Dear Shareholders,

It gives me immense pleasure to connect with you through this 44th Annual Report of your Company. The Indian economy has once again demonstrated its inherent resilience with a healthy GDP growth of 7.6%. Weathering twin consecutive monsoon deficits, the Government has increased its focus towards rural economy in the Union Budget 2016. Impending structural reforms shall further strengthen the economy and augment the ease of doing business in India. An above average monsoon forecast backed by continued foreign investments can reinforce country's socio-economic growth.

Sharing a glimpse of our FY16 business, agricultural machinery segment constitutes 59% of the Company's revenue. A slowdown in global agricultural machinery industry including India curbed our top-line growth in FY16. However, during the year we have focused on improving our overall efficiencies at an organizational level. During the year, our gross revenue declined by 4% and stood at Rs. 433.31 crores. Our FY16 EBITDA improved notably by 33% and stood at Rs. 33.18 crores due to various cost saving initiatives. We ended FY16 with a net profit of Rs. 0.24 crores vis-a-vis loss of Rs. 4.21 crores in FY15. We continue to stay the course towards our journey of creating a sustainable organization via technology & design improvements, scale & efficiency optimization and customer & geography expansion.

We have shared our value engineering competence at an embryonic design stage which has won honour and prestige for our products amongst our global clientele. Investments towards technological advancements have begun yielding its fruits. We have developed in-house software solutions to optimize the various parameters of gears in bevel and transmission. We have developed state-of-the-art crown wheel and pinions for a variety of applications. We have a dedicated team of engineers to optimize gear profiles in bevel and transmission gears. Metallurgical parameters of all gears are regularly analyzed with a vision to improve the gear life at optimum cost. Technological collaboration with AFC- Holcroft appends innovation, quality and reliability to the Furnace division. While, the auto-components products are engineered to excellence, highest design and quality control.

Being one of the world leaders in gears and transmission technology, we are serving the finest gear and transmission technology to our clients. To have a complete transmission set-up is our long-term goal. Currently, most of the OEMs in India are developing in-house powertrains. But in developed countries, they outsource complete gearboxes to a specialist manufacturer. Unfortunately in India, OEM's prefer to follow the in sourcing route to keep a firm check on the vehicles' overall costs. We are confident of delivering a superior product at competitive rate. We aim to be a holistic transmission supplier in India as the market matures.

Overall cost competencies at our capacities have been optimized by implementation of LEAN manufacturing approach. Initiatives like TQM, Quality Circles, safety audit, Kaizen, machine health check up report, visual management, machine risk assessment audit has increased efficiency and enhanced savings at plant level.

We have consciously continued to maintain a long term strategy focusing exports. We have developed export-oriented quality products through our enhanced production process. Further, cordial customer relationships with prompt logistics and design stage collaboration with clients has further improved our export credentials. Make-in-India has propagated us to diversify into non- automotive segments with backward linkages along with our existing business. We have made a mark already in the agricultural vehicles segment. We are eyeing at the passenger car, defence industry and also intend to roll out hi-tech industrial gears after consolidating our existing operations. We also sense huge opportunities in aviation and aerospace industries.

We maintained our journey towards overall operational excellence in FY16 and continue to stay the course to meet our long term objective of being a full-fledged Tier-I auto-component manufacturer.

I would like to take this opportunity to express my gratitude to all the stakeholders for their firm belief in Bharat Gears Limited and also extend my gratefulness to our 'human capital' for their continual passion, dedication and valuable contribution.

Surinder P. Kanwar
Chairman & Managing Director