HARITA SEATING SYSTEMS LIMITED Seating [email protected] [email protected] Contents Page No. Financial highlights 2 Notice to the shareholders 3 Directors’

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HARITA SEATING SYSTEMS LIMITED

Board of DirectorsH Lakshmanan, ChairmanS I Jaffar AliMartin GrammerC N PrasadRam Natarajan

PresidentA G Giridharan

Company SecretaryN Iswarya Lakshmi

Audit CommitteeH Lakshmanan, ChairmanS I Jaffar AliC N Prasad

Investors’ Grievance CommitteeH Lakshmanan, ChairmanS I Jaffar AliC N Prasad

Remuneration CommitteeH Lakshmanan, ChairmanS I Jaffar AliC N Prasad

BankersState Bank of IndiaIndustrial Finance BranchAnna Salai, Chennai 600 002

State Bank of MysoreIndustrial Finance BranchAnna Salai, Chennai 600 006

AuditorsSundaram & SrinivasanChartered Accountants,No. 4 (Old No. 23), Sir C.P. Ramaswamy Road,Alwarpet, Chennai 600 018

Shares listed withMadras Stock Exchange Ltd., ChennaiNational Stock Exchange of India Ltd., MumbaiBangalore Stock Exchange Ltd., Bengaluru

Share Transfer AgentSundaram-Clayton LimitedNo. 22 (Old No. 31), Railway Colony, 3rd Street,Mehta Nagar, Chennai - 600 029Tel. : 044 - 2374 1889, 2374 2939Fax : 044 - 2374 1889E-mail : [email protected]

[email protected]@[email protected]

Contents Page No.

Financial highlights 2

Notice to the shareholders 3

Directors’ report to the shareholders 8

Report on Corporate Governance 17

Auditors’ report to the shareholders 31

Balance Sheet 34

Statement of Profit and Loss 35

Notes on accounts 36

Accounting Standards andadditional disclosures 45

Cash flow statement 59

Statement under Section 212 ofthe Companies Act, 1956 61

Auditors’ Report on Consolidated Accounts 63

Consolidated Accounts 64

Financial Information of Subsidiary as perSection 212(8) of the Companies Act, 1956 78

Registered Office“Jayalakshmi Estates”No.29 (Old No.8), Haddows Road,Chennai - 600 006, Tamil Nadu, IndiaTel. : 044-28272233, Fax : 044-28257121

FactoriesBelagondapalli, Thally Road,Hosur - 635 114, Tamil Nadu, IndiaTel. : 04347-233445, Fax : 04347-233460

Plot A2 MIDC Industrial areaRanjangaon, Koregaon village, Shirur taluk,Pune - 412210, Maharashtra, IndiaTel. : 02138-660742

Chaurasia Road, Pargana Plassi,Bhatian Village, Thesil Nalagarh,Solan District - 174 101,Himachal Pradesh, IndiaTel. : 01795-220562

Web site: www.haritaseating.com

Subsidiary companyHarita Fehrer Limited, Chennai

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Financial Highlights

Details 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11$ 2011-12$

Statement of Profit & LossSales 7873.25 9202.06 11798.82 13736.82 15547.33 19104.87 19625.18 22356.35 24,078.27 30,664.18

Other income 48.71 90.81 117.93 143.80 149.41 271.76 196.98 893.51 153.53 225.85

Total income 7921.96 9292.87 11916.75 13880.62 15696.74 19376.63 19822.16 23249.86 24,231.80 30,890.03

Gross profit before interest ,depreciation &tax 730.09 894.03 987.92 1292.85 1363.01 1772.58 330.76 1487.56 594.85 2,516.04

Depreciation 174.99 212.76 269.39 315.28 386.34 532.93 696.92 883.52 431.66 434.38

Profit/(Loss) before interest &tax 555.10 681.27 718.53 977.57 976.67 1239.65 (366.16) 604.04 163.19 2,081.66

Interest 10.11 0.35 0.28 31.78 75.75 286.90 424.77 704.44 747.29 663.70

Profit/(Loss) before taxation 544.99 680.92 718.25 945.79 900.92 952.75 (790.93) (100.40) (584.10) 1,417.96

Profit/(Loss) after taxation 341.80 437.69 451.78 638.79 583.92 641.25 (892.09) 8.81 (509.99) 1,122.01

Balance Sheet

Net fixed assets 1329.35 1564.07 1878.80 2337.96 4380.64 5546.86 7999.88 4705.11 4,652.63 3,577.92

Investment 0.06 661.12 367.96 407.87 350.00 437.38 259.85 2988.76 2,759.00 2,759.00

Net current assets 924.23 305.29 598.89 1420.19 1866.44 725.77 5217.27 900.36 1,064.00 2,374.75

Total 2253.64 2530.48 2845.65 4166.02 6597.08 6710.01 13477.00 8594.23 8,475.63 8,711.67

Share capital 388.45 388.45 388.45 388.45 388.45 776.90 776.90 776.90 776.90 776.90

Reserves & Surplus 1464.20 1767.96 2082.72 2522.17 2902.57 2930.94 2055.78 2072.98 1,561.79 2,407.25

Net worth 1852.65 2156.41 2471.17 2910.62 3291.02 3707.84 2832.68 2849.88 2,338.69 3,184.15

Loan funds 265.25 240.10 220.04 1091.96 3125.62 2639.73 10200.03 5422.27 5,888.97 5,282.64

Deferred tax liability 135.74 133.97 154.44 163.44 180.44 362.44 444.29 322.08 247.97 244.88

Total 2253.64 2530.48 2845.65 4166.02 6597.08 6710.01 13477.00 8594.23 8,475.63 8,711.67

Earnings per share (Rs.) 8.80 11.20 11.75 16.44 15.03 ^ 8.25 (11.48) 0.11 (6.56) 14.44

Dividend per share (Rs.) 2.50 3.00 3.20 4.50 4.50 2.50 – – – 3.50

Book value per share (Rs.) 47.69 55.51 63.62 74.93 84.72 47.73 36.46 36.68 30.10 40.99

Return on capital employed %(ROCE)* 27.80 30.40 28.40 25.80 18.70 19.40 (2.69) 7.31 1.92 25.88

Return on networth % (RONW)** 19.70 21.80 19.50 23.70 18.80 18.30 (27.28) 0.31 (19.66) 40.63

Fixed asset turnover (No. of times) # 6.29 6.36 6.85 6.52 4.63 3.85 2.90 3.52 5.15 7.45

Working capital turnover (No. of times) @ 7.91 14.97 26.10 13.61 9.46 14.74 6.60 7.31 24.52 17.83

Gross profit as % of total income 9.20 9.60 8.30 9.30 8.70 9.10 1.70 6.40 2.45 8.15

Profit/(Loss) before tax as % of total income 6.90 7.30 6.00 6.80 5.70 4.90 (4.00) (0.43) (2.41) 4.59

* 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.

^ Adjusted for bonus issue

$ The figures for 2011-12 and 2010-11 are based on the Revised Schedule VI classifications. The figures upto 2009-10 are based on the respective year's reported results.

Rs. in lakhs

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Notice to the ShareholdersNOTICE is hereby given that the sixteenth annualgeneral meeting of the shareholders of the Companywill be held at Kasturi Srinivasan Hall (Mini Hall),The Music Academy, No.168, (Old No. 306) T. T. KRoad, Royapettah, Chennai 600 014 on Friday, the21st September 2012 at 10.00 a.m. to transact thefollowing businesses:

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 2012 and the statement of profit

and loss 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 Mr Martin Grammer,

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,

M/s. Sundaram & Srinivasan, Chartered

Accountants, Chennai, having the firm

registration no. 004207S issued by The Institute

of Chartered Accountants of India, be and are

hereby re-appointed as auditors of the

Company to hold office from the conclusion of

this annual general 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."

SPECIAL BUSINESS




"RESOLVED THAT Mr Ram Natarajan, who was

appointed as an additional director of the

Company and who holds office upto the date of

this annual general meeting, in terms of the

applicable provisions of the Companies Act,

1956, be and is hereby appointed as a director

of the Company, subject to retirement by

rotation".

5. To consider and, if thought fit, to pass with or

without modification the following resolution as

a special resolution:

"RESOLVED THAT, in partial modification of

the resolution passed by the shareholders of

the Company, at the annual general meeting

held on 7th September 2009, and subject to the

provisions of Sections 386 and 388 read with

the Schedule XIII and other applicable

provisions of the Companies Act, 1956 (the Act),

the revision in the remuneration payable to

Mr A G Giridharan, President of the Company,

as Manager under the Act, by increasing the

overall limit of remuneration to Rs.54 lakhs per

annum from Rs.48 lakhs per annum, by

enhancing the quantum of maximum

remuneration, payable under the head "Salary

and commission on profits or performance

linked incentive or bonus, from Rs.24 lakhs to

Rs.30 lakhs per annum" effective from 1st April

2011 for the period commencing from 1st April

2011 to 10th November 2012 with an authority

to the Chairman of the board, to decide the

quantum of remuneration payable under each

head as agreed to between the board and Mr A

G Giridharan, during the currency of his tenure

mentioned hereinabove, be and is hereby

approved".

"RESOLVED FURTHER THAT all other

terms and conditions of appointment of

Mr A G Giridharan as Manager for the purpose

of the Act, as approved by the shareholders of

the Company at the annual general meeting

held on 7th September 2009 shall remain

unchanged".

6. To consider and, if thought fit, to pass with or

without modification the following resolution as

a special resolution:

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"RESOLVED THAT subject to the provisions ofSection 269 read with Sections 386,387 and 388and Schedule XIII of the Companies Act, 1956(the Act) and such other applicable provisions, ifany of the Act, consent be and is herebyaccorded for the re-appointment ofMr A G Giridharan, President of the Companyas Manager, for the purpose of the Act for aperiod of 3 years commencing from 11th

November 2012, with the power of the board orthe Chairman of the board to determine thequantum of individual items of his remuneration,payable at such intervals, within the overall limits,for each financial year so as not to exceed 5%of the net profits of the Company, calculated inaccordance with the provisions of Sections 349and 350 of the Act".

"RESOLVED FURTHER THAT theremuneration within the aforesaid limits, payableto Mr A G Giridharan, as Manager under the Act,for a period of three years commencing from 11th

November 2012, subject to the condition that theboard or the Chairman of the board, from timeto time, may determine the quantum of individualitems of his remuneration for each financial year,not exceeding the maximum limit specified ineach category as follows, be and is herebyapproved:

(1) Salary and commission on profits orperformance linked incentive or bonus:

Subject to a ceiling of Rs.30 lakhs perannum.

(2) Perquisites and allowances:

Perquisites like unfurnished accommodation/ house rent allowance, conveyanceallowance, medical reimbursement, leavetravel assistance for self and family, clubfees, medical / personal accident insurancepremia and other benefits or amenities, inaggregate restricted to a sum not exceedingRs.24 lakhs per annum.

Provision of telephone at residence includingpayment of local calls and long distance callsshall not be included in the computation ofperquisites for the purpose of calculation ofthe said ceiling.

Personal long distance calls on telephonefor private purposes shall be recovered bythe Company.

(3) Contribution to statutory funds:

Company's contribution to provident fund notexceeding 12% of the salary or such otherpercentage of the salary as may be fixed bythe Central Government from time to timeand gratuity as per the rules of the Company.

Company's contribution to provident andgratuity funds, shall not be included forcomputation of limits of perquisites andallowances as aforesaid.

(4) Pension benefits:

Entitled to pension, if any, payable afterretirement, as per the rules of the Company".

"RESOLVED FURTHER THAT the salary,commission on profits or performance linkedincentive, perquisites and other allowances /benefits, contributions payable at such quantumand such intervals, as may be decided by theboard or the Chairman of the board, from timeto time, for each financial year, in aggregate, shallalways be well within the limits prescribed underSection 387 read with Schedule XIII of the Act".

"RESOLVED FURTHER THAT, pursuant toSection II of Part II of Schedule XIII of the Actand other applicable provisions of the Act, in theevent of loss or inadequacy of profits in anyfinancial year, the board shall revise theremuneration payable to Mr A G Giridharan, asManager during such financial year in suchmanner, as may be agreed to between him andthe board within the limits prescribed in this behalfor the Company may pay the remuneration notexceeding the limits as set out in Section II ofPart II of Schedule XIII of the Act, subject to suchapprovals, if required under the Act, includingthe approval of the Central Government duringany financial year during the currency of histenure mentioned hereinabove".

"RESOLVED FURTHER THATMr A G Giridharan, as Manager of the Companyshall be subject to the superintendence, controland directions of the board and he shall have allsuch powers, duties and responsibilities in terms

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of the provisions of the Act that may be vestedin him by the board, from time to time".

By order of the Board

Chennai N Iswarya Lakshmi30th May 2012 Company Secretary

Registered Office:"Jayalakshmi Estates"No.29 (Old No.8), Haddows RoadChennai 600 006

Notes:

1. A member entitled to attend and vote at themeeting is entitled to appoint one or moreproxies to attend and vote instead of himself/herself and the proxy or proxies so appointedneed not be a member or members as thecase may be of the Company. The instrumentappointing the proxy and the power ofattorney or other authority, if any, underwhich it is signed or a notarially certified copyof that power of attorney or other authorityshall be deposited at the registered office ofthe Company not later than 48 hours beforethe time fixed for holding the meeting.

2. The Explanatory Statement in respect of item nos.4, 5 and 6 as set out under special business,pursuant to Section 173(2) of the Companies Act,1956 (the Act) is annexed hereto.

3. The interim dividend on the equity shares for theyear ended 31st March 2012 as declared by theboard of directors will be paid on or after 11th

June 2012 to those shareholders (or theirmandatees) whose names appear in the registerof members of the Company as at the close of9th June 2012, being the record date fixed bythe board at its meeting held on 30th May 2012.

4. The register of members and the share transferbooks of the Company will remain closed forfour days, from 18th September 2012 to21st September 2012, both days inclusive, forthe purpose of annual general meeting of theCompany, in terms of Clause 16 of the ListingAgreement.

5. In terms of Section 205A read with Section 205Cof the Companies Act, 1956, the dividendsdeclared by the Company which remainunclaimed for a period of seven years will betransferred on due dates to the InvestorEducation and Protection Fund (IEPF) established

by the Central Government. The particulars of duedates for transfer of such unclaimed dividends toIEPF are furnished in the report on corporategovernance forming part of the annual report.

Members, who have not encashed their dividendwarrants, are requested to make their claim bysurrendering the unencashed warrantsimmediately to the Company.

6. Members holding shares in physical form, in theirown interest, are requested to dematerialize theshares to avail the benefits of electronic holding/trading.

7. Members are requested to notify any change intheir address to the Company immediately.Members holding shares in electronic form arerequested to advise change of correspondenceand e-mail addresses to their depositoryparticipants.

8. As a measure of economy, copies of the annualreport will not be distributed at the annual generalmeeting. Members are, therefore, requested tobring their copies of the annual report to themeeting.

9. Members are requested to affix their signature atthe space provided on the attendance slipannexed to the proxy form and hand over the slipat the entrance of the meeting hall.

10. The Ministry of Corporate Affairs vide circular nos.17/2011 and 18/2011 dated 21st April and29th April 2011 respectively, has undertaken a"Green Initiative in Corporate Governance" andallowed companies to send communications tothe shareholders including Notices / AnnualReports / documents through electronic mode.Members are requested to support this greeninitiative by registering / updating their e-mailaddresses, in respect of shares held indematerialized form with their respectivedepository participants and in respect of sharesheld in physical form with the share transfer agentand also to confirm receiving the said documentsthrough electronic mode, if required.

11. In terms of clause 49(IV)(G) of the ListingAgreement with the Stock Exchanges, a briefresume of the directors, who are proposed to bere-appointed / appointed in this meeting, natureof their expertise in specific functional areas,their other directorships and committeememberships and their shareholdings and

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relationships with other directors in theCompany are given below:

I. Mr Martin Grammer

Born on 5th June, 1960 in Amberg, Germany,Mr Martin Grammer holds a degree in BusinessEconomics from University Nuremberg,Germany. He was co-opted as a director by theboard on 21st January 2004.

He has vast experience in internationalmarketing and consultancy areas. He hasserved in internationally renowned companieswhich include Magna International Inc., Toronto,Canada, a leading supplier to the globalautomotive industry and Roland Berger &Partner, a leading international managementconsultant in Germany and Europe.

He held the position as Managing Director andmember of Executive Committee of Board ofGrammer AG, Germany for ten years, a leadingsupplier to the global automotive industry.During 2003 - 2008, he served as a member ofthe board of directors of GHE S.p.A, Milano,Italy, a leading supplier of European bus andtrain interiors industry with manufacturinglocations in Italy, Germany, Spain, UK, CzechRepublic and Mexico.

He does not hold any position as a director inany Indian company or a member of anycommittee of directors of any other companyand he is not related to any director of theCompany.

He holds 10,87,600 equity shares of theCompany.

II. Mr Ram Natarajan

Born on 7th April 1956, Mr Ram Natarajan is aMechanical Engineer from REC, Trichy, withMBA in Finance & Operations from Universityof Alberta, Edmonton, Canada.

He has 30 years of rich experience in plantoperations, supplier development, productdevelopment, cost optimization, quality systemsand TQM practices in companies like BharatElectronics, Philips India, General Motors,Whirlpool India & Sono-Koya Group. He alsoheld the position of CEO in Magenti Marelli-SKH.

He was co-opted as an additional director of theCompany by the board on 10th November 2011.

He holds the position as director in Uranus AutoSeat Trims Private Limited. He does not holdany position as a member of any committee ofdirectors of any other company.

He does not hold any share in the Companyand he is not related to any director of theCompany.

ANNEXURE TO NOTICE

Explanatory statement pursuant to Section173(2) of the Companies Act, 1956

The following explanatory statement sets out all thematerial facts relating to the special businessesmentioned in the accompanying Notice dated30th May 2012 and shall be taken as forming part ofthe Notice.

Item No. 4

Mr Ram Natarajan was appointed as an additionaldirector of the Company effective 10th November2011. Mr Ram Natarajan will hold office only uptothe date of this annual general meeting, in terms ofSection 260 of the Companies Act, 1956.

A notice has been received from a member of theCompany under Section 257 of the Companies Act,1956, along with a deposit of Rs.500/- signifying hisintention to propose the candidature of Mr RamNatarajan and move the ordinary resolution set outin Item No.4 of this Notice.

The directors recommend the said resolution to beapproved as an ordinary resolution by theshareholders.

None of the directors, except Mr Ram Natarajan, isdeemed to be interested or concerned in thisresolution.

Item No. 5

Mr A G Giridharan, President of the Company, wasappointed as Manager under the Companies Act,1956 (the Act) for a period of three years effective11th November 2009 on a remuneration payable,within the limit of -

(i) Rs.48 lakhs per annum, and when the Companyhas no profits or inadequate profits, based onthe 'effective capital' during the currency of histenure for a period of three years; and

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(ii) 5% of profits, should the Company haveadequate profits to pay up to this limit ofRs.48 lakhs per annum during these periods;

as per the terms and conditions approved by theboard, at its meeting held on 27th July 2009, andlater by the shareholders, at the annual generalmeeting held on 7th September 2009. The aforesaidoverall limit of remuneration of Rs.48 lakhs perannum approved comprised of -

(i) Salary and commission on profits orperformance linked incentive or bonus, subjectto a ceiling of Rs.24 lakhs per annum; and

(ii) Perquisites and allowances, i.e perquisites likeunfurnished accommodation / house rentallowance, conveyance allowance, medicalreimbursement, leave travel assistance for selfand family, club fees, medical / personalaccident insurance premia and other benefitsor amenities, in aggregate restricted to a sumnot exceeding Rs.24 lakhs, per annum.

The shareholders also conferred powers upon theboard to determine the quantum of individual itemsof his remuneration for each financial year, subjectto the said overall limit, calculated in accordance withthe provisions of Sections 349 and 350 of the Act.

The board, at its meeting held on 30th May 2012,based on the recommendation and approval of theremuneration committee of directors at its meetingheld on 15th March 2012, approved a revision in hisremuneration, after taking into consideration hiscontribution to the growth of the Company and theprofitability of the Company.

The board also approved the revision, subject tothe approval of the shareholders by way of a specialresolution, by increasing the said overall limit toRs.54 lakhs per annum effective 1st April 2011 fromRs.48 lakhs per annum, by enhancing the quantumof maximum remuneration, payable under the head"Salary and commission on profits or performancelinked incentive or bonus, from Rs.24 lakhs toRs.30 lakhs per annum" effective from 1st April 2011,for the period commencing from 1st April 2011 to10th November 2012.

All other terms and conditions of appointment andremuneration, as approved by the shareholders atthe annual general meeting of the Company heldon 7th September 2009, remain unchanged.

An abstract of the variation in terms of remunerationpayable to Mr A G Giridharan, President asManager, pursuant to Section 302 of the Act hasbeen sent separately.

The directors, therefore, recommend the resolution,as set out in item no.5 of the Notice to be approved,as a special resolution, by the shareholders of theCompany.

None of the directors is deemed to be interested orconcerned in the resolution.

Item No:6

Mr A G Giridharan, President of the Company, wasappointed as "Manager" under the Companies Act,1956 for a period of three years from 11th November2009 on the terms and conditions approved by theshareholders of the Company at the annual generalmeeting held on 7th September, 2009. His presentterm of office will expire on 10th November 2012.

It is proposed to re-appoint him as Manager, for afurther period of three years effective 11th November2012 on such terms and conditions, as set out indetail in the resolution in item No.6 of the Noticeand in terms of the agreement entered into with himby the Company and subject to the approval of theshareholders in the ensuing annual general meetingof the Company.

An abstract of the terms of re-appointment andremuneration of Mr A G Giridharan, President asManager, pursuant to Section 302 of the Act hasbeen sent separately.

The directors, therefore, recommend the resolutionas set out in item no.6 of the Notice to be approvedas a special resolution, by the shareholders of theCompany.

None of the directors is deemed to be interested orconcerned in the resolution.

Inspection of documents:

The documents referred to in the explanatorystatement will be available for inspection at theregistered office of the Company between 10.00 a.m.and 12.00 noon on all working days except Saturdaysupto the date of Annual General Meeting.

By order of the Board

Chennai N Iswarya Lakshmi30th May 2012 Company Secretary

Registered Office:"Jayalakshmi Estates"No.29 (Old No.8), Haddows RoadChennai 600 006

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Directors’ Report to the Shareholders

The directors have pleasure in presenting thesixteenth annual report of the Company and theaudited accounts for the year ended 31st March

2012.

1. FINANCIAL HIGHLIGHTS

(Rs. in lakhs)

Year ended Year ended31.3.2012 31.3.2011

Sales and other income 30890.03 24231.80

Gross profit before financialcosts, depreciation andamortization expensesand tax 2,364.22 594.85

Financial costs 663.70 747.29

Depreciation andamortization expenses 434.38 431.66

Profit / (Loss) beforeexceptional items and tax 1,266.14 (584.10)

Exceptional items (income) 151.82 –

Profit before tax 1,417.96 (584.10)

Provision for taxation 295.95 (74.11)

Profit / (Loss) after tax 1,122.01 (509.99)

Add: Surplus brought forward (493.99) 17.20

Profit / (Loss) available forappropriation 628.02 (492.79)

Appropriations:

Tax relating to earlier years (3.25) (1.20)

Proposed Interim Dividend 271.92 –

Dividend tax payable 27.48 –

Transfer to general reserve 112.20 –

Surplus in profit and lossstatement carrried

forward 213.17 (493.99)

2. DIVIDEND

The board of directors of the Company at theirmeeting held on 30th May 2012, declared aninterim dividend of Rs.3.50 per share for the year

ended 31st March 2012, absorbing a sum of

Rs.299.40 lakhs (including dividend distribution

tax) on 77,69,040 equity shares of Rs.10/- each

fully paid up. The same will be paid on or after

11th June 2012.

The directors of the Company do not recommend

any further dividend for the year under

consideration.

3. MANAGEMENT DISCUSSION AND ANALYSIS

REPORT

The Company provides complete seating

solutions for driver and cabin seating for

commercial vehicles, tractors and construction

equipments, as well as passenger seats for

buses across all segments and has established

itself as a leader in these segments in the country

for seating systems. The Company has also

developed and established a good supply

relationship with a Global OEM for export of

seats to the United States.

INDUSTRY STRUCTURE AND DEVELOPMENTS

In 2011-12, the economy grew only at 6.9%,

signalling a slowdown after two years of growth

at 8.4%. The industrial sector grew moderately

by 3.9% as against 7.2% last year. This

slowdown can be attributed to contraction in

demand from manufacturing and mining sectors.

Manufacturing sector grew by 3.9% as against

7.6% last year. Mining sector declined by 2.2%

as against 5% growth last year.

During the fiscal year 2011-12, the Rupee

depreciated to Rs. 50.87 / USD by March 2012

from Rs. 44.65 in March 2011. In the current

year (2012-13), it has slided down further.

All segments of the Indian automotive industry

registered growth during 2011-12. The following

table highlights the segment wise industry sales

figures in vehicle units.

Category 2011-12 2010-11 GrowthNos. Nos. %

Medium andHeavy CommercialVehicles (M & HCV) 376618 351229 7

Light CommercialVehicles (LCV) 525577 399225 32

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Buses - M & HCV 58704 57539 2

Cars & MUVs(Multi Utility Vehicles) 3129250 2973296 5

Tractors 596500 544495 10

Three wheelers 877127 795989 10

Two wheelers 15382967 13324714 15

[ Source: SIAM, TMA ]

Added to the industrial growth, the Company was

able to capture additional share of business from

key customers, resulting in the overall sales of

the Company growing by 27% in 2011-12. These

customers were from the commercial vehicle

and tractor segments. Additional efforts taken

by the Company to penetrate the Bus passenger

segment had yielded results.

The Company registered sales at Rs.307 Cr in

2011-12 (Rs.241 Cr in 2010-11). The Company's

export sales registered a growth of 28% to

Rs.27.57 Cr on account of higher volumes of

new products introduced during Q4 of 2010-11.

During the year, the Company registered a

turnaround in profitability recovering from a loss

situation during the previous year. Capacity at

specific vendors was improved. Lean

manufacturing initiatives were introduced

in-house, ensuring improved deliveries and

eliminating air-freights. The Company's

continued efforts to get compensation for raw

material increase in all products were partially

successful. Along with this compensation, the

implementation of cost reduction projects across

all functions and plants has enabled the Company

to post a profit before tax of Rs.14.18 Cr in

2011-12.

OPPORTUNITIES AND THREATS

The Company maintains the leadership position

in the tractor segment in the domestic market.

The Company has laid down strategies to develop

products in the high volume segment for the

domestic market.

The Company continues to supply products to

export markets and has also laid down strategies

to increase export sales. The growth in

off-road equipments (construction equipments)

presents a good opportunity for the Company to

explore for better prospects.

The Company continues to be the market leader

in the deluxe segment of bus passenger seats

with a wide range of seats with all the features.

The Company expects the deluxe bus passenger

segment to grow with more features added in the

products which can be an area for Company's

further growth. The Company has obtained new

business for supply of seats from OEMs who have

entered the Indian market for the deluxe buses.

It is expected that, this will help the Company to

maintain its leadership position.

The Company is focusing on product innovation

by developing feature-rich products as well as

optimizing product cost to create more value

addition to customers.

Several seating companies have established their

manufacturing facilities in India either directly or

through joint ventures. This development poses

a significant competitive threat. The Company has

developed and deployed strategies in product

development, marketing and manufacturing

areas to capture the additional opportunities

offered by the market and to address and counter

these competitive threats.

The likely economic slow-down in the coming

years is a threat not just to the Company alone

but to the entire industry as well. The Company

has been taking preventive measures to contain

costs. The Company has initiated implementation

of Lean Manufacturing concept across all its

manufacturing locations to reduce cost and to stay

competitive.

PRODUCT-WISE PERFORMANCE

The Company was able to post 27% growth in

the overall sales. The Company posted 35%

growth in commercial vehicle segment, 28% in

tractor segment, 27% in bus passenger segment

and 36% for the export market.

Category 2011-12 2010-11 GrowthNos. Nos. %

10


BUSINESS OUTLOOK AND OVERVIEW

The projected GDP growth is 6.0-6.5% in2012-13. In the automotive sector, the M & HCVand LCV segments are estimated to grow muchbelow the last year's growth level and theCompany estimates a very moderate growth for2012-13. Tractor and bus passenger segmentsare estimated to have a flat growth. As a result,the Company's sales are likely to register only avery moderate growth in 2012-13.

In order to increase the share of business withkey OEM customers, the Company is in theprocess of implementing its strategy for creatingassembly locations close to customers. Further,the Company has developed new products witha platform concept for all segments, which willenable gaining additional market share.

RISKS AND CONCERNS

Higher interest rates, fuel price increase andincrease in excise duty are expected to impactthe commercial vehicles and bus industry. Theslowdown in growth of the OEMs may affect theirprofitability adversely and in turn, the OEMs mayput further pressure on cost reduction from theCompany. The Company is working closely withits suppliers to improve their operationalefficiency and to maintain the cost base in spiteof reduced volume growth.

Low crop yield, poor rain fall, and slow down ininfrastructure growth are hampering the tractorindustry growth. The Company plans to developadditional products to maintain its growth plans.The Company continues its focus to improveproduct quality to gain greater customerconfidence.

The Rupee depreciation is expected to prevailin 2012-13 also. The risk due to fluctuations inforeign exchange is mitigated by taking suitableforex cover.

OPERATIONS REVIEW

a. Manufacturing:

By imparting training to key employees in

the manufacturing areas, improvements in

facility and also reduction of costs are

expected to be achieved.

Further improvements of Lean Manufacturing

initiatives will help the Company in containing

manufacturing costs.

b. Quality:

The Company is certified for TS 16949. The

Quality laboratory in the Company is certified

by National Accreditation Board for Testing

and Calibration Laboratories (NABL) for

conformance to ISO/IEC 17025. The quality

system at the factories aims at achieving total

customer satisfaction through its focus on

improving product quality. Consistently, we

have been achieving improved quality levels

at the customer-end, both in their line and

warranty quality. Apart from use of quality

techniques such as Poka-yokes and improved

process control, this quality improvement is

aided by the Company's continuous

improvement culture and total employee

involvement.

100% employee participation in the

Company's improvement programmes like

suggestion schemes, Quality Control Circle

Competition projects and Supervisory

Improvement Team projects continued

successfully for the 11th year in succession.

c. Focus on Cost:

The Company is closely studying costs at

every activity level for identifying cost

reduction projects for implementation by

means of value engineering, eliminating

wastages in the supply chain and by

productivity improvement projects.

The successful implementation of the

Lean Manufacturing concepts in Hosur has

also yielded cost saving. As mentioned

above, these initiatives will continue in

2012-13 also.

11


Year ended Year endedParticulars 31st March 2012 31st March 2011

Rs. in lakhs % Rs. in lakhs %

Income:

Sales 30,664.18 99.27 24,078.27 99.37

Other Income 225.85 0.73 153.53 0.63

Total Income 30,890.03 100.00 24,231.80 100.00

Expenditure:

Raw materials and components consumed 23,281.47 75.37 19,097.79 78.81

Staff cost 2,266.06 7.34 1,924.91 7.94

Stores and tools consumed 58.00 0.19 72.87 0.30

Power and fuel 206.59 0.67 181.69 0.75

Repairs and maintenance 451.87 1.46 254.20 1.05

Carriage outward & Packing expenses 903.53 2.92 1,034.64 4.27

Other expenses 1,358.29 4.40 1,070.85 4.42

Financial costs 663.70 2.15 747.29 3.08

Depreciation and amortization expenses 434.38 1.41 431.66 1.78

Total expenditure 29,623.89 95.90 24,815.90 102.41

Profit/(Loss) before exceptional items and tax 1,266.14 4.10 (584.10) (2.41)

Exceptional items (income) 151.82 0.49 – –

Profit before tax 1,417.96 4.59 (584.10) (2.41)

Provision for taxation - Current tax 299.04 0.97 – –- Deferred tax (3.09) (0.01) (74.11) (0.31)

Profit / (Loss) after tax 1,122.01 3.63 (509.99) (2.10)

EBITDA/Turnover % 7.65 2.45

Profit/(Loss)before tax/turnover % 4.10 (2.41)

Return on capital employed % 25.88 1.92

Return on net worth % 40.63 (19.66)

Earnings per share in Rs. 14.44 (6.56)

INTERNAL CONTROLS AND THEIRADEQUACY

The Company has a proper and adequateinternal control system to ensure that all assetsare safeguarded and protected against loss fromunauthorized use or disposition and thosetransactions that are authorized and recordedare reported correctly. The internal controls are

supplemented by an extensive programme ofinternal audits, review by management anddocumented policies, guidelines andprocedures. The status of the observations madeduring the internal audit is reviewed by the auditcommittee of directors and concerns, if any, arereported to the board periodically. Suggestionsof the members are duly incorporated and status

d. Financial performance:

The financial and operational performance of the Company for the year 2011-2012, as compared to

the previous year 2010-2011, is as follows:

12


update of the same is periodically reported tothe audit committee of directors.

HUMAN RESOURCE DEVELOPMENT

The dedicated efforts by all employees acrossthe hierarchy towards the aligned set of goalsduring policy deployment have helped theCompany to register a turnaround performancefor 2011-12. The Company places on record itsdeep appreciation for the exemplary contributionof the employees at all levels.

The Company continues to follow the programfor induction of fresh management trainees andfunctional specialists this year as well. TheCompany continues to adhere to the process oftraining needs identification and providingtraining as per plan, which has helped to improvethe employee skill levels. The Company'sindustrial relations continue to be cordial.

As of 31st March 2012, the Company had 338employees on its rolls.

COMMUNITY DEVELOPMENT AND SOCIALRESPONSIBILITY

Through the Srinivasan Services Trust, theCompany facilitates the process of sustainabledevelopment of the local communities where theCompany operates. Apart from economicdevelopment through Self Help Groups andadvocacy, the focus areas include humanand livestock health care, quality education,provision / maintenance of infrastructure as wellas conservation of the environment.

Since the Company has plants at Hosur,Ranjangaon and Nalagarh, the focus for thecommunity development activities has been inBelagondapalli village, Hosur in Tamil Nadu andvillages around Ranjangaon and Pune inMaharashtra.

CAUTIONARY STATEMENT

Statements in the management discussion andanalysis report describing the Company'sobjectives, projections, estimates, expectationsmay be forward looking statements within themeaning of applicable Securities Laws andRegulations. Actual results could differ materiallyfrom those expressed and implied. Important

factors that could make a difference to theCompany's operations include, among otherthings, economic conditions affecting the demand,supply and price conditions in the domestic andinternational markets in which the Companyoperates, changes in government regulations, taxlaws and other statutes and incidental factors.

4. SUBSIDIARY COMPANY

As on the date of this report, Harita FehrerLimited, Chennai (HFRL) is the only subsidiaryof the Company.

HFRL is a material non-listed Indian subsidiaryin terms of sub-clause III of Clause 49 of theListing Agreement, as the total turnover of thesubsidiary exceeds 20% of the consolidatedturnover of the Company.

The Company is fully compliant with theprovisions as specified in sub-clause III of Clause49 of the Listing Agreement. During the financialyear 2011-12, HFRL achieved an income ofRs. 294.76 Cr and registered a profit after tax ofRs. 11.04 Cr. It had declared a maiden dividendof 10% for the year 2011-2012.

5. CONSOLIDATED FINANCIAL STATEMENTS

The annual accounts of the subsidiary for theyear ended 31st March 2012 is consolidated withthe accounts of the Company in accordance withAccounting Standards as prescribed underSection 211(3C) of the Companies Act, 1956and as required under the Listing Agreement.These financial statements disclose the assets,liabilities, income, expenses and other detailsof the Company and its subsidiary.

The Ministry of Corporate Affairs (MCA) vide itscircular No. 2 in file No. 51/12/2007-CL-III dated8th February 2011 has granted generalexemption under Section 212(8) of theCompanies Act, 1956 for holding companiesfrom attaching annual reports of subsidiariesalong with its annual report without seeking anyapproval of the Central Government. However,this is subject to fulfillment of conditions asstipulated in the said circular granting generalexemption to the holding company and passingof a resolution by the board of the holdingcompany in this regard.

13


The board of directors at the meeting held on30th May 2012 passed necessary resolution forcomplying with all the conditions enabling thecirculation of annual report to the shareholdersof the Company without attaching all thedocuments of the subsidiary company, referredto in Section 212(1) of the Companies Act, 1956.

The annual accounts, reports and other documentsof the subsidiary company will be made availableto the members, on receipt of a request from them.The annual accounts of the subsidiary companywill be available at the registered office of theCompany and at the registered office of thesubsidiary company. If any member or investorwishes to inspect the same, it will be availableduring the business hours of any working day atthe registered office of the Company.

A statement giving the following information aboutHFRL consisting of (a) capital (b) reserves (c)total assets (d) total liabilities (e) details ofinvestment (f) turnover (g) profit before taxation(h) provision for taxation (i) profit after taxationand (j) proposed dividend, has been attached withthe consolidated balance sheet of the Companyin compliance with the conditions as provided inthe circular issued by MCA.

6. DIRECTORS

Mr Martin Grammer, director, retires at the ensuingannual general meeting of the Company and beingeligible, offers himself for re-appointment.

Mr Ram Natarajan was appointed as anadditional, non executive and independentdirector of the Company effective 10th November2011. Mr Ram Natarajan will hold office uptothis annual general meeting.

A notice in terms of Section 257 of theCompanies Act, 1956 has been received from amember of the Company signifying his proposalfor the appointment of Mr Ram Natarajan as adirector of the Company.

The brief resume of Mr Martin Grammer andMr Ram Natarajan, directors, have been detailedin the notice convening the annual generalmeeting of the Company. Appropriate resolutionsfor their re-appointment and appointment arebeing placed for approval of the shareholders atthe ensuing annual general meeting. Thedirectors recommend their re-appointment /appointment as directors of the Company.

7. AUDITORS

M/s.Sundaram & Srinivasan, CharteredAccountants, Chennai, retire at the ensuingannual general meeting and are eligible forre-appointment.

The Company has received a letter from them,stating that the appointment, if made, will bewithin the limit prescribed under Section 224(1B)of the Companies Act, 1956.

8. COST AUDITOR

MCA issued an industry specific Cost AuditOrder vide No. 52/26/CAB-2010 dated24th January 2012, thereby requiring all suchcompanies, which are in the manufacturingactivities of automotive components (coveredunder Central Excise Tariff Chapter Nos. 84, 87)to appoint a Cost Auditor for auditing the costaccounting information effective 1st April 2012for the financial year 2012-13 and file a reportwith the Central Government, on or before 30th

September of every year.

The board of directors, in view of this industryspecific order, at their meeting held on 30th May2012 appointed M/s. Raman & Associates, CostAccountants, Chennai, as Cost Auditor forcarrying out the cost audit of the Company forthe financial year 2012-2013, subject to thecompliance of all the requirements, as stipulatedin circular no.15/2011 dated 11th April 2011issued by MCA and subject to the approval ofthe Central Government.

The Company has received a letter from the saidCost Audit firm, stating that the appointment,if made, will be within the prescribed limit underSection 224(1B) of the Act.

For the financial year under review, a CostCompliance report will be obtained and filed withMCA on or before 30th September 2012 in termsof Companies (Cost Accounting) Records Rules,2011.

9. CORPORATE GOVERNANCE

The Company has been practicing the principlesof good corporate governance over the yearsand lays strong emphasis on transparency,accountability and integrity.

14


A separate section on Corporate Governanceand a certificate from the statutory auditors ofthe Company regarding compliance ofconditions of Corporate Governance asstipulated under Clause 49 of the ListingAgreement with the Stock Exchanges form partof the Annual Report.

The president and the general manager - financeof the Company have certified the financialstatements and other connected matters inaccordance with Clause 49(V) of the ListingAgreement pertaining to CEO/CFO certificationfor the financial year ended 31st March 2012.

10. STATUTORY STATEMENTS

a. Conservation of energy, technologyabsorption and foreign exchange earningsand outgo:

As per the requirements of Section 217(1)(e)of the Companies Act, 1956, read with TheCompanies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988,information regarding conservation ofenergy, technology absorption and foreignexchange earnings and outgo are given inAnnexure I to this report.

b. Particulars of employees:

There is no employee receiving remunerationin excess of the limits prescribed under Section217 (2A) of the Companies Act, 1956, readwith the Companies (Particulars of Employees)Rules 1975 as amended.

c. Public Deposits:

The Company has not accepted any depositfrom the public within the meaning of Section58A of the Companies Act, 1956, for the yearended 31st March 2012.

d. Directors' Responsibility Statement:

Pursuant to the requirement of Section217(2AA) of the Companies Act, 1956 withrespect to directors' responsibility statement,it is hereby confirmed:

(i) that in the preparation of annual accountsfor the financial year ended 31st March

2012, the applicable accountingstandards had been followed and therewere no material departures;

(ii) that the directors had selected suchaccounting policies and applied themconsistently and made judgements andestimates that were reasonable andprudent so as to give a true and fair viewof the state of affairs of the Company atthe end of the financial year and of theprofit of the Company for the year underreview;

(iii) that the directors had taken proper andsufficient care for the maintenance ofadequate accounting records inaccordance with the provisions of theCompanies Act, 1956 for safeguardingthe assets of the Company and forpreventing and detecting fraud and otherirregularities; and

(iv) that the directors had prepared theaccounts for the financial year ended 31st

March 2012 on a "going concern basis".

11. ACKNOWLEDGEMENT

The directors acknowledge the support and co-operation received from the promoters, HaritaGroup and Mr Martin Grammer.

The directors thank the customers, suppliers,financial institutions and bankers for theirvaluable support and assistance.

The directors wish to place on record theirappreciation of the sincere efforts of all theemployees of the Company during the yearunder review.

The directors also thank the shareholders fortheir continued faith in the Company.

For and on behalf of the Board

Chennai H LAKSHMANAN30th May 2012 Chairman

15


A. CONSERVATION OF ENERGY

1. Measures taken:

• Energy conservation in shop floor lighting by

introduction of T5 fittings;

• Introduction of auto shut off valves for air

lines;

• Introduction of auto cut off timers for air

conditioners;

• Power factor improvement;

• Reduction in energy consumption through

replacement of Thin Film Transistor (TFT)

monitors;

• Water pressure switches for canteen

submersible pumps; and

• Electronic ballast changing in tube lights.

The above measures had resulted in an annual

saving of Rs. 8.25 lakhs.

2. Proposed measures:

• Introduction of T5 fittings in shop floor and

street lights;

• Replacement of TFT monitors;

• Introduction of light pipes in office building;

• Introduction of auto shut off valves for air

lines in assembly section;

• Sustainment of power factor in electrical

distribution system; and

• Introduction of solar heating at canteen.

The above measures will result in an annual

saving of about Rs.11 lakhs.

Annexure I to the Directors' Report for the year ended 31st March 2012 - Informationpursuant to Section 217(1)(e) of the Companies Act, 1956

B. TECHNOLOGY ABSORPTION

Research & Development (R&D)

1. Specific areas in which R&D is carried out in

the Company:

• Seats developed for agricultural tractors;

• Seats developed for residential lawn

mowers and agricultural transport

vehicles;

• Seat design and development initiated

for construction equipment; and

• Designed and developed seats for

Daimler India's "Bharat Benz" trucks.

2. Benefits derived as a result of above

measures:

• Enhanced sales;

• Reduced lead time to respond to

customer; and

• Increase in new product sales.

3. Future plan of action:

• Development of seating systems with

additional features for improving the

safety and comfort levels of passengers

in the bus passenger segments; and

• Development of high end commercial

vehicle driver seat.

16


4. Expenditure on R&D:

(Rs. in lakhs)

(i) Capital expenditure 4.1

(ii) Revenue expenditure 330.1

Total R&D expenditure 334.2

Percentage of sales 1.1%

5. Technology absorption, adaptation and

innovation:

(i) Efforts in brief:

• Development of commonized

structural design, parts and raw

materials standardization to reduce

product cost.

(ii) Benefits derived as a result of the above

are:

• Price competitiveness; and

• Improvement in Supply chain

management.

(iii) Details relating to imported technology:

• NIL

C. FOREIGN EXCHANGE EARNINGS AND

OUTGO

1. Activities relating to export:

• During 2011-12, new orders for tractor

seats were obtained and delivered.

• The Company has been continuing its

efforts to increase the current volume of

export of tractor seats to USA.

2. Total foreign exchange earned and outgo:

(Rs. in lakhs)

Foreign exchange earned : 2,757.74

Foreign exchange used : 927.81

For and on behalf of the Board

Chennai H LAKSHMANAN

30th May 2012 Chairman

17


1. Company’s philosophy on Code of

Governance

The Company believes in ensuring corporate

fairness, transparency, professionalism,

accountability and propriety in total functioning

of the Company, which are pre-requisites for

attaining sustainable growth in this competitive

corporate world. Obeying the law, both in letter

and in spirit, is the foundation on which the

Company's ethical standards are built. The

Company would constantly endeavour to

improve on these aspects.

The Company's corporate governance

philosophy has been further strengthened by

adopting a Code of Business Conduct and Ethics

and Code of Conduct for Prevention of Insider

Trading for members of the board and senior

management personnel.

2. Board of Directors

The board of directors (the board) which consists

of eminent persons with considerable

professional expertise and experience, provides

leadership and guidance to the management,

thereby enhancing stakeholders' value.

2.1 Composition and category of directors:

As of 31st March 2012, the board consists of

five directors. All are non-executive directors.

Out of the five non-executive directors, four

directors are independent directors.

Chairman is a non-executive and independent

director. The number of independent directors

is more than one third of the Board’s total

strength. Thus, the Company meets with the

requirements of composition of the board as

per the Listing Agreement.

2.2 Board Meetings:

The Company, in consultation with the

directors, prepares and circulates a tentative

Report on Corporate Governance

annual calendar for meetings of the

committees / board in order to assist the

directors for planning their schedules to

participate in the meetings.

The Company regularly places before the

board, for its review, the information as

required under Annexure 1A to Clause 49 of

the Listing Agreement such as annual

operating plans, capex budget and its

quarterly updates, quarterly results, minutes

of meetings of audit committee and other

committees of the board, quarterly details of

foreign exchange exposures, report on

compliance of all laws applicable to the

Company and steps taken by the Company

to rectify instances of non-compliances,

if any, etc.

Comprehensively drafted notes for each

agenda item along with back ground

materials, wherever necessary, are

circulated well in advance to the committee/

board members, to enable them for making

value addition as well as exercising their

business judgment in the committee / board

meetings. Presentations are also made by

the business heads on the Company's

operations in board meetings.

During the year 2011-2012, the board met

four times viz., on 2nd May 2011, 3rd August

2011, 10th November 2011 and 7th February

2012 and the gap between two meetings did

not exceed four months.

2.3 Attendance and other directorships:

The details of attendance of the directors at

the board meetings during the year and at

the last annual general meeting held on

19th September 2011 and also the number

of other directorships and committee

memberships / chairmanships as on

31st March 2012 are as follows:

18


Attendance Number of directorships andParticulars committee memberships /

chairmanships

Name of the Directors Category Board Last Other Committee Committee(M/s.) Meeting Annual director- memberships@ chairman-

General ships* shipsMeeting

H Lakshmanan NE-I 4 Yes 20 10 4

S I Jaffar Ali NE-I 4 Yes – 2 –

Martin Grammer NE-NI 4 Yes – – –

C N Prasad NE-I 4 Yes 8 8 –

Ram Natarajan NE-I 2 – 1 – –(Appointed with effect

from 10th November 2011)

* includes private companies@ includes Committees where the director is also a chairman

NE-I : Non Executive - Independent director

NE-NI : Non Executive - Non Independent director

None of the directors on the board is a member of more than 10 board level committees or chairman of morethan 5 such committees across all the companies in which they are directors. Chairmanship / membership ofcommittees include only audit and shareholders / investors' grievance committees, as covered under Clause49 of the Listing Agreement, as per the disclosures made by the directors.

departments concerned. Action taken reporton decisions taken in the previous meetingsof the board / committee is regularly placedat every succeeding meeting of the board /committee for reporting the compliance.

2.5 Code of Business Conduct and Ethics forboard and senior management personnel(the Code):

The Company has in place, a duly adoptedCode approved by the board. The Code hasbeen communicated to directors and thesenior management personnel. The Codehas also been displayed on the Company'swebsite www.haritaseating.com.

All the members of the board and seniormanagement personnel have affirmedcompliance with the Code for the year ended31st March 2012. The annual report containsa declaration to this effect signed by thepresident and the company secretary ascompliance officer for the Code.

2.4 Access to information and Updation todirectors:

The board reviews all information providedperiodically for discussion and considerationat its meetings in terms of Clause 49 of theListing Agreement. Functional heads arepresent whenever necessary and apprise allthe directors about the developments. Theyalso make presentations to the board andaudit committee of directors.

Apart from this, the observations of auditcarried out by the internal auditors and thecompliance report on payment of statutoryliabilities submitted by the statutory auditorsof the Company are being placed anddiscussed with the functional heads by thecommittee / board. The board also reviewsthe declarations made by the president andthe company secretary regarding complianceof all applicable laws on quarterly basis.

Decisions taken at the board / committeemeetings are communicated to the

19


2.6 Appointment of directors:

In terms of clause 49(IV)(G) of the ListingAgreement with the Stock Exchanges, a briefresume of the directors, proposed to beappointed / re-appointed, nature of theirexpertise in specific functional areas, theirother directorships and committeememberships, their shareholdings and theirrelationships, if any, with other directors areprovided in the Notice convening the ensuingannual general meeting of the Company.

3. Audit Committee

The primary objective of the Audit Committee isto monitor and provide effective supervision ofthe management's financial reporting processwith a view to ensure accurate, timely and properdisclosures and transparency, integrity andquality of financial reporting.

3.1 Brief description of terms of reference:

The Audit Committee of the Company isentrusted with the responsibility to supervisethe Company's internal control and financialreporting process and inter alia performs thefollowing functions:

a. Overviewing the Company's financialreporting process and the disclosure offinancial information.

b. Reviewing with the managementquarterly and annual financial statementsbefore submission to the board forapproval with particular reference to thematters specified in the ListingAgreement.

c. Reviewing the statement of related partytransactions and transactions withcompanies in which one (or) moredirector(s) of the Company is / aredeemed to be interested / concerned.

d. Discussing the nature and scope of auditincluding internal audit prior to thecommencement of the audit and areasof concern, if any, arising post audit.

e. Reviewing the reports of internal auditorsand ensuring that adequate follow-upaction is taken by the management onobservations and recommendationsmade by the internal auditors.

f. Reviewing the findings of any internalinvestigations by the internal auditors intomatters where there is suspected fraudor irregularity or a failure of internal controlsystem of a material nature, if any.

g. Recommending to the board theappointment / re-appointment /replacement of the statutory auditors &cost auditors and the fees payable foraudit and approving the payment for anyother services rendered by the statutoryauditors.

h. Reviewing the adequacy of internal auditfunctions and systems, structure,reporting process, audit coverage andfrequency of internal audit.

i. Reviewing of management discussionanalysis of financial conditions andresults of operations and other mattersspecified under Clause 49 of the ListingAgreement.

j. Reviewing of financial statements, inparticular the investments made by theunlisted subsidiary.

k. Reviewing the cost audit report.

l. Reviewing with the management theannual financial statement beforesubmission to the board, and in particular:

a. Any changes in accounting policiesand practices;

b. Major accounting entries passedbased on exercise of judgment bymanagement;

c. Significant adjustments arising out ofaudit;

d. Compliance with AccountingStandards; and

e. Disclosure of contingent liabilities.

m. Approving the appointment of the ChiefFinancial Officer after assessing thequalifications, experience & background,etc. of the candidate.

n. In addition, review of such other functionsas envisaged under Section 292A of theCompanies Act, 1956 and Clause 49 ofthe Listing Agreement with StockExchanges.

20


3.2 Composition, name of members and thechairman:

As at 31st March 2012, the Audit Committeeconsists of the following non-executive andindependent directors:

Name of the DirectorsPosition

(M/s.)

H Lakshmanan Chairman

C N Prasad Member

S I Jaffar Ali Member

Mr H Lakshmanan, Chairman of the AuditCommittee, is a non-executive andindependent director. Ms N Iswarya Lakshmi,Company Secretary acts as the Secretary ofthe Audit Committee.

Chairman of the Audit Committee was presentat the last annual general meeting held on 19th

September 2011.

The composition of the Committee is inaccordance with the requirements of Clause49 of the Listing Agreement read with Section292A of the Companies Act, 1956.

3.3 The particulars of meetings and attendanceby the members of the Committee, during theyear under review, are given in the table below:

Date of the Members presentmeeting (M/s.)

02.05.2011 H Lakshmanan,C N Prasad and S I Jaffar Ali




4. Subsidiary company

4.1 The Company's subsidiary Harita FehrerLimited is covered within the definition of"material non-listed Indian subsidiary" interms of Clause 49(III) of the ListingAgreement.

4.2 The board of directors of the said subsidiarycompany consists of two independentdirectors of the Company viz.,M/s.H Lakshmanan and C N Prasad, in termsof Clause 49 (III) of the Listing Agreement.

4.3 The Audit Committee of directors of theCompany reviews the financial statementsand in particular the investments made bythe unlisted subsidiary.

4.4 The minutes of the board meetings of theunlisted subsidiary are periodically placedbefore the board. The board is periodicallyinformed about all significant transactionsand arrangements entered into by theunlisted subsidiary.

5. Disclosures

5.1 Materially significant related partytransactions:

During the year, the Company has notentered into any transaction of materialnature with the directors, their relatives ormanagement, which is in conflict with theinterests of the Company.

The transactions with the related parties,namely its promoters, its subsidiary companyetc., of routine nature have been reportedelsewhere in the annual report as perAccounting Standard 18 (AS 18) issued byThe Companies (Accounting Standards)Rules, 2006 / The Institute of CharteredAccountants of India.

The Audit Committee is briefed, inter alia,on the following aspects:

(a) related party transactions undertaken bythe Company in the ordinary course ofbusiness;

(b) material individual transactions, if any,which were not in the normal course ofbusiness; and

(c) material individual transactions, if any,with related parties or others, which werenot at arm's length basis.

5.2 Disclosure of accounting treatment:

The Company follows Accounting Standardsissued by The Institute of CharteredAccountants of India / The Companies(Accounting Standards) Rules, 2006 and in

21


the preparation of financial statements, theCompany has not adopted a treatmentdifferent from that prescribed in anyAccounting Standards.

5.3 Risk Management:

The Company has laid down procedures toinform the board about the risk assessmentand minimization procedures. Theseprocedures are periodically reviewed toensure that executive management controlsrisk through means of a properly definedframework.

5.4 Instances of non-compliances, if any:

There were no instances of non-compliancesby the Company, penalties and stricturesimposed on the Company by the StockExchanges or Securities and ExchangeBoard of India (SEBI) or any other statutoryauthorities on any matter related to capitalmarkets during the last three years.

5.5 Disclosure by senior managementpersonnel:

The senior management personnel havemade disclosures to the board relating to allmaterial, financial and other transactionsstating that they did not have any personalinterest that could result in a conflict with theinterest of the Company at large.

5.6 CEO and CFO Certification:

The president (CEO) and general manager -finance (CFO) of the Company have certifiedto the board on financial and other matters inaccordance with Clause 49(V) of the ListingAgreement pertaining to CEO/CFO certificationfor the financial year ended 31st March 2012.

5.7 Compliance with mandatory / non-mandatoryrequirements:

The Company has complied with allapplicable mandatory requirements in termsof Clause 49 of the Listing Agreement. Thenon-mandatory requirements have beenadopted to the extent and in the manner asstated under the appropriate headingsdetailed elsewhere in this report.

5.8 Code of Conduct for Prevention of InsiderTrading:

In compliance with the SEBI (Prohibition ofInsider Trading) Regulations 1992, asamended till date, the Company has a

comprehensive code of conduct forprevention of insider trading and the sameis being strictly adhered to by the directors,senior management personnel and otherpersons covered by this Code. The Codeexpressly lays down the guidelines and theprocedures to be followed and disclosuresto be made, while dealing with the shares ofthe Company and cautioning them on theconsequences of non-compliances thereof.

The Company regularly follows the closureof trading window prior to the publication ofprice sensitive information. The Companyhas been informing the directors, seniormanagement personnel and other personscovered by the Code about the same,advising not to trade in Company's securitiesduring the closure of trading window period.

5.9 Management Discussion and AnalysisReport

The management discussion and analysisreport forms part of the Directors' Report.

6. Remuneration Committee

6.1 The Company constituted a RemunerationCommittee of directors on 10th July 2009 withthe main objective to decide the Company'spolicy on specific remuneration packages forexecutive directors, if any, and managerincluding, payment of remuneration as perthe limits specified in terms of the provisionsof Schedule XIII and other applicableprovisions of the Companies Act, 1956 (theAct) and to have such additional powers, asmay be entrusted to them, from time to time,by the board, on other matters, includingpension rights and any compensation tomanagerial personnel.

6.2 The Committee comprises ofMr H Lakshmanan as Chairman, Mr C NPrasad and Mr S I Jaffar Ali as members. Allthe members of the Committee arenon-executive and independent directors.

6.3 The Committee earlier recommended theterms and conditions of the appointment ofMr A G Giridharan, President of theCompany, as Manager under the Act for aperiod of three years effective 11th November2009, on a remuneration payable within thelimit of -

22


(i) Rs.48 lakhs per annum, when theCompany has no profits or inadequateprofits, based on the 'effective capital'during the currency of his tenure for aperiod of three years from 11th November2009 to 10th November 2012; or

(ii) 5% of profits, should the Company haveadequate profits to pay up to this limit ofRs.48 lakhs per annum during theseperiods.

The aforesaid terms and conditions ofappointment and remuneration were laterapproved by the board at its meeting heldon 27th July 2009 and by the shareholdersat their annual general meeting held on 7th

September 2009.

6.4 During the year under review, the Committeemet on 15th March 2012 and recommended -

(i) the revision in the remuneration payableto Mr A G Giridharan, President asManager, by increasing the overall limit ofremuneration to Rs.54 lakhs per annumfrom Rs.48 lakhs per annum in view of theadequacy of profits, by enhancing thequantum of maximum remuneration,payable under the head "Salary andcommission on profits or performancelinked incentive or bonus, from Rs.24 lakhsto Rs.30 lakhs per annum" effective from1st April 2011 and for the remaining periodof his tenure of office up to 10th November2012; and also

(ii) the re-appointment and remuneration ofthe managerial person for a further periodof three years effective 11th November2012, subject to the limits prescribed underSchedule XIII of the Act.

6.5 The details of the revised terms ofremuneration and re-appointment, in line withthe recommendations of the RemunerationCommittee of directors and as approved bythe board, are included in the Notice conveningthe ensuing annual general meeting of theCompany, for approval of the shareholders byway of special resolutions.

6.6 Details of remuneration paid to managerialpersonnel during the financial year 2011-2012:

Salary, performanceName & Position incentives, provident

fund & other allowances

Mr A G Giridharan,President cum Rs.51.47 lakhs

Manager

6.7 Remuneration to directors:

The directors of the Company do not drawany remuneration from the Company otherthan the sitting fees for attending themeetings of the board and committeesthereof.

Sitting fees of Rs. 2,500/- are paid to the non-executive directors for every meeting of theboard and / or committee thereof attendedby them, which is within the limits prescribedunder the Companies Act, 1956. Presently,the Company does not have a scheme forgrant of any stock option, either to thedirectors or employees of the Company.

6.8 Particulars of sitting fees paid to the directorsduring the financial year 2011-2012:

Name of the Directors Sitting fees paid(M/s.) (in Rs.)

H Lakshmanan 40,000

C N Prasad 40,000

S I Jaffar Ali 40,000

Martin Grammer 10,000

Ram Natarajan 2,500

Total 1,32,500

6.9 Details of shareholdings of non-executivedirectors in the Company as on 31st March2012:

Name of the No. of PercentageDirectors shares held to the

(M/s.) (face value of paid upRs.10/- each) capital

H Lakshmanan 2,020 0.03

Martin Grammer 10,87,600 14.00

C N Prasad – –

S I Jaffar Ali – –

Ram Natarajan – –

None of the directors of the Company isrelated to each other.

There are no other pecuniary relationshipsor transactions of the non-executive directorsvis-à-vis of the Company.

7. Investors’ Grievance Committee

7.1 The Investors' Grievance Committeeconsists of three members viz.,

23


M/s. H Lakshmanan, C N Prasad andS I Jaffar Ali. Mr H Lakshmanan is thechairman of the Committee. All the membersof the committee are non-executiveindependent directors.

7.2 As required by SEBI, Ms N Iswarya Lakshmi,company secretary is the compliance officerof the Investors' Grievance Committee. Forany clarification/ complaint, the shareholdersmay contact Ms N Iswarya Lakshmi,company secretary.

7.3 The Committee oversees and reviews all thematters connected with share transfers,issue of duplicate share certificates and otherissues pertaining to shares. The Committeealso looks into redressal of investors'grievances pertaining to transfer of shares,non-receipt of annual report, non-receipt ofdeclared dividends etc. The Company, inorder to expedite the process of sharetransfers, has delegated the powerspertaining to share transfers to an officer ofthe STA. The Company, as a matter of policy,disposes off investor complaints within aspan of seven days.

7.4 The Company has not received any investorcomplaint during the year 2011-2012.

7.5 All requests for dematerialization of shareswere carried out within the stipulated timeperiod and no share certificate was pendingfor dematerialization.

7.6 Reconciliation of Share Capital Audit:

A qualified Practising Company Secretarycarries out a Reconciliation of Share Capital(RSC) Audit on a quarterly basis to reconcilethe total admitted capital with NationalSecurities Depository Limited (NSDL) andCentral Depository Services (India) Limited(CDSL) and the total issued and listed capitalof the Company and the report is placed forperusal of the Board.

The RSC audit report confirms that the totalissued and listed capital is in agreement withthe total number of shares in physical formand the total number of dematerializedshares held with NSDL and CDSL.

8. General Body Meeting

8.1 Location and time where the annual generalmeetings (AGM) were held during the lastthree years:

Year Location Date Time

2008-09 Narada Gana Sabha 07.09.2009 10.15 A.M(Mini Hall),No.314 (Old No.254),T.T.K. Road,Chennai 600 018.

2009-10 Kasturi Srinivasan Hall 06.09.2010 2.30 P.M.(Mini Hall)The Music Academy,No.168 (Old No.306),T.T.K. Road,Chennai 600 014.

2010-11 Narada Gana Sabha 19.09.2011 10.15 A.M(Mini Hall),No.314 (Old No.254),T.T.K. Road,Chennai 600 018.

8.2 Special resolutions passed in the previousthree AGMs:

During the last three years, namely 2008-09to 2010-11, approval of the shareholders wasobtained by passing special resolutions inrespect of the following:

YearSubject matter of Date ofspecial resolution AGM

2008-09 • Revision in payment of 07.09.2009

remuneration to Mr S Thiagarajan,

president, as manager under the

provisions of the Companies

Act, 1956.

• Appointment of Mr A G Giridharan,

president as manager under the

provisions of the Companies Act,

1956, effective 11th November 2009.

2009-10 Nil 06.09.2010

2010-11 Amending the articles of association

of the Company in terms of Section 31 19.09.2011

of the Companies Act, 1956

8.3 None of the subjects placed before theshareholders in the last / ensuing annualgeneral meeting required / requires approvalthrough Postal Ballot.

24


10.5 Market price data:

The shares of the Company were not tradedduring the period from 1st April 2011 to 31st

March 2012 in MSE and BgSE but are regularlytraded in NSE. The shares of the Company arealso being regularly traded in BSE-INDONext

9. Means of communication to shareholders

The board believes that effective communicationof information is an essential component ofcorporate governance. The Company regularlyinteracts with shareholders through multiplechannels of communication such as resultannouncement, annual report, Company'swebsite and specific communications to StockExchanges, where the Company's shares arelisted / traded.

9.1 Quarterly Results:

The unaudited quarterly financial results ofthe Company were published in English andregional language newspapers. These arenot sent individually to the shareholders.

9.2 Newspapers wherein results normallypublished:

The results are normally published inBusiness Line and Makkal Kural.

9.3 Website:

The Company has in place a websiteaddressed as www.haritaseating.com. Thiswebsite contains the basic information aboutthe Company, e.g., details of its business,financial information, shareholding pattern,compliance with corporate governance,contact information of the designated officialsof the Company, who are responsible forassisting and handling investor grievancesand such other details as required underClause 54 of the Listing Agreement. TheCompany ensures that the contents of thiswebsite are periodically updated.

The Company has designated thefollowing e-mail IDs, [email protected] /[email protected] for the purpose ofregistering complaints, if any, by the investorsand expeditious redressal of their grievances.

10. General shareholder information

10.1 Annual General Meeting:

Date and time : Friday, the 21st September, 2012at 10.00 A.M.

Venue : Kasturi Srinivasan Hall (Mini Hall)The Music Academy,No. 168, (Old No. 306),T.T.K. Road, Royapettah,Chennai - 600 014.

10.2 Financial calendars:Financial year : 1st April to 31st March

Financial Calendar (2012-2013) (Tentative)

Annual General : During August /Meeting (next year) September 2013

Financial reportingfor the quarter : Financial calendarended / ending

30th June 2012 : between 15th Julyand 15th August 2012

30th September 2012 : between 15th Octoberand 15th November 2012

31st December 2012 : between 15th Januaryand 15th February 2013

31st March 2013 : On or before 30th May 2013

10.3 Date of book closure : 18th September 2012 to21st September 2012(both days inclusive).

The board at its meeting held on 30th May 2012,declared an interim dividend of Rs. 3.50 per sharefor the year 2011-2012, absorbing a sum of Rs.299.40lakhs (including dividend distribution tax). The samewill be paid to the shareholders on or after 11th June2012. The directors do not recommend any furtherdividend for the year ended 31st March 2012.

10.4 Listing on Stock Exchanges:

Name of the Stock Exchanges

Madras Stock Exchange Ltd., (MSE)

Bangalore Stock Exchange Ltd., (BgSE)

National Stock Exchange of

India Limited (NSE) : HARITASEAT

(Stock Symbol)

ISIN allotted by Depositories : INE 939D01015

(Company ID Number)

Effective 7th January 2005, the equity shares of the

Company are regularly traded in BSE-INDONext under

scrip code 590043.

(Note : Annual listing fees and custodial charges for the

year 2012-13 have been paid to the above stock

exchanges and depositories.)

25


10.7 Share Transfer Agent and share transfer

system:

a.With a view to render prompt and efficient

service to the shareholders, Sundaram-

Clayton Limited (SCL), which has been

registered with SEBI as share transfer agents

in Category II, has been appointed as the Share

Transfer Agent of the Company (STA). The

shareholders have also been advised about

this appointment of STA to handle share

registry work pertaining to both physical and

electronic segments of the Company effective

1st October 2004.

b.All matters connected with the share transfer,

dividends and other matters are handled by

the STA located at the address mentioned

elsewhere in this report.

c. Shares lodged for transfer are normally

processed within 10 days from the date of

lodgement, if the documents are clear in all

respects. All requests for dematerialization of

securities are processed and the confirmation

is given to the depositories within 7 days.

Grievances received from investors and other

miscellaneous correspondences relating to

change of address, mandates etc., are

processed by the STA within 7 days.

d.Certificates are being obtained and submitted

to Stock Exchanges, on half-yearly basis, from

a Company Secretary-in-practice towards due

compliance of share transfer formalities by the

Company within the due dates, in terms of

Clause 47(c) of the Listing Agreement with

Stock Exchanges.

e.Certificates have also been received from a

Company Secretary-in-practice and submitted

to the Stock Exchanges, on a quarterly basis,

for timely dematerialization of shares of the

Company and for reconciliation of the share

capital of the Company, as required under

SEBI (Depositories and Participants)

Regulations, 1996.

f. The Company, as required under

Clause 47(f) of the Listing Agreement,

has designated the following e-mail IDs,

namely [email protected] /

[email protected] for the purpose of

and the data relating to the trading in NSE andBSE - INDONext are given below:

(in Rs.)

MonthNSE BSE-INDONext

High Low High Low

April 2011 74.95 64.10 79.75 62.10

May 2011 72.00 64.65 76.00 61.05

June 2011 72.50 62.00 79.80 60.20

July 2011 85.95 67.15 89.25 74.00

August 2011 85.00 73.00 90.25 74.50

September 2011 82.80 65.00 86.45 63.25

October 2011 73.70 62.00 83.05 61.50

November 2011 93.60 65.00 99.20 67.55

December 2011 92.00 80.50 94.45 80.60

January 2012 96.95 87.40 98.60 86.50

February 2012 110.25 90.25 111.00 92.50

March 2012 119.95 101.00 121.00 103.00

10.6 Company's share price performance in

comparison to broad based indices - NSE Nifty

and BSE Sensex:

SHARE PRICE MOVEMENT

NSE NIFTY VS HSSL

SHARE PRICE MOVEMENT

BSE SENSEX VS HSSL

75

Apr. 2011 May June July Aug Sept Oct Nov Dec Jan 2012 Feb March

NSE NIFTY HSSL Price (in Rs.)

72 73

86 85 8374

94 9297

110

120

529653855199

46244832

532749435001

5482564755615750

Apr. 2011 May June July Aug Sept Oct Nov Dec Jan 2012 Feb March

BSE SENSEX HSSL Price (in Rs.)

8018503

80

89 9086

83

9994

99

111

121

174041775317194

1545516123

177051645416677

1819718846

7619136

26


registering complaints, if any, by the investorsand expeditious redressal of their grievances.

g.Shareholders are, therefore, requested tocorrespond with the STA for transfer /transmission of shares, change of address andqueries pertaining to their shareholding,dividend, etc., at their address given in thisreport.

10.8 Shareholding pattern as on 31st March 2012:

Particulars No. of shares % toof Rs.10 each total

Shareholding of Promoterand Promoter Group

• Indian - Bodies Corporate 40,72,400 52.42

• Foreign - Individuals 10,87,600 14.00

Total (A) 51,60,000 66.42

Public Shareholding

Institutions

• Banks, Financial Institutionsand Insurance companies 200 –

Total (a) 200 –

Non-Institutions

• Bodies Corporate 11,67,548 15.03

• Individuals <1 lakh 13,38,148 17.22

• Individuals > 1 lakh 86,580 1.11

• NRI - Repatriable 12,164 0.16

• NRI - Non-Repatriable 4,400 0.06

Total (b) 26,08,840 33.58

Total (B)=(a)+(b) 26,09,040 33.58

Grand Total (A) + (B) 77,69,040 100.00

10.9 Distribution of Shareholding as on 31st March

2012:

Shareholding No. of % No. of %(Range) shares members

Upto 500 5,51,828 7.10 3069 82.50

501-1,000 3,00,865 3.87 376 10.11

1,001-2,000 2,44,683 3.16 166 4.46

2,001-5,000 2,13,379 2.75 69 1.85

5,001-10,000 1,40,426 1.81 19 0.51

10,001 & above 63,17,859 81.31 21 0.57

Total 77,69,040 100.00 3720 100.00

10.10 Dematerialization of shares:

All the Promoter’s holding consisting of51,60,000 equity shares of Rs.10/- each havebeen fully dematerialised.

Out of 26,09,040 equity shares of Rs.10/-each held by persons other than Promoters,20,99,411 shares have been dematerialisedas on 31st March 2012 accounting for80.47%.

10.11 The Company has not issued any GlobalDepository Receipt / American DepositoryReceipt / Warrant or any convertibleinstrument, which is likely to have impact onthe Company's equity.

10.12 Address for investor correspondence:

(i) For transfer / demate- : Sundaram-Clayton Limitedrialization of shares, Share Transfer Agent (STA)payment of dividend on Unit : Harita Seatingshares and any other Systems Limitedquery relating to the New No. 22, Old No. 31shares of the Company Railway Colony, 3rd Street,

Mehta Nagar,Chennai - 600 029.

(ii) For any query on Tel. : 044 - 2374 1889,annual report 044 - 2374 2939

Fax : 044 - 2374 1889

(iii) For investors’ grievance : Emailand general [email protected] [email protected]

[email protected]@gmail.com

10.13 Plant Locations:Hosur : Belagondapalli,

Thally Road,Hosur - 635 114,Tamil Nadu, IndiaTel : 04347 - 233445Fax : 04347 - 233460Email : [email protected]

Ranjangaon : Plot No. A2,MIDC Industrial area,Ranjangaon,Koregaon Village,Shirur taluk,Pune - 412 210Maharashtra, IndiaTel : 02138 - 660742Email : [email protected]

Himachal : Chaurasia Road,Pradesh Pargana Plassi

Village Bhatian,Thesil NalagarhSolan District - 174 101Himachal Pradesh, IndiaTel : 01795 - 220562

Email : [email protected]

27


11. Non-Mandatory Disclosure

The non-mandatory requirements have beenadopted to the extent and in the manner asstated under the appropriate headings detailedbelow:

11.1 The Board:

The non-executive directors of theCompany are liable to retire by rotationand if eligible, offer themselves for re-appointment. No policy has been fixedon determining specific tenure for theindependent directors.

11.2 Remuneration Committee:

The board has set up a remunerationcommittee on 10th July 2009.

11.3 Shareholder rights:

The half-yearly results of the Companyare published in English and Regionallanguage newspapers and are alsodisplayed on the Company's websitenamely www.haritaseating.com and inthe official website of the StockExchanges, where the shares of theCompany are listed / traded, as soon asthe results are approved by the board.The results are not sent to theshareholders individually.

11.4 Audit Qualifications:

The statutory financial statements of theCompany are unqualified.

11.5 Training of board members / mechanismfor evaluating non-executive directors:

The present board consists of well-experienced and responsible membersof society. All the directors are well awareof business model as well as the riskprofile of the business parameters of theCompany and their responsibilities asdirectors. Hence, in the opinion of theboard, they do not require any furthertraining. There is also no specificmechanism for evaluating theperformance of the non-executivedirectors of the Company.

11.6 Whistle Blower Policy:

The Company has not adopted whistleblower policy. However, the Company

has not denied access to any personnelto approach the management on anyissue.

12. Request to shareholders

Shareholders are requested to follow thegeneral safeguards / procedures as detailedhereunder in order to serve them efficiently andavoid risks while dealing in securities of theCompany.

12.1 Demat of Shares:

Shareholders are requested to converttheir physical holding to demat/ electronicform through any of the DepositoryParticipants (DPs) to avoid any possibilityof loss, mutilation etc., of physical sharecertificates and also to ensure safe andspeedy transaction in securities.

12.2 Registration of Electronic ClearingService (ECS) Mandate:

SEBI has made it mandatory for allcompanies to use the bank accountdetails furnished by the Depositories forpayment of dividend through ECS toinvestors wherever ECS and bank detailsare available. The Company will notentertain any direct request frommembers holding shares in electronicmode for deletion of / change in suchbank details. Members who wish tochange such bank account details aretherefore requested to advise their DPsabout such change, with complete detailsof bank account.

ECS helps in quick remittance of dividendwithout possible loss/delay in postaltransit. Shareholders, who have notearlier availed this facility, are requestedto register their ECS details with the STAor their respective DPs.

12.3 Transfer of shares in physical mode:

Shareholders should fill up complete andcorrect particulars in the transfer deed,for expeditious transfer of shares.Wherever applicable, registrationnumber of power of attorney should alsobe quoted in the transfer deed at theappropriate place.

28


Shareholders, whose signatures haveundergone any change over a period oftime, are requested to lodge their newspecimen signature duly attested by abank manager to the STA. In terms ofSEBI's circular no. MRD/DoP/Cir -05/1009dated 20th May 2011, it has made itmandatory for transferees to furnish acopy of Permanent Account Number(PAN) for registration of transfer of sharesheld in physical mode.

In case of loss / misplacement of sharecertificates, shareholders shouldimmediately lodge a FIR / Complaint withthe police and inform the Company / STAwith original or certified copy of FIR /acknowledged copy of complaint formarking stop transfer of shares.

12.4 Consolidation of Multiple Folios:

Shareholders, who have multiple foliosin identical names, are requested to applyfor consolidation of such folios and sendthe relevant share certificates to theCompany.

12.5 Registration of Nominations:

Nomination in respect of shares - Section109A of the Companies Act, 1956provides facility for making nominationsby shareholders in respect of theirholding of shares. Such nominationgreatly facilitates transmission of sharesfrom the deceased shareholder to his /her nominee without having to go throughthe process of obtaining successioncertificate / probate of the Will etc.

It would therefore be in the best interestsof the shareholders holding shares inphysical form registered as a sole holderto make such nominations. Shareholders,who have not availed the nominationfacility, are requested to avail the sameby submitting the nomination in Form 2B.This form will be made available onrequest. Shareholders holding shares indemat form are advised to contact theirDP's for making nominations.

12.6 Updation of address:

Shareholders are requested to updatetheir address registered with the

Company, directly through the STAlocated at the address mentioned above,to receive all communications promptly.

Shareholders, holding shares inelectronic form, are requested to dealonly with their DPs in respect of changeof address and furnishing bank accountnumber, etc.

12.7 SMS Alerts:

Investors are requested to note thatNSDL and CDSL have announced thelaunch of SMS facility for demat accountholders whereby shareholders willreceive alerts for debits / credits(transfers) to their demat accounts a dayafter the transaction. These alerts will besent to those account holders who haveprovided their mobile numbers to theirrespective DPs. No charge will be leviedby NSDL / CDSL on DPs providing thisfacility to investors. This facility will beavailable to investors who request for thesame and provide their mobile numbersto the DPs. Further information isavailable on the website of NSDL andCDSL namely www.nsdl.co.in andwww.cdslindia.com, respectively.

12.8 Timely encashment of dividends:

Shareholders are requested to encashtheir dividends promptly to avoid hasslesof revalidation/ losing their right of claimowing to transfer of unclaimed dividendsbeyond seven years to InvestorEducation and Protection Fund (IEPF).

As required by SEBI, shareholders arerequested to furnish details of their bankaccount number and name and addressof the bank for incorporating the same inthe warrants. This would avoid wrongcredits being obtained by unauthorizedpersons.

Shareholders who have not encashedtheir dividend warrants in respect ofdividends declared for the year ended31st March 2005 and for any financialyear thereafter may contact the Companyand surrender their warrants for payment.

Shareholders are requested to note thatthe dividend not claimed for a period of

29


seven years from the date they firstbecame due for payment shall betransferred to IEPF in terms of Section205C of the Companies Act, 1956.Shareholders are requested to note thatas per the Companies Act, 1956,unclaimed dividends once transferred toIEPF will not be refunded.

Accordingly, a sum of Rs. 94,098 beingunclaimed dividend upto 31st March2004, was transferred to IEPF during theyear 2011-12.

Information in respect of unclaimed dividendsdue for remittance to IEPF is given below:

PARTICULARS OF UNCLAIMED DIVIDENDOF THE COMPANY

Financial Date of Date of Date ofYear declaration transfer to transfer to

special IEPFaccount

2004-05 05.09.2005 11.10.2005 11.10.2012

2005-06 18.09.2006 24.10.2006 24.10.2013

2006-07 22.03.2007 27.04.2007 27.04.2014(Interim)

2007-08 07.08.2008 12.09.2008 12.09.2015

UNCLAIMED SHARE CERTIFICATES

In terms of the provisions of Clause 5A of the Listing

Agreement (introduced vide SEBI circular dated 16th

December, 2011) the share certificates, remaining

unclaimed by the shareholders, will be

dematerialized and transferred to "Unclaimed

Suspense Account". As required under this clause

of the Listing Agreement, the Company has sent its

first reminder letter to the shareholders, whose share

certificates were returned undelivered or unclaimed.

It is also proposed to send the second and third

reminder letter as required and action would be

taken thereafter to transfer the shares so unclaimed

to "Unclaimed Suspense Account" to comply with

the requirement of this Clause of the Listing

Agreement.

GREEN INITIATIVE IN CORPORATE

GOVERNANCE

MCA has undertaken a "Green Initiative in the

Corporate Governance" by allowing paperless

compliances by the companies and issued circulars

stating that service of notice / documents including

annual reports can be sent by e-mail to its members.

The advantages of sending such documents in

electronic mode are to:

• Receive communication promptly;

• Reduce paper consumption and save trees;

• Eliminate wastage of paper;

• Avoid loss of document in postal transit; and

• Save costs on paper and on postage

Accordingly, the annual report for the year 2011-

12, notice for the annual general meeting, etc. of

the Company are being sent in electronic mode to

such of the members of the Company whose e-mail

addresses are registered with the Company / DP

and who have not opted to receive the same in

physical form.

To support this green initiative of the Government,

members are requested to register their e-mail

addresses, with the DPs, in case shares are held in

dematerialized form and with the STA, in case the

shares are held in physical form and also intimate

changes, if any, in their registered e-mail addresses

to the Company / DPs, from time to time, for this

purpose.

30


DECLARATION PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENTREGARDING ADHERENCE TO THE CODE OF BUSINESS CONDUCT AND ETHICS

To

The ShareholdersHarita Seating Systems Limited, Chennai

On the basis of the written declarations received from members of the board and senior management personnel

in terms of the relevant provisions of Clause 49 of the Listing Agreement, we hereby certify that both the

members of the board and the senior management personnel of the Company have affirmed compliance with

the respective provisions of the Code of Business Conduct and Ethics of the Company as laid down by the

board for the year ended 31st March 2012.

Chennai A G GIRIDHARAN N ISWARYA LAKSHMI

30th May 2012 President cum Manager Company Secretary

AUDITORS' CERTIFICATE ON COMPLIANCE OF THE PROVISIONS OF THE CODEOF CORPORATE GOVERNANCE IN THE LISTING AGREEMENT

To

The shareholders

Harita Seating Systems Limited, Chennai

We have examined the compliance of conditions of

corporate governance by Harita Seating Systems

Limited, Chennai 600 006 for the year ended 31st

March 2012, 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 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 abovementioned 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 & SRINIVASANCHARTERED ACCOUNTANTS

FRN: 004207S

M BALASUBRAMANIYAMChennai Partner30th May 2012 Membership No.F7945

31


Auditors' report to the shareholders of Harita Seating Systems Limited, Chennaifor the year ended 31st March 2012.

We have audited the attached Balance Sheet ofHarita Seating Systems Limited, Chennai 600 006as at 31st March 2012 and the Statement of Profitand Loss for the year ended on that date annexedthereto and the Cash Flow Statement for the yearended on that date. These financial statements arethe responsibility of the Company's management.Our responsibility is to express an opinion on thesefinancial statements based on our audit.

1. We conducted our audit in accordance withauditing standards generally accepted in India.These standards require that we plan and performthe audit to obtain reasonable assurance aboutwhether the financial statements are free ofmaterial misstatement. An audit includesexamining, on a test basis, evidence supportingthe amounts and disclosures in the financialstatements. An audit also includes assessing theaccounting principles used and significantestimates made by management, as well asevaluating the overall presentation of the financialstatements. We believe that our audit provides areasonable 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, 2004issued by the Central Government in terms ofsub-section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure, astatement on the matters specified in paragraphs4 and 5 of the said Order.

3. Further to our comments in the Annexure, referredto above, we state that -

(i) we have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary for thepurposes of our audit.

(ii) In our opinion, proper books of account, asrequired by law, have been kept by theCompany so far as it appears from ourexamination of those books. The Company'sbranch accounts were also audited by us.

(iii) The balance sheet, statement of profit andloss and cash flow statement referred to in

this report are in agreement with the books ofaccount including its branch.

(iv) In our opinion, the balance sheet, statementof profit and loss and cash flow statementdealt with by this report comply with theaccounting standards, referred to insub-section (3C) of Section 211 of theCompanies Act, 1956.

(v) On the basis of written representationsreceived from the directors, as on 31st March2012 and taken on record by the board ofdirectors, we report that no director isdisqualified from being appointed as a directorof the Company in terms of clause (g) of sub-section (1) of Section 274 of the CompaniesAct, 1956 on the said date.

(vi) In our opinion and to the best of ourinformation and according to the explanationsgiven to us, the said accounts read togetherwith the Significant Accounting Policies andother notes thereon particularly Note (XXVII)No.5 on Managerial remuneration give theinformation required by the Companies Act,1956, in the manner so required and give atrue and fair view in conformity with theaccounting principles generally accepted inIndia.

a. in so far as it relates to the Balance Sheet,of the state of affairs of the Company asat 31st March 2012;

b. in so far as it relates to the Statement ofProfit and Loss, of the profit for the yearended on that date; and

c. in so far as it relates to the cash flowstatement, of the cash flows for the yearended on that date.


FRN: 004207S

M BALASUBRAMANIYAMChennai Partner

30th May 2012 Membership No.F7945

32


(i) (a) The Company has maintained proper recordsshowing full particulars including quantitativedetails and situation of fixed assets.

(b) Fixed assets are verified physically by themanagement at reasonable intervals. In ouropinion the interval is reasonable havingregard to the size of the Company and thenature of its assets. The discrepanciesnoticed during verification were not materialand have been properly dealt with in the booksof account.

(c) The assets disposed off during the year arenot substantial and therefore do not affect thegoing concern status of the Company.

(ii) (a) The inventories have been physically verifiedat reasonable intervals during the year by themanagement. In our opinion, the frequencyof such verification is adequate. In respect ofinventory with third parties which have notbeen physically verified, there is a process ofobtaining confirmation from such parties.

(b) In our opinion and according to theinformation and explanations given to us, theprocedures for physical verification ofinventory followed by the management werereasonable and adequate in relation to thesize of the Company and the nature of itsbusiness.

(c) In our opinion, the Company has maintainedproper records of inventory. Thediscrepancies between the physical stocksand the books stocks were not material andhave been properly dealt with in the books ofaccount.

(iii) (a) During the year the Company has not grantedany loan, secured or unsecured tocompanies, firms or other parties covered inthe Register maintained under Section 301of the Companies Act, 1956.

(b) During the year, the Company has taken andrepaid an unsecured loan of Rs. 300 lakhsfrom one company covered in the registermaintained under Section 301 of theCompanies Act, 1956 and the Company haspartly repaid another unsecured loan duringthe year which was taken in earlier years. Theamount outstanding against that loan at theyear end is Rs. 300 lakhs.

(c) In our opinion, the rate of interest and the

terms and other conditions of loan availed by

the Company were not, prima facie prejudicial

to the interest of the Company. The payment

of interest was regular and in accordance with

the terms of loan. No portion of the principal

amount was due for re-payment during the

financial year.

(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 minor

or major continuing failure 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 of the

Companies Act, 1956 and exceeding in value

by rupees five lakhs during the year 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.

Annexure referred to in our report of even date on the accounts for the year ended31st March 2012.

33


(ix) (a) According to the records provided to us, theCompany is regular in depositing undisputedstatutory dues including Provident Fund,Employees State Insurance, InvestorEducation and Protection Fund, Sales Tax,Wealth Tax, Service Tax, Income Tax,Customs Duty, Excise Duty, Cess and otherstatutory dues with the appropriateauthorities. The provisions of EmployeesState Insurance Act, 1948 are not applicableto the units at Hosur and Pune.

(b) According to the information and explanationsgiven to us, no undisputed amounts payablein respect of Income Tax, Wealth Tax, SalesTax, Service Tax, Customs Duty, Excise Dutyand Cess were in arrears, as at 31st March2012 for a period of more than six monthsfrom the date they became payable.

(c) According to information and explanationsgiven to us, the following is the detail of thedisputed dues that were not deposited withthe concerned authorities:

(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.

However, the Company invests its surplus funds

in mutual funds from time to time. Securities are

held as current investments and are not traded

in.

(xv) The Company has not given any guarantee for

loans taken by others from banks or financial

institutions.

(xvi) The term loan availed by the Company was

utilized for the purpose for which the loan was

obtained.

(xvii) On the basis of our examination, the Company

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.


FRN: 004207S

M BALASUBRAMANIYAMChennai Partner30th May 2012 Membership No.F7945

Name of the Nature of Forum where Amount involved

Statute dues dispute is pending (Rs. in Lakhs)

Tamil Nadu Tamil Nadu

Value Added Value Added High Court of Madras 114.78

Tax Act, 2006 Tax

Karnataka Karnataka The Joint Commissioner

Value Added Value Added of Commercial Taxes 5.95

Tax Act, 2003 Tax (Appeals) Bangalore

Central Excise Excise duty The Assistant and

Act,1944 Additional Commissioner

Chennai III

Commissionerate 269.51

Finance Act, Service tax The Assistant and

1994 Additional Commissioner

Chennai III

Commissionerate 290.25

Income Tax Income Tax Commissioner of Income

Act, 1961 Tax (Appeals ), Chennai 44.77

(x) The Company has not incurred cash loss during

the year. However, the Company has incurred

cash losses during the immediately preceding

financial 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 its banks.

34


Balance Sheet as at 31st March, 2012(Rs. in Lakhs)

Note As at As at

No 31.03.2012 31.03.2011

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(a) Share Capital I 776.90 776.90

(b) Reserves and Surplus II 2,407.25 1,561.79

(2) Non-Current Liabilities

(a) Long-term borrowings III 1,278.27 111.65

(b) Deferred tax liabilities (Net) 244.88 247.97

(c) Other Long-term liabilities IV 347.93 –

(d) Long-term provisions V 107.54 178.18

(3) Current Liabilities

(a) Short-term borrowings VI 1,993.59 1,520.13

(b) Trade payables 4,313.07 5,291.10

(c) Other current liabilities VII 2,684.42 5,333.63

(d) Short-term provisions VIII 670.14 110.30

TOTAL 14,823.99 15,131.65

II. ASSETS

(1) Non-current assets

(a) Fixed assets

(i) Tangible assets IX 3,561.38 4,411.31

(ii) Intangible assets 14.41 17.47

(iii) Capital work-in-progress 2.13 223.85

(b) Non-current investments X 2,759.00 2,759.00

(c) Deferred tax assets (net) – –

(d) Long-term loans and advances XI 313.37 72.16

(e) Other non-current assets XII 35.00 42.99

(2) Current assets

(a) Current investments XIII 185.57 193.10

(b) Inventories XIV 760.29 839.83

(c) Trade receivables XV 4,775.27 5,105.44

(d) Cash and cash equivalents XVI 501.31 350.52

(e) Short-term loans and advances XVII 32.10 29.36

(f) Other current assets XVIII 1,884.16 1,086.62

TOTAL 14,823.99 15,131.65

Accounting standards, additional disclosures &Notes on accounts XXVII

As per our report annexedH LAKSHMANAN RAM NATARAJAN A G GIRIDHARAN For SUNDARAM & SRINIVASANChairman Director President cum Manager Chartered Accountants

FRN: 004207S

M. BALASUBRAMANIYAMChennai N ISWARYA LAKSHMI Partner30th May 2012 Company Secretary Membership No.F7945

35


Statement of Profit and Loss for the year ended 31st March, 2012(Rs. in Lakhs)

Note Year ended Year ended

No 31.03.2012 31.03.2011

I. Revenue from Operations XIX 30,664.18 24,078.27

II. Other Income XX 225.85 153.53

III. Total Revenue (I +II) 30,890.03 24,231.80

IV. Expenses:

Cost of materials consumed XXI 23,158.31 19,175.45

Changes in inventories of finished goods

and work-in-process XXII 123.16 (77.66)

Employee benefits expense XXIII 2,266.06 1,924.91

Financial costs XXIV 663.70 747.29

Depreciation and amortization expense

On Tangible assets 427.97 419.40

On Intangible assets 6.41 12.26

Other expenses XXV 2,978.28 2,614.25

Total Expenses 29,623.89 24,815.90

V. Profit before exceptional and

extraordinary items and tax (III - IV) 1,266.14 (584.10)

VI. Exceptional Items (Income) XXVI 151.82 –

VII. Profit before extraordinary items and tax (V + VI) 1,417.96 (584.10)

VIII. Extraordinary Items

IX. Profit before tax (VII - VIII) 1,417.96 (584.10)

X. Tax expense:

(1) Current tax 299.04 –

(2) Deferred tax (3.09) (74.11)

XI. Profit/(Loss) for the year (IX - X ) 1,122.01 (509.99)

XII. Earnings per equity share:

(1) Basic 14.44 (6.56)

(2) Diluted 14.44 (6.56)

Accounting standards, additional disclosures &Notes on accounts XXVII


FRN: 004207S


36


Notes on accountsAs at 31.03.2012 As at 31.03.2011

Number Rs. in Lakhs Number Rs. in Lakhs

I. SHARE CAPITAL

Authorised

Equity Shares of Rs.10/- each 1,00,00,000 1,000.00 1,00,00,000 1,000.00

Issued, subscribed and fully paid up

Equity Shares of Rs.10/- each 77,69,040 776.90 77,69,040 776.90

77,69,040 776.90 77,69,040 776.90

Reconciliation of the number of shares outstanding and the amount of share capital as at 31.03.2012

and 31.03.2011

Particulars As at 31.03.2012 As at 31.03.2011

Equity Shares Equity Shares

Number Rs. in Lakhs Number Rs. in Lakhs

Shares outstanding at the beginning of the year

on 01.04.2011 77,69,040 776.90 77,69,040 776.90

Shares Issued during the year – – – –

Shares bought back during the year – – – –

Shares outstanding at the end of the year

on 31.03.2012 77,69,040 776.90 77,69,040 776.90

List of shareholders holding more than 5% of the share capital as on the Balance Sheet date

Name of shareholder As at 31.03.2012 As at 31.03.2011

No. of Shares held No. of Shares held

Harita Limited, Chennai 1800500 1800500

Harita Gopal Private Limited, Chennai 485000 485000

Harita Sheela Private Limited, Chennai 485000 485000

Harita Malini Private Limited, Chennai 467800 467800

Harita Venu Private Limited, Chennai 467800 467800

Mr Martin Grammer, Germany 1087600 1087600

Horticultural and Constructions Engineers (India)

Private Limited, Chennai 436816 436816

Strategic Management and Marketing Consultancy

Services Limited, Chennai 603936 603936

Rights attached to Equity Shares : Shareholders are entitled to such rights as to attend meetings of the shareholders,

to receive dividend distributable and also have a right in residual interest in the assets of the Company. Further

shareholders are entitled to right of inspection of the documents as provided in Companies Act, 1956.

37


Details of issue of Bonus shares in the last five years preceding the date on which Balance Sheet is prepared.

Class of Shares: - Equity Shares

Number of Shares - 3884520 (Fully paid)

Year of Issue - 2007-08

II. RESERVES AND SURPLUS Rs. in Lakhs

As at 31.03.2012 As at 31 .03.2011

a. Capital Redemption Reserve

Opening Balance 10.00 10.00

(+) Current Year Transfer – –

(-) Written Back in Current Year – –

Closing Balance 10.00 10.00

b. Other Reserves

(i) State subsidy


(+) Current Year receipt 26.10 –



(ii) General Reserve

Opening Balance 2,030.78 2,030.78

(+) Current Year Transfer 112.20 –


Closing Balance 2,142.98 2,030.78

c. Surplus i.e balance as per statement of profit and loss:

Opening balance (493.99) 17.20

(+) Net Profit/(Net Loss) for the current year 1,122.01 (509.99)

(-) Tax relating to earlier years (3.25) (1.20)

(-) Interim Dividend payable (271.92) –

(-) Dividend distribution tax (27.48) –

(-) Transfer to General Reserve (112.20) –

Closing Balance 213.17 (493.99)

Total 2,407.25 1,561.79

Notes on accounts - (Continued)

38


III. LONG TERM BORROWINGS

Rs. in Lakhs

As at 31.03. 2012 As at 31.03.2011

Secured

Term loans

From banks 1,200.00 –

Secured by equitable mortgage of land and

buildings and first charge on all other fixed

assets of the company.

Terms of Repayment:

(Repayable Rs 150 lakhs each quarter with the first

instalment due on December 2012 )

1,200.00 –

Unsecured

Term loans

i) From banks – –

ii) From Others

Interest Free Sales Tax Loan 78.27 111.65

Terms of Repayment:

(Repayable in 5 yearly equal instalments of

Rs. 33.38 lakhs with effect from April 2010)

Total 1,278.27 111.65

IV. OTHER LONG TERM LIABILITIES

(a) Long term advance from subsidiary company 347.42 –

(b) Other deposits 0.51 –

Total 347.93 –

V. LONG TERM PROVISIONS

Employee benefits : Pension 84.87 178.18

Leave encashment 22.67 –

Total 107.54 178.18

VI. SHORT TERM BORROWINGS

Secured

Loans repayable on demand

From banks 1,993.59 1,520.13

(Secured by first charge on the entire current assets

of the Company present and future)

Total 1,993.59 1,520.13


39


VII.OTHER CURRENT LIABILITIES

Rs. in Lakhs

As at 31.03. 2012 As at 31.03.2011

Secured

Current maturities of long-term debt - From Banks 301.15 1,873.69

Unsecured

i) Interest Free Sales Tax Loan 33.38 33.38

ii) Unpaid dividends 7.21 8.45

iii) Loans repayable on demand

(a) From Banks 1,376.25 550.11

(b) From Others 300.00 1,800.00

iv) Interest accrued but not due on borrowings 17.36 16.11

Other Payables

Employees 126.74 91.43

Advances from customers 125.89 127.69

Statutory payables:

- Tax deducted at source 42.26 40.79

- Value added taxes and central sales tax 67.70 62.07

- Other taxes 0.24 0.13

Other payables 286.24 729.78

Total 2,684.42 5,333.63

VIII. SHORT TERM PROVISIONS

(a) Employee benefits:

Leave Encashment 13.27 24.57

(b) Others:

Income Tax 314.04 32.31

Warranty 43.43 53.42

Interim dividend 271.92 –

Dividend distribution tax 27.48 –

Total 670.14 110.30


40


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41


X. NON-CURRENT INVESTMENTS

Rs. in Lakhs

As at 31.03. 2012 As at 31.03.2011

Trade Investments (At cost)

Unquoted:

Investment in Equity Instruments :

(1,02,50,000 Equity shares of Rs.10/- each

fully paid, in Harita Fehrer Limited, Chennai,

subsidiary company) 2,759.00 2,759.00

Total 2,759.00 2,759.00

XI. LONG-TERM LOANS AND ADVANCES

(Secured considered good)

Income Tax - Advance tax paid and tax

deducted at source receivable 313.37 72.16

Total 313.37 72.16

XII. OTHER NON - CURRENT ASSETS

Unsecured, considered good - Deposits made

Electricity Deposit 20.09 25.12

Telephone Deposit 0.18 0.64

Others 14.73 17.23

Total 35.00 42.99

XIII. CURRENT INVESTMENTS

Investment in Mutual funds (Trade and quoted)

L&T Mutual Fund, Mumbai

(formerly DBS Cholamandalam

Asset Management) – 8.06

- 306590.379 units in Small -

Cap Fund Cumulative

HDFC Standard Life Insurance, Mumbai

- 2,22,510.9166 units in HDFC Group unit

linked plan balanced managed fund 87.54 87.01

(Market Value of the above investment is

Rs.123.09 lakhs. Last year Rs.135.30 lakhs.)

87.54 95.07

Others:

Life Insurance Corporation of India, Chennai

Group annuity policy 98.03 98.03

Total 185.57 193.10


42


XIV. INVENTORIES (Valued at lower of weighted average cost or net realisable value)

Rs. in Lakhs

As at 31.03. 2012 As at 31.03.2011

a. Raw Materials and components * 423.04 308.32

b. Work-in-process * 194.45 201.54

c. Finished goods * 141.08 257.15

d. Stores and spares * 1.72 72.82

Total 760.29 839.83

(* As certified by the Chairman)

XV. TRADE RECEIVABLES

Debts outstanding for a period exceeding

six months from the date due for payment

Unsecured

Considered doubtful 288.79 1,196.83

Less : Provision for doubtful debts 288.79 357.62

– 839.21

Other debts

Considered good 4,775.27 4,266.23

Considered doubtful 180.11 –

4,955.38 4,266.23

Less : Provision for doubtful debts 180.11 –

4,775.27 4,266.23

Total 4,775.27 5,105.44

XVI. CASH & CASH EQUIVALENTS

a. Balances with banks 82.56 327.87

b. Cheques, drafts on hand 22.77 5.86

c. Cash on hand 5.13 5.55

d. Unpaid dividend (earmarked balance) 7.21 8.45

e. Bank deposits 383.64 2.79

Total 501.31 350.52

XVII.SHORT-TERM LOANS & ADVANCES

Employee advances (unsecured considered good) 32.10 29.36

Total 32.10 29.36


43


XVIII.OTHER CURRENT ASSETS

Rs. in Lakhs

As at 31.03. 2012 As at 31.03.2011

Advances to suppliers 938.60 338.41

Prepaid expenses 60.50 45.90

Income tax - Advance tax paid and tax


Short term deposits with statutory authorities:

Cenvat receivable 81.50 115.35

VAT set off receivable 15.34 13.93

Advances made 105.79 141.98

202.63 271.26

Dividend receivable 102.50 –

Claims Receivable 225.89 129.35

Total 1,884.16 1,086.62

XIX. REVENUE FROM OPERATIONS

Rs. in Lakhs

For the year ended For the year ended

31.03.2012 31.03.2011

Sale of products 32,075.35 24,412.07

Sale of services 77.81 75.00

Other operating revenues 1,731.03 1,521.46

33,884.19 26,008.53

Less : Excise duty 3,220.01 1,930.26

Total 30,664.18 24,078.27

XX. OTHER INCOME

a. Interest Income 3.20 2.49

b. Dividend Income (From Subsidiary Company) 102.50 –

c. Net gain / loss on sale of investments 6.62 90.55

d. Net Foreign Exchange gain / (loss) 12.40 (3.51)

e. Lease rent 99.60 62.99

f. Other non-operating income (Net of expenses) 1.53 1.01

Total 225.85 153.53


44


XXI. RAW MATERIAL & COMPONENTS CONSUMED

Rs. in Lakhs


31.03.2012 31.03.2011

OPENING STOCK

Raw materials (A) 308.32 335.73

Purchase of raw materials and components (B) 23,273.03 19,148.04

Total (C) (A) + (B) 23,581.35 19,483.77

CLOSING STOCK

Raw materials (D) 423.04 308.32

Consumption (C) - (D) 23,158.31 19,175.45

XXII. CHANGES IN INVENTORIES OF FINISHED GOODS,

WORK-IN-PROCESS AND STOCK IN TRADE

Opening Stock of Work-in-Process and Finished Goods

Work-in-process (Seat assembly) 201.54 237.02

Finished goods 257.15 144.01

Total (A) 458.69 381.03

Less: Closing Stock of Work-in-Process and Finished Goods

Work-in-process (Seat assembly) 194.45 201.54

Finished goods 141.08 257.15

Total (B) 335.53 458.69

Changes in Inventory (A-B) 123.16 (77.66)

XXIII.EMPLOYEE BENEFIT EXPENSES

Salaries and wages 1,870.76 1,578.97

Contribution to provident and other funds 42.35 58.64

Welfare expenses 352.95 287.30

Total 2,266.06 1,924.91

XXIV.FINANCE COST

Interest expense 637.54 734.97

Other borrowings costs 26.16 12.32

Total 663.70 747.29


45


XXV. OTHER EXPENSES

Rs. in Lakhs


31.03.2012 31.03.2011

Consumption of stores and spare parts 58.00 72.87

Power and fuel 206.59 181.69

Rent 14.05 10.54

Rates and taxes, excluding taxes on income 20.05 21.15

Repairs to buildings 169.00 75.37

Repairs to Plant and Equipment 193.04 102.96

Repairs to other assets 89.83 75.87

Insurance 38.93 48.25

Carriage outward 444.01 649.59

Packing charges 459.52 385.05

Other expenses 1,271.22 978.94

Audit fees - as auditors 7.00 6.00

- tax audit 1.00 1.00

- certification 0.50 0.50

- other services 1.18 1.05

- reimbursement of expenses 4.36 3.42

Total 2,978.28 2,614.25

XXVI. EXCEPTIONAL ITEMS

Profit on sale of Fixed assets 151.82 –


XXVII Accounting Standards, additional disclosures and notes on accounts

Rs. in Lakhs

As at/year ended As at/year ended

31.03.2012 31.03.2011

1. Accounting Standards

ACCOUNTING STANDARD (1) - Disclosure of accounting

policies

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

ACCOUNTING STANDARD (2) - Valuation of inventories

Inventories are valued in accordance with the method of valuation

prescribed by The Institute of Chartered Accountants of India at

weighted average cost or net realisable value, whichever is less.

46


XXVII Accounting Standards, additional disclosures and notes on accounts - (continued)

Rs. in Lakhs


31.03.2012 31.03.2011

ACCOUNTING STANDARD (3) - Cash flow statement

The cash flow statement is prepared under "indirect method" and

the same is annexed.

ACCOUNTING STANDARD (4) -Contingencies and events

occurring after the Balance Sheet date

Details regarding contested liabilities are furnished in Note No.3

and also disclosed under Accounting Standard - 29.

ACCOUNTING STANDARD (5) Net profit or loss for the period,

prior period items and changes in accounting policies

a) Prior period Items

- Price revision on Inputs – 1.60

- Packing materials – 36.93

- Purchase of raw material – 0.37

- Repairs & maintenance – 0.18

- Electricity charges – 0.16

- Other expenses – 0.07

- Rates & Taxes 2.60 –

b) Changes in accounting policies

During the year, the Company has changed the accounting

policy on provision of depreciation on moulds from number

of shots basis to straight line method. This change has no

material impact on profitability.

ACCOUNTING STANDARD (6) - Depreciation accounting

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 pro-rata 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, 1956.

Until the year ended 31st March 2002, moulds were

depreciated by applying rates fixed under Schedule XIV of

the Companies Act, 1956.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 manufactured.

47



Rs. in Lakhs


31.03.2012 31.03.2011

Until the year ended 31st March, 2002, tools and fixtures were

depreciated by applying rates fixed under Schedule XIV of

the Companies Act,1956.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 deleted 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 and non automotive

application and other parts and accessories for automotive

and non automotive application.

Indigenous sales are recognised based on raising of invoices

and delivery of goods thereof to the carrier.

Export sales are recognised on the basis of date of let export

certificate and includes realised exchange fluctuations on

exports (Gain - Rs.24.30 lakhs )

The revenue and expenditure are accounted on a going

concern basis.

Interest income is recognised on a time proportion basis taking

into account the amount outstanding and the rate applicable.

Income from services is recognised on rendering of services

and as per terms of agreement.

Dividend income is recognised when right to receive dividend

is established. Interim dividend declared by the subsidiary

company relating to 31st March 2012 subsequent to Balance

Sheet date, not being a contingent asset is recognized as

income in view of Accounting Standard 4 and further to avail

deduction from dividend distribution tax payable under the

provisions of Income Tax Act 1961, if dividend from subsidiary

is recognised as income in the same accounting year.

48


ACCOUNTING STANDARD (10) - Accounting for fixed

assets

Fixed assets are stated at cost including expenditure incurred

in bringing them to usable condition less 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, spare parts and capital goods which are in transit

and where invoices/bills are yet to be received, the liability is

accounted based on the advance copies of documents at the

market exchange rate prevailing on the date of the Balance

Sheet.

Net exchange difference debited/(credited) to Statement of

Profit and Loss (12.40) 25.70

External commercial borrowings for acquisition of an

asset

The amendment to Accounting Standard-11 introduced by

Government of India permitting fluctuation in exchange rates

in relation to acquisition of capital assets to be added to or

deducted from the carrying cost of such assets is not

applicable as the Company did not have any external

commercial borrowings for acquisition of any asset.

The Company has not entered into any transactions in

derivative instruments and hence reporting on currency

swapping/interest rate structure does not arise.

ACCOUNTING STANDARD (12) - Accounting for

Government grants

During the year grant has been received from Government 26.10 –

of Himachal Pradesh for capital investment.


Investments

Investments are valued at cost. Provision for diminution in

the carrying cost of investments is made if such diminution is

other than temporary in nature in the opinion of the

management. (Refer Note XIII of the Balance Sheet)


Rs. in Lakhs


31.03.2012 31.03.2011

49


As at/year ended31.03.2012

C. Disclosure as required by Accounting Standard 15

Leave Salary Pension Gratuity

a) Expenses recognised in the Statement of Profit and Loss

(i) Current service cost 11.52 – 14.52

(ii) Interest cost 1.32 14.25 12.62

(iii)Expected return on plan assets – – (15.62)

(iv)Net actuarial loss / (gain) recognised in the year 14.63 (107.56) 42.20

Total 27.47 (93.31) 53.72

b) Change in defined benefit obligation during the

year ended 31st March 2012

(i) Present total value of obligation as at beginning of

the year (01-04-2011) 24.57 178.18 157.78

(ii) Interest cost 1.32 14.25 12.62

(iii)Current service cost 11.52 – 14.52

(iv)Benefits paid (16.10) – (37.15)

(v) Actuarial loss on obligation 14.63 (107.56) 42.20

(vi)Present value of obligation as at the end of

the year (31-03-2012) 35.94 84.87 189.97


amalgamation Not applicable Not applicable

ACCOUNTING STANDARD (15) - Employee benefits

A Defined contribution plan

Contributions to provident fund is in the nature of defined

contribution plan and are made to provident fund maintained

by Government.

B Defined benefit plan

a) The Company extends defined benefit plans in the form of

leave salary to employees. In addition, the Company also

extends pension to senior managers. Provision for leave

salary and pension is made on actuarial valuation basis

b) The Company also extends defined benefit plan in the form

of gratuity to employees. Contribution to gratuity is made

to Life Insurance Corporation of India in accordance with

the scheme framed by the corporation.


Rs. in Lakhs


31.03.2012 31.03.2011

50


Rs. in Lakhs

As at/year ended31.03.2012

C. Disclosure as required by Accounting Standard 15

(continued)

Leave Salary Pension Gratuity


c) Change in fair value of plan assets during the

year ended 31st March 2012

(i) Fair value of plan assets at the beginning

of the year (01-04-2011) – – 185.53

(ii) Expected return on plan assets – – 15.62

(iii) Contribution made during the year – – 39.00

(iv) Benefits paid – – (37.15)

(v) Actuarial gain on plan assets – – –

(vi) Fair value of plan assets as at the end of

the year (31-03-2012) – – 203.00

(d) Balance Sheet movements

(i) Value of benefit obligations/(net assets)

at the beginning of the year (01-04-2011) 24.57 178.18 –

(ii) Contribution made during the year – – 39.00

(iii) Expenses 27.47 (93.31) (53.73)

(iv) Benefits paid (16.10) – (37.15)

(v) Value of benefit 35.94 84.87 (13.01)

Note: The net asset in respect of gratuity plan is

not recognised as it is lying in irrevocable trust

fund approved by Income Tax authorities.

(e) Actuarial assumptions

(i) Discount rate used 8.00% 8.00% 8.00%

(ii) Expected return on plan assets Not Not 8.00%

applicable applicable


31.03.2012 31.03.2011

ACCOUNTING STANDARD (16) - Borrowing costs

During the year the Company has not incurred any borrowing

cost within the meaning of this Accounting Standard.

51



Rs. in Lakhs


31.03.2012 31.03.2011

ACCOUNTING STANDARD (17) - Segment reporting

The operations of the entity relate to manufacture of seating

system for automotive & non automotive applications, and

other parts and accessories for automotive and non

automotive applications. The income from sale of other parts

and accessories being individually less than ten percent of

total revenue, no separate disclosure is made.

ACCOUNTING STANDARD (18) - Related party disclosures

A) List of related parties as per Clause 3(a) of the Standard where control exists.

Reporting Entity : Harita Seating Systems Limited, Chennai

Holding Companies : Nil

Subsidiary Company : Harita Fehrer Limited, Chennai

(01.04.2011 to 31.03.2012)

B) List of related parties as per Clause 3(c) of the Standard

Key Management Personnel : Mr.A.G.Giridharan

Manager under the provisions of the Companies Act, 1956.

C) Particulars of transactions with related parties

(i) Purchases made

Subsidiary company

Harita Fehrer Limited, Chennai 3,456.70 2,455.41

(ii) Sale of Materials

Subsidiary company

Harita Fehrer Limited, Chennai 6.09 407.72

(iii) Services rendered

Subsidiary company

Harita Fehrer Limited, Chennai 505.35 543.33

(iv) Amount outstanding as at Balance Sheet date

Sundry Creditors

Subsidiary company

Harita Fehrer Limited, Chennai

Trade payables 506.78 735.07

Other payables 347.42 –

52


ACCOUNTING STANDARD (19) - Accounting for leases Not applicable Not applicable

ACCOUNTING STANDARD (20) - Earnings per share

Earnings per share is calculated by dividing the profit

attributable to the shareholders by the number of equity shares

outstanding as at the close of the year

Profit after tax 1,122.01 (509.99)

No. of equity shares 77,69,040 77,69,040

Face value per share 10.00 10.00

Weighted average number of equity shares 77,69,040 77,69,040

Earnings Per Share (EPS) 14.44 (6.56)

Diluted Earnings Per Share 14.44 (6.56)

ACCOUNTING STANDARD (21) - Consolidated financial

statements

Consolidated financial statements of the Company and its

subsidiary is enclosed.

ACCOUNTING STANDARD (22) - Accounting for taxes 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 1,180.72 1,042.62

- tax on expenses claimed on payment basis under

Income Tax Act, 1961 394.80 257.18

(A) 1,575.52 1,299.80

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 1,330.64 1,051.83

(B) 1,330.64 1,051.83

Deferred tax liability (net of deferred tax asset) (A)-(B)

(refer Balance Sheet) 244.88 247.97


Rs. in Lakhs


31.03.2012 31.03.2011

53



investments in associates in consolidated

financial statements Not applicable Not applicable

ACCOUNTING STANDARD (24) - Discontinuing

operations

During the year the Company has not discontinued any of its

operations.

ACCOUNTING STANDARD (25) - Interim financial

reporting

The Company has elected to publish quarterly financial results

which were subject to limited review by the statutory auditors.

ACCOUNTING STANDARD (26) - Intangible assets

Amortisation for intangibles has been provided as under:

(i) Software is amortised over a period of two years.

- Estimated useful life of the asset 2 years 2 years

- Amortisation rates used 50% each 50% each

year as year as

amortization amortization

(ii) Technical know-how and product licence fee

- Estimated useful life of the asset 10 years 10 years

- Amortisation rates used 10% each 10% each

year as year as

amortization amortization

ACCOUNTING STANDARD (27) - Financial reporting of

interest in joint venture

Company and the Company's joint venture partner viz.

M/s. F.S Fehrer Automotive GmbH, Germany (Fehrer) holds

equity shares in the subsidiary company viz. Harita Fehrer

Limited, Chennai in the ratio of 51:49.

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 for the year.


Rs. in Lakhs


31.03.2012 31.03.2011

54


ACCOUNTING STANDARD (29) - Provisions, contingent

liabilities and contingent assets

1. Provisions

In respect of warranty obligations provision is made in

accordance with the terms of sale of seat assemblies.

Provision for warranty at beginning of the year 53.42 66.03

Provided during the year 43.43 30.10

96.85 96.13

Reversed during the year 53.42 42.71

Net Provision as on Balance Sheet date 43.43 53.42

2. Contingent liabilities

The amount for which the Company is contingently

liable are disclosed in Note No. 2

3. Contingent assets

Contingent assets which are likely to give rise to the

possibility of inflow of economic benefits Nil Nil

4. Contested liabilities

Contested liabilities are detailed in Note No.3

ACCOUNTING STANDARD (30) - Financial instruments

The Company has forward contracts to hedge its risks

associated with foreign currency fluctuation relating to import

of raw materials. Only net exposure is hedged. The Company

has no contracts for import of capital goods. The Company

also does not hold derivatives for speculation purposes.

The foreign exchange liabilities are restated at the prevailing

rates at the year end.

2. Contingent liabilities not provided for

a. On counter guarantee furnished to bank 403.74 327.15

b. On account of bill discounting 91.80 93.70

c. Customs duty under Export Promotion

Capital Goods Scheme 189.13 189.13

d. Contracts remaining to be executed on

Capital Account and not provided for 100.47 –


Rs. in Lakhs


31.03.2012 31.03.2011

55


3. Liability contested and not provided for

a) Income-tax 44.77 44.77

b) Service tax 290.25 228.51

c) Central Excise 269.51 238.00

d) Value Added Tax 120.73 100.35

e) Customer Claim 439.00 –

4. Sundry creditors include

a) Dues to small scale industrial undertakings. 361.62 577.03

b) Dues of creditors other than small scale industrial

undertaking. 3,951.45 4,756.60

c) Information required under the Micro, Small and Medium

Enterprises Development Act, 2006

The Company has written to all suppliers to ascertain if

they are covered by the said Act. No information has been

received in reply.

However, the suppliers' credit terms are generally 45 days

within which all payments are made. Hence, the question

of payment of interest or provision thereof for belated

payments does not arise.

5. Managerial Remuneration

The shareholders have approved at the annual general meeting

held on 7th September, 2009 remuneration to Mr A G Giridharan,

Manager, upto 5% of the net profits of the Company, subject to a

ceiling of Rs.48 lakhs per annum. However, based on the

profitability for the year ended 31st March 2012, he was paid

Rs.51.47 lakhs, which was approved by Board of Directors, subject,

ofcourse, to the final approval by the shareholders vide item no.5

of notice of even date for the ensuing annual general meeting.

6. Other expenses include

No individual expense is in excess of 1% of the Revenue from

operations or Rs.1,00,000/- whichever is higher.

7. Expenses, wherever applicable are inclusive of service tax at

appropriate rates and net of service tax set off permissible.

8. Dividend - Interim Dividend payable: The amount proposed to

be distributed to the shareholders on 77,69,040 Equity Shares

is at Rs.3.50/- per share amounting to Rs.271.92 lakhs.


Rs. in Lakhs


31.03.2012 31.03.2011

56


9. Disclosures made in terms of Clause 32 and 41 of the Listing Agreement with Stock Exchanges

Amount Maximum Amount

outstanding outstanding outstanding

ParticularsName of

as on due at any as onthe Company

31.03.2012 one time 31.03.2011

during the year

a) Loans and advances

(i) Inter corporate deposit granted to Harita Fehrer

subsidiary. Limited,

Chennai Nil Nil Nil

(ii) Loans and advance in the nature of Not Not

loans made to associate company applicable applicable

(iii) Loans and advance in the nature of

loans where there is

1) no repayment schedule or

repayment beyond seven years Nil Nil Nil

2) no interest / rate of interest

lower than the rates specified under

Section 372A of the Companies

Act, 1956 Nil Nil Nil

iv) Loans and advances in the nature of

loans made to firms/companies in

which directors of the Company are

interested. Nil Nil Nil

b) Investments by Company in subsidiary 2,759.00 2,759.00

10. Last year's figures have been regrouped wherever necessary to conform to this year's classification.


Rs. in Lakhs


31.03.2012 31.03.2011

57


I RAW MATERIALS CONSUMED Rs. in Lakhs

For the For the

Year ended Year ended

31.03.2012 31.03.2011

A. Basic raw materials

Raw material consists Foam, Rexine,

Fabrics and Frames etc. No

individual raw material accounts for

more than 10% of total raw material

& components consumed. 23,158.31 19,175.45

23,158.31 19,175.45

B. Consumption of raw materials and components

% of total % of total

consumption Value consumption Value

a) Imported 3.28 759.24 3.92 752.09

b) Indigenous 96.72 22,399.07 96.08 18,423.36

100.00 23,158.31 100.00 19,175.45

C. Consumption of machinery spares

% of total % of total

consumption Value consumption Value

a) Imported 4.42 3.65 2.07 1.07

b) Indigenous 95.58 78.99 97.93 50.72

100.00 82.64 100.00 51.79

Rs. in Lakhs

For the For the


31.03.2012 31.03.2011

II IMPORTS - CIF VALUE

a) Raw materials & components 781.36 751.59

b) Capital goods 14.68 68.53

c) Spares 3.65 68.00

III OTHER EXPENDITURE IN FOREIGN CURRENCY

a) Travel 1.01 10.65

b) Consultancy fee 123.96 112.08

c) Others 3.15 11.89


58



FRN: 004207S


IV EARNINGS IN FOREIGN EXCHANGE

Exports - F.O.B 2,757.74 2,147.17

V PAYMENT TO NON-RESIDENT SHAREHOLDERS

a) No. of non-resident shareholders 1 1

b) No. of shares held by non-residents 10,87,600 10,87,600

c) Dividend – –

VI SALE BY CLASS OF GOODS

Quantity Value Quantity Value

(Nos.) (Nos.)

Seats:

For automotive application 11,86,421 28,710.91 9,78,107 22,279.83

Other 144.43 201.98

28,855.34 22,481.81


Rs. in Lakhs

Year ended 31.03.2012 Year ended 31.03.2011

59


Cash flow statement for the year ended 31st March, 2012

Rs. in Lakhs


31.03.2012 31.03.2011

A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax and extra ordinary items 1,417.96 (584.10)

Add:

Depreciation 434.38 431.66

Dividend income (102.50) –

Interest Income (3.20) (2.49)

Profit/(loss) on sale of assets(net) (84.55) (0.04)

Finance Cost 663.70 907.83 747.29 1,176.42

Operating profit before working capital changes 2,325.79 592.32

Adjusted for:

Working Capital changes

Trade Payables (978.03) (738.02)

Other Current Liabilities (2,649.23) 1,117.68

Short Term Provisions (21.29) (26.32)

Other Non current assets (43.57) 8.11

Current Investments 7.53 36.66

Inventories 79.54 (34.26)

Trade Receivables 330.17 506.74

Short Term Loans and Advances (2.74) 212.28

Other Current Assets (642.70) (3,920.32) (5.94) 1,076.93

Cash generated from operations (1,594.53) 1,669.25

Less : Taxes paid (314.11) (42.90)

Net cash from operating activities- (A) (1,908.64) 1,626.35

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (647.89) (544.78)

Proceeds from sale of assets 1,372.78 165.64

Interest received 3.78 2.22

Net cash used in investing activities- (B) 728.67 (376.92)

60



FRN: 004207S


Cash flow statement for the year ended 31st March, 2012 (Contd.)

Rs. in Lakhs


31.03.2012 31.03.2011

C. CASH FLOW FROM FINANCING ACTIVITIES

State subsidy 26.10 –

Long Term Borrowings 1,166.62 (1,893.85)

Long Term Provisions (70.64) (17.60)

Other Long term liabilities 347.93 –

Short Term Borrowings 473.46 1,349.12

Finance cost paid (662.45) (738.74)

Dividend paid (1.24) (1.54)

Net cash from financing activities- (C) 1,279.78 (1,302.61)

D. NET INCREASE / (DECREASE) IN CASH AND

CASH EQUIVALENTS (A)+(B)+(C) 99.81 (53.18)

Cash and cash equivalents at the beginning of the year 350.52 403.70

Cash and cash equivalents at the end of the year 450.33 350.52

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

61


Statement pursuant to Section 212 of the Companies Act, 1956 relating to subsidiary

S. No Particulars

Subsidiary Company

(Harita Fehrer Limited,

Chennai)

(1) (2) (3)

1. Financial year of the subsidiary 01.04.2011 to 31.03.2012

2. Shares of the subsidiary held by the Company on the above date

(a) Number and face value 1,02,50,000 Equity share of

Rs.10 each fully paid up

(b) Extent of holding 51%

3. Net aggregate amount of profits / (losses) of the subsidiary for the

above financial year of the subsidiary not dealt with the

Company’s account

(a) for the financial year of the subsidiary - profit / (loss) Rs. 1104.01 lakhs

(b) for the previous financial years since it became a subsidiary -

profit / (loss) Rs. 211.78 lakhs

4. Net aggregate amount of profits / (losses) of the subsidiary for the

above financial year of the subsidiary dealt with in the Company’s

account

(a) for the financial year of the subsidiary - Profit / (loss) –

(b) for the previous financial years since it became a subsidiary -

Profit / (loss) –

H LAKSHMANAN RAM NATARAJAN A G GIRIDHARAN

Chairman Director President cum Manager

Chennai N ISWARYA LAKSHMI

30th May 2012 Company Secretary

62

CONSOLIDATED FINANCIAL STATEMENTS OF HARITA SEATING SYSTEMS LIMITED AND ITS SUBSIDIARY

CONSOLIDATED

FINANCIAL STATEMENTS OF


AND ITS SUBSIDIARY

63


AUDITORS' REPORT ON CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED

31ST MARCH, 2012

We have audited the attached consolidated Balance

Sheet of Harita Seating Systems Limited, Chennai

and its subsidiary viz., Harita Fehrer Limited,

Chennai, as at 31st March 2012, and also the related

Statement of Profit and Loss and the Cash Flow

Statement for the year ended on that date, both

annexed hereto.

These financial statements are the responsibility of

the Company's management. Our responsibility is

to express an opinion on these consolidated

financial statements based on our audit.

We did not audit the financial statements of the

subsidiary, namely Harita Fehrer Limited, Chennai.

The financial statements and other information of

the said subsidiary have been audited by other

auditor whose report has been furnished to us and

our opinion, in so far it relates to the amounts

included in respect of the subsidiary, is based solely

on the report of the other auditor.

We conducted our audit in accordance with

generally accepted auditing standards in India.

These standards require that we plan and perform

the audit to obtain a reasonable assurance about

whether the financial statements are free of material

misstatements. An audit includes examining, on a

test basis, evidence supporting the amount and

disclosures in the financial statements. An audit also

includes assessing the accounting principles used

and significant estimates made by the management,

as well as evaluating the overall financial statement

presentation. We believe that our audit provides a

reasonable basis for our opinion.

We report that the consolidated financial statements

have been prepared by the Company in accordance

with the requirements of Accounting Standard 21

on "Consolidated Financial Statements" issued by

The Institute of Chartered Accountants of India, on

the basis of the individual financial statements of

Harita Seating Systems Limited, Chennai and its

subsidiary, namely, Harita Fehrer Limited included

in the aforesaid consolidation.

In our opinion and based on our audit, the

consolidated financial statements referred to above

give a true and fair view of the financial position of

Harita Seating Systems Limited, Chennai and its

subsidiary named above as at 31st March 2012 and

of the results of their operations and their cash flows

for the year ended in conformity with the generally

accepted accounting principles in India.

For SUNDARAM & SRINIVASAN

CHARTERED ACCOUNTANTS

FRN: 004207S

M BALASUBRAMANIYAM

Chennai Partner

30th May 2012 Membership No.F7945

64


Balance Sheet as at 31st March, 2012Rs. in Lakhs

Note As at As atNo. 31.03.2012 31.03.2011

I. EQUITY AND LIABILITIES

(1) Shareholders’ funds

(a) Share Capital I 776.90 776.90

(b) Reserves and Surplus II 4,971.50 3,681.53

(2) Minority Interest XXVII 5,850.42 5,423.91

(3) Non-Current Liabilities

(a) Long-term borrowings III 1,278.27 1,365.68

(b) Deferred tax liabilities (Net) – 31.96

(c) Other Long-term liabilities IV 0.51 –

(d) Long-term provisions V 107.54 178.18

(4) Current Liabilities

(a) Short-term borrowings VI 2,993.59 1,920.13

(b) Trade payables 9,419.86 10,964.01

(c) Other current liabilities VII 3,078.73 5,976.47

(d) Short-term provisions VIII 1,225.07 576.22

Total 29,702.39 30,894.99

II. ASSETS

(1) Non-current assets

(a) Fixed assets

(i) Tangible assets IX 13,791.29 13,957.61

(ii) Intangible assets 47.77 35.80

(iii) Capital work-in-progress 19.91 280.95

(b) Non-current investments X 75.00 75.00

(c) Deferred tax assets (net) 188.42 –

(d) Long-term loans and advances XI 313.45 273.38

(e) Other non-current assets XII 61.12 66.21

(2) Current assets

(a) Current investments XIII 185.57 193.10

(b) Inventories XIV 2,370.39 2,582.71

(c) Trade receivables XV 9,356.38 9,622.84

(d) Cash and cash equivalents XVI 668.94 2,046.61

(e) Short-term loans and advances XVII 52.76 50.42

( f ) Other current assets XVIII 2,571.39 1,710.36

Total 29,702.39 30,894.99

Accounting standards, additional disclosures &Notes on accounts XXVIII


FRN: 004207S


65


Statement of Profit and Loss for the year ended 31st March, 2012Rs. in Lakhs

NoteFor the For the

Year ended Year endedNo.

31.03.2012 31.03.2011

I. Revenue from Operations XIX 56,597.21 45,764.78

II. Other Income XX 128.80 98.71

III. Total Revenue (I +II) 56,726.01 45,863.49

IV. Expenses:

Cost of materials consumed XXI 40,626.29 35,098.01

Changes in inventories of finished goods andwork in process XXII 737.53 (706.35)

Employee benefits expense XXIII 4,867.63 4,022.02

Financial costs XXIV 928.55 918.02

Depreciation and amortization expense

On Tangible assets 1,331.50 1,236.60

On Intangible assets 24.28 291.54

Other expenses XXV 5,834.99 5,340.21

Total Expenses 54,350.77 46,200.05

V. Profit before exceptional and extraordinaryitems and tax (III - IV) 2,375.24 (336.56)

VI. Exceptional Items (Income) XXVI 151.82 –

VII. Profit before extraordinary items and tax (V + VI) 2,527.06 (336.56)

VIII. Extraordinary Items – –

IX. Profit before tax (VII - VIII) 2,527.06 (336.56)

X. Tax expense:

(1) Current tax 520.83 47.79

(2) Deferred tax (220.38) (93.90)

XI. Profit/(Loss) for the year before minority interest (IX - X ) 2,226.61 (290.45)

XII. Minority Interest 426.51 87.11

XIII. Profit/(Loss) for the year (XI - XII) 1,800.10 (377.56)

XIV. Earnings per equity share:

(1) Basic 23.17 (4.86)

(2) Diluted 23.17 (4.86)

Accounting standards, additional disclosures & Notes on accounts XXVIII


FRN: 004207S


66


Notes on accountsRs. in Lakhs

As at As at31.03.2012 31.03.2011

I. SHARE CAPITAL

Authorised

Equity Shares of Rs.10/- each 1,000.00 1,000.00

Issued, Subscribed & fully Paid up

Equity Shares of Rs.10/- each 776.90 776.90

Total 776.90 776.90

II. RESERVES & SURPLUS

a. Capital Redemption Reserve


(+) Current Year Transfer – –



b. Share premium


(+) Current Year receipt – –



c. Other Reserves (State subsidy)


(+) Current Year receipt 26.10 –



General Reserve


(+) Current Year Transfer 112.20 –



d. Surplus i.e balance as per Statement of Profit and Loss:

Opening balance (1,357.13) (978.37)

(+) Net Profit/(Net Loss) for the current year 1,800.10 (377.56)

(-) Taxes relating to earlier years (3.25) (1.20)

(-) Interim Dividend payable (472.90) –

(-) Dividend Distribution Tax (60.08) –

(-) Transfer to General Reserves (112.20) –

Closing Balance (205.46) (1,357.13)

Total 4,971.50 3,681.53

67


Notes on accounts - (continued)Rs. in Lakhs

As at As at31.03.2012 31.03.2011

III. LONG-TERM BORROWINGS

Secured

Term loans

From Banks 1,200.00 1,254.03

Secured by equitable mortgage of land and buildings at

Belagondapalli village, Hosur and first charge on all other

fixed assets of the Company.

Terms of Repayment:

(Repayable Rs.150 lakhs each quarter with the first instalment

due on 31.12.2012 )

Unsecured

Term loans

i) From Banks – –

ii From Others

Interest Free Sales Tax Loan 78.27 111.65

Terms of Repayment:

(Repayable in 5 yearly equal instalments of Rs. 33.38 lakhs

with effect from April 2010)

Total 1,278.27 1,365.68

IV. OTHER LONG-TERM LIABILITIES

Deposits 0.51 –

Total 0.51 –

V. LONG-TERM PROVISIONS

Employee benefits : Pension 84.87 178.18

Leave encashment 22.67 –

Total 107.54 178.18

VI. SHORT TERM BORROWINGS

Secured

Loans repayable on demand

From banks 2,993.59 1,920.13

(Secured by first charge on the entire current assets

of the Company present and future)

Total 2,993.59 1,920.13

68



As at As at31.03.2012 31.03.2011

VII. OTHER CURRENT LIABILITIES

Secured

Current maturities of long-term debt - From Banks 301.15 1,873.69

Unsecured

i) Interest Free Sales Tax Loan 33.38 33.38

ii) Unpaid dividends 7.21 8.45

iii) Loans repayable on demand

(a) From Banks 1,376.25 550.11

(b) From Others 300.00 1,800.00

iv) Interest accrued but not due on borrowings 26.30 33.34

Other Payables

Employees 163.94 136.68

Advances from customers 322.76 536.07

Statutory payables

- Tax deducted at source 80.09 66.38

- Value added taxes and central sales tax 174.38 194.38

- Other taxes 6.90 14.06

Other payables 286.37 729.93

Total 3,078.73 5,976.47

VIII. SHORT TERM PROVISIONS

(a) Employee benefits:

Leave Encashment 26.00 33.96

(b) Others:

Income tax 583.61 80.10

Warranty 43.43 53.42

Interim dividend 430.48 –

Others 141.55 408.74

Total 1,225.07 576.22

69


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As at As at31.03.2012 31.03.2011

X. NON-CURRENT INVESTMENTS

Non Trade Investments (At cost)

Investment in Equity Instruments :

Non-trade unquoted shares (long term fully paid) 75.00 75.00

Total 75.00 75.00

XI. LONG-TERM LOANS AND ADVANCES

(Secured considered good)

Income Tax - Advance tax paid and tax deducted at source receivable 313.37 72.16

Capital Advances – 201.06

Miscellaneous Expenditure to the extent not written off or adjusted 0.08 0.16

Total 313.45 273.38

XII. OTHER NON-CURRENT ASSETS

Unsecured, considered good : Deposits – 23.22

Electricity Deposit 20.09 25.12

Telephone Deposit 0.18 0.64

Others 40.85 17.23

Total 61.12 66.21

XIII. CURRENT INVESTMENTS

Investment in Mutual funds : (Trade and quoted)

HDFC Standard Life Insurance, Mumbai – 8.06

- 2,22,510.9166 units in HDFC Group unit linked

plan Balanced managed fund 87.54 87.01

(Market Value of the above investment is

Rs.123.09 lakhs. Last year Rs.135.30 lakhs.)

87.54 95.07

Others :

Life Insurance Corporation of India, Chennai

Group annuity policy 98.03 98.03

Total 185.57 193.10

71



As at As at31.03.2012 31.03.2011

XIV. INVENTORIES

(Valued at lower of weighted average cost or net realisable value)

a. Raw Materials and components 1,329.22 960.06

b. Raw Materials and components - Goods in transit 66.67 115.52

c. Work-in-process 220.11 234.11

d. Finished goods 347.76 1,071.28

e. Stores and spares 406.63 201.74

Total 2,370.39 2,582.71

XV. TRADE RECEIVABLES

Debts outstanding for a period exceeding six months

from the date due for payment

Unsecured

Considered good 84.73 189.74

Considered doubtful 334.79 1,233.91


Total - (A) 84.73 1,028.95

Other debts

Considered good 9,271.65 8,593.89

Considered doubtful 180.11 1.10

9,451.76 8,594.99


Total - (B) 9,271.65 8,593.89

Total (A)+(B) 9,356.38 9,622.84

XVI. CASH & CASH EQUIVALENTS

a. Balances with banks 248.10 2,019.08

b. Cheques, drafts on hand 22.77 5.86

c. Cash on hand 7.22 10.43

d. Unpaid dividend (earmarked balance) 7.21 8.45

e. Bank deposits 383.64 2.79

Total 668.94 2,046.61

72



As at/for the As at/ for theperiod ended period ended

31.03.2012 31.03.2011

XVII. SHORT-TERM LOANS & ADVANCES

Employee advances (Unsecured considered good) 32.10 29.36

Others 20.66 21.06

Total 52.76 50.42

XVIII.OTHER CURRENT ASSETS

Advances to suppliers 1,028.51 458.20

Prepaid expenses 100.73 80.13

Income tax - Advance tax paid and tax


Short term deposits with statutory authorities:

Cenvat receivable 172.96 283.62

VAT set off receivable 126.56 109.27

Advances made 228.00 192.08

Claims Receivable 225.89 129.35

Total 2,571.39 1,710.36

XIX. REVENUE FROM OPERATIONS

Sale of products 60,865.85 48,637.17

Other operating revenues 1,977.17 1,769.18

62,843.02 50,406.35

Less: Excise duty 6,245.81 4,641.57

Total 56,597.21 45,764.78

XX. OTHER INCOME

(a) Interest Income 3.20 2.49

(b) Dividend Income (From subsidiary company) 102.50 –

(c) Net gain/loss on sale of investments 6.62 90.55

(d) Net Foreign Exchange gain/(loss) 12.40 (3.51)

(e) Other non-operating income (Net of expenses ) 4.08 9.18

Total 128.80 98.71

73


XXI. RAW MATERIALS AND COMPONENTS CONSUMED

OPENING STOCK

Raw materials (A) 1,075.58 681.70

Purchase of raw materials

and components (B) 40,946.60 35,491.89

Total (C) (A) + (B) 42,022.18 36,173.59

CLOSING STOCK

Raw materials (D) 1,395.89 1,075.58

Consumption (C) - (D) 40,626.29 35,098.01

XXII. CHANGES IN INVENTORIES OF FINISHED GOODS,

WORK IN PROCESS AND STOCK IN TRADE

Opening Stock of Work in Process and Finished Goods

Work-in-process 234.11 276.16

Finished goods 1,071.29 322.89

Total 1,305.40 599.05

Less: Closing Stock of Work in Process and Finished Goods

Work-in-Process 220.11 234.11

Finished Goods 347.76 1,071.29

Total 567.87 1,305.40

Changes in Inventory 737.53 (706.35)

XXIII. EMPLOYEE BENEFIT EXPENSES

Salaries and wages 3,945.24 3,305.14

Contribution to Provident and other funds 167.23 129.06

Welfare expenses 755.16 587.82

Total 4,867.63 4,022.02

XXIV. FINANCE COST

Interest expense 849.23 954.39

Other borrowing costs 79.32 (36.37)

Total 928.55 918.02


For the period For the period

ended 31.03.2012 ended 31.03.2011

74


XXV. OTHER EXPENSES

Consumption of stores and spare parts 862.82 746.60

Power and fuel 806.62 717.56

Rent 27.88 95.57

Rates and taxes, excluding taxes on income 52.66 88.67

Repairs to buildings 190.02 126.04

Repairs to Plant and Equipment 658.38 513.35

Repairs to other assets 127.34 116.64

Insurance 63.59 69.19

Carriage outward 444.01 649.59

Packing charges 459.52 385.05

Other expenses 2,119.71 1,811.69

Audit fees - as auditors 12.00 10.00

- tax audit 1.50 1.50

- certification 0.50 0.50

- others services 1.68 1.55

- reimbursement of expenses 6.76 6.71

Total 5,834.99 5,340.21

XXVI. EXCEPTIONAL ITEMS

Profit on sale of Fixed assets 151.82 –

As at As at31.03.2012 31.03.2011

XXVII.MINORITY INTEREST

Share capital 984.80 984.80

Share premium 4,531.91 4,531.91

Total 5,516.71 5,516.71

Less: Loss up to the year 2010-11 (92.80) (92.80)

Profit for the year 2011-12 426.51 333.71

Total 5,850.42 5,423.91


For the period For the period

ended 31.03.2012 ended 31.03.2011

XXVIII. Accounting Standards, additional disclosures and notes on accounts

1. Consolidation of accounts

A. Basis of accounting

The financial statements are prepared under the historical cost convention and comply with theapplicable accounting standards issued by The Institute of Chartered Accountants of India andthe relevant provisions of the Companies Act, 1956.

B. Principles of consolidation

(i) Consolidated financial statements relate to Harita Seating Systems Limited, Chennai and itssubsidiary viz. Harita Fehrer Limited, Chennai.

75


XXVIII. Accounting Standards, additional disclosures and notes on accounts - (continued)

1. Consolidation of accounts - (continued)

(ii) Consolidated financial statements have been prepared on the following basis:

- the financial statements of the Company and its subsidiary have been prepared on a line

by line consolidation by adding the book values of the like items of assets and liabilities as

per the respective audited financial statements of the respective companies.

- the consolidated financial statements have been prepared using uniform accounting policies

for like transactions and other events in similar circumstances and are presented to the

extent possible, in the manner as the Company's individual financial statements.

- Intra - group transactions and resulting unrealised profits have been eliminated.

(iii) The details of subsidiary company considered in the consolidated financial statements are

furnished below:

a Name of the subsidiary companyHarita Fehrer Limited,

Chennai

b Country of incorporation India

c Proportion of ownership(interest / voting power - in %) 51

d Reporting date 31.03.2012

e Difference in reporting date Nil

C. Significant Accounting Policies - on consolidation:

Accounting Standards 1 to 30 (wherever applicable ) issued by the Institute of Chartered

Accountants of India have been duly considered while preparing the accounts of each company

and the same have been explained in detail in the notes on accounts of the respective companies.

These may be referred to. The statements made therein form part of the consolidated accounts.

Rs. in Lakhs

As at/Year ended As at/Year ended

31.03.2012 31.03.2011

2. Contingent liabilities not provided for

a) On counter guarantee furnished to Bank 1,703.74 1,627.15

b) On account of bill discounting 91.80 93.70

c) Customs duty under Export Promotion Capital Goods Scheme 189.13 189.13

d) Contracts remaining to be executed on Capital Account

and not provided for 100.47 –

e) On account of Import LC 514.52 45.76

f) VAT Input credit claimed beyond the prescribed period

as per Section 19(7) of the Tamil Nadu VAT Act 2006 7.95 7.95

3. Liability contested and not provided for

a) Income Tax 44.77 44.77

b) Service tax 290.25 228.51

c) Central Excise 269.51 238.00

d) Value Added Tax 120.73 100.35

e) Customer Claim 439.00 –

76


Accounting Standards, additional disclosures and notes on accounts - (continued)

Rs. in Lakhs

As at/Year ended As at/Year ended31.03.2012 31.03.20114. Sundry creditors include

a) Dues to small scale industrial undertakings 1,355.32 1,043.73

b) Dues of creditors other than small scale industrial undertaking 8,115.22 9,093.25

c) Information required under the Micro, Small and MediumEnterprises Development Act, 2006:

The Company has written to all suppliers to ascertain ifthey are covered by the said Act. No information has beenreceived.

However, the suppliers' credit terms are generally 45 dayswithin which all payments are made. Hence, the questionof payment of interest or provision thereof for belatedpayments does not arise.

5. Other expenses include

No individual expense is in excess of 1% of the Revenuefrom operations or Rs.1,00,000/- whichever is higher.

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

7. Last year's figures have been regrouped wherever necessaryto conform to this year's classification.

Related party disclosure:

LIST OF RELATED PARTIES

a) Key Management Personnel

For Harita Seating Systems Limited, Chennai : Mr. A.G. Giridharan - Manager cum President

For Harita Fehrer Limited, Chennai· : Mr. Rajesh Oommen - Manager

b) Fellow Associate : F.S. Fehrer Automotive GmbH, Germany

Related party transactions Rs. in Lakhs

Nature of transactionFor the Year ended For the Year ended

31.03.2012 31.03.2011

F.S. Fehrer Automotive GmbH, Germany

Equity contribution received during the year – 1,560.99

Purchases 93.97 178.26

Rendering of Services – 6.79

Receipt of Services 557.55 –

Payable 27.97 8.99


FRN: 004207S


77


Consolidated Cash Flow Statement for the year ended 31st March, 2012

Rs. in lakhs


31.03.2012 31.03.2011

A CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax and extra ordinary items 2,527.06 (336.56)

Add: Depreciation 1,355.70 1,528.06

Preliminary expenses 0.08 0.08

Interest Income (3.20) (2.49)

Profit/(loss) on sale of assets(net) (85.11) (0.65)

Finance Cost 928.55 2,196.02 918.02 2,443.02

Operating profit before working capital changes 4,723.08 2,106.46

Adjusted for:

Working Capital changes

Trade Payables (1,544.15) 9.63

Other Current Liabilities (2,889.46) 2,696.47

Short Term Provisions (387.64) 319.92

Long Term Loans and Advances 201.14 (201.22)

Current Investments 7.53 36.66

Inventories 212.32 (1,172.30)

Trade Receivables 266.46 (2,475.43)

Short Term Loans and Advances (2.34) 191.22

Other Non current assets 4.43 14.07

Other Current Assets (630.00) (4,761.71) 98.54 (482.44)

Cash generated from operations (38.63) 1,624.02

Less : Taxes paid (492.81) (323.59)

Net cash from operating activities - (A) (531.44) 1,300.43

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (2,229.76) (2,467.84)

Proceeds from sale of assets 1,374.56 887.74

Purchase of investments – (75.00)

Interest received 3.78 2.22

Net cash used in investing activities - (B) (851.42) (1,652.88)

78


Consolidated Cash Flow Statement for the year ended 31st March, 2012(continued)

Rs. in lakhs


31.03.2012 31.03.2011C CASH FLOW FROM FINANCING ACTIVITIES

Share Capital – 1,560.99

State subsidy 26.10 –

Long Term Borrowings (87.41) (639.82)

Long Term Provisions (70.64) (17.60)

Other Long term liabilities 0.51 –

Short Term Borrowings 1,073.46 1,749.12

Finance cost paid (935.59) (892.24)

Dividend paid (1.24) (1.54)

Net cash from financing activities - (C) 5.19 1,758.91

D. NET INCREASE / (DECREASE) IN CASH AND

CASH EQUIVALENTS (A)+(B)+(C) (1,377.67) 1,406.46

Cash and cash equivalents at the beginning of the year 2,046.61 640.15

Cash and cash equivalents at the end of the year 668.94 2,046.61

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

direct tax, 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


FRN: 004207S


(Rs. in lakhs)

S. No. Particulars Amount

Disclosure of Information relating to subsidiary viz., Harita Fehrer Limited, Chennai as required by the Central

Government under Section 212 (8) of the Companies Act, 1956

(Rs. in lakhs)

S. No. Particulars Amount

(a) Capital 2,009.80

(b) Reserves 9,881.22

(c) Total assets 19,556.33

(d) Total liabilities 19,556.33

(e) Details of investment 75.00

(f) Turnover including other income 29,473.63

(g) Profit before taxation 1,108.51

(h) Provision for taxation 4.50

(i) Profit after taxation 1,104.01

(j) Proposed dividend 200.98

Documents

HARITA SEATING SYSTEMS LIMITED Seating [email protected] [email protected] Contents Page No. Financial highlights 2 Notice to the shareholders 3 Directors’