Dear Shareholders,

FY 2017-18 marked a reversal in the performance of the Indian economy. Although the GDP growth declining to 6.7% in FY 2017-18, after clocking 7.1% in FY 2016-17, there was a distinct improvement in growth in the second half of the year. Q3 FY 2017-18 was characterised by signs of acceleration in the growth of corporate sales, a depleting finished goods inventories and a revival in corporate investments in fixed assets and an overall pick-up in the CAPEX cycle. In fact, it is a matter of pride that India has now claimed the position of the world's sixth largest economy. While the IMF projects that India will grow at 7.4% in FY 2019 and 7.8% in FY 2020, the World Bank expects growth to reach 7.3% in FY 2019 and accelerate to 7.5% in FY 2020. All these factors, when seen against the backdrop of two consecutive good monsoons indicate good demand for your Company's products within the country, coming years.

The global economy also delivered a strong growth of 3.7% for FY 2017, on the back of robust growth in emerging markets and developing economies alongside steady growth in advanced economies. This bodes well for your Company, as it implies robust economic activity in our export markets.

In this optimistic environment, your Company has put up a good performance in FY 2017-18. The gross turnover increased 18.29% from Rs. 434.37 Crores in FY 2016-17 to Rs. 513.84 Crores in FY 2017-18 due to higher offtake from both domestic OEMs and overseas customers. The gears business grew by 26.78% in FY 2017-18 from a figure of Rs. 359.22 Crores in FY 2016-17. The Company has achieved a net profit of Rs. 6.30 Crores for the year ended 31 March, 2018, after incurring a loss of Rs. 1.46 Crores for the year ended 31 March, 2017.

In light of positive sentiments in both domestic & global markets, your Company is confident of posting similar growth in topline in upcoming financial year. Investment initiatives are being drawn up to support this as well as maintain our position as the leader in gear technology in India.

As in the past, we have focused on improving our efficiency and quality through in-house retrofitting and rebuilding of our capital equipment. Where necessary, we have invested in fresh equipment and latest technology. We have moved ahead with our automation drive and robotic solutions initiative, both in terms of softline and hardline technology.

We continued with our customer feedback programme in the form of score cards which give us critical inputs for improvement. After analysing these, we reconsider our actions on delivery, quality and communication to achieve greater efficiency and accuracy in our products.

While we have focused on improvement of our machinery, we have laid great emphasis on enhancing the quality of our human resources too as we realise that it is a crucial input component. We have recruited and given on-thejob training to fresh employees. At the same time, we ensure that we hone the skill sets and knowledge of existing staff by updating their education suitably in various facets including technology, behavioral training, Communicative aspects, Six-Sigma training, etc.

We are committed to continue with our LEAN enterprise and operational excellence journey in the coming financial year. Towards this end, we plan to undertake various initiatives at strategic and ground level to achieve these objectives.

Before I conclude, I would like to thank our clients for their unstinted support. I would also like to convey my appreciation for the valuable advice provided by my colleagues on the Board and the management team; and for the steadfast dedication of all employees across various locations.

Last but not the least, I would like to thank our business associates, bankers and all stakeholders for the trust that they have reposed in Bharat Gears. We look forward to your continued support while we endeavor to take the momentum of growth ahead from efficiencies to acceleration.

Regards,


Surinder Paul Kanwar
Chairman & Managing Director