 49 of the listing agreement, forming part of the annual report.

APPROPRIATIONS

Out of the profit available for appropriation a sum of Rs.300 lakhs has been transferred to General Reserve. The surplus of Rs.158.69 lakhs has been retained in the profit and loss account.

DIRECTORS

With deep regret the directors announce that Mr Georg Grammer, one of the founder directors of the company, passed away on 15th May 2005 at the age of 74 years in his home town in Germany. Mr Georg Grammer was deeply involved in the progress of the company right from the beginning and had greatly contributed to its growth.

The directors wish to place on record their appreciation of the yeoman service rendered by Mr Georg Grammer during the tenure of his directorship in the company and convey their condolences to his family members.

Mr H Lakshmanan and Mr C Narasimhan directors retire at the ensuing annual general meeting of the company and being eligible offer themselves for re-appointment.

AUDITORS

M/s Sundaram and Srinivasan, Chartered Accountants, Chennai, retire at the ensuing annual general meeting and are eligible for re-appointment.

CORPORATE GOVERNANCE

As required by clause 49 of the listing agreement, a management discussion and


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analysis report and a report on corporate governance are enclosed. A certificate from the auditors of the company regarding compliance of the conditions of corporate governance as stipulated by clause 49 of the listing agreement is attached to this report.

STATUTORY STATEMENTS

As per the requirements of section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished in annexure I to this report.

The particulars required pursuant to section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Emplo-yees) Rules, 1975, as amended are furnished in annexure II to this report.

As required under section 217(2AA) of the Companies Act, 1956, the directors’ responsibility statement is given in annexure III to this report.

ACKNOWLEDGEMENT

The directors acknowledge the support and co-operation received from the promoters, Harita Group, Chennai.

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 for 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 C Narasimhan 17th June 2005 Director Director


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Annexure 1 to the Directors report for the year ended 31st March 2005 INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956

A. CONSERVATION OF ENERGY

(1) Measures taken

(i) Changeover to Liquefied petroleum gas (LPG) from high speed diesel (HSD) for powder coating heating process.

(ii) Modification of chilling plant.

(iii) Introduction of high energy motors for foaming process.

(iv) Conversion to variable frequency drive for motors.

The above measures have resulted in the annual savings of Rs. 10.15 Lakhs.

(2) Proposed Measures

(i) Changeover to Liquefied petroleum gas (LPG) from Superior kerosene oil (SKO) for pretreatment process system.

(ii) Introduction of high energy transformer for power and distribution system.

(iii) Introduction of energy saving devices for compressed air system.

(iv) Introduction of energy saving luminaries for lighting system.

The above measures are expected to yield an annual savings of Rs. 8.00 Lakhs.

B. TECHNOLOGY ABSORPTION

Research & development

1. SPECIFIC AREAS IN WHICH R&D IS CARRIED OUT IN THE COMPANY

(i) Pour-in-place process for headrest developed for first time in India.

(ii) Integral skin process developed for production of armrest.

(iii) Development of new generation bus passenger seats and variants for various segments.

(iv) Development of new platform concept for Bus passenger DLX / Semi DLX segment.

(v) Development of seats for construction equipment for domestic and export market.

(vi) Development of seats for Multi Utility Vehicles.

(vii) Development of new generation modular suspension mechanism for driver seats.

2. BENEFITS DERIVED AS A RESULT OF ABOVE MEASURES:

(i) Enhanced bus passenger seat sales with STU’s and Private segment.

(ii) Enhanced market presence in tractor and driver seat segment.

(iii) Enhanced aesthetics and comfort levels to passengers and drivers.

(iv) Entry into automotive seating in Exports.

(v) Reduction in input cost due to introduction of alternate process.

3. FUTURE PLAN OF ACTION:

(i) Development of variants in new generation premium bus passenger seat.

(ii) Upgradation of semi-deluxe bus passenger seats.

(iii) Development of seats for new models of two wheeler seats.

(iv) Development of modular Low SIP suspended driver seats.

(v) Development of seats for Low tonnage vehicles.

(vi) Development of cost effective new type seats for auditorium.

4. EXPENDITURE ON R&D

Rs. in lakhs

(i) Capital 103.69

(ii) Recurring 126.66

(iii) Total 230.35

(iv) Total expenditure as a percentage of turnover 1.93%

5. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

(i) Efforts in brief:

(a) Development of cost effective alternate materials and processes to reduce the material cost.

(b) Exploration of various technologies in polyurethane foaming.


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(c) Development of new process in headrest foaming.

(ii) Benefits derived as a result of the above will be improvement in manufacturing process, upgradation of technology, improvement in product quality, aesthetics, productivity and end-user comfort besides improvement in profitability.

(iii) Details relating to imported technology : (Technology imported during the last 5 years reckoned from the beginning of the financial year)

NIL

C . FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to export :

(i) During the year 2004-05 export increased to Rs. 5.52 crores from Rs.3.84 crores in the previous year.

(ii) The company is continuing its efforts to export driver seats for agriculture, construction machinery, material handling equipment, Bus passenger seats and seat components to USA, European Union, middle east and far east nations.

(b) Total foreign exchange used and earned

Foreign exchange earnings : Rs.551.55 lakhs

Foreign exchange outgo : Rs.586.13 lakhs




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Annexure II to the Directors' report for the year ended 31st March 2005 Particulars of employees as per section 217(2A) of the Companies Act, 1956

Sl. No.

Name

Age (yrs)

Designation

Date of employ-

ment

Remuneration (Gross)

Rs.

Qualification

Experi- ence

(years)

Previous Employment

1

S Thiagarajan 57 President 27.11.1995 41,89,007 BE (Mech.) PDGBM (IIM-A)

32 Sr. Vice President Fisher Xomox (India) Ltd.

2

Y N Kale 47 General Manager (R&D)

02.03.1988 27,89,580 BE (Mech) M.DES (Product Design)

21 Product Designer Bharat Forge Ltd.

3

V Thiyagarajan

44

General Manager (Finance) & Company Secretary

11.02.1998

25,60,291

B.Com., ACA, ACS MBA

19

Manager-Finance Lakshmi Auto Components Ltd.

Notes: 1) Years of experience include experience prior to joining the company also. 2) Remuneration comprises of salary, dearness allowance wherever applicable, lease rent paid, special

allowance, contribution to provident fund and superannuation fund, medical reimbursement, medical insurance premium, leave travel assistance and other benefits evaluated under Income Tax Rules.

3) Besides, employees are entitled to gratuity as per rules. 4) None of the employees is related to any of the directors of the company. 5) Terms of employment of above mentioned employees are contractual. 6) None of the employees, either individually or together with spouse or children, held more than 2% of the

equity shares of the company. of the company.


Chennai H Lakshmanan C Narasimhan 17th June 2005 Director Director Annexure III to the Directors’ report for the year ended 31st March 2005 Directors’ Responsibility Statement as required under section 217(2AA) of the Companies Act, 1956

Pursuant to the requirement of section 217(2AA) of the Companies Act, 1956 with respect to Director’s Responsibility Statement, it is hereby stated:

i. that in the preparation of the annual accounts for the financial year ended 31st March 2005, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. that the directors had selected such accounting policies and applied them consistently and made judgements 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 of the profit of the company for the year under review;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and

iv. that the directors had prepared the annual accounts for the financial year ended 31st March 2005 on a “going concern basis”.




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Management Discussion And Analysis Report The company provides seating solutions for transport applications catering to all segments of the automotive industry in the country.

1. Industry Structure and Developments

Indian economy continued to perform well during 2004-05. During the year, industrial recovery firmed up driven mainly by manufacturing and service sectors and also through buoyant exports.

For the second year in succession, all segments of the automotive industry have performed well. Commercial vehicles, cars and two wheelers grew by 24%, 20% and 16% respectively. The tractor industry registered a healthy growth of 29%.

2. Product- wise performance

The company registered a strong growth of 65% in sale of bus passenger seats, mainly due to introduction of new products, increased market penetration and higher offtake by State Transport Undertakings (STU).

Tractor industry received a strong push owing to good monsoon in the previous year and good support from financial institutions. Sales of tractor seats increased from Rs.813 lakhs to Rs.1266 lakhs thus registering a growth of 56% over previous year.

In line with excellent growth in commercial vehicles in the country during 2004-05, supplies of driver and co-driver seats from the company also increased substantially at Rs. 1775 lakhs from Rs.1161 lakhs in the previous year registering a growth of 53%

Exports grew by 44% from Rs. 384 lakhs to Rs. 552 lakhs during 2004-05. However, two wheeler seats registered a negative growth during 2004-05.

3. Opportunities and threats

The continued good performance of the Indian economy in general and the automotive industry in particular, promises increasing opportunities for business growth. The capability attained by the company over the years in designing and developing seating system for varied applications offers abundant opportunity to expand its business to overseas markets. The company continues to upgrade product testing and validation facilities in line with international standards.

The company has the potential to increase further, its market share in bus passenger seats in the country, by developing products that meet the requirements of the market. The company also has potential to increase content per vehicle in buses by developing adjacent products.

Business other than bus passenger seats are demand driven. The company is continuously focusing all its efforts in meeting expectations of the customers year on year to retain and improve market share with OEMs and will strive hard to become most preferred supplier of seats.

The main threats to the company arises from competition in the domestic market, both from the organised and unorganised sector due to low entry barrier.

4. Risks and concerns:

The increasing trend of crude oil and steel prices globally continued throughout 2004-05. This had a direct adverse effect on the prices of materials used for seats affecting the bottom line of the company.

The effect of rising input costs was even felt by vehicle manufacturers, whose margins were under pressure and are likely to exert more pressure on components suppliers.

5. Business outlook and overview

The company continues to be the market leader in deluxe bus passenger seats. The company has entered the low end metro seating and the products have been well received by the STUs. As the STUs are in the process of upgradation of their metro buses, the outlook for this product is good.

Similarly in the OE market, company’s driver seats are perceived to be of good quality and command preference over competitors’ products. The company has submitted samples to overseas customers, who are vehicle manufacturers of great repute. Breakthrough in this area is expected during the current financial year.

6. Operations Review

For the first time, the company crossed the Rs.100 crores mark and closed the year with sales of Rs.117.99 crores compared to the previous year’s sales of Rs.92 crores. During the same period,


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profit after tax rose from Rs.437.69 lakhs to Rs.451.78 lakhs. During the year the company undertook low cost automation towards product improvement.

6.1 Quality

The company has

¬ Received certification for implementing ISO 14001-2004 for effective environ-mental management.

¬ Successfully completed surveillance audit of ISO/TS 16949.

¬ Automated online product inspection.

¬ Added new facilities for product testing and validation.

¬ Reduced customer end line rejection by implementing poka yokes.

¬ Implemented process audit of various processes for effective process management.

6.2 Focus on cost

In order to stay competitive, the company has been undertaking several measures like value engineering, alternate materials and processes, elimination of non-value added activities, productivity improvement, waste elimination, process and material optimisation, etc.

6.3 Financial performance

The financial and operational performance of the company for the year 2004-05 as compared to the previous year 2003-04 is furnished :

Year ended 31st March 2005

Year ended 31st March 2004 Particulars

Rs.in lakhs % Rs. in lakhs %

Income

Sales

Other income

11,798.82

117.93

99.0

1.0

9,202.06

90.81

99.0

1.0

Total Income 11,916.75 100.0 9,292.87 100.0

Raw materials and components consumed

Staff cost

Stores and tools consumed

Power and fuel

Repairs and maintenance

Other expenses

Interest

Depreciation

8,562.75

986.00

186.98

139.54

169.14

884.42

0.28

269.39

71.9

8.3

1.5

1.2

1.4

7.4

0.0

2.3

6,373.09

844.14

111.68

119.09

161.27

789.57

0.35

212.76

68.6

9.1

1.2

1.3

1.7

8.5

0.0

2.3

Total expenditure 11,198.50 94.0 8,611.94 92.7

Profit before tax 718.25 6.0 680.92 7.3

Provision for taxation - current tax

- deferred tax

246.00

20.47

2.1

0.2

245.00

(1.77)

2.6

(0.02)

Profit after tax 451.78 3.7 437.69 4.7


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Some of the key ratios for the current year are furnished in the following table:

UOM 2004-05 2003-04

EBITDA / turnover % 8.3 9.6

Profit before tax / turnover

% 6.0 7.3

Return on capital employed

% 28.4 30.4

Return on net worth

% 19.5 21.8

Earnings per share Rs. 11.75 11.20

6.4 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 authorised, recorded and reported.

6.5 Human resources development

The company strongly believes that employees are the assets of a successful organisation. The company provides continuous training to its employees to enhance their skill and knowledge to suit current requirements. The company has engaged qualified trainers and consultants to train employees and continuously improve its business process. The participation in total employee involvement (TEI) activities was 100% during the year.

As of 31st March 2005, the company had 304 employees in its rolls.

6.6 Awards and accolades

♣ Won Silver Trophy in Energy Conservation Award for the year 2004 in General Category from the Ministry of Power, Government of India, New Delhi

♣ Won Silver Trophy for Excellence in Manufacturing from the Automotive Components Manufacturing Association of India.

♣ Trophy for Best Organisation for Promoting Quality Control Circles in Private Sector at the National Conven-tion of Quality Control Forum of India.

Cautionary statement

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


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REPORT ON CORPORATE GOVERNANCE

1. Company’s philosophy on code of Governance

The company truly believes in transparency, professionalism and accountability, which are the basic principles of Corporate Governance and would constantly endeavour to improve on these aspects.

2. Board of Directors

a. Composition and category of directors

The board consists of four directors. All are non-executive and independent directors.

b. Attendance of each director at the meetings of the board of directors and the last annual general meeting :

During the financial year 2004-2005, the Board met 4 times on 16th April 2004, 16th July 2004, 14th October 2004 and 28th January 2005.

Particulars of attendance of directors at the board meetings and at the last annual general meeting, number of memberships held by the directors in the boards of other companies and memberships / chairmanships held by them across committees of all the companies are furnished in table given below:

Name Category Attendance Particulars

Number of Directorships and Committee Memberships/ chairmanships

M/s

Board Meeting

Last Annual General Meeting

Other Director-

Ships*

Committee Memberships**

Committee chairman-

ships

H Lakshmanan NE-I 4 Yes 14 8 4

Georg Grammer (Expired on 15.5.2005)

NE-I - Yes 1 - -

S I Jaffar Ali NE-I 4 Yes - 2 -

C Narasimhan NE-I 3 Yes 6 3 1

Martin Grammer NE-I - Yes 1 - -

E : Executive

NE : Non Executive

NE-I : Non Executive – Independent

* Includes private companies

** including committees where the director is also chairman.

None of the directors is a member of more than 10 board level committees or chairman of more than 5 such committees as required under clause 49 of the listing agreement.

3. Remuneration to Directors:

The directors do not draw any remuneration from the company other than sitting fees for attending the meetings of the board and committees thereof.

The company paid sitting fees of Rs.2,500/- each to all the non-executive directors for attending each meeting of the board and/or committee thereof.

Particulars of sitting fees paid to directors during the financial year 2004-2005.

Name of the Director M/s

Sitting fees paid (in Rs.)

H Lakshmanan 35,000

C Narasimhan 27,500

S I Jaffar Ali 35,000

Total 97,500

The board has not constituted any remune-ration committee as there is no requirement for constitution of such a committee.

4. Audit Committee

4.1 The audit committee consists of three independent directors as its members viz., M/s H Lakshmanan, C Narasimhan and S I Jaffar Ali. Mr H Lakshmanan is the chairman of the committee. The chairman was present at the annual general meeting held on 19th August 2004.


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4.2 The terms of reference stipulated by the board of directors to the audit committee are as contained in clause 49 of the listing agreement, brief particulars of which are furnished below:

a. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

b. Recommending the appointment and removal of external auditors and fixation of audit fees.

c. Reviewing with management the annual and quarterly financial statements before submission to the board.

d. Reviewing with the management, external and internal auditors, the adequacy of internal control systems.

e. Reviewing the adequacy of internal audit function and discussion with internal auditors any significant findings and follow up thereon.

f. Discussion with external auditors regarding audit Plan, as well as post-audit discussion to ascertain any area of concern.

g. Other matters as set out in the listing agreement.

4.3 Meetings and attendance during the year

Date of the meeting

Members present M/s

16.04.2004 H Lakshmanan and S I Jaffar Ali

16.07.2004 H Lakshmanan, C Narasimhan and S I Jaffar Ali



5. Investors' Grievance Committee:

The investors’ grievance committee consists of three members viz., M/s. H Lakshmanan, C Narasimhan and S I Jaffar Ali. Mr. H Lakshmanan is the chairman of the committee.

The committee oversees and reviews all matters connected with share transfers, issue of duplicate share certificates, etc. The committee also looks into redressal of investors’ grievances pertaining to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends, etc., The company, as a matter of policy disposes of investor complaints within a span of seven days.

As required by Securities Exchange Board of India (SEBI), Ms A C Padmaja, secretary of the company has been appointed as compliance officer. For any clarification / complaint, shareholders may contact Ms A C Padmaja, secretary or Mr P Srinivasan, special officer of the company.

Complaints received and redressed during the financial year 2004-2005:

S.No. Nature of Complaint No. of Complaints

1 Non receipt of dividend warrants

1

2 Other complaints -

Total 1

The above complaint was resolved and as on 31st March 2005 there was no investor complaint pending.

All requests for dematerialisation of shares were carried out within the stipulated time period and no share certificates were pending for demateria-lisation as on 31st March 2005.

6. Secretarial audit report regarding reconciliation of capital

As required by SEBI, commencing from the quarter ended 31st December 2002, a quarterly audit was conducted by a practising company secretary reconciling the issued and listed capital of the company with the aggregate of the number of shares held by investors in physical form and in the depositories and the said certificates were submitted to the stock exchanges within the prescribed time limit.

As on 31st March 2005, there was no difference between the issued and listed capital and the aggregate of shares held by investors in both physical form and in electronic mode with the depositories.


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7. General Body Meeting:

(a) Location and time where the annual general meetings were held during the last three years:

Year Location Date Time

2001-02 The Music Academy, 306, T T K Road (Mowbrays Road), Chennai 600 014.

20.09.2002 2.00 P.M.

2002-03 The Music Academy, 306, T T K Road (Mowbrays Road), Chennai 600 014.

04.08.2003 10.15 A.M.

2003-04 Kasturi Srinivasan Hall (Mini Hall) The Music Academy, 306, T T K Road (Mowbrays Road), Chennai 600 014.

19.08.2004 10.15 A.M.

(b) None of the subjects placed before the shareholders in the last annual general meeting required approval of the equity shareholders by a postal ballot.

8. Disclosures

(a) Disclosures on materially significant related party transactions that may have potential conflict with the interest of company at large.

During the year the company has not entered into any transaction of material nature with the directors, their relatives or management which were in conflict with the interest of the company.

The transactions with the promoters, associate companies etc., of routine nature have been reported elsewhere in the annual report as per Accounting Standard 18 (AS 18) issued by the Institute of Chartered Accountants of India.

(b) Details of non compliance by the company, penalties, strictures imposed on the company by Stock Exchanges or SEBI, or any statutory authority, on any matter related to capital markets, during the last three years.

Securities and Exchange Board of India (SEBI) vide its letter No.CFD / DCR / RC/ TO / 23040/04 dated 16th November 2004 has alleged that the company violated the provisions of Regulations 6 & 8 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the said Regulations). It was alleged in the said notice that the company has not made the disclosure under Regulation 8(3) of the said Regulations furnishing particulars of changes, if any in respect of the holdings of promoters or persons having control

over the company and persons acting in concert and by persons holding shares in excess of 15% of the paid up capital of the company as on the record date fixed for declaration of dividend on 16th May 2000.

In the said letter, SEBI also has given an option that it may consider the company’s request for a consent order, upon payment of an amount of Rs.25,000/- as penalty for the aforesaid violation.

The company contended that it has not violated the provisions of regulation 8(3) of the said Regulation on the ground that:

1. the payment of interim dividend approved by the board of directors and the fixation of record date as 16th May 2000 for this purpose does not fall within the scope of the said regulation as it did not amount to declaration of dividend in terms of Companies Act, 1956, as the law stood on that date.

2. there were no changes in the shareholding of the persons referred to in the said communication and the regulation requires a declaration to be filed only when there is change in shareholding.

However, the company without prejudice to its stand taken has also given its consent to pay Rs.25,000/- as penalty under Section 15A of the Securities and Exchange Board of India Act, 1992 vide its letter No.01/04/C/07 dated 24th December 2004.


17

9. Means of communication:

(a) The unaudited quarterly financial results of the company were published in the English newspaper viz., News Today and the Tamil version in a Tamil daily viz., Makkal Kural.

(b) As required by clause 49 of the listing agreement, the management discussion and analysis report is annexed to the annual report.

10. General Shareholder information:

10.1 Annual General Meeting

Date and time : 5th September 2005 at 2.00 p.m.

Venue : Kasturi Srinivasan Hall (Mini Hall) The Music Academy 306, T T K Road (Mowbrays Road) Chennai 600 014

10.2 Financial Calendar (2005-2006) (Tentative)

Annual General Meeting (next year) August/ September 2006

Financial reporting for Date of Board meeting the quarter ending

Any day between:

30th June 2005 15th to 31st of July 2005

30th September 2005 15th to 31st of October 2005

31st December 2005 15th to 31st of January 2006

31st March 2006 15th to 30th of April 2006

10.3 Particulars of dividend payment

Rate of Dividend 32%

To be paid on 6th September 2005

10.4 Period of From 25th August 2005 to book closure 31st August 2005 (both days inclusive).

10.5 Listing of equity shares

The Stock exchange, Mumbai (BSE) has formed a separate trading segment known as “BSE-INDONext” with effect from 7th January 2005 with a view to benefit the investors of small and medium size companies. BSE and the Federation of Indian Stock Exchanges (FISE) comprising of more than 15 Regional Stock Exchanges (RSEs) have jointly launched this platform for trading

known as INDONext which is administered by BSE.

The equity shares of the company have been admitted for trading in BSE-INDONext with effect from 7th January 2005 and the shares of the company are regularly traded in BSE-INDONext under scrip code 590043.

Name of the stock exchange Stock code

Madras Stock Exchange, (MSE)

HARITASEAT

Bangalore Stock Exchange, (BgSE)

HARITASEAT

ISIN alloted by Depositories (Company ID Number)

INE 939D01015

(Note : Annual listing fees for the year 2005-2006 have been duly paid to all the above stock exchanges)

10.6 Stock Market Data

The shares of the company were not traded during the period 1st April 2004 to 31st March 2005 in Madras Stock Exchange and Bangalore Stock Exchange. However the shares of the company are being regularly traded in BSE-INDONext and the data relating to the trading in BSE –INDONext with effect from 7th January 2005 is given below:

Month BSE-INDONext (in Rs.)

Month’s high price

Month’s low price

January 2005 160 100

February 2005 130 107

March 2005 130 104

10.7 Changes in Demat scenario

Shareholders are requested to note that as per circular no. SEBI/MRD/cir-10/2004 dated 10th February 2004 issued by Securities and Exchange Board of India (SEBI) to the depositories, the facility of transfer-cum-demat has since been withdrawn.

Recently, SEBI has issued a circular dated 28th January 2005 rationalising the fee structure for dematerialisation of securities as follows:


18

Effective from February 1, 2005:

(a) No investor shall be required to pay any charge towards opening of a Beneficiary Owner (BO) Account except for statutory charges as may be applicable;

(b) No investor shall be required to pay any charge for credit of securities into his/her BO account; and

(c) No custody charge shall be levied on any investor who would be opening a BO account on or after February 1, 2005.

With effect from April 1, 2005 the issuer companies will bear the custody charges.

The shareholders are requested to make use of this opportunity and dematerialize their physical share certificates, through a depository participant. Shareholders requi-ring any further clarification / assistance

on the subject may contact the company’s share transfer agent.

10.8 Share transfer system and RTA:

With a view to rendering prompt and efficient service to the investors, M/s Sundaram-Clayton Limited (SCL), Chennai which has been registered with SEBI as share transfer agents in category II, has been appointed as the share transfer agents (STA) of the company.

The shareholders have also been advised about this appointment of STA to handle share registry work pertaining to both physical and electronic segment by circular dated 31st July 2004.

Shareholders are therefore requested to correspond with the share transfer agent for transfer / transmission of shares, change of address and queries pertaining to their shareholding, dividend etc., at their address given in this report.

10.9 Shareholding pattern as on 31st March 2005

Particulars No. of shares held % to total

Indian Promoters 20,36,200 52.42

Foreign nationals 5,43,800 14.00

Banks, Financial Institutions, Insurance companies, (Central, State Government Institutions, Non-Govt. Institutions)

100 -

Private Corporate Bodies 3,34,193 8.60

FII 2,500 0.06

NRI/OCB 3,200 0.08

Indian Public 9,64,527 24.84

Total 38,84,520 100.00


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10.10 Distribution of Shareholding as on 31st March 2005

Shareholding (Range)

No. of shares % to total shares

No. of members

% to total members

Upto 500

501-1000

6,17,688

1,83,213

15.90

4.72

3,822

249

91.20

5.94

1001-2000 99,886 2.57 72 1.72

2001-5000 90,440 2.33 29 0.69

5001-10000 35,503 0.91 6 0.14

10001 & above 28,57,790 73.57 13 0.31

Total 38,84,520 100.00 4,191 100.00

10.11 Dematerialisation of shares:

Out of 18,48,320 equity shares of Rs.10/- each held by persons other than Promoters, 4,80,745 shares have been dematerialised as on 31st March 2005 accounting for 26%.

10.12 The company has not issued any Global Depository Receipt / American Depository Receipt / Warrant or any convertible instrument, which is likely to have impact on the company’s equity.

10.13 Plant Locations

Hosur : Belagondapalli, Thally Road

Hosur 635 114.

Tel : 04347 233445

Fax: 04347 233460

Email: [email protected]

Ranjangoan : Plot No.A2, MIDC Industrial area

Ranjangaon, Koregaon Village

Shirur taluk, Pune District

Maharashtra

Tel: 02138 - 560742

10.14 Address for Investor Correspondence

(i) For transfer / dematerialisation of shares , payment of dividend on shares and any other query relating to the shares of the Company;

:

(ii) For any query on annual report

Sundaram-Clayton Limited Share transfer agent Unit: Harita Seating Systems Limited New No.22, Old No.31 Railway Colony, 3rd Street Mehta Nagar, Chennai 600 029. Tel : 044 - 2374 1889, 2374 2939 Fax : 044 - 2374 1889 Email : [email protected]

Note: Applicable to all the shareholders irrespective of their mode of holding (physical or demat)


20

11. Non-Mandatory Disclosure:

11.1 Remuneration Committee:

The board has not set up a Remuneration Committee as the need for the same has not arisen.

11.2 Publication of Half-yearly Results:

The half-yearly results of the Company are being published in newspapers. The results are not been sent to the Shareholders individually.

11.3 Postal Ballot:

There is no subject proposed to be taken up in the ensuing annual general meeting to be held on 5th September 2005, requiring approval of the Shareholders through postal ballot.

12. Request to investors:

Investors are requested to kindly note the following procedure:

¬ Investors holding Shares in physical mode, may please communicate the change of address, if any, directly to the company’s share transfer agents of the company at the above address.

¬ As required by SEBI, investors shall furnish details of their bank account number and name and address of the bank for incorporating the same in the warrants. This would avoid wrong credits being obtained by unauthorized persons.

¬ Investors, who have not availed nomination facility, are requested to kindly avail the same, by submitting the nomination form. The form will be made available on request.

¬ Members who have not encashed their dividend warrants in respect of dividends declared for the year ended 31st March 1998 and for any financial year thereafter may contact the share transfer agents and surrender their warrants for payment. Investors are requested to note that the dividend not claimed for a period of seven years from the date they become due for payment shall be transferred to “Investor Education and Protection Fund” (IEPF) in terms of Section 205C of the Companies Act, 1956. Information in respect of unclaimed dividends due for remittance into IEPF is as follows:


21

PARTICULARS OF UNCLAIMED DIVIDEND OF HARITA SEATING SYSTEMS LIMITED

Financial Year Date of declaration

Date of transfer to special account

Date of transfer to IEPF

1997-1998 17.09.1998 04.11.1998 04.11.2005

1998-1999 06.09.1999 24.10.1999 24.10.2006

1999-2000 23.05.2000 10.07.2000 10.07.2007

2000-2001 17.09.2001 23.10.2001 23.10.2008

2001-2002 20.09.2002 26.10.2002 26.10.2009

2002-2003 04.08.2003 09.09.2003 09.09.2010

2003-2004 19.08.2004 24.09.2004 24.09.2011

Members will be advised well in advance before transferring the unclaimed dividends to IEPF. Investors are requested to note that as per the Companies Act, 1956, unclaimed dividends once transferred to IEPF will not be refunded.

¬ Investors holding Shares in electronic form are requested to deal only with their depository participants in respect of any change of address, nomination facility and furnishing bank account number, etc.

oOo


22

AUDITORS CERTIFICATE ON COMPLIANCE OF THE PROVISIONS OF THE CODE OF CORPORATE GOVERNANCE IN THE LISTING AGREEMENT. To The Shareholders of Harita Seating Systems Limited, Chennai. We have examined the compliance of conditions of corporate governance by Harita Seating Systems Limited, Chennai for the year ended 31st March 2005, as stipulated in Clause 49 of the Listing Agreement of the said company with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the company’s management. Our examination was limited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, we

certify that the company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that no investor grievances are pending for a period exceeding one month against the company as per the records maintained by the Investors’ Grievances Committee.

We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with which the management has conducted the affairs of the company.

For SUNDARAM & SRINIVASAN Chartered Accountants

Chennai M Balasubramaniyam 17th June, 2005 Partner Membership No.F7945


23

Auditors' Report to the shareholders of Harita Seating Systems Limited for the year ended 31st March 2005

We have audited the attached balance sheet of Harita Seating Systems Limited, Chennai 600 006 as at 31st March 2005, the profit and loss account for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditor’s Report) Order, 2003 and amended by the Companies (Auditor’s report) (Amendment) Order, 2004 issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

3. Further to our comments in the Annexure, referred to above, we state that –

(i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

(ii) In our opinion, proper books of account, as required by law, have been kept by the company so far as appears from our examination of those books. The company’s branch accounts were also audited by us.

(iii) The balance sheet, profit and loss account and cash flow statement referred to in this

report are in agreement with the books of account including its branch.

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards, referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

(v) On the basis of written representations received from the directors, as on 31st March 2005 and taken on record by the board of directors, we report that no director is disqualified from being appointed as a director of the company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 on the said date.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

(a) In so far as it relates to the balance sheet, of the state of affairs of the company as at 31st March 2005,

(b) In so far as it relates to the profit and loss account, of the profit for the year ended on that date, and

(c) In so far as it relates to the cash flow statement, of the cash flows for the year ended on that date.


Place : Chennai M Balasubramaniyam Date : 17th June, 2005 Partner Membership No.F7945


24

Auditors' report to the shareholders— Annexure referred to in our report of even date on the accounts for the year ended 31st March 2005

(i) (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The assets disposed off during the year are not substantial and therefore do not affect the going concern status of the company.

(ii) (a) The inventory other than in-transit have been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory with third parties which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion, the company, has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account.

(iii) (a) During the year, the company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) During the year the company has not taken any loan, secured or unsecured from companies, firms or other parties

covered in the register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the contracts or arrangements that need to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956 have been properly entered in the said register.

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the register maintained under Section 301 and exceeding during the financial year by Rupees five lakhs in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

(vi) The company has not accepted any deposit from the public.

(vii) The company has an internal audit system which, in our opinion, is commensurate with the size and nature of its business;

(viii) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government under Section 209 (1)(d) of the Companies Act, 1956 for maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.


25

(ix) (a) According to the records provided to us, the company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities. The provisions of Employees State Insurance Act are not applicable to the company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2005 for a period of more than six months from the date they became payable.

(c) According to information and explanations given to us, there are no dues of Income tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty which have not been deposited on account of any dispute.

(x) The company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding year.

(xi) Based on our verification and according to the information and explanations given by the management, the company has not defaulted in repayment of dues to any bank.

(xii) Based on our examination and according to the information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities;

(xiii) The company is not a chit/ nidhi / mutual benefit fund / society and as such clause (xiii) of the Order is not applicable.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments;

(xv) The company has given guarantee to Housing Development Finance Corporation Limited, Mumbai in respect of housing loans availed by its employees. The terms of such guarantee are not prejudicial to the interests of the company.

(xvi) The company has not availed any term loan;

(xvii) On the basis of our examination, the com-pany has not used funds raised on short term basis for long term investment.

(xviii) During the year, the company has not allotted any shares on preferential basis to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) During the year, the company has not issued any secured debentures.

(xx) During the year, the company has not raised any money by public issue;

(xxi) Based on the audit procedures adopted and information and explanations given to us by the management, no fraud on or by the company has been noticed or reported during the course of our audit.


Place : Chennai M Balasubramaniyam Date : 17th June, 2005 Partner Membership No.F7945


26

Balance Sheet as at 31st March 2005 (Rupees in lakhs)

I SOURCES OF FUNDS: Schedule

Number As at

31.03.2005 As at

31.03.2004 1. Shareholders' funds a) Capital I 388.45 388.45 b) Reserves & surplus II 2,082.72 1,767.96

2,471.17

2,156.41

2. Loans a) Secured loans III – 0.21 b) Unsecured loans IV 220.04 239.89

220.04

240.10

3. Deferred tax liability (net of deferred tax asset) 154.44 133.97

2,845.65 2,530.48 II APPLICATION OF FUNDS:

1. Fixed assets V a) Gross block 3,618.64 3,057.01 1,739.84 1,492.94

b) Less: depreciation Net block

1,878.80

1,564.07

2. Investments VI 367.96 661.12 3. Current assets, loans and advances a) Interest accrued 0.08 0.03 b) Inventories VII 330.84 280.94 c) Sundry debtors VIII 2,455.64 1,757.95 d) Cash & bank balances IX 152.95 224.72 e) Loans and advances X 741.62 687.96 f) Other current assets XI 28.69 23.21 (A) 3,709.82 2,974.81

Less: Current liabilities and provisions

Current liabilities XII 2,224.94 1,819.95 Provisions XIII 885.99 849.57

(B) 3,110.93 2,669.52

Net current assets (A)-(B) 598.89 305.29 2,845.65 2,530.48

H LAKSHMANAN C NARASIMHAN S I JAFFAR ALI As per our report annexed Director Director Director For SUNDARAM & SRINIVASAN Chartered Accountants

M. BALASUBRAMANIYAM

Partner

Chennai S THIAGARAJAN A C PADMAJA 17th June, 2005 President Secretary


27

Profit & Loss account for the year ended 31st March 2005 (Rupees in lakhs)

Schedule number

Year ended 31.03.2005

Year ended 31.03.2004

Sales - Gross 13,634.37 10,620.16

Less: Excise duty 1,835.55 1,418.10

Net Sales 11,798.82 9,202.06

Other income XIV 117.93 90.81

A 11,916.75 9,292.87

Raw materials and components consumed XV 8,562.75 6,373.09

Salaries, wages, stores consumed and other expenses XVI 2,366.08 2,025.75

B 10,928.83 8,398.84

Profit before interest, depreciation and tax (A – B) C 987.92 894.03

Interest XVII 0.28 0.35


D 269.67 213.11

Profit before tax (C – D) E 718.25 680.92

Provision for taxation 246.00 245.00

Provision for deferred tax 20.47 (1.77)

F 266.47 243.23

Profit for the year (after tax) (E – F) G 451.78 437.69

Balance profit brought forward 143.93 140.17

Profit for the year 451.78 437.69

Tax relating to earlier year 4.71 --

Total 600.42 577.86

Proposed dividend @ 32% (Last year 30%) 124.30 116.54

Provision for dividend tax 17.43 14.93

Tax relating to earlier year -- 2.46

Transfer to general reserve 300.00 300.00

Balance surplus carried forward to balance sheet 158.69 143.93

Total 600.42 577.86

No. of equity shares 3,884,520 3,884,520

Nominal value of equity shares Rs. 10.00 10.00

Basic and diluted earnings per share Rs. 11.75 11.20

Notes on accounts XVIII


M. BALASUBRAMANIYAM

Partner



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Schedules (Rupees in lakhs)

As at

31.03.2005 As at

31.3.2004

I CAPITAL

Authorised

50,00,000 equity shares of Rs.10/- each 500.00 500.00

Issued, subscribed and paid up

38,84,520 equity shares of Rs.10/- each

fully paid up 388.45 388.45

388.45 388.45

II RESERVES & SURPLUS

(a) State subsidy 15.00 15.00

(b) General reserve

As per last balance sheet 1,549.03 1,249.03

Add: transfer from profit & loss account 300.00 300.00

1,849.03 1,549.03

(c) Investment allowance reserve 50.00 50.00

(d) Capital redemption reserve 10.00 10.00

(e) Surplus, i.e

Balance in profit & loss account 158.69 143.93

2,082.72 1,767.96

III SECURED LOANS

From banks

Secured by hypothecation of raw materials,

work in process, finished goods and book debts – 0.21

– 0.21

IV UNSECURED LOANS

From others- long term 220.04 239.89

220.04 239.89


29

SCHEDULES — (Continued)

V. FIXED ASSETS (Rupees in lakhs)

Gross block Depreciation Net block

Sl. No

Particulars

As at 1st April

2004

Additions during

the year

Sales/ transfers during

the year

As at 31st March 2005

Upto 31st March 2004

For the year

Sales/ transfers

Upto 31st March 2005



1 Land 48.91 – – 48.91 – – – – 48.91 48.91

2 Building 544.81 99.92 – 644.73 150.42 19.08 – 169.50 475.23 394.39

3 Plant & machinery 1,744.03 383.91 2.21 2,125.73 949.37 168.39 – 1,117.76 1,007.97 794.66

4 Vehicles 93.16 4.73 67.09 30.80 26.58 10.25 22.49 14.34 16.46 66.58

5 Office Equipments 376.76 80.75 – 457.51 243.26 54.32 – 297.58 159.93 133.50

6 Moulds 196.55 47.06 – 243.61 98.18 13.66 – 111.84 131.77 98.37

7 Furniture & fittings 32.55 2.77 – 35.32 18.86 2.02 – 20.88 14.44 13.69

8 Canteen equipments 19.14 2.83 – 21.97 6.27 1.67 – 7.94 14.03 12.87

3,055.91 621.97 69.30 3,608.58 1,492.94 269.39 22.49 1,739.84 1,868.74 1,562.97

9 Capital work-in-progress

- Moulds 1.10 – 1.10 – – – – – – 1.10

- Electrical installation – 10.06 – 10.06 – – – – 10.06 –

Total 3,057.01 632.03 70.40 3,618.64 1,492.94 269.39 22.49 1,739.84 1,878.80 1,564.07

VI INVESTMENTS (AT COST)

I Non-trade-quoted (Short-term) As at

1st April, 2004

Additions during the

year

Sale/ realisation during the

year

As at 31st March

2005

A HSBC Mutual Fund

1 235746.751 units in Cash Fund - Growth 25.00 - 25.00 -

2 1116019.530 units in Cash Fund Growth institutional

- 120.00 120.00 -

B DSP Merrill Lynch Fund

1

2250000 units in Savings plus Aggressive Growth

-

225.00 225.00

-

2

2294042.909 units in Savings plus -Aggressive Quarterly Dividend

-

234.27 234.27

-

3

2250015.017 units in Savings plus Aggressive Growth

-

239.39 239.39

-

4

2355910.310 units in Savings plus Aggressive Quarterly Dividend

-

244.68 244.68

-

Balance c/d 25.00 1,063.34 1,088.34 -


30

SCHEDULES — (Continued) VI. INVESTMENTS (AT COST) – Contd. (Rupees in lakhs)

As at 1st April

2004


year

Sale/ realization during the

year

As at 31st March

2005

Balance B/f 25.00 1,063.34 1,088.34 –

C JM Mutual Fund

2305644.308 units in Short term Institutional Plan-Dividend

230.75

1.17

231.92

–

D Sundaram Mutual Fund

1

1203733.704 units in Monthly Income Plan Growth

120.37

–

120.37

–

2

453826.895 units in Money Fund Appreciation

60.00

–

60.00

–

E Deutsche Mutual Fund

2250000 units in Monthly Income Plan A - Growth

225.00

–

225.00

–

F Standard Chartered Mutual Fund

1

1901590.575 units in Grindlays Cash Fund-Inst Plan B Growth

–

225.00

225.00

–

2

1848632.792 units in Dynamic Bond Fund-Inst Plan B Growth

–

225.03

225.03

–

3

1868324.506 units in Cash Fund Inst Plan B Growth

–

224.16

224.16

–

4

2242120.190 units in Grindlays Floating Rate Fund LT Inst Plan B growth

–

224.21

224.21

–

5

839969.089 units in Cash fund Plan B Growth

–

100.00

100.00

–

6

782071.655 units in Short term Inst Plan B Growth

–

100.78

100.78

–

7

1009341.678 units in All Seasons bond fund Inst plan B Growth

–

100.93

100.93

–

8

1002189.857 units in Grindlays Floating Rate Fund LT Growth

–

101.70

101.70

–

Balance C/o 661.12 2,366.32 3,027.44 –


31

SCHEDULES — (Continued) VI. INVESTMENTS (AT COST) – Contd. (Rupees in lakhs)

As at 1st April

2004


year

Sale/ realization during the

year

As at 31st March

2005

Balance B/f 661.12 2,366.32 3,027.44 –

G Reliance Mutual Fund

486526.461 units in Treasury Plan

Growth

–

75.00

75.00

–

H HDFC Mutual Fund

1

336473.755 units in Cash management

fund Savings plan growth

–

45.00

45.00

–

2

2000100 units in Multiple Yield

Fund dividend

–

200.01

200.01

–

3


Fund Growth

–

205.17

205.17

–

4


Fund Dividend

–

208.11

208.11

–

5

2000118.885 units in Multiple Yield

Fund Growth – 211.84 – 211.84

6

1059012.562 units in cash management

fund savings plan growth

–

–

99.70

45.30

99.70

45.30

– –

I Birla Sun Life Mutual Fund

144176.149 units in Cash plus retails

plan growth

–

25.00

25.00

–

J ABN AMRO Asset Management

1

1000000 units in Flexi Debt Fund

Institutional Growth

–

100.00

100.00

–

2

996088.644 units in Floating Rate

Fund-Institutional Growth

–

100.59

44.47

56.12

K Frankling Templeton Investments

1000000 units in flexi cap fund growth – 100.00 – 100.00

Total 661.12 3,782.04 4,075.20 367.96

(Market value of quoted investments: Rs.364.77 lakhs)


32

SCHEDULES — (Continued) (Rupees in lakhs)

As at/ year

ended 31.03.2005

As at/ year

ended 31.03.2004

VII INVENTORIES (at cost)

* Raw materials and components 174.04 133.84

* Work in process 94.66 81.52

* Stores 11.96 13.00

* Finished goods 45.33 43.22

* Goods in bond 4.85 4.66

Goods in transit – 4.70

330.84 280.94

* as certified by a director

VIII SUNDRY DEBTORS-unsecured considered good

a) Debts outstanding for a period exceeding

six months 62.06 50.53

Less: Provision for doubtful debts 62.06 – 46.44 4.09

b) Other debts 2,455.64 1,753.86

2,455.64 1,757.95

IX CASH & BANK BALANCES

a) Cash on hand 44.08 1.96

b) With scheduled bank

1) Current account 107.83 222.76

2) Deposit account 1.04 –

152.95 224.72

X LOANS AND ADVANCES

(Unsecured considered good)

a) Advance recoverable in cash or

in kind or for value to be received 719.99 664.16

b) Deposits 21.63 23.80

741.62 687.96


33


As at/year ended 31.03.2005


XI OTHER CURRENT ASSETS a) Prepaid expenses 27.43 20.89 b) Income tax deducted at source on labour charges and on interest income 1.26 2.32 28.69 23.21

XII CURRENT LIABILITIES a) Sundry creditors 2,218.29 1,813.46

b) Investor Education and Protection Fund i) Unpaid dividend 6.65 6.49 2,224.94 1,819.95

XIII PROVISIONS Proposed Dividend 124.30 116.54 Dividend tax 17.43 14.93 Taxation - income tax and wealth tax 491.00 523.00 Warranty 69.00 64.00 Leave salary 29.37 22.51 Pension fund 154.89 108.59 885.99 849.57

XIV OTHER INCOME a) Scrap sales 29.12 23.25 b) Labour charges received (gross) 15.02 7.05 (TDS-Rs.0.09 lakh) (Last year: Rs. Nil) c) Interest on deposit & investments (gross) 2.53 6.92 (TDS-Rs.0.30 lakh) (Last year: Rs.0.85 lakh) d) Miscellaneous income (see note no. 8) 71.26 53.59 117.93 90.81

XV RAW MATERIAL AND COMPONENTS CONSUMED Opening stock - Raw materials 133.84 141.81 - Work-in-process 81.52 77.49 - Finished goods 43.22 40.42 258.58 259.72 Purchases of raw materials and components 8,618.20 6,371.95 Total (A) 8,876.78 6,631.67 Closing stock - Raw materials 174.04 133.84 - Work-in-process 94.66 81.52 - Finished goods 45.33 43.22 Total (B) 314.03 258.58 Consumption (A)-(B) 8,562.75 6,373.09


34




XVI SALARIES, WAGES, STORES CONSUMED AND OTHER EXPENSES

a) Salaries & wages* 772.87 668.58

b) Contribution to provident and other funds* 115.19 94.41

c) Staff welfare expenses* 97.94 81.15

d) Stores & tools consumed 186.98 111.68

e) Power & fuel 139.54 119.09

f) Rent* 13.32 19.80

g) Rates & taxes* 106.83 95.71

h) Repairs & maintenance*

– building 28.02 28.36

– machinery 91.90 79.32

– other assets 49.22 53.59

i) Audit fees – as auditors 3.86 3.87

– tax audit 1.02 1.10

– certification 0.55 0.56

j) Directors' sitting fee 0.98 1.10

k) Insurance 14.01 11.71

l) Other expenses (see note no. 7)* 740.54 645.91

m) Excise duty paid on samples 1.56 0.79

n) Loss on sale of assets 0.88 1.34

o) Loss on sale of investments 0.87 7.68

2,366.08 2,025.75

[* Net of recoveries]

XVII INTEREST

On other than fixed loans 0.28 0.35

0.28 0.35


35

Schedules — (Continued)

(Rupees in lakhs)

As at/year ended

31.03.2005 As at/year ended

31.03.2004 XVIII NOTES ON ACCOUNTS

1 Notes on Accounting Standards prescribed by The Institute of Chartered Accountants of India.

ACCOUNTING STANDARD (1) - Accounting policy

The accounts are maintained on accrual basis as a going concern.

ACCOUNTING STANDARD (2) - Inventories

Inventories are valued in accordance with the method of valuation prescribed by the Institute of Chartered Accountants of India at weighted average rates and in applicable cases at lower of cost or realisable value.

ACCOUNTING STANDARD (3) - Cash flow

The cash flow statement is prepared under "indirect method" and the same is annexed.

ACCOUNTING STANDARD (4) - Contingencies & events occuring after balance sheet date

Details regarding contested liabilities are furnished in Note No.2.

ACCOUNTING STANDARD (5) - Prior period item

Discount to customer Short provision of employee cost Excess provision of employee cost Raw materials and components consumed Retrospective selling price revision

-- (0.06) 1.70 4.61

(1.60)

(12.50) (1.42)

-- 0.30

--

ACCOUNTING STANDARD (6) - Depreciation

Depreciation has been provided under straight line method in respect of all assets at the rates prescribed under schedule XIV of the Companies Act, 1956 and on prorata basis on assets acquired/sold during the year. Depreciation in respect of computers and vehicles has been provided at 30% and 18% respectively which is higher than the rate prescribed in schedule XIV of the Companies Act.

Until the year ended 31st March, 2002, moulds were depreciated applying rates fixed under schedule XIV of the Companies Act. This method is continued for moulds acquired before 31st March, 2002 and put to use. In respect of moulds acquired on and after 1st April, 2002 and put to use, depreciation is charged based on quantity of seat cushions produced.


36


(Rupees in lakhs)

As at/year ended


31.03.2004

XVIII NOTES ON ACCOUNTS – Contd.

Until the year ended 31st March, 2002, tools and fixtures were depreciated applying rates fixed under schedule XIV of the Companies Act. This method is continued for tools and fixtures acquired before 31st March, 2002 and put to use. In respect of tools and fixtures acquired on and after 1st April, 2002 and put to use, depreciation is charged at 25%.

Depreciation in respect of assets acquired during the year whose actual cost does not exceed Rs.5,000/- has been provided at 100%.

ACCOUNTING STANDARD (7) - Construction contracts -Not applicable- -Not applicable-

ACCOUNTING STANDARD (8) - R & D

This standard is not applicable from 1st April, 2003.

ACCOUNTING STANDARD (9) - Revenue recognition

The income of the company is derived from manufacture and sale of seating systems for automotive applications, railways and fitness equipment and parts thereof. Indigenous sales are recognised based on raising invoices. Export sales are recognised on the basis of date of bill of lading. The revenue and expenditure are accounted on a going concern basis. Interest income/ expenses is recognised using the time proportion method based on rates implicit in the transaction.

ACCOUNTING STANDARD (10) - Fixed assets

Fixed assets including technical knowhow fees are stated at cost less accumulated depreciation.

ACCOUNTING STANDARD (11) - Effects of changes in foreign exchange rates

Purchase of imported raw materials, components, spares and capital goods are accounted based on retirement memos from banks. In respect of liabilities on import of raw materials, components and spares which are in transit for which invoices/bills are not received, the liability is accounted based on the market exchange rates prevailing on the date of the balance sheet.

Sales include realised exchange fluctuation on exports.

Net exchange difference credited to Profit and loss account. 0.30 0.28


37


(Rupees in lakhs)

As at/year ended


31.03.2004


ACCOUNTING STANDARD (12) - Government grants

No grant has been received during the year.

ACCOUNTING STANDARD (13) - Investments

Investments are valued at cost. Provision for dimunition in the carrying cost of long term investments is made if such dimunition is other than temperory in nature in the opinion of the management.

ACCOUNTING STANDARD (14) - Amalgamation -Not applicable- -Not applicable-

ACCOUNTING STANDARD (15) - Retirement benefits

a)

Contributions to provident fund are made to a recognised Trust in respect of excluded employees. In respect of other employees the contribution is made to Government.

b) Leave salary is provided on actuarial basis.

c)

The company has evolved a pension policy for the senior managers. Provision in this regard is made on actuarial valuation basis for current and past services.

d)

Contributions to gratuity and superannuation fund are made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

ACCOUNTING STANDARD (16) - Borrowing cost

The borrowing cost has been treated in accordance with Accounting Standard on borrowing cost (AS 16) issued by the Institute of Chartered Accountants of India. During the year, there were no borrowings attributable to qualifying assets and hence no borrowing costs were capitalised.

ACCOUNTING STANDARD (17) - Segment reporting

The entire operations of the company relate to only one segment viz., seating systems.


38



ACCOUNTING STANDARD (18) - Related party disclosure

i Reporting enterprise Harita Seating Systems Limited

ii Name of the transacting related party. Harita Limited, Chennai

iii Description of the relationship. The reporting enterprise is an associate of the related party.

iv Description and nature of transaction. Payment of service charges to related party

v Volume of the transactions either as an amount or as an appropriate proportion.

Rs.82.73 lakhs

vi

Any other elements of the related party transactions necessary for an understanding of the financial statements.

Service charges for availing management services from related party

vii The amounts or appropriate proportion of outstanding items pertaining to related parties as at the balance sheet date and provisions for doubtful debts due from such parties as at that date.

Amount payable Rs.78.81 lakhs (Last year Rs.52.10 lakhs) provision for doubtful debts - Nil

viii

Amounts written off or written back in the period in respect of debts due from or to related parties.

Nil

As at/year ended


31.03.2004 ACCOUNTING STANDARD (19) - Accounting of leases -Not applicable- -Not applicable-

ACCOUNTING STANDARD (20) - Earnings per share

Disclosure is made in the Profit & Loss Account as per the requirement of the standard.

ACCOUNTING STANDARD (21) - Consolidated financial statement -Not applicable- -Not applicable-


39


(Rupees in lakhs)

As at/year ended

31.03.2005

As at/year ended

31.03.2004


ACCOUNTING STANDARD (22) - Accounting for tax on income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax liability and asset are recognised based on timing difference.

1 Deferred tax liability consists of:

- tax on Depreciation 146.20 135.79

- tax on R & D expenditure 118.99 84.09

- tax on expenses claimed on payment basis under Income-tax Act, 1961. 63.01 47.46

(A) 328.20 267.34

2 Deferred tax asset consists of:

- tax on provision in respect of expenditure which will be allowed under the Income-tax Act, 1961 only on payment basis. 173.76 133.37

(B) 173.76 133.37

Deferred tax liability (net of deferred tax asset) (A)-(B) refer Balance Sheet. 154.44 133.97

ACCOUNTING STANDARD (23) - Investment in associates -Nil- -Nil-

ACCOUNTING STANDARD (24) - Discontinued operations -Nil- -Nil-

ACCOUNTING STANDARD (25) - Interim financial reporting

As per clause 41 of listing agreement the company is required to publish the financial results on a quarterly basis. Condensed form of Profit & Loss is being published for every quarter.


40


(Rupees in lakhs)

XVIII NOTES ON ACCOUNTS – Contd. As at/year ended 31.03.2005


ACCOUNTING STANDARD (26) - Intangible assets

During the year the company acquired the following asset falling under the definition of intangible assets as per the Accounting Standard and the following disclosure is made in respect of this asset:

(1) Software

- Useful life of the asset 2 years --

- Amortisation rates used 50% each year as depreciation

--

- Gross carrying amount at the beginning and at the end of the period.

Opening balance -- --

Addition during the year 37.48 --

Total 37.48 --

Amortised as depreciation 19.00 --

Closing balance 18.48 --

ACCOUNTING STANDARD (27) - Reporting on financials of joint venture Not applicable Not applicable

ACCOUNTING STANDARD (28) - Impairment of assets

As on the Balance Sheet date the carrying amounts of the assets net of accumulated depreciation is not less than the recoverable amount of those assets. Hence there is no impairment loss on the assets of the company.

ACCOUNTING STANDARD (29) - Provisions, contingent liability and contingent asset

1. Provisions

In respect of warranty obligations provision is made in

accordance with terms of sale of seat assemblies.

2. Contingent liabilities

The amount for which the company is contingently

liable are disclosed in Note No. 2.

3. Contingent assets which are likely to give rise to the

possibility of inflow of economic benefits – NIL.

4. Contested liabilities are detailed in Note No.3


41


(Rupees in lakhs)

XVIII NOTES ON ACCOUNTS – Contd. As at/ year ended

31.03.2005

As at/ year ended

31.03.2004

2. Contingent liabilities not provided for

a. On counter guarantee furnished to banks 250.74 68.72

b. On letters of credit opened with banks 4.06 2.93

c. On guarantee furnished to Housing Development Finance Corporation Ltd, Mumbai, on loans granted to employees of the company.

3.96

4.04

3. Liability contested and not provided for

a. On Income tax matters 16.07 28.41

b. On Sales tax matters 5.72 5.72

4. Deposit includes deposit with Central Excise 0.37 5.61

5. Sundry creditors include:-

a. Amount liable to be transferred to Investor Education and Protection Fund as and when falls due.

- Unclaimed dividend. 6.65 6.49

b. Dues to small scale industrial undertakings. 111.30 69.30

c. Dues of creditors other than small scale industrial undertaking. 2,106.99 1,744.16

Name of small scale industrial undertakings to whom the company owes an amount which is outstanding for more than 30 days.

Autocomps, Bangalore, Aravind Enterprises, Hosur, Asian Packagings, Hosur, Essaar Tools, Hosur, Ever Bright Products, Hosur, Hari Industries, Bangalore, India Engineering Works, Kolahpur, Indo German Tools, Hosur, Jai Guru Fabricators, Hosur, Jit Auto Comp, Hosur, Kamadhenu Enterprises, Bangalore, Kavia Engineering Pvt Ltd, Bangalore, L R Industries, Hosur, Magod Laser Machining Pvt Ltd, Bangalore, Metlok Company, Bangalore, Mecolam Engineering Pvt Ltd, Bangalore, Micron Precision Plastics, Bangalore, MKV Engineering Pvt Ltd, Hosur, Numann Industries, Hosur, Paragon Fasteners, Bangalore, Presscom Products Pvt Ltd, Hosur, Rubber Extrusion and Moulding Co., Bangalore, Siddhi Foams, Bangalore, Supram Industries, Bangalore, Sai Kunal Industries, Bangalore, STS Engineering Services, Hosur, Suriya Plastics, Hosur, Sri Ram- Kartthic Polymers, Coimbatore, Shri Vaari Engineering Enterprises, Hosur, Scintillating Engineering CNC India Pvt Ltd, Hosur, Vijay Precision Components, Bangalore, Young Polymers Pvt Ltd, Hosur, Zigma Pressings, Hosur, Mistry Industries, Pune, Golden Jubilee Corporation, Pune, Gold Seal Engineering Products, Mumbai.

Payment terms for the above suppliers is 45 days from the date of invoice. The dues are less than 45 days old and therefore do not bear any interest.


42


(Rupees in lakhs)

XVIII NOTES ON ACCOUNTS – Contd. As at/ year ended

31.03.2005

As at/ year ended

31.03.2004

6. a. Due from an officer of the company 6.08 6.31 b. Maximum balance due at any time during the year 6.31 11.54

7. Other expenses include: a. reimbursement of expenses to auditors 1.26 1.03

b. legal & retainer fees 208.90 147.52

c. carriage outwards 165.18 82.19

d. warranty claims 2.82 13.47

e. commission 27.39 16.41

f. cash discount 6.95 --

8. Miscellaneous income under other income includes:

a. packing cost recoveries 0.36 0.24

b. sale of moulds manufactured 4.72 6.66

c. sale of raw materials 15.26 2.99

d. profit on sale of assets 0.79 2.15

e. dividend income 1.17 15.69

f. profit on sale of investments 48.58 24.08

9. Building (cost Rs.134.10 lakhs) is situated on leasehold land alloted by Maharashtra Industrial Development Corpora-tion Limited, Mumbai. The lease deed is yet to be executed while agreement to lease has been concluded.

10. Cash & bank balances include:

a. Cheques on hand 41.49 --

b. Unpaid dividend 6.65 6.49

11. Expenses, wherever applicable are inclusive of service tax at appropriate rates and net off service tax set off permissible

12. Previous year's figures have been regrouped wherever necessary to conform to the current year's classification.


M. BALASUBRAMANIYAM

Partner



43


13. Information pursuant to the provisions of Part II of Schedule VI of the Companies Act, 1956 (Vide Notification dated 30th October 1973 of the Department of Company Affairs, Government of India).

(Rupees in lakhs)

I RAW MATERIALS CONSUMED

Year ended 31.03.2005 Year ended 31.03.2004

Unit Quantity Value Quantity Value

A. Basic raw materials

a) Polyol Kgs 808,210 936.70 710,020 769.34

b) Isocyanate Kgs 516,066 656.11 472,545 554.87

c) Others (which include sheets, tubes, upholstery materials etc., which indi-vidually do not account for 10% or more of the total value of con-sumption)

6,985.19 5,055.71

8,578.00 6,379.92

B. Consumption of raw materials and components

% of total Consumption Value % of total

Consumption Value

a) Imported 5.20 445.71 1.48 94.34

b) Indigenous 94.80 8,132.29 98.52 6,285.58

100.00 8,578.00 100.00 6,379.92

C. Consumption of machinery spares

% of total consumption

Value % of total consumption

Value

a) Imported 12.37 11.37 7.40 5.87

b) Indigenous 87.63 80.53 92.60 73.45

100.00 91.90 100.00 79.32

II IMPORTS - CIF VALUE

a) Raw materials & components 362.81 73.67

b) Capital goods 81.38 66.86

c) Stores -- 2.98

d) Spares 9.10 3.49


44

Schedules — (Continued) (Rupees in lakhs)

Year

ended 31.03.2005

Year

ended 31.03.2004

III OTHER EXPENDITURE IN FOREIGN EXCHANGE

a) Travel 20.06 14.61

b) Consultancy fee 87.86 2.64

c) Others 8.61 0.47

IV EARNINGS IN FOREIGN EXCHANGE

Exports - F.O.B 551.55 384.33

V PAYMENT TO NON-RESIDENT SHAREHOLDERS

a) No. of non-resident shareholders 2 –

b) No. of shares held by non-residents 543,800 –

c) Dividend (relating to the year 2003-04)

16.31

–

VI SALE BY CLASS OF GOODS Quantity (Nos.)

Value Quantity (Nos.)

Value

a) Seats for tractors 83,265 1,265.18 55,909 812.92

b) Seats for cars 83,423 1,605.10 11,382 202.21

c) Deluxe seating system for 4 wheelers 185,078 4,811.78 155,549 4,031.38

d) Deluxe seating system for 2 wheelers 1,710,993 3,455.12 1,548,586 3,564.17

e) Deluxe seating system for railways 1,445 74.08 2,747 194.27

f) Fitness equipment 58,589 523.03 45,488 342.92

g) Others 64.53 54.19

11,798.82 9,202.06

VII LICENSED AND INSTALLED CAPACITY

Information not furnished in view of abolition of industrial licencing requirements for the products manufactured by the company


45

Schedules — (Continued) VIII OPENING AND CLOSING STOCK OF GOODS PRODUCED (Rupees in lakhs) Description Year ended 31st March 2005 Year ended 31st March 2004

Opening

stock Production Closing stock

Opening stock

Production Closing stock

a) Seats for tractors

Qty (in Nos) 90 83,337 162 100 55,899 90

Value 1.12 2.29 1.36 1.12

b) Seats for cars

Qty (in Nos) 60 83,564 201 2 11,440 60

Value 1.59 3.50 0.01 1.59

c) Deluxe seating system for 4 wheelers

Qty (in Nos) 699 185,745 1,366 746 155,502 699

Value 17.56 25.77 18.99 17.56

d) Deluxe seating system for 2 wheelers

Qty (in Nos) 237 1,711,206 450 5,208 1,543,615 237

Value 0.52 1.08 13.30 0.52

e) Deluxe seating system for railways

Qty (in Nos) – 1,445 – – 2,747 –

Value – – – –

f) Fitness equipment

Qty (in Nos) 2,612 57,702 1,725 1,001 47,099 2,612

Value 21.74 10.15 6.76 21.74


M. BALASUBRAMANIYAM

Partner



46

Cash flow statement for the year ended 31st March, 2005

(Rupees in lakhs)

Year

ended 31.03.2005

Year

ended 31.03.2004

A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax and extra ordinary items 718.25 680.92

Adjustments for :


Depreciation on assets sold (22.49) (43.19)

Income-tax relating to earlier years 4.71 (2.46)

Dividend income (1.17) (15.69)

Interest income (2.53) (6.92)

Interest expenditure 0.28 248.19 0.35 144.85

Operating profit before working capital changes 966.44 825.77

Adjustment for:

Interest accrued (0.05) 1.25

– Inventory (49.90) (8.76)

Trade receivables (697.69) (318.00)

Loans and advances 184.33 186.00

Other current assets (5.48) 4.63

Trade payables and provisions 185.16 (383.63) 424.28 289.40

Cash generated from operations 582.81 1,115.17

Direct taxes paid (238.00) (238.00) (231.00) (231.00)

Net cash from operating activities - (A) 344.81 884.17

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (630.93) (455.95)

Sale of fixed assets 69.30 51.66

Purchase of investments (3,782.04) (4,368.17)

Sale of investments 4,075.20 3,707.11

Interest received 2.53 6.92

Dividend received 1.17 (264.77) 15.69 (1,042.74)

Net cash used in investing activities -(B) (264.77) (1,042.74)


47

Cash flow statement for the year ended 31st March, 2005 – (continued)

(Rupees in lakhs)

Year

ended 31.03.2005

Year

ended 31.03.2004

C. CASH FLOW FROM FINANCING ACTIVITIES

Secured loans (0.21) 0.21

Sales tax deferral loan repaid (19.85) (25.36)

Interest paid (0.28) (0.35)

Dividend and dividend tax paid (131.47) (151.81) (109.56) (135.06)

Net cash from financing activities- (C) (151.81) (135.06)

D. Net increase in cash and cash equivalents (A+B+C) (71.77) (293.63)

Cash and cash equivalent at the beginning of the year 224.72 518.35

Cash and cash equivalent at the end of the year 152.95 224.72

Note: 1) The above statement has been prepared in indirect method except in case of interest, dividend

and purchase and sale of investments, which have been considered on the basis of actual movement of cash.

2) Cash and cash equivalent represents cash and bank balances.


M. BALASUBRAMANIYAM

Partner



48

BALANCE SHEET ABSTRACT AND COMPANY’S BUSINESS PROFILE VIDE NOTIFICATION DATED 15th MAY,1995 ISSUED BY MINISTRY OF COMPANY AFFAIRS

I REGISTRATION DETAILS Registration No. Date

Balance Sheet date State Code Date Month Year

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)

Public Issue Rights issue

Bonus issue Private Placement

III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount Rs. In thousands)

Total liabilities Total assets

Sources of Funds

Paid up capital Reserves & Surplus

Secured loans Unsecured loans

Deferred tax

Application of funds

Net fixed assets Investments

Net current assets Misc. expenses

Accumulated loss

IV PERFORMANCE OF THE COMPANY (Amount in Rs. Thousands)

Turnover (including other income) Total expenditure

Profit before tax Profit after tax

Earning per share Dividend rate

V GENERIC NAMES OF THREE PRINCIPAL PRODUCTS / SERVICES OF COMPANY (as per monetary terms)

Items code No.

Product description

1.

2.

3.


M. BALASUBRAMANIYAM

Partner


N I L

2 4 . 4 . 9 6

3 1 0 3 2 0 0 5

1 8 - 3 5 2 9 3

2 0 8 2 7 2

N I L

1 8

N I L

N I L

V E H I C L E S

S E A T S F O R C A R S

3 8 8 4 5

1 5 4 4 4

1 8 7 8 8 0

5 9 8 8 9

N I L

1 0 9 2 8 8 3

4 5 1 7 8

3 2 %

8 7 0 8

2 8 4 5 6 5

D E L U X E S E A T I N G S Y S T E M F O R T R A N S P O R T

S E A T S F O R T R A C T O R S

2 2 0 0 4

3 6 7 9 6

N I L

2 8 4 5 6 5

1 1 9 1 6 7 5

7 1 8 2 5

1 1 . 7 5

N I L


Ninth Annual Report 2004-2005

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