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Directors Report of Schaeffler India Ltd.

Dec 31, 2023

The Directors are pleased to present the 61^st Annual Report of the Company together with the audited financial statements (Standalone & Consolidated) of the Company for the year ended December 31, 2023.

Standalone Financial Highlights

(Rs. in Million)
Particulars	2023	2022
Net revenue	72,261	68,674
EBITDA¹	13,528	13,076
Less: Depreciation/Amortisation	2,191	2,065
Less: Finance cost	42	36
Add: Interest income	989	645
Profit before exceptional items and tax	12,284	11,620
(Less)/Add : Exceptional items	(47)	150
Provision for tax	3,147	2,978
Profit after tax	9,090	8,792
¹ Earnings before Interest, Tax, Depreciation and Amortisation.

Financial and Operational Performance

Performance of the Company and State of Companyâs Affairs

Your Companyâs Revenues was ''72,261 million in year 2023 (Year 2022: ''68,674 million) which is higher by 5.2%. Profit before tax (before exceptional items) was ''12,284 million (Year 2022: ''11,620 million) representing a growth of 5.7%. Your Company recorded profit after tax of ''9,090 million (Year 2022: ''8,792 million) which represent a growth of 3.4%.

Global Outlook

The year 2023 started with what appeared as bleak prospects for the global economy with expectations of recession in the developed world following the war created inflationary pressures and subsequent monetary tightening by the global central banks. While the political situation in the middle east and market upheavals in China should have further exacerbated the situation, the global economy remained comparatively strong and continued to surprise on upside. With reduced risk of recession, and the IMF expects the global economy to grow by 3.2% in 2024. Advanced economies are expected to see growth decline slightly in 2024 before rising in 2025, with a recovery in the euro area from low growth in 2023 and a moderation of growth in the United States. Emerging market and developing economies are expected to experience stable growth through 2024 and

2025, with regional differences. There is still room for more positive surprises in global economy, but caution remains on a few persistent risks. Potential challenges to global growth include sticky inflation, geopolitical uncertainties including the red sea crisis where freight and insurance premiums have gone up significantly and shipments volume has reduced could make the recovery sticky.

India Outlook

India continued its strong growth trajectory during the year. As per the advanced estimates released by NSO (National Statistical Organization) Indian economy is expected to grow by 7.3% for fiscal 2024. RBI also raised the growth estimate from the earlier 6.5% to 7% for the same period given the robustness observed in the industry sector.

Strong collections of goods and services taxes, increasing automobile sales, consumer confidence, and double-digit credit growth indicate that demand for urban consumption is still strong. Growing manufacturing and services PMIs contribute to the evidence of strong economic momentum on the supply side. Although private industrial capital spending has been sluggish, this is anticipated to change as a result of the continuous benefits of supply chain diversification and investor reaction to the governmentâs plan to support important manufacturing industries. An improving picture for private investment is seen as a result of increasing capacity utilization, strong loan growth, and positive sentiment.

Higher-than-anticipated commodity prices, adverse weather conditions and an increase in inflation, though not expected, are some of the factors which may impact Indiaâs momentum. However, despite these challenges,

India is expected remain among the fastest growing economies globally in the next decade attributed to key drivers of digitalization, decarbonization, demographics and deglobalization.

Share Capital Structure

There has been no increase/decrease in the Authorised Share Capital of your Company during the year under review.

Alteration of âCapital Clauseâ of Memorandum of Association

During the year under review, there was no alteration of âCapital Clauseâ of Memorandum of Association of the Company.

Material Changes and Commitments and Change in Nature of Business

There have been no material changes and commitments affecting the financial position of your Company from the end of the Financial Year 2023 up to the date of this report.

There has been no change in the nature of business of your Company.

Dividend and Transfer to Reserves

Your Company has a steady dividend payment history and considering the financial performance of the year 2023, your Directors recommend dividend for the year ended December 31, 2023 at the rate of ''26/- per share of face value ''2/-(2022:24/- dividend per share of face value ''2/-) per equity share amounting to ''4,063.9 million (2022: ''3,751.3 million). Considering sufficiency of balance, your Directors do not propose to transfer any amount to General Reserves for the year under review.

The details of the Dividend for the Financial Years 2023 and 2022 are as follows:

Dividend	2023	2022¹
Month and Year of Declaration	April 2024	April 2023
Amount of Dividend Per Equity Share of ''2 each (in '')	26	24
% of Dividend	1,300	1,200
Total Dividend (Amt. in '' million)	4,063.9	3,751.3

¹ Sub-division/Stock split of 1 (One) Equity Share of the Company of face value of ''10/- (Rupees Ten Only) each into 5 (Five) Equity Shares of the Company of face value of ''2/- (Rupees Two only) each.

Dividend Distribution Policy

The Dividend Distribution Policy also forms part of this Integrated Annual Report 2023.

Dividend Payout Ratio

To meet Shareholdersâ expectations and as a good governance practice, the Board of Directors of your Company has approved the target dividend payout ratio of 30% to 50% of the annual standalone profits after tax (PAT) as announced by the Company from time to time, subject to the applicable rules and regulations and amended the Dividend Distribution Policy accordingly.

Your Company has adopted a progressive Dividend Policy, intending to sustain or raise the dividend each year, in conjunction with the financial performance and free cash profit generation each year.

Corporate Governance

A separate section on Corporate Governance forms integral part of the Integrated Annual Report and a compliance certificate from M/s. Samdani Kabra & Associates, Company Secretaries, the Companyâs Secretarial Auditors confirming the compliance of conditions of Corporate Governance is annexed thereto.

Management Discussion and Analysis

Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ), detailed review of operations, performance and future outlook of the Company is covered under Management Discussion & Analysis section of the Annual Report.

Business Responsibility and Sustainability Report

BRSR is a performance-based disclosure on 9 (nine) defined principles of the âNational Guidelines on Responsible Business Conductâ, which are intended towards having quantitative and standardized disclosures on ESG parameters. It enables comparability across companies and sectors. This will enable the investors for better investment decision making. Also, companies are benefited by showcasing their ESG performance in more structured way.

The SEBI, vide its circular dated May 10, 2021, made Business Responsibility and Sustainability Report (BRSR) mandatory for the top 1,000 listed companies (by market capitalization) from FY2023. The Company has prepared Business Responsibility and Sustainability Report (BRSR) for FY2023 in accordance with the format as prescribed in the SEBI Circular. The Company would also like to report that your Company has voluntarily published the BRSR, including leadership indicators in the Integrated Annual Report 2022.

Board of DirectorsBoardâs Composition and Independence

Board Composition

Your Companyâs Board consists of leaders and visionaries who provide strategic direction and guidance to the Company.

As on December 31, 2023, the Board comprised of 2 (Two) Executive Directors, 4 (Four) Non-Executive Independent Directors and 3 (Three) Non-Executive Non-Independent

Directors. As on the date of this Report, your Company has 7 (Seven) Non-Executive Directors out of which 4 (Four) are Independent Directors. Pursuant to the provision of Regulation 17(1)(a) of the SEBI Listing Regulations, the Board of Directors of the top 1,000 listed entities are required to have at least one Independent Woman Director. The Company has 3 (Three) Women Directors comprising of 2 (Two) Independent Women Directors and 1 (One) NonExecutive Non- Independent Woman Director. Further, as per the Regulation 17(1)(b) of the SEBI Listing Regulations, every listed company is required to have at least one-third of its total strength of the Board of Directors as Independent Directors where Chairperson is a Non-Executive Director. Your Company complies with these requirements.

Independent Directorsâ Declaration

All Independent Directors have affirmed compliance to the code of conduct for Independent Directors as prescribed in Schedule IV to the Companies Act, 2013. List of key skills, expertise and core competencies of the Board forms part of this Integrated Annual Report.

Based on the declarations received from the Independent Directors, your Board of Directors confirm the independence, integrity, expertise and experience (including the proficiency) of the Independent Directors of the Company.

As per regulatory requirements, all the Independent Directors have registered their names in the Independent Directorsâ Databank, pursuant to provisions of the Companies Act, 2013 and rules made thereunder. Further, they are exempted from the requirement of passing the online proficiency self- assessment test.

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013, Dharmesh Arora [DIN: 05350121] will retire by rotation at the ensuing Annual General Meeting (âAGMâ) and being eligible offer himself for reappointment. Dharmesh Arora has confirmed his eligibility and willingness to accept the office of the Director of your Company, if confirmed by the Members at the ensuing AGM. In the opinion of your Directors, Dharmesh Arora possess requisite qualifications and experience and therefore, your Directors recommend that the proposed resolution relating to the re-appointment of Dharmesh Arora be passed with the requisite majority.

During the year under report, the Members of your Company in 60^th Annual General Meeting confirmed the appointment/ re-appointment as follows:

a. Re-appointment of Corinna Schittenhelm [DIN: 09257159] as a Non-Executive Non-Independent Director.

b. Re-appointment of Andreas Schick [DIN: 09257160] as a Non-Executive Non- Independent Director.

There is no inter-se relationship between the Directors.

In terms of the SEBI Listing Regulations, your Company conducts the Familiarisation Program for Independent Directors about their roles, rights and responsibilities in your Company, nature of the industry in which your Company operates, business model of your Company etc., through various initiatives. The details of the same can be found at https://www.schaeffler.co.in/en/investor-relations/ corporate-governance/independent-directors/.

Key Managerial Personnel (KMP)

Pursuant to provisions of Sections 2(51) and 203 of Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following persons are acting as Key Managerial Personnel (KMP) of the Company:

1. Managing Director & Chief Executive Officer:

Harsha Kadam

2. Director-Finance & Chief Financial Officer: Hardevi Vazirani (Appointed as Whole-time Director, designated as Director-Finance) for a period of five years with effect from February 13, 2024 and Chief Financial Officer of the Company.

¹ Satish Patel superannuated on February 12, 2024, and ceased to be the Director-Finance & CFO of the Company after the business hours of February 12, 2024.

3. Company Secretary: Ashish Tiwari

Pursuant to Rule 8(5)(iii) of the Companies (Accounts) Rules, 2014, no change occurred in KMP during the year ended December 31, 2023.

Meetings of Board of Directors

During the year under review, 6 (Six) meetings of the Board of Directors were held in compliance with the Companies Act, 2013 and SEBI Listing Regulations on -

Sr. No.	Quarter ended	Date of Meeting
1.	December 2022	February 16, 2023
2.	March 2023	April 18, 2023
3.	June 2023	July 7, 2023, July 26, 2023 & August 28, 2023
4.	September 2023	October 27, 2023

The details of attendance of each Director at these meetings are provided in the Corporate Governance Report.

Policy on Nomination and Remuneration

The Companyâs Policy on Nomination and Remuneration of Directors and Senior Management is framed with the objectives as under:

1. To formulate criteria and advise the Board in matters of determining qualifications, competencies, positive attributes and independence of Directors and policies relating to their appointment and removal;

2. To review corporate goals and objectives, to set norms of performance evaluation and to lay out remuneration principles for Directors, KMP and Senior Management linked to their effort, performance and contribution towards achievement of organisational goals;

3. To evaluate performance and give recommendations to the Board on succession planning and remuneration payable to the Directors, KMP, Senior Management, and critical direct reportees to Senior Management as may be determined from time to time and

4. To review and recommend to the Board measures to retain and motivate talent including KMP and Senior Management Personnel with a view to ensuring long term sustainability and competitiveness of the organization.

In addition to above, the Nomination and Remuneration Committee (NRC) may take up any other matters related to talent management in general upon the advice of the Board.

Nomination and Appointment of Directors and Senior Management Criteria and Qualification

A person to be appointed as Director, KMP or at Senior Management level should possess adequate relevant qualification, expertise and experience for the position that he/she is being considered. The NRC evaluates whether qualification, expertise and experience possessed by a person is sufficient/satisfactory for the concerned position and makes appropriate recommendations to the Board of Directors. The Board independently evaluates the candidate, and if found suitable confirms the appointment.

Policy on Remuneration

the limits specified under the Companies Act, 2013 read with the Rules thereunder and as approved by the Shareholders of the Company.

2. None of the Directors (including Independent Directors) shall be entitled to any stock option of the Company.

3. The remuneration to be paid to KMP and Senior Management is recommended by NRC to the Board for its approval.

The Nomination and Remuneration Policy of the Company is disclosed on the website at https://www.schaeffler.co.in/ en/investor-relations/corporate-governance/codes-and-policies/.

Formal Annual Performance Evaluation

Your Company believes that systematic performance evaluation of the Board, Committees, and the Directors contributes significantly to improve performance at 3 (Three) levels; Organisational, Board and Individual Board Member.

The Annual Performance Evaluation encourages the leadership, teamwork, accountability, decision-making, communication and efficiency of the Board. It also ensures teamwork by creating better understanding of Board dynamics & Board-management.

Methodology

The evaluation is done as per the process and criteria of annual performance evaluation recommended by the NRC and approved by the Board of Directors. Separate evaluation questionnaire for each category of evaluation viz. the Board, Committees of the Board and Directors (including Executive Directors, Non-Executive Non-Independent Directors and Non-Executive Independent Directors) have been prepared as per the process and criteria approved by the Board.

Process

Separate sets of questions (questionnaire) for each of the evaluations i.e., for evaluation of (a) Board; (b) Each of the Committees of the Board; (c) Independent Director; (d) NonIndependent Director and (e) Chairperson of the Board, are defined in the Policy for Annual Performance Evaluation.

The questionnaire for each category of evaluation is circulated to all the Directors. Each question has four rating options i.e., 1 to 4. 1 denotes âNeed Improvementâ, 2: âFairâ,

3: âGoodâ and 4: âExcellentâ.

The ratings of every question are averaged (âaveraged ratingsâ) based on feedbacks received from the Directors. Further, average of all âaveraged ratingsâ are considered

Amit Kalyani, Eranti V. Sumithasri, Andreas Schick and Satish Patel. The Committee met 6 (Six) times during the year. The terms of reference of the Audit Committee, details of meetings held during the year and attendance of members are disclosed in the Report on Corporate Governance. As on the date of this report, Satish Patel superannuated effective from February 12, 2024 and ceased to be the member of Audit Committee. Hardevi Vazirani was appointed as Director-Finance and CFO and was also inducted as a Member of the Audit Committee effective from February 13, 2024.

There was no instance where the recommendation by the Committee was not accepted by the Board.

Whistle-Blower Policy/Vigil Mechanism

Your Company has a well-defined âWhistle-Blower Policyâ and established vigil mechanism to provide for adequate safeguard against victimisation of Directors and employees who use the mechanism. The mechanism also provides for direct access to the Chairperson of Audit Committee in appropriate cases.

The Whistle-Blower/Vigil Mechanism Policy can be accessed on the Companyâs Website at https://www.schaeffler.co.in/ en/investor-relations/corporate-governance/codes-and-policies/.

Risk Management

Your Company has established comprehensive Risk Management System to ensure that risks to the Companyâs continued existence as a going concern and to its development are identified and addressed on timely basis. Report on Risk Management forms an integral part of this Annual Report.

Risk Management Committee

As on December 31, 2023, the Risk Management Committee comprises of 5 (Five) Directors and 2 (Two) Senior Management employees of the Company. Dharmesh Arora is the Chairperson of the Committee. The other members of the Committee were Eranti V. Sumithasri, Andreas Schick, Harsha Kadam, Satish Patel, Sameer Mathur (Chief Operating Officer) and Santanu Ghoshal (Head of Human Resources).

As on the date of this report, Satish Patel superannuated effective from February 12, 2024 and ceased to be the member of Risk Management Committee. Hardevi Vazirani was appointed as Director-Finance and CFO and was also inducted as a Member of the Risk Management Committee effective from February 13, 2024. Further, Mr. Jens Schuler was appointed as Non Executive Non Independent Director effective from January 1, 2024, and was also inducted as a Member of the Risk Management Committee effective from January 29, 2024.

as the rating for a particular questionnaire. Based on the outcomes of questionnaire, the NRC carries out evaluation of all the Directors including Independent Directors and the Board carries out the evaluation of its own performance, each of the Committees and that of all Directors.

For the year 2023, the Board has carried out an annual performance evaluation of its own and that of each of the Committees and all Directors including the Chairperson of the Company. The NRC has also carried out evaluation of all the Directors including Independent Directors.

Qualitative comments received during the Board evaluation were as follows:

â¢ Corporate governance emphasis was discussed and appreciated.

â¢ The role played by India management team and majority shareholders was well appreciated.

â¢ Directors are keen to guide and monitor growth of KRSV Innovative Auto Solutions Private Limited.

â¢ Identity of Schaeffler India is evolving over time. The Board and its contribution over the years has also transformed significantly.

â¢ The management team of Schaeffler India was appreciated.

â¢ High ROCE of Schaeffler India share price was noted.

â¢ Company presence in IC and EV segments was well appreciated.

Conclusion

The evaluation for the year 2023 of Directors, each of the Committees and that of the Board have received ratings near excellent. The Board has taken note of the feedback received from Directors to further improve the performance of the Directors, the Board itself and Committees of the Board. NRC expressed its satisfaction to the overall process of annual performance evaluation.

Meeting of Independent Directors

As per provisions of Schedule IV to the Companies Act, 2013, the Independent Directors are required to hold at least one meeting in a financial year, without the attendance of Nonindependent Directors and members of management.

During the financial year 2023, the Independent Directors have held one separate meeting on October 27, 2023.

Audit Committee

As on December 31, 2023, the Audit Committee consists of 6 (Six) Directors including 4 (Four) Independent Directors. Renu Challu is the Chairperson of the Committee. The other members of the Audit Committee were Arvind Balaji,

AuditorsStatutory Auditors

The Statutory Auditors, M/s. Walker Chandiok & Co.

LLP, Chartered Accountants, (Firm Registration Number: 001076N/ N500013) were appointed as Statutory Auditors of the Company at the 58^th Annual General Meeting (âAGMâ) of the Company held on April 27, 2021 for a period of 5 (Five) consecutive years from the conclusion of the 58^th AGM till the conclusion of the 63^rd AGM of the Company.

The Audit Committee annually reviews and monitors the performance, independence of the Statutory Auditors and effectiveness of the audit process.

There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their Report.

The observations made in the Auditorâs Report, read together with relevant notes thereon, are self-explanatory and hence do not call for any comments.

Reporting of Fraud

The Auditor of the Company have not reported any instances of fraud against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013

Secretarial Auditors

M/s. Samdani Kabra & Associates, a firm of Company Secretaries in Practice was appointed as âSecretarial Auditorsâ to carry out Secretarial Audit of the Company.

In terms of provisions of Section 204 of the Companies Act, 2013, and in terms of regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015 read with SEBIâs circular CIR/CFD/CMD1/27/2019 dated February 8, 2019, a Secretarial Audit Report has been annexed to this Report. (Annexure - A)

There is no qualification, reservation, adverse remark or disclaimer by the Secretarial Auditors in their Secretarial Audit Report.

Cost Records and Cost Audit Maintenance of Cost Records

The Company is required to maintain cost records under Companies (Cost Records and Audit) Rules, 2014. Accordingly, cost records have been maintained by the Company.

Cost Audit

M/s. Y. S. Thakar & Co., Cost Accountants, as Cost Auditors were appointed to conduct the audit of the cost records of the Company for the financial year ended December 31, 2023. Based upon the declaration on their eligibility,

consent and terms of engagement, your Directors have reappointed M/s. Y. S. Thakar & Co., Cost Accountants to conduct Audit of Cost records for the financial year 2024.

As required under the provisions of the Companies Act,

2013, the remuneration of Cost Auditors as approved by the Board of Directors is subject to ratification by the Shareholders at the ensuing Annual General Meeting.

Corporate Social Responsibility (CSR)

Being a responsible Corporate Citizen, your Company is committed in fulfilling its social responsibilities. Guided by the prevailing regulatory requirements, the Company has constituted a âCorporate Social Responsibility (CSR) Committeeâ and framed a Policy on CSR. The policy is available on the website of the Company at https:// www.schaeffler.co.in/en/investor-relations/corporate-governance/codes-and-policies/.

Your Companyâs CSR expenditure was '' 160.2 million i.e.

2% of the Average Net Profits of your Company made during three immediately preceding financial years. A summary of CSR Policy together with details of CSR activities undertaken by the Company during the year 2023 have been covered in the Annual Report on CSR activities, which is annexed to this Report. (Annexure - B)

Contracts and Arrangements with Related Parties

During the year, all the transactions with the Related Parties have been carried out the in normal course of business and based upon well set principles of armâs length.

Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. The details of all transactions executed with Related Parties are placed before the Audit Committee on a quarterly basis for its review or ratification as the case may be and are also placed before the Board for its information.

The Related Party Transaction Policy of the Company is available on the website of the Company at https:// www.schaeffler.co.in/en/investor-relations/corporate-governance/codes-and-policies/.

A separate Report containing details of Material Related Party Transactions carried out during the year is annexed to this Report in prescribed form AOC-2. (Annexure - C)

Particulars of Employees and Related Disclosures

The disclosures pertaining to remuneration and other details of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of

Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been annexed to this report. (Annexure - D)

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 have been annexed to this report. (Annexure - E)

Annual Return

As per provisions of Section 92(3) of the Companies Act, 2013, a copy of draft Annual Return of the Company for the financial year 2023 in the prescribed form MGT-7 has been placed on the website of the Company at https:// www.schaeffler.co.in/en/investor-relations/shareholders-information/annual-return/.

Particulars of Loans, Investments, Guarantees and Securities

The particulars of loans and investments have been disclosed in notes to the Financial Statements. The Company did not give any guarantee or provide any security in connection with any loan. During the year the Company acquired 100% shareholding of KRSV Innovative Auto Solutions Private Limited (âKooversâ) and acquisition transaction has been completed on September 8, 2023.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has in place a Policy against Sexual Harassment of Women at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company at https:// www.schaeffler.co.in/en/investor-relations/corporate-governance/codes-and-policies/.

Internal Complaints Committee (ICC) is in place to redress complaints received regarding sexual harassment. The Company is committed to provide protection against sexual harassment of women at workplace (including employee or any other women visiting worksite for any other purpose).

Status of complaints during the year 2023

There was 1 (One) complaint pending at the beginning of the year 2023, which was resolved in January 2023. The Company received 1 (One) complaint during the year 2023, which is under investigation.

Directorsâ Responsibility Statement

Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state that:

(a) In preparation of the annual accounts, the applicable Indian Accounting Standards (Ind AS) have been followed and there are no material departures from the same;

(b) The accounting policies have been selected and these have been applied consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at December 31, 2023 and of the profit of the Company for that period;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) Annual accounts of the Company have been prepared on a âgoing concernâ basis;

(e) Internal Financial Controls have been laid down and being followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

(f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and were operating effectively.

Adequacy of Internal Financial Controls

The Board of your Company has laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and operating effectively. The Risk Management framework recognizes the Internal Financial Controls as an integral part of its framework and has policies and procedures for addressing the financial reporting risks and ensures orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

Based on the framework of Internal Financial Controls and Compliance Systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial auditors and external consultants and the reviews performed by management and the Audit

Committee, the Board is of the opinion that during the financial year ended December 31, 2023 had sound Internal Financial Controls.

These controls placed by the Company commensurate with the nature and size of the business operations and are adequate and operating effectively with no material weakness.

The key Internal Financial Controls and compliance systems have been documented, automated wherever possible and embedded in the respective business processes.

Compliance of Secretarial Standards

Your Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

Investor Education and Protection Fund (IEPF)

Pursuant to the applicable provisions of the Act, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe Rulesâ) as amended, all unpaid or unclaimed dividends which were required to be transferred by the Company to the IEPF were transferred to IEPF Authority.

The Company has also transferred Shares in respect of which dividend amount remained unpaid/unclaimed for a consecutive period of 7 (Seven) years or more to IEPF Authority within stipulated time.

The details of unpaid/unclaimed dividend and the Shares transferred to IEPF Authority are available on the Companyâs website at https://www.schaeffler.co.in/en/investor-relations/shareholders-information/unclaimed-unpaid-dividend/.

Deposit

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Subsidiaries, Joint Ventures and Associates

During the year the Company acquired 100% shareholding of KRSV Innovative Auto Solutions Private Limited (âKooversâ) and the acquisition transaction has been completed on September 8, 2023.

The Company does not have any other Joint Venture or Associate Companies as defined in the Companies Act, 2013.

Orders Passed by the Regulators or the Courts or the Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations.

Acknowledgements

Your Directors express their gratitude for the continued cooperation and support extended by Schaeffler Group, all the Shareholders, Customers, Suppliers, Distributors, Bankers and all Stakeholders. Your Directors also place on record their appreciation for the employees for their dedication, hard work and efforts.

Dec 31, 2022

Your Directors are pleased to present the 60^th Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2022.

Financial Highlights Particulars	2022	('' in million) 2021
Net revenue	68,674	55,605
EBITDA ¹	13,076	9,950
Less: Depreciation/Amortisation	2,065	1,971
Less: Finance cost	36	37
Add: Interest income	645	489
Profit before exceptional items and tax	11,620	8,431
Add : Exceptional items	150
Provision for tax	2,978	2,140
Profit after tax	8,792	6,291
¹ Earnings before Interest, Tax, Depreciation and Amortisation

Financial and Operational Performance

Performance of the Company and State of Companyâs Affairs

Your Companyâs Revenues was ''68,674.2 million in year 2022 (Year 2021: ''55,605.1 million) which is higher by 23.5%.

Profit before tax (before exceptional items) was placed at ''11,620.6 million (Year 2021: ''8,431.4 million) representing a growth of 37.8%. Your Company recorded profit after tax of ''8,792.1 million (Year 2021: ''6,291.2 million) which represent a growth of 39.8%.

Global Outlook

The year 2022 began with cautious optimism, as pandemic-related restrictions were lifted globally and economic activities showed signs of gradual recovery. However, the escalation of the Russia-Ukraine conflict resulted in a sharp increase in commodity prices, exacerbating the already surging global inflation. China''s Zero-COVID Policy led to frequent lockdowns, low demand, and supply chain disruptions in Asia.

The IMF predicts a moderation in global growth to 2.7% in CY23, while global inflation is expected to rise to 8.8% in CY22, before declining to 6.5% in CY23 and to 4.1% by CY24. To restore price stability, monetary policy should remain consistent, while fiscal policy should aim to mitigate the cost-of-living pressures while maintaining a sufficiently tight stance in alignment with monetary policy. Structural reforms can further aid in the fight against inflation by boosting productivity and easing supply constraints. Additionally, multilateral cooperation is essential for accelerating the transition to green energy and preventing fragmentation.

India Outlook

The Indian economy has demonstrated remarkable resilience and is poised to grow by 7% in FY23, despite ongoing global challenges resulting from external factors such as post-pandemic spillovers, supply chain disruptions caused by the Russia-Ukraine conflict, and potential recessionary pressures facing developed economies. India continues to maintain its position as the world''s fastest-growing economy and is now the fifth-largest economy globally, with strong population growth and gradual reform progress expected to drive GDP growth to an average of 6.8% during FY24. This growth can be attributed to key drivers such as digitalisation, decarbonisation, demographics, and deglobalisation.

However, several factors may impact Indiaâs sustained momentum, including inflation challenges, aggressively tight monetary policies, and policy matters that are crucial in effectively accelerating the growth curve. Nonetheless, Indiaâs remarkable progress and potential for continued growth make it an attractive destination for investors and a significant player in the global economy.

Share Capital Structure

There has been no increase/decrease in the Authorised Share Capital of your Company during the year under review.

To encourage wider participation of investors and improve the liquidity of the Equity Shares in the stock market, the Board of Directors and the Shareholders of the Company approved the Sub-division/Stock split of 1 (One) Equity Share of face value of ''10/- (Rupees Ten Only) each in to 5 (Five) Equity Shares of face value of ''2/- (Rupees Two only) each with effect from the record date (February 9, 2022).

Alteration of âCapital Clauseâ of Memorandum of Association

Pursuant to the Sub- division/Stock split of face value of equity shares of your Company, as mentioned above, the Capital Clause of the Memorandum of Association of the Company was altered and substituted with a new Clause V to reflect the corresponding changes in the Authorised Share Capital.

Material Changes and Commitments and Change in Nature of Business

There have been no material changes and commitments affecting the financial position of your Company from the end of the Financial Year 2022 up to the date of this report.

There has been no change in the nature of business of your Company.

Dividend and Transfer to Reserves

Your Company has a steady dividend payment history and considering the financial performance of the year 2022, your Directors recommend dividend for the year ended December 31, 2022 at the rate of ''24/- per share of ''2/- (2021: ''16/-dividend per share of ''2/-) per equity share amounting to ''3,751.3 million (2021: ''2,500.8 million). Considering sufficiency of balance, your Directors do not propose to transfer any amount to General Reserves for the year under review.

The details of the Dividend for the Financial Years 2022 and 2021 are as follows:

Dividend	2022	2021
Month and Year of Declaration	April 2023	April 2022
Amount of Dividend Per Equity Share of ''2 each (in '' ¹	24	16
% of Dividend	1,200	800
Total Dividend (Amt. in '' million)	3,751.3	2,500.8
¹ Sub-division/Stock split of 1 (One) Equity Share of the Company of face value of ''10/- (Rupees Ten Only) each into 5 (Five) Equity Shares of the Company of
face value of ''2/- (Rupees Two only) each.

Dividend Distribution Policy

Your Company has adopted the Dividend Distribution Policy to determine the distribution of dividends in accordance with the provisions of applicable laws and has been uploaded on the website at https://www.schaeffler.co.in/ remotemedien/media/ shared'' media rwd/03 worldwide 1/ websites worldwide/india 3/investor relations/corporate governance 1/codes and policies/Annexure 8b Dividend Distribution Policv.pdf.

The Dividend Distribution Policy also forms part of this Annual Report 2022.

Dividend Payout Ratio

Your Company has adopted a progressive Dividend Policy, intending to sustain or raise the dividend each year, in conjunction with the financial performance and free cash profit generation each year.

Corporate Governance

A separate section on Corporate Governance forms integral part of the Annual Report and a compliance certificate from M/s. Samdani Kabra & Associates, Company Secretaries, the Companyâs Secretarial Auditors confirming the compliance of conditions of Corporate Governance is annexed thereto.

Management Discussion and Analysis

Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing

Regulationsâ), detailed review of operations, performance and future outlook of the Company is covered under Management Discussion & Analysis section of the Annual Report.

Business Responsibility Sustainability Report

The Securities and Exchange Board of India (SEBI), through a notification dated May 5, 2021, made certain amendments to the Listing Regulations. One of the key changes is the requirement to submit a Business Responsibility and Sustainability Report (BRSR) instead of the existing Business Responsibility Report. The BRSR disclosure requirements are based on the National Guidelines on responsible business conduct principles, which are divided into two parts: essential Indicators (mandatory reporting) and leadership Indicators (voluntary reporting).

In an effort to improve our governance disclosure and meet stakeholder expectations, your company has decided to voluntarily publish the BRSR, including leadership indicators to the extent available, from CY22. The report is included in this year''s Integrated Annual Report.

Board of Directors

Boardâs Composition and Independence Board Composition

Your Companyâs Board consists of leaders and visionaries who provide strategic direction and guidance to the Company. As on December 31, 2022, the Board comprised of 2 (Two) Executive Directors, 5 (Five) Non-Executive Independent Directors and 3 (Three) Non-Executive Non-Independent Directors. At present, your Company has 7 (Seven) Non-Executive Directors out of which 4 (Four) are Independent Directors. Pursuant to the provision of Regulation 17(1)(a) of the SEBI Listing Regulations, the Board of Directors of the top 1,000 listed entities are required to have at least one Independent Woman Director. The Company has 3 (Three) Women Directors comprising of 2 (Two) Independent Women Directors and 1 (One) Non-Executive NonIndependent Woman Director. Further, as per the Regulation 17(1)(b) of the SEBI Listing Regulations, every listed company is required to have at least one-third of its total strength of the Board of Directors as Independent Directors where Chairperson is a Non-Executive Director. Your Company complies with these requirements.

Independent Directorsâ Declaration

Definition of âIndependenceâ of Directors is derived from Regulation 16 of the SEBI Listing Regulations and Section 149(6) of the Companies Act, 2013. The Company has received necessary declarations under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI Listing Regulations, from the Independent Directors stating that they meet the prescribed criteria for independence. All Independent Directors have affirmed compliance to the code of conduct for Independent Directors as prescribed in Schedule IV to the Companies Act, 2013. List of key skills, expertise and core competencies of the Board forms part of this Annual Report.

As per regulatory requirements, all the Independent Directors have registered their names in the Independent Directorsâ Databank, pursuant to provisions of the Companies Act,

2013 and rules made thereunder. Further, they are exempted from the requirement of passing the online proficiency selfassessment test.

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013, Ms. Corinna Schittenhelm [DIN: 09257159] and Mr. Andreas Schick [DIN: 09257160] will retire by rotation at the ensuing Annual General Meeting (âAGMâ) and being eligible offer themselves for reappointment.

Ms. Schittenhelm and Mr. Schick have confirmed their eligibility and willingness to accept the office of the Director of your Company, if confirmed by the Members at the ensuing AGM. In the opinion of your Directors, Ms. Schittenhelm and Mr. Schick possess requisite qualifications and experience and therefore, your Directors recommend that the proposed resolutions relating to the re-appointment of Ms. Schittenhelm and Mr. Schick be passed with the requisite majority.

During the year under report, the Members of your Company in 59^th Annual General Meeting confirmed the appointment/ re-appointment as follows:

a. Confirmation of appointment of Ms. Corinna Schittenhelm [DIN: 09257159] as a Non-Executive Non-Independent Director.

b. Confirmation of appointment of Mr. Andreas Schick [DIN: 09257160] as a Non-Executive NonIndependent Director.

c. Reappointment of Mr. Satish Patel [DIN: 00690869], who was liable to retire by rotation and being eligible had offered himself for re-appointment.

d. Reappointment of Mr. Dharmesh Arora [DIN: 05350121], who was liable to retire by rotation and being eligible had offered himself for re-appointment.

A brief resume of the Directors seeking appointment or reappointment at the ensuing Annual General Meeting, nature of their expertise in specific functional areas and details regarding the companies in which they hold Directorship, Membership/Chairmanship of Committees of the Board is annexed to the Notice convening 60^th Annual General Meeting of the Company.

There is no inter-se relationship between the Directors.

In terms of the SEBI Listing Regulations, your Company conducts the Familiarisation Program for Independent Directors about their roles, rights and responsibilities in your Company, nature of the industry in which your Company operates, business model of your Company etc., through various initiatives. The details of the same can be found at https://www.schaeffler.co.in/remotemedien/media/ shared media rwd/03 worldwide 1/websites worldwide/india 3/ investor relations/corporate governance 1/Familiarisation Programs-2022.pdf.

Key Managerial Personnel (KMP)

1. Managing Director & Chief Executive Officer:

Mr. Harsha Kadam

2. Director-Finance & Chief Financial Officer:

Mr. Satish Patel

3. Company Secretary: Mr. Ashish Tiwari

Pursuant to Rule 8(5)(iii) of the Companies (Accounts) Rules, 2014, no change occurred in KMP during the year ended December 31, 2022.

Meetings of Board of Directors

During the year under review, 5 (Five) meetings of the Board of Directors were held in compliance with the Companies Act, 2013 and SEBI Listing Regulations on -

Sr. No.	Quarter ended	Date of Meeting
1.	December 2021	February 16, 2022
2.	March 2022	April 26, 2022, May 23, 2022
3.	June 2022	July 27, 2022
4.	September 2022	October 18, 2022

The details of attendance of each Director at these meetings are provided in the Corporate Governance Report.

Policy on Nomination and Remuneration

The Companyâs Policy on Nomination and Remuneration is framed with the objectives as under:

3. To evaluate performance and give recommendations to the Board on remuneration payable to the Directors, KMP and Senior Management; and

4. To review and recommend to the Board measures to retain and motivate talent including KMP and Senior Management Personnel with a view to ensuring long-term sustainability and competitiveness of the organisation.

In addition to above, the Nomination and Remuneration Committee (NRC) may take up any other matters related to talent management in general upon the advice of the Board.

Nomination and Appointment of Directors and Senior Management Criteria and Qualification

For appointment of new Director/Senior Managerial Personnel, a detailed profile of the candidate is being circulated to NRC and Board for discussion and deliberation. The Board independently evaluates the candidate, and if found suitable confirms the appointment.

Policy on Remuneration

1. The remuneration (including revisions) of Directors is recommended by NRC to the Board for its approval. The remuneration (including revisions) of the Directors, so recommended by NRC to the Board, should be within the limits specified under the Companies Act, 2013 read with the Rules thereunder and as approved by the Shareholders of the Company.

2. None of the Directors (including Independent Directors) shall be entitled to any stock option of the Company.

3. The remuneration to be paid to KMP and Senior Management is recommended by NRC to the Board for its approval.

The Nomination and Remuneration Policy of the Company is disclosed on the website at https://www.schaeffler.co.in/ remotemedien/media/ shared'' media rwd/03 worldwide 1/ websites worldwide/india 3/investor relations/corporate governance 1/codes and policies/nomination and remuneration policy schaeffler india.pdf.

Formal Annual Performance Evaluation

Your Company believes that systematic evaluation contributes significantly to improved performance at 3 (Three) levels; Organisational, Board and Individual Board Member.

It encourages the leadership, teamwork, accountability, decision-making, communication and efficiency of the Board. Evaluation also ensures teamwork by creating better understanding of Board dynamics, Board-management relations and thinking as a group within the Board.

Methodology

Process

Separate sets of questions (questionnaire) for each of the evaluations i.e., for evaluation of (a) Board; (b) Each of the Committees of the Board; (c) Independent Director;

(d) Non-Independent Director and (e) Chairman of the Board, are defined in the Policy for Annual Performance Evaluation.

The questionnaire for each category of evaluation is circulated to all the Directors. Each question has four rating options i.e.,

1 to 4. 1 denotes âNeed Improvementâ, 2: âFairâ, 3: âGoodâ and 4: âExcellentâ.

The ratings of every question are averaged (âaveraged ratingsâ) based on feedbacks received from Director. Further, average of all âaveraged ratingsâ are considered as the rating for a particular questionnaire. Based on the outcomes of questionnaire, the NRC carries out evaluation of all the Directors including Independent Directors and the Board carries out the evaluation of its own performance, each of the Committees and that of all Directors.

For the year 2022, the Board has carried out an annual performance evaluation of its own and that of each of the Committees and all Directors including the Chairman of the Company. The NRC has also carried out evaluation of all the Directors including Independent Directors.

Qualitative comments received during the Board evaluation were as follows:

â¢ The composition of Board of Directors provides for the right level of experience and expertise to guide the management team.

â¢ The visit of Board of Directors of the Company to Schaeffler HQ, Germany in 2022 and information shared during the said visit is highly appreciated and add value to performing ID roles.

â¢ Audit Committee (AC) - Audit Committee comprise of highly qualified and competent Members. The meetings are well structured & conducted. Kudos to Chairperson. There should be five AC meetings in a year. The special meeting - focusing on RPT, Internal audits and regulatory updates - be continued in the future as well.

â¢ Stakeholders Relationship Committee (SRC) - SRC appreciates the efforts of the Secretarial team to ensure shareholdersâ satisfaction, minimum complaints particularly during the split exercise.

â¢ Risk Management Committee (RMC) - RMC is very diverse, comprised of very competent Members including those from the Company management. Kudos to Chairman for bringing the RMC to a benchmark level. His deep involvement is commendable. RMC should also review opportunities

and not only risks. All the Committee Members should contribute to discussions and constructively.

â¢ Independent Directors highly appreciates the time Mr. Klaus Rosenfeld, the CEO of the Schaeffler Group, spends in briefing the Board of Directors of the Company about Schaeffler Group in the frank and transparent manner.

Conclusion

The evaluation for the year 2022 of Directors, each of the Committees and that of the Board have received ratings near excellent. The Board has taken note of the feedback received from Directors to further improve the performance of the Directors, the Board itself and Committees of the Board. NRC expressed its satisfaction to the overall process of annual performance evaluation.

Meeting of Independent Directors

As per provisions of Schedule IV to the Companies Act,

2013, the Independent Directors are required to hold at least one meeting in a financial year, without the attendance of Non-independent Directors and members of management. During the financial year 2022, the Independent Directors have held one separate meeting on November 24, 2022.

Audit Committee

As on December 31, 2022, the Audit Committee consists of 7 (Seven) Directors including 5 (Five) Independent Directors. Mrs. Renu Challu is the Chairperson of the Committee. The other members of the Audit Committee were Mr. Avinash Gandhi, Mr. Arvind Balaji, Mr. Amit Kalyani, Ms. Eranti V. Sumithasri, Mr. Andreas Schick and Mr. Satish Patel. The Committee met 6 (Six) times during the year. The terms of reference of the Audit Committee, details of meetings held during the year and attendance of members are disclosed in the Report on Corporate Governance.

There was no instance where the recommendation by the Committee was not accepted by the Board.

Whistle-Blower Policy/Vigil Mechanism

Your Company has a well-defined âWhistle-Blower Policy'' and established vigil mechanism to provide for adequate safeguard against victimisation of Directors and employees who use the mechanism. The mechanism also provides for direct access to the Chairperson of Audit Committee in appropriate cases.

The Whistle-Blower/Vigil Mechanism Policy can be accessed on the Companyâs Website at https://www.schaeffler.co.in/ remotemedien/media/ shared media rwd/03 worldwide 1/ websites worldwide/india 3/investor relations/corporate governance 1/codes and policies/Whistle Blower Policy India 2023.pdf.

Risk Management

Constitution of Risk Management Committee

The Board of Directors of the Company has constituted the Risk Management Committee which comprises of 5 (Five) Directors and 2 (Two) Senior Management employees of the Company. Mr. Dharmesh Arora is the Chairman of the Committee. The other members of the Committee are

Ms. Eranti V. Sumithasri, Mr. Andreas Schick, Mr. Harsha Kadam, Mr. Satish Patel, Mr. Sameer Mathur (Chief Operating Officer) and Mr. Santanu Ghoshal (Head of Human Resources).

Auditors Statutory Auditors

The Statutory Auditors, M/s. Walker Chandiok & Co. LLP, Chartered Accountants, (Firm Registration Number: 001076N/ N500013) were appointed as Statutory Auditors of the Company at the 58^thAnnual General Meeting (âAGMâ) of the Company held on April 27, 2021 for a period of 5 (Five) consecutive years from the conclusion of the 58^th AGM till the conclusion of the 63^rd AGM of the Company.

The Audit Committee annually reviews and monitors the performance, independence of the Statutory Auditors and effectiveness of audit process.

There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their Report.

The observations made in the Auditorâs Report, read together with relevant notes thereon, are self-explanatory and hence do not call for any comments.

Reporting of Fraud

The Auditor of the Company have not reported any instances of fraud against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.

Secretarial Auditors

M/s. Samdani Kabra & Associates, a firm of Company Secretaries in Practice was appointed as âSecretarial Auditorsâ to carry out Secretarial Audit of the Company. In terms of provisions of Section 204 of the Companies Act, 2013, and in terms of regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBIâs circular CIR/CFD/CMD1/27/2019 dated February 8, 2019, a Secretarial Audit Report has been annexed to this Report. (Annexure - A)

Secretarial auditorsâ observation(s) in secretarial audit report and directorsâ explanation thereto -

Pursuant to provisions of Section 135(6) of the Companies Act, 2013, any amount remaining unspent under Sub-section (5), pursuant to ongoing project(s), shall be transferred by the Company within a period of thirty days from the end of the financial year to a Special account to be opened by Company in that behalf for that financial year in any Scheduled Bank to be called the âUnspent Corporate Social Responsibility Accountâ. We report that the unspent amount relating to ongoing project(s) was transferred by the Company with a delay of 14 (fourteen) days. As informed to us due to COVID-19 situation prevailing at that time, the aforesaid account could not get opened within prescribed time, hence there was a delay in transfer of unspent amount to a special account.

Directorsâ explanation:

Pursuant to provisions of Section 135(6) of the Companies Act, 2013, any amount remaining unspent under Sub-section (5), pursuant to ongoing project, shall be transferred by

the Company within a period of thirty days from the end of the financial year to a Special âUnspent Corporate Social Responsibility Accountâ. The Company had initiated the process to open the Special Bank account in due course, though due to COVID-19 situation, the account could not get opened within the prescribed time and therefore, the unspent amount relating to ongoing Project(s) was transferred to a Special Bank account, on February 14, 2022 i.e. with an unintentional delay of 14 days.

Cost Records and Cost Audit

Maintenance of Cost Records

The Company is required to maintain cost records under Companies (Cost Records and Audit) Rules, 2014. Accordingly, cost records have been maintained by the Company.

Cost Audit

M/s. Y. S. Thakar & Co., Cost Accountants, as Cost Auditors were appointed to conduct the audit of the cost records of the Company for the financial year ended December 31, 2022. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors have reappointed M/s. Y. S. Thakar & Co., Cost Accountants to conduct Audit of Cost records for the financial year 2023.

As required under the provisions of the Companies Act, 2013, the remuneration of Cost Auditors as approved by the Board of Directors is subject to ratification by the Shareholders at the ensuing Annual General Meeting.

Corporate Social Responsibility (CSR)

Being a responsible Corporate Citizen, your Company is committed in fulfilling its social responsibilities. Guided by the prevailing regulatory requirements, the Company has constituted a âCorporate Social Responsibility (CSR) Committeeâ and framed a Policy on CSR. The policy is available on the website of the Company at https://www. schaeffler.co.in/remotemedien/media/ shared media rwd/03 worldwide 1/websites worldwide/india 3/investor relations/corporate governance 1/codes and policies/ Annexure 14 - CSR Policv.pdf.

Your Company was required to make CSR expenditure of ''118.3 million i.e., 2% of the Average Net Profits of your Company made during 3 (Three) immediately preceding financial years. Your Company CSR expenditure was ''107.3 million and ''11 million was transferred to Unspent CSR Bank Account on January 20, 2023 for the ongoing CSR projects to be spent in the next 3 (three) years. A summary of CSR Policy together with details of CSR activities undertaken by the Company during the year 2022 have been covered in the Annual Report on CSR activities, which is annexed to this Report. (Annexure - B)

Contracts and Arrangements with Related Parties

During the year, all the transactions with the Related Parties have been carried out in normal course of business and based upon well set principles of armâs length.

Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. The details of all transactions executed with Related

Parties are placed before the Audit Committee on a quarterly basis for its review or ratification as the case may be and are also placed before the Board for its information.

The Related Party Transaction Policy of the Company is available on the website of the Company at https://www. schaeffler.co.in/remotemedien/media/ shared media rwd/03 worldwide 1/websites worldwide/india 3/investor relations/corporate governance 1/codes and policies/ Amended RPT Policy SIL 01-04-2022pdf.pdf.

A separate Report containing details of Material Related Party Transactions carried out during the year is annexed to this Report in prescribed form AOC-2. (Annexure - C)

Particulars of Employees and Related Disclosures

The disclosures pertaining to remuneration and other details of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been annexed to this report. (Annexure - D)

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 have been annexed to this report. (Annexure - E)

Annual Return

As per provisions of Section 92(3) of the Companies Act, 2013, a copy of draft Annual Return of the Company for the financial year 2022 in the prescribed form MGT-7 has been placed on the website of the Company at https://www.schaeffler.co.in/en/ investor-relations/shareholders-information/annual-return/.

Particulars of Loans, Investments, Guarantees and Securities

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has in place a Policy against Sexual Harassment for Women at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company at https://www. schaeffler.co.in/remotemedien/media/ shared media rwd/03 worldwide 1/websites worldwide/india 3/investor relations/corporate governance 1/codes and policies/ policy against sexual harrasment.pdf.

Internal Complaints Committee (ICC) has been constituted to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy.

Status of complaints during the year 2022

There were 0 complaints pending at the beginning of the year 2022 and the Company received 1 complaint during the year 2022, which was resolved in January 2023.

Directorsâ Responsibility Statement

Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state that:

(a) In preparation of the annual accounts, the applicable Indian Accounting Standards (Ind AS) have been followed and there are no material departures from the same;

(b) The accounting policies have been selected and these have been applied consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at December 31, 2022 and of the profit of the Company for that period;

(d) Annual accounts of the Company have been prepared on a âgoing concernâ basis;

(e) Internal financial controls have been laid down and being followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and were operating effectively.

Adequacy of Internal Financial Controls

The Board of your Company has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively. Your Company has also implemented FACTS (Financial Accounting and Controlling Tools) project for integrating accounting and controlling system. The Risk Management framework recognises the Internal Financial Controls as an integral part of its framework and has policies and procedures for addressing the financial reporting risks and ensures orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the Audit Committee, the Board is of the opinion that during the financial year ended December 31, 2022 had sound internal financial controls.

These controls placed by the Company commensurate with the nature and size of the business operations and are adequate and operating effectively with no material weakness.

The key internal financial controls and compliance systems have been documented, automated wherever possible and embedded in the respective business processes.

Compliance of Secretarial Standards

Your Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

Investor Education and Protection Fund (IEPF)

The Company has also transferred shares in respect of which dividend amount remained unpaid/unclaimed for a consecutive period of 7 (Seven) years or more to IEPF Authority within stipulated time.

The details of unpaid/unclaimed dividend and the shares transferred to IEPF Authority are available on the Companyâs website at https://www.schaeffler.co.in/content.schaeffler. co.in/en/ investor-relations/shareholders-information/ unclaimed- unpaid-dividend/index.jsp.

Deposit

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Subsidiaries, Joint Ventures and Associates

The Company does not have any Subsidiary Company, Joint Venture or Associate Companies as defined in the Companies Act, 2013.

Orders Passed by the Regulators or the Courts or the Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations.

Acknowledgements

For and on behalf of the Board

Ms. E. V. Sumithasri Chairperson

Mumbai: February 16, 2023 DIN: 07087197

Dec 31, 2018

Directors'' Report

Dear Shareholders,

The Directors are pleased to present the 56^th Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2018.

Financial Highlights

(Rs,In Million)

Particulars	2018	2017
REVENUE FROM OPERATIONS (NET)	45,615.1	39,331.4
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)	7,396.4	6,821.3
Less: Depreciation / Amortization	(1,485.0)	(1,381.6)
Earnings Before Interest and Tax (EBIT)	5911.4	5439.7
Less: Interest expense	(70.4)	(101.6)
Add: Other income	908.0	595.5
EARNINGS BEFORE TAX (before exceptional items)	6,749.0	5,933.6
Provision for Tax	2,119.0	2,003.4
EARNINGS AFTER TAX	4,198.0	3,884.9

Financial and Operational Performance Economy

2018 on an upbeat note for the global economy, buoyed by a pickup in global manufacturing and trade through 2017. The final global growth numbers for 2018 is estimated to come in at 3.7%, despite weaker performance in some economies, notably Europe and Asia.

Indian economy continues to be a bright spot among major economies. Despite market volatilities, India retains the fastest growing major economy tag in the world and is expected to maintain the momentum. According to data, Indiaâs GDP grew by 7.3 per cent in 2018-19. As proof of its

growing economy and increased investor spending, India is now ranked at 77^th position in the World Bankâs Ease of Doing Business rankings 2018 - a jump of 23 places up from 2017.

Performance of the Company and State of Companyâs Affairs

Your Companyâs Revenues (net) was at Rs, 45,615.1 million in year 2018 (Year 2017: Rs, 39,331.4 million) representing a growth of 16.0 %. Profit before tax (before exceptional items) was placed at Rs, 6,749.0 million (Year 2017: Rs, 5,933.6 million) representing a growth of 13.7%. Your Company recorded profit after tax (after exceptional items)of Rs, 4,198.0 million (Year 2017: Rs, 3,884.9 million) representing a growth of 8.1%.

Outlook

The IMF expects the weakness in the second half of 2018 will carry over to coming quarters, with global growth projected to decline to 3.5 percent in 2019 before picking up slightly to 3.6 percent in 2020. It also mentions that Indiaâs economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease. Indian Economy is projected to grow at 7.5 % during 2019.

Dividend

Your Company has a steady dividend payment history and considering the financial performance of the year 2018, your Directors recommend a dividend for the year ended December 31, 2018 at the rate of Rs, 20/- (2017: Rs, 17/-) per equity share amounting to Rs, 625.2 Million (2017: Rs, 282.5 Million). Further, your directors have also recommended a one-time special dividend at the rate of Rs, 10/- per equity share amounting to Rs, 312.6 Million. The Company will pay the tax on dividend as per the provisions of the Income Tax Act, 1961.

One Schaeffler India Entity

During the year under review, the Company has successfully completed the merger of INA Bearings India Private Limited and LuK India Private Limited with the Company.

Mr. Marcus Eisenhuth [DIN: 07904850] resigned from the Directorship effective February 14, 2019. Your Directors express their gratitude for the contribution made by Mr. Eisenhuth during his tenure as Director.

Mr. Satish Patel [DIN: 00690869] has been appointed as an Additional Director and Whole-time Director, designated as Director-Finance, with effect from February 13, 2019. Your Company has received a notice for his candidature for the office of Director under Section 160 of the Companies Act, 2013. The Nomination and Remuneration Committee and the Board of Directors recommend his appointment as a Director of the Company, liable to retire by rotation and as Director-Finance for a period of five years up to February 12, 2024.

The details of the Directors retiring by rotation / seeking appointment or reappointment at the ensuing AGM including, nature of their expertise in specific functional areas and the names of companies in which they hold directorship, membership/ chairmanship of committees of the Board is annexed to the Notice convening 56^th AGM of the Company.

Key Managerial Personnel (KMP)

Pursuant to provisions of Sections 2(51) and 203 of Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 following persons are acting as Key Managerial Personnel of the Company:

1. Managing Director & Chief Executive Officer:

Mr. Dharmesh Arora

2. Director-Finance & Chief Financial Officer:

Mr. Satish Patel

3. Company Secretary: Mr. Chirag K. Shukla

Meetings of Board of Directors

During the year under review, four meetings of the Board of Directors were held on February 7, 2018, April 17, 2018, July 26, 2018 and October 22, 2018. The details of attendance of each Director at these meetings are provided in the Corporate Governance Report.

Policy on Nomination and Remuneration

The Companyâs Policy on Nomination and Remuneration is framed with objectives as under:

1. To formulate criteria and advise the Board in matters of determining qualifications, competencies, positive attributes and independence of Directors, and policies relating to their appointment and removal;

2. To review corporate goals and objectives, to set norms of performance evaluation and to lay out remuneration principles for Directors, KMP and Senior Management

The Honâble National Company Law Tribunal (NCLT), Chennai Bench, vide its order dated June 13, 2018 read with corrigendum dated July 3, 2018 and Honâble Mumbai bench, vide its order dated October 08, 2018 have approved the Scheme of Amalgamation. The merger has become effective from October 22, 2018

The Company is now one of the leading automotive and industrial component supplier.

Increase in Authorized Share Capital

Pursuant to the Scheme of Amalgamation of INA Bearings India Private Limited (âINAâ) and LuK India Private Limited (âLuKâ) with Schaeffler India Limited (âthe Schemeâ), the Authorized Share Capital of the Company has increased from Rs, 200 Million to Rs, 1,255 Million.

Issue of Shares

During the year under review the Company issued and allotted 14,643,464 fully paid up Equity Shares having face value of Rs, 10/- each of the Company to the shareholders of INA and LuK in respect of Equity Shares held by them in INA and LuK, as per the share entitlement ratio provided under the Scheme. Consequently, the paid up share capital of the Company has increased from Rs, 166.2 Million to Rs, 312.6 Million.

Management Discussion and Analysis

Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, detailed review of operations, performance and future outlook of the Company is covered under a separate section of the Annual Report as Management Discussion & Analysis.

Corporate Governance

A separate section on Corporate Governance is included in the Annual Report and the certificate from M/s. Samdani Kabra & Associates, Company Secretaries, the Companyâs Secretarial Auditors confirming the compliance of conditions on Corporate Governance is annexed thereto.

Directors

In accordance with the provisions of Section 152 the Companies Act, 2013, Mr. Klaus Rosenfeld [DIN: 07087975] will retire by rotation at the ensuing Annual General Meeting (âAGMâ) and being eligible offers himself for reappointment.

Mr. Jurgen Ziegler [DIN: 07092477] has been appointed as an Additional Director with effect from April 18, 2018. Your Company has received a notice for his candidature for the office of Director under Section 160 of the Companies Act, 2013. The Nomination and Remuneration Committee and the Board of Directors recommend his appointment as a Director of the Company, liable to retire by rotation.

linked to their effort, performance and contribution towards achievement of organizational goals;

3. To evaluate performance and give recommendations to the Board on remuneration payable to the Directors, KMP and Senior Management; and

Nomination and Appointment of Directors and Senior Management

Criteria and Qualification:

A person to be appointed as Director, KMP or at Senior Management level should possess adequate relevant qualification, expertise and experience for the position he / she is considered for appointment. Further, a person, to be appointed as Director, should possess impeccable reputation for integrity, expertise and insight in sectors / areas relevant to the Company, besides ability to contribute to the Companyâs growth and should possess complementary skills in relation to the other Board members.

Process:

The candidates are identified internally as well as externally, depending on the position. Thereafter Human Resources / Relevant Department / Subject matter expert / external sourcing agency, as the case may be, carries out assessment of suitability of the candidate for the position and requisite interviews / background verification / remuneration negotiations are carried out. Thereafter, proposals are placed before the Nomination and Remuneration Committee. The NRC reviews qualification, expertise and experience possessed by the candidate for the concerned position and makes appropriate recommendations to the Board of Directors.

Policy on Remuneration

1. The remuneration (including revisions) to Directors is recommended by NRC to the Board for approval. The remuneration (including revisions) to the Directors, so recommended by NRC to the Board, should be within the limits under the Companies Act, 2013 read with the Rules thereunder and as approved by the shareholders of the Company.

2. None of the Directors (including Independent Directors) shall be entitled to any stock option of the Company.

3. While determining remuneration to KMP, Senior Management Personnel and other Employees, the Company encourages and rewards, merit and superior performance. The objective is to set the total remuneration at levels to attract, motivate, and retain high-calibre, and high potential personnel in a competitive global market.

The Nomination and Remuneration Policy of the Company is disclosed on the website at https://www.schaeffler.co.in/ remotemedien/media/_shared_media_rwd/03_worldwide_l/ websites_worldwide/india_3/investor_relations/corporate_ governance_l/codes_and_policies/nomination_and_

remuneration_policy_schaeffler_india.pdf

Formal Annual Evaluation

Your Company believes that systematic evaluation contributes significantly to improve performance at three levels: Organizational, Board and Individual Board Member.

It encourages the leadership, teamwork, accountability, decision-making, communication and efficiency of the Board. Evaluation also ensures teamwork by creating better understanding of Board dynamics, board-management relations and thinking as a group within the board.

Methodology

The Evaluation is done as per the criteria of performance evaluation recommended by the Nomination and Remuneration Committee (NRC) and approved by the Board of Directors. As per the said criteria, separate evaluation questionnaire for each category of evaluation viz. the Board of Directors, Non-Independent Directors, Independent Directors and Committees of the Board are defined under the policy document on the criteria. The NRC has reviewed the implementation and compliance of the process of performance evaluation.

Process

Separate sets of questions (questionnaire) for each of the evaluations i.e. for evaluation of (a) Board; (b) Each of the Committees of the Board; (c) Independent Director; (d) Non-Independent Director and (e) Chairman of the Board, are defined in the Policy for Performance Evaluation.

Inclusive summary of evaluation criteria for each category are as under:

Chairperson: (i) Effective conduct of meetings, (ii) Leading the policy and governance work of the Board (iii) Handling and resolving conflict of interest situations at the meetings

(iv) Unbiased opinions on the matters (v) Ability to assert and build support for consensus among the Board members

(vi) Understanding of legal/compliance requirements under Companies Act, 2013 (vii) ability to assess sense of meeting, objectively, independently and practically (viii) Considering views of all Board members and ensuring decisions are taken keeping in mind interest of all stakeholders and company as a whole.

Board of Directors: (i) Expertise and Experience of Directors,

(ii) Integrity of Directors, avoiding conflict of interest

(iii) Understanding of legal requirements and obligations

(iv) Quality of participation at the Board Meeting (v) Time spent on targets and strategy (vi) Frequency of meetings whether sufficient (vii) Length of meetings, agenda content, effective discussion (viii) Foresight of Board in anticipating issues (ix) Understanding of risk of the business and ensuring risk management system etc.

Committees of the Board: (i) Competence of Members,

(ii) Clarity of terms of reference (iii) Sufficient reporting to the Board (iv) Frequency and organization of meetings (v) Effective suggestions and recommendations provided to the Board (vii) Open participation and meaningful contribution by members (viii) Sufficiency of time allocation for discussion in detail on pertinent topics etc.

Non-Independent Directors: (i) Attendance at the meetings,

(ii) Preparedness for and active participation at the meeting

(iii) Staying updated on developments, (iv) Constructive contribution at the meetings, (v) Being objective and protecting interest of all shareholders, (vi) Quality and innovation of contributions at the meetings (vii) Ensuring integrity of financial statements / internal controls (viii) Ability to present oneâs view convincingly etc.

Independent Directors: (i) Attendance at the meetings,

(ii) Preparedness for and participation at the meetings,

(iii) Staying updated on developments, (iv) Constructive contribution at the meetings, (v) Being objective and protecting interest of all shareholders, (vi) Engaging with and challenging management without being confrontational or obstructionist, (vii) Ensuring integrity of financial statements / internal controls, (viii) Ensuring risk management system & mitigation measures are in place and effective February 13, 2019 include fulfillment of the independence criteria (as specified in the Listing Regulations) and independence from the management.

The questionnaire for each category of evaluation are circulated to all the Directors. Each question has four rating options i.e. 1 to 4. Rating 1 denotes âNeed Improvementâ, 2: âFairâ, 3: âGoodâ and 4: âExcellentâ.

The ratings of every question are averaged (âaveraged ratingsâ) based on feedbacks received from each Director. Further, average of all âaveraged ratingsâ are considered as the rating for a particular questionnaire. Based on the outcomes of questionnaire, the NRC carries out evaluation of all the Directors including Independent Directors and the Board carries out the evaluation of its own performance, each of the committees and that of all Directors.

For the year 2018, the Board has carried out an annual performance evaluation of its own and that of each of the committees and all Directors. Further, the NRC has also carried out evaluation of all the Directors including Independent Directors.

Conclusion

The Evaluation for the year 2018 of Directors, each of the Committees and that of the Board have received ratings that are near Excellent.

The Board has taken note of the following feedback received from Directors to further improve the performance of the Directors, the Board itself and Committees of the Board:

- Suggestion to bring more awareness to all Independent Directors on risks of the Company and mitigation measures being taken.

- Suggestion for holding an additional meeting of the Board once a year to discuss strategy and other business matters - as good governance practice.

- Suggestion for holding an additional meeting of Audit Committee to review Internal Audit Plan for the year.

- Suggestion for enhanced involvement of the Nomination and Remuneration Committee in overall process of appointment and remuneration of persons directly reporting to Managing Director.

Separate Meeting of Independent Directors

As per provisions of Schedule IV to the Companies Act 2013, the Independent Directors are required to hold at least one meeting in a financial year, without the attendance of Non Independent Directors and members of management. During the financial year 2018, the Independent Directors have held one separate meeting on February 6, 2018.

Independent Directorsâ Declaration

The Independent Directors have given declarations that they meet the criteria of independence as per the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Audit Committee

The Audit Committee is duly constituted and has met four times during the year 2018. The details of terms of reference of the Committee, dates of meetings held during the year and attendance of members thereat, are disclosed in the Corporate Governance Report. There was no instance where any recommendation by the Committee was not accepted by the Board.

Mrs. Renu Challu is Chairperson of the Committee. Other members of the Committee are Mr. Avinash Gandhi, Dr. Sanak Mishra and Mr. Rakesh Jinsi. The Board of Directors has reconstituted the Audit Committee effective from February 13,

2019 and thereby, has appointed Mr. Jurgen Ziegler and Mr. Satish Patel as members of the Committee.

Whistle Blower Policy / Vigil Mechanism

Your Company has a well-defined Vigil Mechanism / Whistle Blower Policy which provides for mechanism for stakeholders to report their genuine concerns. The said mechanism/policy provides for adequate safeguard to the whistle blower against victimization. It provides for direct access to the Chairperson of Audit Committee in appropriate cases.

Whistle Blower Policy of the Company is available on the

Companyâs website at the web-link: https://www.schaeffler.

co.in/remotemedien/media/_shared_media_rwd/03_

worldwide_1/websites_worldwide/india_3/investor_

relations/corporate_governance_1/codes_and_policies/vigil_

mechanism_or_whistle_blower_policy_schaeffler_india.pdf

Risk Management

Your Company has established comprehensive Risk Management System to ensure that risks to the Companyâs continued existence as a going concern and to its performance are identified and addressed on timely basis.

Constitution of Risk Management Committee

The Board of Directors of the Company has constituted the Risk Management Committee on February 13, 2019 comprising Mr. Dharmesh Arora, as Chairman, Dr. Sanak Mishra, Mr. Satish Patel, Mr. Sameer Mathur (Chief Operating Officer) and Mr. Santanu Ghoshal (Head of Human Resources) as Members. The terms of reference of the Risk Management Committee is disclosed in the Corporate Governance Report.

Auditors Statutory Auditors

The Statutory Auditors, M/s. B.S.R. & Co. LLP, Chartered Accountants, Mumbai, (Firm Registration Number: 101248 W / W-100022) were appointed as Statutory Auditors of the Company at the 52^nd Annual General Meeting of Company held on April 24, 2015 for a period of five consecutive years.

The observations made in the Auditorâs Report, read together with relevant notes thereon, are self-explanatory and hence do not call for any comments. There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their Report.

Reporting of Fraud

The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.

Secretarial Auditors

M/s. Samdani Kabra & Associates, a firm of Company Secretaries in Practice was appointed as âSecretarial Auditorsâ to carry out Secretarial Audit of the Company for the year 2018. In terms of provisions of section 204 of the Companies Act, 2013, a Secretarial Audit Report has been annexed to this Report. (Annexure - A)

Cost Records and Cost Audit Maintenance of Cost Records

The Company is required to maintain cost records under Companies (Cost Records and Audit) Rules, 2014. Accordingly, cost records have been maintained by the Company.

Cost Audit

M/s Y. S. Thakar & Co., Cost Accountants, as Cost Auditors were appointed to conduct the audit of the cost records of the Company for the Financial Year ended December 31, 2018. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors have reappointed M/s.

Y. S. Thakar & Co., Cost Accountants to conduct Audit of Cost records for the FY 2019.

As required under the provisions of Companies Act, 2013, the remuneration of Cost Auditors as approved by the Board of Directors is subject to ratification by the shareholders at the ensuing Annual General Meeting.

Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the auditorâs reports:

Explanation with regard to the remarks of the Secretarial Auditors in their Audit report on amount of CSR spend being below 2% of average net profits is as under:

Schaeffler India Limited is committed to creating a positive impact over the society. Most of the Companyâs projects are long term association towards creating a sustainable transformation. Since the time CSR policy came into effect, Companyâs records demonstrate that it has been very particular in picking up the right projects and comply with legal spending mandate as well. During the year under review, the Company, while continuing to support its ongoing projects, has associated itself with a few new projects and intends to expand its CSR initiatives in a systematic manner to create meaningful contributions in the development of weaker sections of the society. The Company envisages valuable CSR spend in a more structured manner for which it has initiated a long-term project in the field of community development and skill training. As an organization, it took time, to identify the

A separate report containing details of Material Related Party Transactions carried out during the year is annexed to this report in prescribed form AOC-2. (Annexure - C)

Erstwhile INA Bearings India Private Limited (âINAâ) and LuK India Private Limited (âLuKâ) had their respective business transactions with Schaeffler Technologies AG & Co. KG, Germany and pursuant to their merger with the Company, those transactions have become transactions of the Company. Therefore, a revision in limits for material related party transactions, with Schaeffler Technologies AG & Co. KG, Germany, pursuant to provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is proposed at the ensuing Annual General Meeting.

Particulars of Employees and Related Disclosures

The disclosures pertaining to remuneration and other details of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Directorsâ Report Rules, 2014, have been annexed to this Report. (Annexure - D)

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 have been annexed to this Report. (Annexure - E)

Annual Return and Extract of Annual Return

As per provisions of Section 92 of the Companies Act, 2013 read with Rules made thereunder, a draft Annual Return of the Company for the year 2018 in the form MGT-7 is available on the website of the Company at https://www.schaeffler.co.in/ content.schaeffler.co.in/en/investor-relations/shareholders-information/annual-return/index.jsp and the Extract of Annual Return in the form MGT-9 has been annexed to this Report. (Annexure - F)

Particulars of Loans Given, Investments Made, Guarantees Given and Securities Provided

The particulars of loans Given and Investments made have been disclosed in notes to the Financial Statements. There were no financial guarantee or security provided by the Company.

right projects which are more sustainable in nature and thus create more impact. These projects were in the initial stage, and because of delay in conceptualization of project design and receiving necessary approvals from local legislation, the whole process of implementation got delayed. In a few of the cases, the Company also faced some challenges with its implementation partner, which further added to the delay. However, the Company is still pursuing those projects and will endeavour to implement them.

Going forward, the Company will take due care in identification of projects in a timely manner and focus on projects that are scalable, those that would create impact and be in alignment with the Companyâs overall HOPE philosophy.

There have been no other disqualifications, reservations, adverse remarks or disclaimers in the auditorâs reports, requiring explanation or comments by the Board.

Corporate Social Responsibility (CSR)

Being a responsible Corporate Citizen, your Company is committed to fulfill Social Responsibility. Guided by the prevailing regulatory requirements, the Company has constituted a âCorporate Social Responsibility (CSR) Committeeâ and framed a Policy on CSR. The Policy is available on the website of the Company at https://www.schaeffler.co.in/ remotemedien/media/_shared_media_rwd/03_worldwide_1/ websites_worldwide/india_3/investor_relations/corporate_ governance_1/codes_and_policies/policy_on_corporate_ social_responsibility_schaeffler_india.pdf

The explanation for amount of CSR spend being below 2% of average net profits has been given under previous paragraphs.

A summary of CSR Policy together with details of CSR activities undertaken by the Company during the year 2018 have been covered in the Annual Report on CSR activities, which is annexed to this report. (Annexure - B)

Contracts and Arrangements with Related Parties

During the year, all transactions with the Related Parties have been carried out in ordinary course of business and based upon well set principles of armâs length.

The Related Party Transaction Policy of the Company is

available on the website of the Company at https://www.

schaeffler.co.in/remotemedien/media/_shared_media_

rwd/03_worldwide_1/websites_worldwide/india_3/investor_

relations/corporate_governance_1/codes_and_policies/

policy_on_related_party_transactions_schaeffler_india.pdf

Directorsâ Responsibility Statement

Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013, your directors hereby state that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

b) The accounting policies have been selected and these have been applied consistently and judgments and estimates made thereon are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at December 31, 2018 and of the profit of the Company for that period;

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) Annual accounts of the Company have been prepared on a âgoing concernâ basis;

e) Internal financial controls have been laid down and are being followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and were operating effectively.

Adequacy of Internal Financial Controls

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Internal Complaints Committees (ICC) have been set up to redress complaints received regarding sexual harassment. Details of Internal Complaints Committee Members are as under:

Maneja & Savli Loacation:

Name	Category
Ms. Hemlata Nair	Chairperson
Ms. Mercy K.	Secretary
Ms. Megha Dave	Member
Ms. Kajal Doshi	Member
Mr. Amul Niphadkar	Member
Mr. Amarjeet Benipal	Member
Mr. Peeyush Dhanak	External Member- Legal
	Consultant

Pune Location:

Name	Category
Mrs. Pallavi Sarkar	Chairperson
Ms. Dipti Khole	Secretary
Mrs. Snehal Birari	Member
Mr. Vinaykumar Pal	Member
Mr. Rajeev Joshi (Advocate)	External Member- Legal
	Consultant

Hosur Location:

Name	Category
Ms. Radha	Chairperson- External
	Member- Legal Consultant
Ms. Gowri Velumayil	Secretary
Mrs. Nalini Kalamani	Member

Status of complaints during the year 2018:

There were no complaints pending at the beginning of the year 2018 and the Company has not received any complaint during the year 2018.

Material Changes and Commitments and Change in Nature of Business

There have been no material changes and commitments, affecting the financial position of the Company from the end of the Year 2018 upto the date of this report.

In view of the Merger of erstwhile INA Bearings India Private Limited and erstwhile LuK India Private Limited with the Company, the Company now deals in wider range of the products including clutches, components for engine and chassis systems apart from bearings. Apart from the above, there has been no change in the nature of business carried on by the Company.

Compliance of Secretarial Standards

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

Transfer to Reserves

Considering sufficiency of balance, your Directors do not propose to transfer any amount to General Reserves for the year under review.

Deposit

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Subsidiaries, Joint Ventures and Associates

The Company does not have any Subsidiary Company, Joint Venture or Associate Companies as defined in the Companies Act, 2013.

Orders Passed by the Regulators or the Courts or the Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations.

Acknowledgements

Your Directors express their gratitude to the employees for their dedication, hard work and efforts. The Board also places on record the continued cooperation and support extended by the Schaeffler Group, all the Shareholders, Customers, Suppliers, Distributors, Banks, Government & Regulatory Authorities and Business Associates.

For and on behalf of the Board

Avinash Gandhi

Chairman

Mumbai: February 13, 2019 DIN: 00161107

Dec 31, 2017

Directorsâ Report

Dear Shareholders,

The Directors are pleased to present the 55^th Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2017.

Financial Highlights

(Rs, in millions)

	2017	2016
Net Total Income	19,866.5	18,645.8
Gross Operating Profit (Earnings before depreciation, interest, tax and prior period adjustments)	4,344.5	3,651.9
Depreciation / Amortization	711.2	641.0
Interest	10.2	17.6
Profit Before Tax	3,623.1	2,993.3
Provision for Tax	1,242.9	1,042.7
Profit After Tax	2,380.2	1,950.6

Change of name of the Company -Schaeffler India Limited

Financial and Operational Performance Economy

The global economy experienced a broad-based cyclical upturn in 2017, with growth increasing in more than half of the worldâs economies. Global growth is expected to be sustained over the next couple of years and even accelerate in emerging markets and developing economies.

In India, the year 2017 was marked by some major reforms.

The transformational Goods and Services Tax (GST) was introduced from July, 2017. This comprehensive tax has replaced the complex multiple indirect tax structure in India. Furthermore, action was taken to address the Twin Balance Sheet challenge, which remained a constraint on Indian growth prospects. The new Indian Bankruptcy Code has provided a resolution framework. The Government has also announced a large recapitalization package to strengthen the balance sheets of the public-sector banks. These reforms will support firms to resume spending and banks to lend, especially to the sectors of infrastructure and manufacturing.

In the first half of the year 2017, Indiaâs economy reported slower growth while the rest of the world economy accelerated. Albeit, India remained the second-best performer amongst major countries with strong macroeconomic fundamentals. The slower growth was a result of a series of developments that pummeled the economy including demonetization; compliance in the new GST regime; rising real interest rates, banking sector stress; and sharp falls in certain food prices that impacted agricultural incomes.

However, the second half of the year 2017 witnessed robust signs of revival. With corrective actions being implemented, economic growth has rebounded. This is also supported by the global economic recovery which is advancing exports.

Industrial production as reflected by development of Index of Industrial Production (IIP) has started showing signs of improvements. Core infrastructure industry, well supported by public sector investment and favorable policy environment, showed positive growth of 3.8% in year 2017. Mobility sectors and agriculture tractors are on a steady path of growth, supported by the Governmentâs thrust on rural spending, infrastructure creation and irrigation spending.

Performance of the Company and State of Companyâs Affairs

Your Companyâs Net Total Income (net of excise duty) was at Rs, 19,866.5 million in year 2017 (Year 2016: Rs, 18,645.8 million) representing a growth of 6.5 %. Profit before tax was placed at Rs, 3,623.1 million (Year 2016: Rs, 2,993.3 million) representing a growth of 21.0%. Your Company recorded profit after tax of Rs, 2,380.2 million (Year 2016: Rs,1,950.6) representing a growth of 22.0%. Better sales mix and operational performance have resulted in the improvements in the EBT margins.

Your Companyâs sales to mobility sectors grew in-line with market growth. Sales to Industry OEM Mobility sectors like Two Wheelers, rail, power transmission registered slight growth. Distribution sales showed improving trend. The export business of your Company registered positive growth during the year.

Your Directors consider the Company has performed exceedingly well.

Change of name of the Company -Schaeffler India Limited

In consonance with the Schaeffler Groupâs overall corporate philosophy, your Company has changed its name from FAG Bearings India Limited to âSchaeffler India Limitedâ with effect from July 7, 2017.

This change of name has not only increased your Companyâs visibility globally but has also underlined the presence of Schaeffler Group in India.

Strategic Initiative - One Schaeffler India Entity

During the year under review, your Company has unveiled the strategic initiative of âOne Schaeffler Indiaâ entity and has announced merger of two of the Schaeffler Group entities in India viz. INA Bearings India Private Limited and LuK India Private Limited with your Company.

INA Bearings India Private Limited is engaged in manufacture of Needle/linear bearings, engine, transmission and chassis precision components for Automotive and Industrial applications, has its manufacturing facility at Talegaon, Pune and employs around 663 employees.

LuK India Private Limited is engaged in manufacture of Clutch and transmission components and systems for Automotive applications, has its manufacturing facility at Hosur, in Tamilnadu and employs around 757 employees.

With the strengths of the two entities being clubbed with the leadership position of the Company in the Ball, Roller and other special bearings, the merged entity - One Schaeffler India entity will become a major manufacturer and supplier of some of the most important products for the Automotive as well as Industrial Sector as under:

1. Wheel Modules, Transmission Bearings and Axial Bearings by your Company;

2. Engine and Transmission components by INA Bearings; and

3. Components for clutch and Transmission Systems by LuK

The synergies of the proposed merger are envisaged in following major areas:

1. Bundling Opportunity -Enhanced content / car on next generation platforms

2. Distribution Network - Expanded geographical coverage, enhanced portfolio

3. Warehousing and Freight Movement - Economies of scale

4. Efficiency improvements - Internal Sales force reorganization,

5. Functional cost efficiencies in various service functions

6. Reduced complexities of Compliances

The proposed merger will help your Company to contribute comprehensively to the Scheffler Groupâs strategy of âMobility for Tomorrowâ. The âMobility for Tomorrowâ strategy, has four focus areas namely Eco-friendly drives, urban mobility, Inter-urban mobility and Energy- chain. Schaefflerâs strategic approach combines long-term thinking with proven success factors of Quality, Technology and Innovation to form robust and systematic organizational orientation towards the future.

In conclusion your Company is set to become leading Automotive and Industrial component supplier with a diversified and high-growth product offering which will create value for all stakeholders.

Outlook

GDP growth in FY 2018 is expected to be around 7.3%. The impacts of Goods and Services Tax (GST) implementation in 2017 seems to have been absorbed by the economy.

Overall your Company is positive about its short term and medium term business outlook. We will continue to pursue growth strategy in customized as well as high volume product business. Leveraging our customer and application expertise, we will provide added value to our customers. At the same time, we will accelerate implementation of our operational excellence strategy to systematically build on long term competitive advantage in the business.

Dividend and Transfer to General Reserve

Your Company has a steady dividend payment history and in line with the financial performance of the year 2017, your Directors recommend dividend for the year ended December 31, 2017 at the rate of Rs, 17/- (2016: Rs, 12/-) per equity share amounting to Rs, 282.5 million (2016: Rs, 199.4 million). The Company will pay the tax on dividend as per the provisions of the Income Tax Act, 1961. It is not proposed to transfer any amount to General Reserve for the year under review.

Management Discussion and Analysis

Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (âListing Regulationsâ), Management Discussion & Analysis Report is annexed to this report. (Annexure - A)

Corporate Governance

A separate section on Corporate Governance is included in the Annual Report and the certificate from M/s. Samdani Kabra & Associates, Company Secretaries, Vadodara (Guj.), the Companyâs Secretarial Auditors confirming the compliance of conditions on Corporate Governance is annexed thereto. (Annexure - B)

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Dietmar Heinrich [DIN: 00928243] will retire by rotation at the ensuing Annual General Meeting (âAGMâ). Although he is eligible for reappointment,

Mr. Heinrich has expressed his unwillingness to be reappointed at the AGM.

Your Directors express their gratitude for the contribution made by Mr. Heinrich during his tenure as Director of the Company. Further, your Directors have decided not to fill up the vacancy that will be caused by retirement of Mr. Heinrich.

Mr. Frank Huber [DIN: 00689169] resigned from the directorship of the Company with effect from June 30, 2017. Board wishes to place on record its appreciation of services rendered by him during his tenure as the Director of the Company.

Mr. Marcus Eisenhuth [DIN: 07904850] has been appointed as an Additional Director with effect from August 10, 2017. Your Company has received a notice together with a deposit of '' 100,000/- for his candidature for the office of Director under section 160 of the Companies Act, 2013. Your Directors recommend his appointment as a Director of the Company.

Mr. Avinash Gandhi [DIN: 00161107] has given a declaration that he meets the requirements for appointment as an Independent Director. Accordingly, upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors of your Company at its Meeting held on February 7, 2018, has appointed Mr. Avinash Gandhi [DIN: 00161107], subject to approval of the Shareholders at the ensuing Annual General Meeting, as an Independent Director to hold office for a term of five consecutive years commencing from February 7, 2018.

Brief profiles of the Directors seeking appointment or reappointment are given separately under the Notice convening 55^th Annual General Meeting of the Company.

Key Managerial Personnel (KMP)

1. Managing Director & Chief Executive Officer: Mr. Dharmesh Arora

2. Chief Financial Officer: Mr. Satish Patel

3. Company Secretary¹: Mr. Chirag K. Shukla

Meetings of Board of Directors

During the year under review, seven meetings of the Board of Directors were held on February 14, 2017, March 6, 2017, April 21, 2017, June 26, 2017, July 25, 2017, August 30, 2017 and November 9, 2017. The details of attendance of each Director at these meetings are provided in the Corporate Governance Report.

Independent Directorsâ Declaration

Your Company has received the declarations in the prescribed format from each Independent Director confirming that they meet the criteria of independence as envisaged in the provisions of Section 149 of the Companies Act, 2013, read with Regulation 16 of the Listing Regulations.

Policy on Nomination and Remuneration

The Companyâs Policy on Nomination and Remuneration is framed with objectives as under:

3. To evaluate performance and give recommendations to the Board on remuneration payable to the Directors, KMP and Senior Management, and

Criteria and Qualification for Nomination and Appointment

A person to be appointed as Director, KMP or at Senior Management level should possess adequate relevant qualification, expertise and experience for the position that he / she is being considered for. The Nomination and Remuneration Committee (NRC) evaluates whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position and the NRC then makes appropriate recommendations to the Board of Directors.

Policy on Remuneration

1. The remuneration (including revisions) to Directors is recommended by NRC to the Board for approval. The remuneration (including increments) to the Directors, so recommended by NRC to the Board, should be within the limits under the Companies Act, 2013 read with the Rules there under and as approved by the shareholders of the Company.

2. None of the Directors (including Independent Directors) shall be entitled to any stock option of the Company.

3. Non-executive Directors, who are in whole-time employment with other Associate Companies of the Schaeffler Group, will not be entitled to any remuneration, profit related commission or sitting fees.

4. While determining remuneration to KMP, Senior Management Personnel and other Employees, the Company encourages and rewards merit and superior performance. The objective is to set the total remuneration at levels to attract, motivate, and retain high-calibre, and high potential personnel in a competitive global market.

Formal Annual Evaluation

Your Company believes that systematic evaluation contributes significantly to improved performance at three levels; Organizational, Board and Individual Board Member. It encourages the leadership, teamwork, accountability, decision-making, communication and efficiency of the Board. Evaluation also ensures teamwork by creating better understating of Board dynamics, board-management relations and thinking as a group within the board.

The process includes multi-layered evaluation based on well-defined criteria consisting of relevant parameters.

For the year 2017, the Board has carried out an annual performance evaluation of its own and that of its Committees and individual Directors.

Performance evaluation criteria for the Board, its Committees, the Directors and the Chairman of the Company were circulated to and filled up by the Directors. The feedbacks of directors were scaled and measured on defined ratings. The Nomination and Remuneration Committee has further carried out evaluation of all the Directors including Independent Directors. The Board of Directors have carried out the evaluation of its own performance, its committees and that of individual Directors. The report of performance evaluation so arrived at was then noted and discussed by the Nomination and Remuneration Committee and the Board of Directors.

Corporate Social Responsibility (CSR)

Being a responsible Indian Corporate Citizen, we are equally motivated by the Indian ethos of Dharma as a key for organizational self-realization. Guided by the prevailing regulatory requirements, the Company has constituted a âCorporate Social Responsibility (CSR) Committeeâ and framed a Policy on CSR, summary of which together with details of CSR activities undertaken by the Company during the year

2017, have been covered in Separate report on CSR annexed to this report. (Annexure - C)

Contracts and arrangements with Related Parties

The transactions with the related parties are governed by prevailing regulatory requirements and Companyâs policy on dealing with such transactions. During the year, all transactions with the Related Parties have been carried out in normal course of business and based upon well set principles of armâs length.

A separate report containing details of âMaterial Related Party Transactionsâ carried out during the year is annexed to this report. (Annexure - D)

Particulars of Employees and Related Disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names of the top ten employees in terms of remuneration drawn and employees drawing remuneration in excess of the limits set out in the said rules forming part of this report is given as an Annexure to this report. However, pursuant to provisions of Section 136(1) of the Companies Act, 2013 all reports and accounts are sent to all the shareholders of the Company except this annexure. Any shareholder, interested in inspecting this report, can write to the Company Secretary for a copy of it. The Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been annexed to this Report. (Annexure - E)

Extract of Annual Return

As per regulatory requirements, âExtract of Annual Returnâ is provided in a separate report annexed to this Report.

(Annexure - F)

Auditors Statutory Auditors

The Statutory Auditors, M/s. B S R & Co. LLP, Chartered Accountants, Mumbai, (Firm Registration Number: 101248 W / W-100022) were appointed as Statutory Auditors of the Company in 52^nd Annual General Meeting (âAGMâ) of the Company held on April 24, 2015 for a period of five consecutive years, subject to ratification by members every year in AGM. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors recommend ratification of their appointment in 55^th Annual General Meeting until conclusion of 56^th Annual General Meeting of the Company.

Secretarial Auditors

M/s. Samdani Kabra & Associates, Company Secretaries, were appointed as âSecretarial Auditorsâ to carry out Secretarial Audit of the Company for the year 2017. In terms of provisions of section 204 of the Companies Act, 2013, the Secretarial Audit Report has been annexed to this Report. (Annexure - G)

Cost Auditors

M/s Y. S. Thakar & Co., Cost Accountants, as Cost Auditors had conducted the audit of the cost records of the Company for the Financial Year ended December 31, 2017. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors have made their appointment for the year 2018.

Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the auditorâs reports:

With regard to the remarks of the Secretarial Auditors in their Audit report on transfer of Equity Shares to Investor Education and Protection Fund (IEPF) pursuant to the provisions of section 124 (6) of the Companies Act, 2013 and rules made there under, we have to state that the Company has already commenced the process of transfer of the Equity Shares on which the dividend amounts have not be paid/claimed for the last seven consecutive years, and it is expected that the said process shall be completed in the month of April, 2018.

There have been no other qualifications, reservations, adverse remarks or disclaimers in the auditorâs reports, requiring explanation or comments by the Board.

Audit Committee

The Audit Committee consists of four Directors with Mrs.

Renu Challu as the Chairperson of the Committee. The other members of the Audit Committee are Mr. Avinash Gandhi, Dr. Sanak Mishra and Mr. Rakesh Jinsi. The terms of reference of the Audit Committee, details of meetings held during the year and attendance of members are disclosed in the Report on Corporate Governance.

Whistle Blower Policy / Vigil Mechanism

Your Company has well defined âWhistle Blower Policyâ and established Vigil Mechanism to provide for adequate safeguard against victimisation of Directors and employees who follow such mechanism and also make provisions for direct access to the chairperson of Audit Committee in appropriate cases.

Whistle Blower Policy of the Company is available on the Companyâs website at the web-link:

https://www.schaeffler.co.in/remotemedien/media/_shared_

media/03_worldwide/02_websites_worldwide/india_2/

company/fag_india/ir/codes_policies/03._Vigil_Mechanism_

or_Whistle_Blower_Policy.pdf

Risk Management

Your Company has established comprehensive Risk Management System to ensure that the risks to the Companyâs continued existence as a going concern and to its development are identified and addressed on timely basis.

Particulars of Loans given, Investments made, Guarantees given and Securities provided

The particulars of loans have been disclosed in notes to the Financial Statements.

Deposits

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

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

The Company has in place a Policy against Sexual Harassment at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set-up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy. No complaints were received by the Committee during the year.

Orders passed by The Regulators or The Courts or The Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations.

Directorsâ Responsibility Statement:

Pursuant to the requirement under Section 134(3)(c) of the

Companies Act, 2013, your directors hereby state that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

b) The accounting policies have been selected and these have been applied consistently and judgments and estimates made thereon are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at December 31, 2017 and of the profit of the Company for that period;

d) Annual accounts of the Company have been prepared on a âgoing concernâ basis;

e) Internal financial controls have been laid down and being followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and were operating effectively.

Adequacy of Internal Financial Controls

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the Audit Committee, the Board is of the opinion that the Companyâs internal financial controls were adequate and effective during the financial year ended December 31, 2017.

Material changes and commitments and change in Nature of Business

There have been no material changes and commitments, affecting the financial position of the company from the end of the Year 2017 upto the date of this report. Further, there has been no change in the nature of business carried on by the Company.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under section 134(3)(m) of the Companies Act, 2013 read with rule 8 of the Companies (Accounts) Rules, 2014 have been annexed to this report (Annexure - H).

Acknowledgements

Your Directors express their gratitude for the cooperation and support extended by Shareholders, Schaeffler Group, Customers, Suppliers, Stockists & Importers, Banks, Government & Regulatory Authorities and all Employees of the Company for their efforts.

For and on behalf of the Board

Avinash Gandhi

Chairman

New Delhi: February 7, 2018 DIN: 00161107

Dec 31, 2016

Dear Shareholders,

The Directors are pleased to present the 54^th Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2016.

Financial Highlights (Rs. in millions)

Year	2016	2015
TOTAL INCOME (Net)	18,821.6	17,805.9
Gross Operating Profit (Earnings before depreciation, interest, tax and prior period adjustments)	3,643.1	3,614.4
Depreciation / Amortization	641.0	655.1
Interest (Net)	17.6	21.2
Prior period adjustments	-	-
PROFIT BEFORE TAX	2,984.5	2,938.1
Provision for Tax	1,039.5	963.3
PROFIT AFTER TAX	1,945.0	1,974.8
Balance brought forward	8,674.6	7,473.3
Other Adjustments to Surplus	0.6	(167.6)
Profit available for appropriation	10,620.2	9,280.5
APPROPRIATIONS
Proposed dividend	199.4	166.2
Tax on Proposed dividend	41.7	39.7
Transfer to General Reserve	400.0	400.0
Balance carried to Balance Sheet	9,979.1	8,674.6

Financial and Operational Performance

Economy

The world economic environment was subdued in year 2016. This was on account of various factors such as uncertainties in global financial market, set-back such as Brexit, slow-down in investments, weaker growth in China and overall heightened policy uncertainties.

In India, while the mood somewhat changed from excitement to pragmatism, the economy remained on healthy growth path till last quarter of CY 2016. Demonetization of R 500 and R 1000 denomination currency notes by the government in November 2016 did impact consumption and economic activities temporarily. Overall GDP growth in FY 2016-17 is still expected to remain around 7.0%.

Industrial production as reflected by development of Index of

Industrial Production (IIP) remained erratic during year 2016. Core infrastructure industry, well supported by public sector investment and favourable policy environment, showed positive growth of 5.0% in year 2016. Mobility sectors such as passenger cars, commercial vehicles and two-wheelers continued healthy growth of 7.0% to 9.0%. Agriculture tractor industry recovered from cyclic decline to grow =5.0% in year 2016. Private investments did not show smart pick-up during the year as capacity utilization in most of the sectors is still not at high levels. The demand of your Company''s products from aftermarket and new projects remained sluggish.

Overall the market environment of your Company''s business was moderately positive. At the same time, competition both from the global and local players intensified during the year.

Performance

Your Company''s total Income (including other income) was placed at R 18,821.6 million in year 2016 (Year 2015: R 17,805.9 million) representing a growth of 5.7%. Profit before tax was placed at R 2,984.5 million (Year 2015: R 2,938.1 million) representing a growth of 1.6%.

Your Company''s sales to mobility sectors grew in-line with market growth. Sales to technology and innovation driven sectors like wind energy, rail, industrial automation registered above average growth. At the same time, sales to aftermarket and distributor sector suffered under price and cash pressure prevailing in the market. The export business of your Company was stable during the year.

Your Directors consider the Company''s performance as satisfactory.

Strategy

During the year Schaeffler Group fine-tuned its strategic concept "Mobility for Tomorrow" with its four focus areas namely Eco-friendly drives, Urban mobility, Inter-urban mobility and Energy chain. Schaeffler''s strategic approach combines long-term thinking with proven success factors of Quality, Technology and Innovation to form robust and systematic organisational orientation towards the future.

As a member company of Schaeffler Group, your Company regularly aligns and adjusts its business approach with Group''s strategy. During the year, the Company took significant steps to strengthen its presence in innovation driven markets such as Automotive, Railways and Wind. Continuing our focus on high volume business, we expanded our production of Ball-Bearings at Savli plant. We continued to invest in expansion of our manufacturing and engineering footprints in the country.

Emphasizing the importance of efficiency and cost control as critical success factors of business in India, your Company accelerated implementation of Schaeffler Group programs such as "Fit for Quality" and "MOVE" across all areas of operations with a view to realizing operational excellence.

Competence of our people is a key differentiator in demanding Indian market. During the year, your Company successfully launched "Team leader" concept at both its plants. This program empowers young engineers and technicians with new skills and shop-floor management tools. Intense involvement of our employees in continuous improvement initiatives was recognized during various competitions in which our employees participated.

In summary, your Company combines its focus on growth in customized as well as high volume businesses together with emphasis on proven success factors - Quality, Technology and Innovation to form basis of its long-term strategy orientation towards the future.

Outlook

GDP growth in FY 2017-18 is expected to exceed the 7.0% mark after suffering temporary negative impact of demonetization in FY 2016-17. The Goods and Services Tax (GST) is most likely to be implemented in 2017. This will simplify taxation, improve transparency and spur growth. The union budget for FY 2017-18 provides for high investment in up gradation of infrastructure and housing. Increased spend on Road and Rail will lead to growth in demand ofyour Company''s products. Higher budgetary investment in agriculture, rural and social sector will provide impetus to two-wheeler, tractors and construction equipment sectors which are important markets of Company''s products.

Dividend

Your Company has a steady dividend payment history and in line with the financial performance of the year 2016, your Directors recommend dividend for the year ended December 31, 2016 at the rate of R 12/- (2015: R 10/-) per equity share amounting to R 199.4 million (2015: R 166.2 million). The Company will pay the Tax on dividend as per the provisions of the Income Tax Act, 1961.

Transfer to General Reserve

A sum of R 400 million has been transferred to the General Reserves of the Company. This reflects well on the financial strength of the Company.

Transfer to Investor Education and Protection Fund

Pursuant to provisions of Section 205A of the Companies Act, 1956 [Pursuant to rule 3 of the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001] the Unclaimed and Unpaid dividend pertaining to the year ended on December 31, 2008 amounting to Rs 3,24,383/- which was lying in the Company''s separate Unpaid Dividend Account and remained unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund (IEPF) during the year.

Management Discussion and Analysis

Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management Discussion & Analysis. (Annexure - A)

Corporate Governance

A separate section on Corporate Governance is included in the Annual Report and the certificate from M/s. Samdani Kabra &

Associates, Company Secretaries, Vadodara (Guj.), the Company''s Secretarial Auditors confirming the compliance of conditions on Corporate Governance is annexed thereto. (Annexure - B)

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (3)(m) of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 has been given in the Annexure forming part of this Report. (Annexure - C)

Directors

In accordance with the provisions of Section 152 the Companies Act, 2013 read with provisions of the Articles of Association of the Company, Mr. Klaus Rosenfeld and Mr. R. Sampath Kumar will retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for reappointment. A brief resume / particulars relating to them are given separately under the report on Corporate Governance.

Mr. Dharmesh Arora [DIN: 05350121] has been appointed as the Managing Director by the Board of Directors to fill the casual vacancy caused due to resignation of Mr. Rajendra Anandpara. Your Board place on record appreciation for Mr. Anandpara''s many years of commitment, outstanding work and contribution to the Company.

Key Managerial Personnel (KMP)

1.	Managing Director & Chief Executive Officer*	Mr. Dharmesh Arora
2.	Chief Financial Officer	Mr. Satish Patel
3.	Company Secretary	Mr. Raj Sarraf

*Mr. Rajendra Anandpara has resigned as Director and Managing Director w.e.f. March 3, 2017. Mr. Dharmesh Arora has been appointed as an Additional Director and Managing Director of the Company w.e.f. March 6, 2017.

Policy on Nomination and Remuneration

The Company''s Policy on Nomination and Remuneration is framed with objectives as under;

3. To evaluate performance and give recommendations to the Board on remuneration payable to the Directors, KMP and Senior Management, and

Criteria and Qualification for Nomination and Appointment

A person to be appointed as Director, KMP or at Senior Management level should possess adequate relevant qualification, expertise and experience for the position that he / she is being considered for. The Nomination and Remuneration Committee (NRC) will evaluate whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position and the NRC will make appropriate recommendations to the Board of Directors.

Policy on Remuneration

2. None of the Directors (including Independent Directors) shall be entitled to any stock option of the Company.

4. While determining remuneration to KMP, Senior Management Personnel and other Employees, the Company encourages and rewards; merit and superior performance. The objective is to set the total remuneration at levels to attract, motivate, and retain high-calibre, and high potential personnel in a competitive global market.

Formal Annual Evaluation

The process includes; multi-layered evaluation based on well defined criteria consisting of relevant parameters.

For the year 2016, the Board has carried out an annual performance evaluation of its own and that of its Committees and individual Directors.

Performance evaluation criteria for the Board, its Committees, the Directors and the Chairman of the Company were circulated to and filled up by the Directors. A consolidated summary of the ratings given by the Directors was prepared by the Company Secretary. Independent Directors in their meeting have evaluated performance of the ''Board'', the ''Non-independent Directors'' and the ''Chairman'' of the Company and submitted its recommendation to the ''Board''. The Nomination and Remuneration Committee has further carried out evaluation of all the Directors including Independent Directors. The report of performance evaluation so arrived at was then noted and discussed by the Nomination and Remuneration Committee and the Board in their respective meetings.

Independent Director''s Declaration

The Company has received the declarations in the prescribed format from each Independent Director conforming that they meet the criteria of independence as envisaged in the provisions of Section 149 of the Companies Act, 2013, read with Regulation 16 of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Auditors

Statutory Auditors

The Statutory Auditors, M/s. B S R & Co. LLP, Chartered Accountants, Mumbai, (Firm Registration Number: 101248 W / W-100022) were appointed as Statutory Auditors of the Company in 52^nd Annual General Meeting of Company held on April 24, 2015 for a period of five consecutive years, subject to ratification by members every year in AGM. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors propose ratification of their appointment in 54^th Annual General Meeting until conclusion of 55^th Annual General Meeting of the Company.

Secretarial Auditors

M/s. Samdani Kabra & Associates, a firm of Company Secretaries in Practice was appointed as ''Secretarial Auditors'' to carry out Secretarial Audit of the Company. In terms of provisions of section 204 of the Companies Act, 2013, a Secretarial Audit Report has been annexed to this Report. (Annexure - H)

Cost Auditors

M/s Y. S. Thakar & Co., Cost Accountants, as Cost Auditors had conducted the audit of the cost records of the Company for the Financial Year ending December 31, 2016. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors have made their appointment for the year 2017.

Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the auditor''s reports:

There have been no disqualifications, reservations, adverse remarks or disclaimers in the auditor''s reports, requiring explanation or comments by the Board.

Contracts and Arrangements with Related Parties

The transactions with the related parties are governed by prevailing regulatory requirements and Company''s policy on dealing with such transactions. During the year, all transactions with the Related Parties have been carried out in normal course of business and based upon well set principles of arm''s length. A separate report containing details of ''Material Related Party Transactions'' carried out during the year is annexed to this report. (Annexure - D)

Corporate Social Responsibility (CSR)

Being an Indian company, we are equally motivated by the Indian ethos of Dharma as a key plank for organizational self-realization. Guided by the prevailing regulatory requirements, the Company has constituted a ''Corporate Social Responsibility (CSR) Committee'' and framed a Policy on CSR, summary of which together with details of CSR activities undertaken by the Company during the year 2016, have been covered in Separate report on CSR annexed to this report. (Annexure - E)

Whistle Blower Policy / Vigil Mechanism

Your Company has well defined ''Whistle Blower Policy'' and established Vigil Mechanism to provide for adequate safeguard against victimization of Directors and employees who follow such mechanism and also make provisions for direct access to the chairperson of Audit Committee in appropriate cases.

Whistle Blower Policy of the Company is available on the Company''s website at the web-link:

http://www.schaeffler.com/remotemedien/media/_shared_ media/03_worldwide/02_websites_worldwide/india_2/company/fag_india/ir/codes_policies/Vigil_Mechanism_OR_ Whistle_Blower_Policy.pdf

Particulars of Loans given, Investments made, Guarantees given and Securities provided

The particulars of loans have been disclosed in notes to the Financial Statements. Except prolongation of existing interoperate loans, there have been no fresh loans given, investments made or guarantees given to the related parties during the year.

Deposit

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names of the top ten employees in terms of remuneration drawn and employees drawing remuneration in excess of the limits set out in the said rules forming part of this report is given in the Annexure to this report. However, pursuant to provisions of Section 136(1) of the Companies Act, 2013 all reports and accounts are sent to all the shareholders of the Company except this annexure. Any shareholder, interested in inspecting this report, can visit our registered office or write to the Company Secretary for a copy of it.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been appended to this Report. (Annexure - F)

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Extract of Annual Return

As per regulatory requirements, ''Extract of Annual Return'' is provided in a separate report annexed to this Report. (Annexure - G)

Orders passed by the Regulators or the Courts or the Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, your directors hereby state that;

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

b) The accounting policies have been selected and these have been applied consistently and judgments and estimates made thereon are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at December 31, 2016 and of the profit of the Company for that period;

d) Annual accounts of the Company have been prepared on a ''going concern'' basis;

e) Internal financial controls have been laid down and being followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and were operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year ended December 31, 2016.

Acknowledgements

Your Directors wish to place on record their sincere appreciation for the wholehearted and continued support extended by the Shareholders, Schaeffer Group, Customers, Suppliers, Stockists & Importers, Banks, Government & Regulatory Authorities and all Employees of the Company for their continued support.

For and on behalf of the Board

Avinash Gandhi

Chairman

New Delhi: March 6, 2017 DIN: 00161107

Dec 31, 2015

Dear Shareholders,

The Directors are pleased to present the 53^rd Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2015.

Financial Highlights

(Rs,in million)

Year	2015	2014
TOTAL INCOME (Net)	17,805.9	16,731.0
Gross Operating Profit (Earnings before depreciation, interest, tax and prior period adjustments)	3,614.4	2,826.9
Depreciation / Amortization	655.1	493.5
Interest (Net)	21.2	9.7
Prior period adjustments - -
PROFIT BEFORE TAX	2,938.1	2,323.7
Provision for Tax	963.3	794.9
PROFIT AFTER TAX	1,974.8	1,528.8
Balance brought forward	7,473.3	6,490.3
Other Adjustments to Surplus	167.6	-
Profit available for appropriation	9,280.5	8,019.1
APPROPRIATIONS
Proposed dividend	166.2	124.6
Income tax on dividend	39.7	21.2
Transfer to General Reserve	400.0	400.0
Balance carried to Balance Sheet	8,674.6	7,473.3
	9,280.5	8,019.1

Financial and Operational Performance

Indian business environment showed mixed signals in the year 2015. Forecast for economic growth as measured by GVA for the fiscal year 2015-16 is estimated at 7.3%. Growth in industrial production as reflected by development of Index of Industrial Production (IIP) is placed much lower at about 3% to 4% during the same year.

Some of the sectors closely related to your Company''s business such as agricultural equipment, for example, showed a strongly negative trend. Unfavorable developments in rural markets were also reflected in flat demand growth from two wheeler industry. Infrastructure development remained at a very moderate level. On a more positive note, Indian Government announced implementation of key projects to improve rail infrastructure in the country. Developments in Renewable Energy have been positive, though India still has significantly higher potential compared to current level of production in this sector.

Lower level of capacity utilization in user industries impacted growth in aftermarket demand.

Exports business showed moderate growth.

Helped by global decline in prices of crude oil and some other commodities, inflation in the country remained well under control.

Slowdown in global economy, especially Chinese economy, turned many global competitors to intensify their Indian business activities thus leading to tough competition in local markets.

Overall, the market environment for your Company''s business was moderately positive.

Performance

Your Company''s total Income (including other income) was placed at RS, 17,806 million in year 2015 (Year 2014: RS, 16,731 million) representing a growth of 6.4%. Profit before tax was placed at RS, 2,938 million (Year 2014: RS, 2,324 million) representing a growth of 26.4%.

Reasonable growth in domestic and export markets together with improvement in operational efficiency led to favorable impact on bottom line. Our Company has been consistently practicing prudent finance and working capital management. The strong focus on working capital and liquidity management has helped timely generation of sufficient internal cash flow to invest in long term strategic objectives of the Company.

We consider your Company''s performance as satisfactory. Strategy

As a member company of Schaeffer Group, your Company focuses on quality, technology and innovation as cornerstones of its long term strategy. We continue to invest in expansion of our manufacturing and engineering capabilities in the country. We keep customer at the centre stage of all our actions, and get involved in customer projects at an early stage of development. This helps us in our endeavors to position FAG as a preferred partner of our customers.

We believe that efficiency and control on costs are critical factors for success for business in India. Our programmes such as Fit for Quality and MOVE are consistently implemented in all areas to improve operational excellence.

Competence of our people is a key differentiator in competitive Indian market. We continue to vigorously invest in talent development as a core process within our Human Resource Development initiatives.

By consistent implementation of initiatives to improve market excellence, operational excellence and people excellence, your Company strives not only to achieve profitable growth but to also improve its long term competitiveness in the business.

Outlook

The forecast for GVA growth in FY 2016 -17 is likely to improve at 7.6% for the year 2016-17.

Government is energetically pushing the Make in India initiative and is taking measures to accelerate infrastructure projects and rural development while continuing its emphasis on fiscal discipline. With commodity prices unlikely to move up much, inflation may remain in control.

Above factors suggest further gradual improvement in economic and industrial outlook of the country.

Experts however do caution that the economic recovery may be uneven and there are downside risks. The pick-up in the investment cycle is yet to gain strength, the banking system is weighed down by bad loans, and the weaker global economy can hit India''s exports.

Your Company believes that long term outlook for Indian economy is very positive, while for the short term we remain cautiously optimistic.

With our strategy to invest in continued expansion of manufacturing and engineering footprint, your Company is determined to maintain its focus on profitable growth in the short and long term. At the same time, we will strive to improve organizational agility and minimize risks that any short term downturn could bring.

The global situation currently is characterized by many challenges and uncertainties. In India, despite several chronic issues, we still see numerous opportunities in the long term. Being a leading player in this business we follow strong future orientation in our approach and continually work towards improving organizational competitiveness and agility. ''Expect More'' epitomizes our organizationâs spirit of continual improvement as we remain positive, raise the bar and strive for innovation and excellence through team work in all areas of operations.

Dividend

Your Company has a steady dividend payment history and in line with the financial performance for the year 2015, your Directors recommend for your approval on dividend for the year ended December 31, 2015 at the rate of RS, 10/- (2014: RS, 7.5) per equity share amounting to RS, 166.2 million. (2014: RS, 124.6 million). The Company will pay the Income Tax on dividend as per the provisions of the Income-Tax Act, 1961.

Transfer to General Reserve

A sum of RS, 400 million has been transferred to the General Reserves of the Company. This reflects well on the financial strength of the Company.

Transfer to Investor Education and Protection Fund

Pursuant to provisions of Section 205A of the Companies Act, 1956 [pursuant to rule 3 of the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001] the unpaid/unclaimed dividend pertaining to the year ended on December 31, 2007 amounting to RS, 2,64,912/-(including interest accrued thereon) which was lying in the Company''s separate unpaid dividend account and remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund (IEPF).

Subsidiary and Associate Companies

At the beginning of the year (effective from January 1, 2015) ''FAG Roller Bearings Private Limited'' [CIN: U29130MH 2001PTC134044], became ''wholly owned subsidiary'', which was amalgamated with the Company during the year.

Corporate Restructuring

The High Court of Judicature at Bombay sanctioned the Scheme of Amalgamation (appointed date: January 1, 2015) of ''FAG Roller Bearings Private Limited'' with ''FAG Bearings India Limited'' and their respective Shareholders and Creditors by passing an order that was received on November 3, 2015. The said order has been registered with ''Registrar of Companies'', Mumbai, Maharashtra on November 10, 2015 and accordingly, the Scheme has become effective from November 10, 2015.

The Company does not have any Subsidiary, Joint Venture or Associate Company incorporated in India, as on December 31, 2015.

Management''s Discussion and Analysis

Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management''s Discussion & Analysis. (ANNEXURE - A)

Corporate Governance

A separate section on Corporate Governance is included in the Annual Report and the certificate from M/s. Samdani Kabra & Associates, Company Secretaries, Vadodara (Gujarat), the Company''s Secretarial Auditors confirming the compliance of conditions on Corporate Governance is annexed thereto. (ANNEXURE - B)

Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo

The particulars as prescribed under sub-section (3) (m) of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 have been given in the Annexure forming part of this Report (ANNEXURE -C).

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with provisions of the Articles of Association of the Company, Mr. Avinash Gandhi and Mr. Dietmar Heinrich will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. A brief resume of and particulars relating to them are given separately under the report on Corporate Governance.

Key Managerial Personnel (KMP)

- Mr. Rajendra Anandpara, Managing Director &

Chief Executive Officer

- Mr. Satish Patel, Chief Financial Officer

- Mr. Raj Sarraf, Company Secretary

None of the Key Managerial Personnel, has resigned during the year ended December 31, 2015.

Policy on Nomination and Remuneration

The Company''s policy on Nomination and Remuneration is framed with objectives as under;

3. To evaluate performance and give recommendations to the Board on remuneration payable to the Directors, KMP and Senior Management, and

4. To review and recommend to the Board, measures to retain and motivate talent including KMP and Senior Management Personnel with a view to ensuring long term sustainability and competitiveness of the organization.

Criteria and Qualification for Nomination & Appointment

A person to be appointed as Director, KMP or at Senior Management level should possess adequate and relevant qualification, expertise and experience for the position that he / she is being considered for. The Nomination & Remuneration Committee (NRC) will evaluate whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position and the NRC will make appropriate recommendations to the Board of Directors.

Policy on Remuneration

2. None of the Directors (including Independent Directors) shall be entitled to any stock option of the Company.

3. Non-executive directors, who are in whole-time employment with other Associate Companies of the Schaeffer Group, will not be entitled to any remuneration, profit related commission or sitting fees.

4. While determining Remuneration to KMP, Senior Management Personnel and other employees, the Company encourages and rewards; merit and superior performance. The objective is to set the total remuneration at levels to attract, motivate, and retain high-calibre, and high potential personnel in a competitive global market.

Formal Annual Evaluation

Your Company believes that systematic evaluation contributes significantly to improved performance at three levels -Organizational, Board and Individual Board Member. It encourages the leadership, teamwork, accountability, decision-making, communication and efficiency of the Board. Evaluation also ensures teamwork by creating better understating of Board dynamics, board-management relations and thinking as a group within the Board.

The process includes multi-layered evaluation based on well defined criteria consisting of relevant parameters.

For the year 2015, the Board has carried out an annual performance evaluation of its own, and that of its Committees and individual Directors.

Performance evaluation criteria for the Board, its Committees, the Directors and the Chairman of the Company were circulated to and responded by the Directors. A consolidated summary of the ratings as provided by the Directors, was prepared by the Company Secretary. Independent Directors in their meeting have, evaluated performance of the ''Board'', the ''Non-independent Directors'' as well as the ''Chairman'' of the Company and submitted their recommendation to the Board. The Nomination and Remuneration Committee has further carried out evaluation of all Directors including Independent Directors. The report of performance evaluation so arrived at was then noted and discussed by the Nomination and Remuneration Committee and the Board in their respective meetings.

Independent Director''s Declaration

The Company has received the declarations in the prescribed format from each Independent Director confirming that they meet the criteria of independence as envisaged in the provisions of Section 149 of the Companies Act, 2013, read with Regulation 16 of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Auditors

Statutory Auditors

The Statutory Auditors, M/s. B S R & Co LLP, Chartered Accountants, Mumbai, (Firm Registration Number: 101248 W / W-100022) were appointed as Statutory Auditor of the Company in the 52^nd Annual General Meeting of Company held on April 24, 2015 for a period of five consecutive years, subject to ratification by members every year in the AGM. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors propose ratification of their appointment in 53^rd Annual General Meeting until conclusion of 54^th Annual General Meeting of the Company.

Secretarial Auditors

M/s. Samdani Kabra & Associates, a firm of Company

Secretaries in practice was appointed as Secretarial Auditors, to carry out Secretarial Audit of the Company. In terms of provisions of section 204 of the Companies Act, 2013, a Secretarial Audit Report has been annexed to this Report. (ANNEXURE -H)

Cost Auditors

M/s Y. S. Thakar & Co., Cost Accountants were appointed as Cost Auditors to carry out the audit of the cost records of the Company for the Financial Year ending December 31, 2015. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors propose their appointment for the year 2016.

Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the auditor''s reports;

There have been no disqualifications, reservations, adverse remarks or disclaimers in the auditor''s reports, requiring explanation or comments by the Board.

Contracts and Arrangements with Related Parties

The transactions with the related parties are governed by prevailing regulatory requirements and Company''s policy on dealing with such transactions. During the year, all transactions with the related parties have been carried out in normal course of business and based upon well set principles of arm''s length. A separate report containing details of ''Material Related Party Transactions'' carried out during the year is annexed to this report. (ANNEXURE - D)

Corporate Social Responsibility (CSR)

Being an Indian company, we are equally motivated by the Indian ethos of Dharma as a key plank for organizational self-realization. Guided by the prevailing regulatory requirements, the Company has constituted a ''Corporate Social Responsibility (CSR) Committee'' and framed a Policy on CSR, summary of which together with details of CSR activities undertaken by the Company during the year 2015, have been covered in separate report on CSR annexed to this report. (ANNEXURE - E)

Whistle Blower Policy/ Vigil Mechanism

Your Company has a well-defined ''Whistle Blower Policy'' and established Vigil Mechanism to provide for adequate safeguard against victimization of Directors and employees who follow such mechanism and also make provisions for direct access to the chairperson of Audit Committee in appropriate cases.

Whistle Blower Policy of the Company is available on the Company''s website at the web-link:

http://www.schaeffler.com/remotemedien/media/_shared_

media/03_worldwide/02_websites_worldwide/india_2/

company/fag_india/ir/codes_policies/Vigil_Mechanism_OR_

Whistle_Blower_Policy.pdf

Particulars of Loans given, Investments made, Guarantees given and Securities provided

The particulars of loans have been disclosed in notes to the financial statements. Except prolongation of existing interoperate loans, there have been no fresh loans given, investments made or guarantees given during the year.

Deposit

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names of employees drawing remuneration in excess of the limits set out in the said rules forming part of this Report is given in the Annexure to this Report. However, pursuant to provisions of Section 136(1) of Companies Act, 2013 all reports and accounts are sent to all the shareholders of the Company except this annexure. Any shareholder, interested in inspecting this report, can visit to our registered office or write to the Company Secretary for a copy of it.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Policy against Sexual Harassment at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set-up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this Policy. No complaint received by the Committee during the year.

Extract of Annual Return

As per regulatory requirements ''Extract of Annual Return'' is provided in a separate report annexed to this Report. (ANNEXURE - G).

Orders passed by the Regulators or the Courts or the Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company''s operation.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 134(3) (c) of the Companies Act, 2013, your Directors hereby state that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

b) The accounting policies have been selected and these have been applied consistently and judgments and estimates made thereon are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at December 31, 2015 and of the profit of the Company for that period;

d) Annual accounts of the Company have been prepared on a ''going concern'' basis;

e) Internal financial controls have been laid down and being followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year ended December 31, 2015.

Acknowledgements

Your Directors wish to place on record their sincere appreciation for the wholehearted and continued support extended by the Shareholders, Schaeffler Group, Suppliers, Customers, Stockists & Importers, Banks and all Employees of the Company during the year under report.

For and on behalf of the Board

Avinash Gandhi

Chairman

Mumbai: February 12, 2016 DIN: 00161107

Dec 31, 2014

Dear Shareholders,

The Directors are pleased to present the 52nd Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2014.

(in million)

Financial Highlights

Year 2014 2013

TOTAL INCOME (Net) 16,731.0 14,482.8

Gross Operating Profit

(Earnings before depreciation, interest, tax and prior period adjustments) 2,826.9 2,294.5

Depreciation / Amortisation 493.5 432.5

Interest (Net) 9.7 7.6

Prior period adjustments - -

PROFIT BEFORE TAX 2,323.7 1,854.4

Provision for Tax 794.9 636.1

PROFIT AFTER TAX 1,528.8 1,218.3

Balance brought forward 6,490.3 5,739.3

Profit available for appropriation 8,019.1 6,957.6

APPROPRIATIONS

Proposed dividend 124.6 99.7 Income tax on dividend 21.2 17.6

Transfer to General Reserve 400.0 350.0

Balance carried to Balance Sheet 7,473.3 6,490.3

8,019.1 6,957.6

Financial and Operational Performance

Economy

After witnessing low GDP growth of 4.7 % in FY 2013-14, the year 2014 saw moderate improvement in the country''s economic climate. GDP growth in the first six months of financial year 2014-15 improved to 5.5%. Service sector continued its strong growth trend while Agriculture too, contributed through reasonable development. Development of Industrial Production though remained very erratic as reflected in the Index of Industrial Production (IIP) which grew very modestly at 1.5% during the year 2014.

Inflation remained in control as the Wholesale Price Index(WPI) continued the trend of deceleration. A sharp drop in crude oil prices, pushed WPI trend further south - from high of 6% in May 2014, WPI dropped to just 0.1% by December 2014.

After the historic general elections in May 2014, a new majority government at the Centre was formed in India. There are high expectations that a strong government not constrained by coalition politics will usher in significant reforms that can

accelerate growth in the medium term.

Despite positive sentiments, the year 2014 saw lacklustre momentum in investment cycle. RBI continued its conservative approach on interest rates and only marginally reduced the repo rate by 25 bps in January 2015.

On the Foreign Exchange Rate front, after a period of high volatility in year 2013, Indian Rupee seems to have stabilised with respect to USD while it improved considerably with respect to Euro.

y Industry Trend and Demand Development

Against the above backdrop, growth in demand of your Company''s products both for automotive and industrial sector remained moderate during the year 2014.

The two wheeler sector surprised by notching up 2-digit growth. On other hand, passenger cars and commercial vehicles did not grow as expected; while production of agricultural tractors declined in 2014 after registering growth in 2012 and 2013.

Due to overall cash crunch and slow progress in implementation of infrastructure and capacity increase in projects, demand from sectors such as Electric Motors, Industrial Gearbox, Railways and Heavy Industries was sluggish throughout the year 2014. Demand from Aftermarket was stable though the market saw intensified competitive actions thus limiting scope for smart recovery in volume and margins.

In the exports markets, demand of your Company''s products was strong.

) Performance

Your Company''s Income for the year 2014, was placed at M 16,731 million which is 15.5% higher than corresponding figures for the year 2013.

With increase in production at Maneja and Savli plants, exports grew by 33%. Other sectors of your Company''s business viz. Automotive, Industry and Aftermarket - each posted a good double digit growth. Profit from ordinary activities Before Tax increased to M 2,323.7 million (2013: M 1,854.4 million); while Profit After Tax increased to M 1,528.8 million (2013: M 1,218.3 million) Given modest economic environment, we consider your Company''s performance as encouraging.

Strategy

Your Company continues to pursue its long-term strategy to invest in profitable and sustainable growth. At our plant in Maneja - Vadodara, we enhanced production of Wheel bearings to meet growing demand of our Automotive customers. Increase in production of roller bearings supported growth in exports as well as domestic markets.

Production of low friction ball bearings at Savli, continues to improve following high global standards of quality and productivity. Though capacity utilisation of our Large Size Bearing production at Savli remained low, we initiated development of number of technologically advanced products there. New products for demanding applications in sector such as Wind, Power Generation, Industrial Transmission and Heavy Industries are gaining customer acceptance.

Your Company is confident that on the strength of Quality and Innovation, our production capacities at Savli and Maneja plants will be gainfully utilised.

The strength of your Company lies in its engineering capabilities. We continued our investment towards developing technical competence of our engineers. Beyond gaining expertise in bearing domain, our engineers are now well trained to develop subsystem and system understanding. This competence helps them immensely while partnering with our

customers at an early stage of development. Our engineers combine their application know-how with process and manufacturing expertise to deliver efficient solutions that delight our customers.

Our efforts to build local engineering competence were recognised this year by the Group when FAG India was certified and became a member of the Schaeffler Global Technical Network, after an extensive qualification audit by Schaeffler Germany.

With emphasis on innovation, R&D and sector approach, your Company was successful in developing large number of value added and energy efficient solutions for our customers in Automotive and Industrial sectors. In Aftermarket sector, we undertook service projects at customer locations and supported our customers'' initiatives towards reduction of Total Cost of Ownership (TCO).

At FAG, we believe that Quality and Productivity are moving targets. During the year, we intensified implementation of MOVE and Fit for Quality (FFQ) initiatives and progressed further towards our objective of realising operational excellence.

Outlook

As we look ahead, effective implementation of economic agenda holds the key to nation''s progress. Industry indeed faces challenges of rigid labour laws, poor infrastructure, to name a few. Yet there is growing optimism that the government at the Centre is pushing reforms and will take actions to create a positive climate where dream of ''Make in India'' becomes a reality. In the short term, economic and industrial growth will largely depend on revival of investment cycle. The year 2015, may prove to be a year in transition before the economy moves to fast-track mid and long-term growth.

Your Company has strong fundamentals, follows robust customer and innovation focused strategy, emphasises on operational excellence and constantly empowers and motivates its people to pursue higher goals. This gives us confidence that your Company is capable of meeting growing customer expectations and is well prepared to benefit from medium and long-term growth of Indian economy.

Dividend

Your Directors recommend for your approval dividend for the year ended December 31, 2014 at the rate of M 7.5/- (2013: M 6.0) per equity share amounting to M 124.6 million. (2013: M 99.7 million).

The Company will pay the Income Tax on dividend as per the provisions of the Income Tax Act, 1961.

Transfer to General Reserve

A sum of M 400 million has been transferred to the General Reserves of the Company. This reflects well on the financial strength of the Company.

Transfer to Investor Education and Protection Fund

Pursuant to provisions of Section 205A of the Companies Act, 1956 the unpaid & unclaimed dividend pertaining to the year ended on December 31, 2006 amounting to M 365,016/- (including interest accrued thereon) which was lying in the Company''s separate unpaid dividend account and remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund.

Subsidiary and Associate Companies

''FAG Roller Bearings Private Limited''

[U29130MH2001PTC134044] has became wholly owned subsidiary of ''FAG Bearings India Limited'' with effect from January 1, 2015.

Management''s Discussion and Analysis

A detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management''s Discussion & Analysis. (ANNEXURE - I)

Directors

At the forthcoming Annual General Meeting, Mr. Sampath Kumar Raman and Mr. Frank Huber will retire by rotation and being eligible, will offer themselves for re-appointment in terms of the Articles of Association of the Company. A brief resume / particulars relating to them are given separately under the report on Corporate Governance. Your Directors recommend their re-appointment at the forthcoming Annual General Meeting.

Mrs. Renu Challu, Independent Director (Woman Director), has been appointed as an Additional Director with effect from November 6, 2014. Your Directors recommend her re- appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

Dr. Sanak Mishra, Independent Director has been appointed as an Additional Director with effect from November 6, 2014. Your Directors recommend his re-appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

Mr. Rakesh Jinsi has been appointed as an Additional Director (Independent) with effect from February 11, 2015. Your Directors recommend his re-appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

Mr. Klaus Rosenfeld has been appointed as an Additional Director with effect from February 11, 2015. Your Directors recommend his re-appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

Mr. Moreshwar Garde and Mr. Bernhard Steinruecke have resigned from the directorship with effect from November 6, 2014. Mr. Robert Schullan and Mr. Dharmesh Arora have resigned from the directorship with effect from February 7, 2015 and February 11, 2015 respectively. The Board wishes to place on record its appreciation of services rendered by them during their tenure as the Directors of the Company.

Key Managerial Personnel

Mr. Rajendra Anandpara, Managing Director & Chief Executive Officer, Mr. Satish Patel, Chief Financial Officer and Mr. Raj Sarraf, Company Secretary of the Company are Key Managerial Personnel of the Company as on December 31, 2014.

Particulars of Employees

The statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended and forming part of this report is given in Annexure - IV. However, pursuant to provisions of proviso (b) (iv) to Section 219 (1) of the Companies Act, 1956 all reports and accounts are being sent to all the shareholders of the Company except this Annexure - IV. Any shareholder interested in getting a copy of the said statement may write to the Company Secretary at Registered Office or at Head Office of the Company.

Corporate Governance

A separate Section on Corporate Governance is included in the Annual Report and the certificate from M/s. Samdani Kabra & Associates, Company Secretaries, Vadodara (Gujarat), the Company''s Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with Stock Exchanges is annexed thereto. (ANNEXURE - II)

Auditors

The Statutory Auditors, B S R & Co. LLP, Chartered Accountants, Mumbai, who will retire at the conclusion of 52nd Annual General Meeting to be held on April 24, 2015 and being eligible, will offer themselves for re-appointment for a period of five years subject to their eligibility and ratification of appointment in Annual General Meeting. A certificate from them has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 139 of the Companies Act, 2013.

Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo

Information required as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 has been given in the Annexure forming part of this Report (ANNEXURE - III).

Environmental Protection and Occupational Health & Safety Policy

Commitment to Environmental protection, Occupational health and safety are important part of your Company''s Management principles. Details of actions taken by your Company towards protecting environment and safety are covered under Management''s Discussion & Analysis (Annexure I to the Directors'' report).

Directors'' Responsibility Statement

The Directors state that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) Accounting Policies as listed in notes to the financial statements have been selected and applied consistently. Reasonable and prudent judgements as

well as estimates have been made so as to give a true and fair view of the state of affairs of the Company as on December 31, 2014 and of the profit of the Company for that period;

c) Proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with the provisions of the Companies Act, 1956 / 2013 so as to safeguard the assets of the Company and to detect and prevent fraud and other irregularities.

d) The annual accounts have been prepared on a going concern basis.

e) Internal Financial Controls System is in place and the same has been followed by the Company. Further, such Internal Financial Controls are adequate and were operating effectively.

f) Proper systems to ensure compliance with the provisions of all applicable law and such systems were adequate and operating effectively.

Notes:

We refer to a General Circular No. 08/2014 No.1/19/2013-CL-V dated April 4, 2014, issued by the Ministry of Corporate Affairs, Government of India, that states "The financial statements (and documents required to be attached thereto), auditors report and Boards'' Report in respect of financial years that commenced earlier than April 1, 2014 shall be governed by the relevant provisions / Schedules / Rules of the Companies Act, 1956". Therefore, in adherence to this Circular, Financial Statements, Auditors'' Report and Board''s Report are prepared in accordance with the provisions of the Companies Act, 1956. However, in view of improved disclosure and corporate governance norms, additional information has been provided to the extent possible.

Acknowledgements

Your Directors place on record their sincere appreciation for the wholehearted and continued support extended by the Shareholders, Schaeffler Group, Suppliers, Customers, Stockists & Importers, Banks and all Employees of the Company during the year under report.

For and on behalf of the Board

Avinash Gandhi Chairman Mumbai:February 11.2015 DIN: 00161107

Dec 31, 2013

DIRECTORS'' REPORT

Dear Shareholders,

The Directors are pleased to present the 51st Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2013.

Financial Highlights (Rs. in million)

Year 2013 2012

TOTAL INCOME (Net) 14,758.7 14,912.8

Gross Operating Profit (Earning before depreciation, interest, tax and prior period adjustments) 2,294.5 2,650.4

Depreciation / Amortisation 432.5 302.7

Interest (Net) 7.6 13.0

Prior period adjustments - -

PROFIT BEFORE TAX 1,854.4 2,334.7

Provision for Tax 636.1 742.9

PROFIT FOR THE YEAR 1,218.3 1,591.8

Balance brought forward 5,739.2 4,594.0

Profit available for appropriation 6,957.5 6,185.8

APPROPRIATIONS

Proposed dividend 99.7 83.1

Income tax on dividend 17.6 13.5

Transfer to General Reserve 350.0 350.0

Balance carried to Balance Sheet 6,490.2 5,739.2

6,957.5 6,185.8

- Financial and Operational Performance

Against the backdrop of challenging macroeconomic situation and weak business sentiments, the year 2013 proved to be yet another difficult year. The economy which grew at 5% in FY 2012-13 - the slowest since a decade, continued its moderate growth trajectory in the first half of FY 2013-14 when economy expanded by 4.6% (5.3% in the corresponding period of FY 2012-13). It appears likely that GDP growth in year 2013-14 may even be lower than 5%.

The wholesale price index showed deceleration in the month of December 2013 at 6.16%. The Consumer Inflation continues to remain at around 10% reflecting persistently high food prices, currency depreciation, fuel price adjustments and other supply side constraints.

Indian Rupee depreciated considerably during the year 2013. Besides adverse economic climate, factors such as excessive import of gold and other external imbalances contributed to this unexpected development making the cost of imported goods dearer.

Demand growth of your Company''s products both from Automotive and Industrial sector slowed down in year 2013 thus limiting top-line development. This also led to relatively lower utilisation of our plants where we have invested significantly in recent years.

Your Company''s income was placed at Rs. 14,758.7 million in year 2013, slightly lower than that in year 2012. Increased cost of traded products and lower absorption of fixed costs impacted margins as profits from ordinary activities declined in year 2013 to Rs. 1,850 million (2012: Rs. 2,330 million). Against the backdrop of challenging environment, we consider your Company''s performance at par with the market.

Your Company continued its long-term strategy to invest in qualitative growth. At our plant in Maneja - Vadodara, production of advanced Generation 2 and Generation 3 Wheel Bearings gained momentum in the second half of year 2013. We successfully launched production of Low-friction Ball Bearings from our Savli plant. Our large-size bearing plant developed number of technologically advanced products for sectors such as wind, power plants, industrial gearboxes, railways, steel and cement plants etc. The Board is convinced that your Company will benefit from the investments made in plant and technology when the economy returns to growth track.

Your Company continued its emphasis on innovation, R&D and sector approach. Know-how of our customers'' business and our ability to design and provide effective value added solutions to our customers'' current and future needs provides us distinct competitive advantage in the market. Your Company was successful in developing large number of value added and energy-efficient solutions for our customers in Automotive and Industrial sectors.

At our plants in Maneja and Savli we intensified our actions to improve quality and reduce waste by implementing Schaeffler concepts such as MOVE, Fit for Quality and Line Challenger.

Your Company continued its pursuit towards people excellence by promoting harmonious work culture and by regularly undertaking various initiatives towards people development and employee engagement.

Challenges currently being faced by Indian economy will not disappear soon. The outcome of forthcoming General Election in 2014 will be crucial. Prospects of single party led stable alliance post General Elections can accelerate policy reforms and thus facilitate fast track growth in the coming years.

Your Company has strong fundamentals, follows robust customer and innovation focused strategy, emphasises on operational excellence and constantly empowers and motivates its people to pursue higher goals. This gives me confidence that your Company is not only prepared to face the current challenges but is also well placed to benefit from medium and long-term growth of Indian economy.

- Dividend

Your Directors recommend for your approval dividend for the year ended December 31, 2013 at the rate of Rs. 6 (2012: Rs. 5) per equity share amounting to Rs. 99.7 million (2012: Rs. 83.1 million).

The Company will pay the Income Tax on dividend as per the provisions of the Income-Tax Act.

- Transfer to General Reserves

A sum of Rs. 350 million has been transferred to the General Reserves of the Company. This reflects well on the financial strength of the Company.

- Transfer to Investor Education and Protection Fund

Pursuant to provisions of Section 205A read with Section 205C of the Companies Act, 1956 the unpaid / unclaimed dividend pertaining to the year ended on December 31, 2005 amounting to Rs. 260,994/- (including interest accrued thereon) which was lying in the Company''s separate unpaid dividend account and remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund.

- Awards / Recognition

Your Company''s capabilities were recognised by our customers.

FAG India received the coveted Best Vendor Award from Bharat Heavy Electricals Limited (BHEL). FAG supplies bearings for Oil-Rigs, Coal Pulverisers and Electrical Machines to BHEL.

Honda Motorcycle and Scooters India Pvt. Ltd. (HMSI) recognised FAG India for ''Valuable Support and Contribution'' to their motorcycle project.

On the occasion of World Environment Day - June 5, 2013, Hero Motocorp Ltd. recognised FAG India for exceptional improvement in environmental performance as a part of their ''Green Supply Chain'' initiative.

Employees of FAG India received 13 Gold and Silver medals in Kaizen / Quality circles organised by QCFI and CII.

- Management''s Discussion and Analysis

A detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management''s Discussion & Analysis (ANNEXURE - I).

- Directors

At the forthcoming Annual General Meeting, Mr. Avinash Gandhi and Mr. Moreshwar Garde will retire by rotation and being eligible, offer themselves for re-appointment in terms of the Articles of Association of the Company. A brief resume / particulars relating to them are given separately under the report on Corporate Governance. Your Directors recommend their re-appointment at the forthcoming Annual General Meeting.

Mr. Robert Schullan, who is presently President - Industrial Schaeffler Group, has been appointed as Additional Director with effect from October 31, 2013. Your Directors recommend his re-appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

Mr. Wolfgang Dangel, Mr. Udo Bauer and Mr. Bruno Krauss have resigned from the directorship with effect from October 30, 2013, December 21, 2013 and January 31, 2014 respectively. The Board wishes to place on record its appreciation of services rendered by them during their tenure as the Directors of the Company.

Mr. Dietmar Heinrich, who is presently Chief Financial Officer of EMEA Region of the Schaeffler Group, has been appointed as Additional Director with effect from February 11, 2014. Your Directors recommend his re-appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

Mr. Dharmesh Arora, who is presently President & CEO of Schaeffler India, has been appointed as Additional Director with effect from February 11, 2014. Your Directors recommend his re-appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

The office of Alternate Directors was considered as vacated on arrival of their original directors and with the consent of original directors they were re-appointed as their Alternate Directors in the respective Board Meetings, the last of which was held on October 31, 2013.

As on date, Mr. Yezad Kapadia is an Alternate Director of Mr. Robert Schullan.

- Particulars of Employees

The statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended and forming part of this report is given in Annexure - IV. However, pursuant to provisions of proviso (b) (iv) to Section 219 (1) of the Companies Act, 1956 all reports and accounts are being sent to all the shareholders of the Company except this Annexure - IV. Any shareholder interested in getting a copy of the said statement may write to the Company Secretary at Registered Office or at Head Office of the Company.

- Corporate Governance

A separate section on Corporate Governance is included in the Annual Report and the certificate from M/s. Samdani Kabra & Associates, Company Secretaries, Vadodara (Guj.), the Company''s Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with Stock Exchanges is annexed thereto (ANNEXURE - II).

- Auditors

The Members are informed that while the registration number of the statutory auditors continues to remain the same, the name of the statutory auditors which was formerly known as B S R & Co., Chartered Accountants has been changed to B S R & Co. LLP, Chartered Accountants with effect from October 14, 2013 consequent to their conversion into a Limited Liability Partnership.

The Statutory Auditors, B S R & Co. LLP, Chartered Accountants, Mumbai, who will retire at the conclusion of 51st Annual General Meeting to be held on April 24, 2014 and being eligible, offer themselves for re-appointment. A certificate from them has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

- Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo

Information required as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 has been given in the Annexure forming part of this Report (ANNEXURE - III).

- Environmental Protection and Occupational Health and Safety Policy Commitment to Environmental protection, Occupational Health and Safety are important part of your Company''s management''s principles. Details of actions taken by your Company towards protecting environment and safety are covered under ''Management''s Discussion & Analysis (Annexure - I to the Directors'' report)''.

- Directors'' Responsibility Statement

The Directors state that:

(i) In preparation of Annual Accounts all applicable accounting standards have been followed.

(ii) Accounting Policies as listed in notes to the financial statements have been selected and applied consistently. Reasonable and prudent judgements as well as estimates have been made so as to give a true and fair view of the state of affairs of the Company as on December 31, 2013 and of the profit of the Company for the accounting year ended on that day.

(iii) Proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with the provisions of the Companies Act, 1956 so as to safeguard the assets of the Company and to detect and prevent fraud and other irregularities.

(iv) The annual accounts have been prepared on a going concern basis.

- Acknowledgements

Your Directors place on record their sincere appreciation for the wholehearted and continued support extended by the Shareholders, Schaeffler Group, Suppliers, Customers, Stockists & Importers, Banks and all Employees of the Company during the year under report.

For and on behalf of the Board

Avinash Gandhi

Mumbai: February 11, 2014 Chairman

Dec 31, 2012

To the members of the Company,

The Directors are pleased to present the 50th Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2012.

Financial Highlights

(Rs.in million)

Year 2012 2011

TOTAL INCOME (Net) 14,912.8 13,394.0

Gross Operating Profit

(Earnings before depreciation, interest, tax and prior period adjustments) 2,650.4 2,848.1

Depreciation / Amortization 302.7 225.9

Interest (Net) 13.0 12.6

Prior period adjustments - -

PROFIT BEFORE TAX 2,334.7 2,609.6

Provision for Tax 742.9 849.9

PROFIT FOR THE YEAR 1,591.8 1,759.7

Balance brought forward 4,594.0 3,377.5

Profit available for appropriation 6,185.8 5,137.2

APPROPRIATIONS

Proposed dividend 83.1 166.2

Income tax on dividend 13.5 27.0

Transfer to General Reserve 350.0 350.0

Balance carried to Balance Sheet 5,739.2 4,594.0

6,185.8 5,137.2

Financial and Operational Performance

2012 was a difficult year. Indian economy slowed down with GDP estimated to grow only at 5% in 2012-13, slowest since a decade. Besides slowing down of economy, factors such as tight liquidity and generally weak sentiments led to reduced consumption and investments.

Demand growth of your Company''s products slowed down in 2012 thus limiting top line development. Increased costs of traded goods due to weakening of Indian Rupee, intense market competition and lower absorption of fixed costs on account of slower volume growth put added pressure on margins.

Amid the sluggish environment, your Company performed reasonably well. Income rose to M 1,491 crores representing growth of 11% (2011: 25%). Profit from ordinary activities in 2012 was placed at Rs.233 crores (2011: Rs.261 crores).

Consistent with its long-term strategy to invest in qualitative growth, your Company commissioned a new plant at Savli (near Vadodara) where we commenced production of Low-friction Ball Bearings. Production of Large Size Bearings and a new heat treatment plant will go on stream soon. At the existing plant in Maneja - Vadodara, we ramped up production of advanced Generation 3 Wheel Bearings, besides investing in various capacity and quality improvement projects.

Your Company intensified the implementation of MOVE and Fit for Quality programmes as a part of continuous improvement process to realise the goal of operational excellence.

Continuing its emphasis on innovation, R&D and sector approach, your Company was successful in developing large number of value added and efficient solutions for its customers in automotive and industrial sectors.

By focusing on Schaeffer Group''s core competencies of innovation, quality, and productivity, your Company will continue to sharpen its future competitiveness.

Your Company will stay on course with its long-term strategy of investing in development of local production and R&D capabilities. Leveraging strengths of our robust processes, and empowered employees, your Company will continue to strive to become preferred partner to customers in India and thus benefit from India''s growth in medium and long-term.

- Dividend

Your Directors recommend for your approval dividend for the year ended December 31, 2012 at the rate of Rs.5/- (2011: Rs.10/- inclusive of a dividend of Rs.5/- per share in celebration of Company''s 50th year of incorporation) per equity share amounting to Rs.83.1 million (2011: Rs. 166.2 million).

The Company will pay the income tax on dividend as per the provisions of the Income-Tax Act.

- Transfer to General Reserves

A sum of Rs.350 million has been transferred to the General Reserves of the Company. This reflects well on the financial strength of the Company.

- Transfer to Investor Education and Protection Fund

Pursuant to provisions of Section 205A read with Section 205C of the Companies Act, 1956, the unpaid / unclaimed dividend pertaining to the year ended on December 31, 2004, amounting to Rs. 290,804/- (including interest accrued thereon) was lying in the Company''s separate unpaid dividend account and, remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund.

- Management Discussion and Analysis

A detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management Discussion and Analysis. (ANNEXURE - I)

- Directors

At the forthcoming Annual General Meeting, Mr. Bruno Krauss and Mr. Bernhard Steinruecke will retire by rotation and being eligible, offer themselves for re-appointment in terms of the Articles of Association of the Company. A brief resume / particulars relating to them are given separately under the report on Corporate Governance. Your Directors recommend their re-appointment at the forthcoming Annual General Meeting.

Mr. Udo Bauer, who is President & CEO of Schaeffer Asia Pacific, has been appointed as Additional Director with effect from May 25, 2012. Pursuant to provisions of Section 260 of the Companies Act, 1956, read with the Articles of Association of the Company, he can hold office only up to the date of the forthcoming Annual General Meeting of the Company. We have received a notice under Section 257 of the Companies Act, 1956, from a member proposing his candidature for directorship and being eligible, your Directors recommend his re-appointment, subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

During the year, the office of Alternate Directors was considered as vacated on arrival of their original directors. With the consent of original directors they were re-appointed as their Alternate Directors in the respective Board Meetings, the last of which was held on October 26, 2012.

As on December 31, 2012, Mr. Kamlesh Tapadar and Mr. Yezad Kapadia are the Alternate Directors of Mr. Bruno Krauss and Mr. Wolfgang Dangel respectively.

- Particulars of Employees

The statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended and forming part of this report is given in Annexure - IV. However, pursuant to provisions of proviso (b) (iv) to Section 219 (1) of the Companies Act, 1956, all reports and accounts are being sent to all the shareholders of the Company except this Annexure - IV. Any shareholder interested in getting a copy of the said statement may write to the Company Secretary at Registered Office or at Head Office of the Company.

- Corporate Governance

A separate section on Corporate Governance is included in the Annual Report and the certificate from M/s Samdani Kabra & Associates, Company Secretaries, Vadodara (Guj.), the Company''s Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with Stock Exchanges is annexed thereto. (ANNEXURE - II)

- Auditors

The Statutory Auditors, B S R & Co., Chartered Accountants, Mumbai, who will retire at the conclusion of 50th Annual General Meeting to be held on April 25, 2013 and being eligible, offer themselves for re-appointment. A certificate from them has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

- Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo

Information required as per Section 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 has been given in the Annexure forming part of this Report. (ANNEXURE - III)

- Environmental Protection and Occupational Health and Safety Policy

Commitment to Environmental Protection and Occupational Health and Safety is an important part of your Company''s management''s principles. Details of actions taken by your Company towards protecting environment and safety are covered under ''Management Discussion and Analysis (Annexure I to the Directors'' Report)''.

- Directors'' Responsibility Statement

The Directors state that:

(i) In preparation of Annual Accounts, all applicable accounting standards have been followed.

(ii) Accounting Policies as listed in notes to the financial statements have been selected and applied consistently. Reasonable and prudent judgments as well as estimates have been made so as to give a true and fair view of the state of affairs of the Company as on December 31, 2012 and of the profit of the Company for the accounting year ended on that day.

(iii) Proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with the provisions of the Companies Act, 1956 so as to safeguard the assets of the Company and to detect and prevent fraud and other irregularities.

(iv) The annual accounts have been prepared on a going concern basis.

- Acknowledgements

Your Directors place on record their sincere appreciation for the wholehearted and continued support extended by the Shareholders, Schaeffler Group, Suppliers, Customers, Stockiest & Importers, Banks and all Employees of the Company during the year under report.

For and on behalf of the Board

Avinash Gandhi

Mumbai: February 14, 2013 Chairman

Dec 31, 2011

The Directors are pleased to present the 49th Annual Report of the Company together with the audited financial statements of the Company for the year ended December31,2011.

Financial Highlights

(Rs. in million)

Year 2011 2010

TOTAL INCOME (Net) 13,393.9 10,653.5

Gross Operating Profit

(Earning before depreciation, interest, tax and prior period adjustments) 2,848.0 2,054.4

Depreciation / Amortisation - : 225.8 201.1

Interest (Net) 12.6 8.9

Prior period adjustments - 25.6

PROFIT BEFORE TAX 2,609.6 1,818.8

Provision for Tax 849.9 603.8

PROFIT AFTER TAX 1,759.7 1,215.0

Balance brought forward 3,377.5 2,609.7

Profit available for appropriation 5,137.2 3,824.7

APPROPRIATIONS

Proposed dividend : 166.2 83.1

Income tax on dividend 27.0 14.1

Transfer to General Reserve 350.0 350.0

Balance carried to Balance Sheet 4,594.0 3,377.5

5,137.2 3,824.7

Financial and Operational Performance

Your Company's sales have been consistently growing at a rate better than the growth of the bearing industry in India. The Company has realised sales growth of 25% (2010: 30%) amidst growth in Automotive and Industrial Segments as well as exports.

Dividend

Your Directors recommend for your approval dividend for the year ended December 31, 2011 at the rate of Rs. 10.0 (inclusive of a dividend of Rs. 5 per share in celebration of the Company's 50th year of incorporation) (2010: Rs. 5.0) per equity share amounting to Rs. 166.2 million (2010: Rs. 83.1 million).

The Company will pay the Income Tax on dividend as per the provisions Of the Income Tax Act.

Transfer to General Reserves

A sum of Rs. 350 million has been transferred to the General Reserves Of the Company. This reflects well on the financial strength of the Company.

Transfer to Investor Education and Protection Fund

Pursuant to provisions of Section 205A read with Section 205C of the Companies Act, 1956 the unpaid and unclaimed dividend pertaining to the year ended on December 31, 2003 amounting to Rs. 314,389/- (including interest accrued thereon) was lying in the Company's separate unpaid dividend account and, remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund.

Management's Discussion and Analysis

A detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management's Discussion & Analysis. (Annexure -1)

Directors

At the forthcoming Annual General Meeting, Mr. Wolfgang Dangel and Mr. Frank Huber will retire by rotation and being eligible, offer themselves for re-appointment in terms ofthe Articles of Association of the Company. A brief resume / particulars relating to them are given separately under the report on Corporate Governance. Your Directors recommend their re-appointment at the forthcoming Annual General Meeting.

Mr. R. Sampath Kumar has been rendering his services to the Company as an Alternate Director since over a decade. Considering his experience, expertise in the areas of corporate and general commercial laws & intellectual commercial property law and being qualified for appointment as Director, the Board in its meeting held on April 21, 2011, appointed him as an Additional Director. Pursuant to provisions of Section 260 of the Companies Act, 1956 read with the Articles of Association of the Company, he can hold office only up to the date of the forthcoming Annual General Meeting of the Company. We have received a notice under Section 257 of the Companies Act, 1956 from a member proposing his candidature for directorship and being eligible, your Directors recommend his re-appointment subject to approval of shareholders at the forthcoming Annual General Meeting of the Company.

During the year, the office of Alternate Directors was considered as vacated on arrival of their original directors and with the consent of original directors they were re-appointed as their alternate directors in the respective Board Meetings, the last of which was held on 0ctober20,2011.

As on December 31, 2011, Mr. Kamlesh Tapadarand Mr. Yezad Kapadia are the Alternate Directors of Mr. Bruno Krauss and Mr. Wolfgang Dangel respectively.

Particulars of Employees

The statement under Section 217 (2A) oft he Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended and forming part of this report is given in Annexure - IV. However, pursuant to provisions of proviso

(b) (iv) to Section 219 (1) of the Companies Act, 1956 all reports and accounts are being sent to all the shareholders of the Company except this Annexure - IV. Any shareholder interested in getting a copy of the said statement may write to the Company Secretary at Registered or Head Office of the Company.

Corporate Governance

A separate Section on Corporate Governance is included in the Annual Report and the certificate from M/s Samdani Kabra & Associates, Company Secretaries, Vadodara (Guj.), the Company's Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreement with Stock Exchanges is annexed thereto. (Annexure - II)

Auditors

The Statutory Auditors, B S R & Co., Chartered Accountants, who retire At the conclusion of 49th Annual General Meeting to be held on 20th day of April 2012 and being eligible, offer themselves for re-appointment. A certificate from them has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act,1956.

Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo

Information required as per Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars

in the Report of Board of Directors) Rules, 1988 has been given in the Annexure forming part of this Report. (Annexure- III)

Environmental Protection and Occupational Health and Safety Policy

- We aim to ensure the continued existence and success of our Company by establishing and maintaining a safe working environment that promotes the health and performance of our employees as well as taking active measures to protect the environment

- We actively use global work safety management systems for continuous improvement

- We place special emphasis on ergonomic design

- We are committed to observing all legislation and specifications regarding work safety

- We take comprehensive measures to protect our employees against health hazards

- Comprehensive and effective emergency measures are in place at all locations to ensure that our employees and visitors receive the property treatment in the event of injury

Directors' Responsibility Statement

The Directors state that:

i) In preparation of Annual Accounts all applicable accounting standards have been followed.

ii) Accounting Policies as listed in the Schedule 15 to the financial statements have been selected and applied consistently. Reasonable and prudent judgments as well as estimates have been made so as to give a true and fair view of the state of affairs of the Company as on December 31,2011 and of the profit of the Company for the accounting year ended on that day.

iii) Proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with the provisions of the Companies Act, 1956 so as to safeguard the assets of the Company and to detect and prevent fraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

Acknowledgements

Your Directors place on record their sincere appreciation for the wholehearted and continued support extended by the Shareholders, Schaeffler Group, Suppliers, Customers, Stockiest & Importers, Banks and all Employees of the Company during the year under report.

For and on behalf of the Board

Avinash Gandhi Mumbai: February 9,2012 . Chairman

Dec 31, 2009

The Directors are pleased to present the 47th Annual Report of the Company together with the audited financial statements of the Company for the year ended December31,2009.

FINANCIAL HIGHLIGHTS Rs.in million

YEAR 2009 2008

TOTAL INCOME (Net) 8,264.2 7,660.5

Gross operating profit 1,318.8 1,728.0 (Earning before depreciation, interest, tax and prior period adjustments)

Depreciation / Amortization 200.8 205.9

Interest (Net) 7.0 4.8

Prior period adjustments 115.2 43.8

PROFIT BEFORE TAX 995.8 1,473.5

Provision for tax 340.4 516.3

PROFIT AFTER TAX 655.4 957.2

Balance brought forward 2,291.8 1,722.1

Profit available for appropriation 2,947.2 2,679.3

APPROPRIATIONS

Proposed dividend 74.8 74.8

Income tax on dividend 12.7 12.7

Transfer to general reserve 250.0 300.0

Balance carried to balance sheet 2,609.7 2,291.8

2,947.2 2,679.3

FINANCIAL AND OPERATIONAL PERFORMANCE

The year 2009 started against the backdrop of a major economic recession that hit the world during the second half of 2008. Though the Indian economy, driven by domestic consumption and well supported by stimulus measures of Government, gradually came out of this global turmoil, the overall business situation remained very challenging during the year 2009.

Your Companys total net sales grew by a moderate 7% during the year. Our exports sales declined by 51%, as the markets in Europe and US slumped under recessionary pressure. At the same time our intensified focus on Indian customers led to a smart increase of 17% in domestic sales (over 2008).

The general business scenario in 2009 was also characterized by severe liquidity crisis - triggered by global financial crisis. Your Company successfully implemented a number of measures to improve working capital management. As at the year ending December 31, 2009, our inventories reduced by 37% and sundry debtors witnessed a decrease of 5% compared to the previous year.

At FAG India, we also undertook a number of projects to improve productivity, quality and customer responsiveness. Under active guidance and support from Schaeffler Group, we successfully launched MOVE project at the Vadodara factory. MOVE provides a platform to empowered employees to come together and avoid waste through error-free processes while working in synchronization with our customers.

During the year, profitability of the Company remained under pressure due to a sharp decline in the exports business, substantial impact of steel price increase and an adverse product mix resulting from market conditions.

Due to the above reasons, operating profit of your Company (Profit before tax) during the year 2009 reduced to 13%, compared to 19% in 2008.

DIVIDEND

Your Directors recommend for your approval dividend for the year ended December 31, 2009 at the rate of Rs. 4.5 (2008: Rs. 4.5) per equity share amounting to Rs. 74.8 million (2008: Rs. 74.8 million).

The Company will pay the IncomeTax on dividend as per the provisions of the lncome Tax Act.

TRANSFER TO GENERAL RESERVES

A sum of Rs. 250 million has been transferred to the general reserves of the Company. This reflects well on the financial strength of the Company.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to provisions of Section 205A read with Section 205C of the Companies Act, 1956, the unpaid / unclaimed dividend pertaining to the year ended on December 31, 2001 amounting to Rs. 297,148/- (including interest accrued thereon) that was lying in the Companys separate unpaid dividend account and remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of operations, performance and future outlook of the Company is covered under a separate Annexure to this report as Management Discussions Analysis (Annexure-1).

DIRECTORS

Mr. Rajendra Anandpara was appointed as an Additional Director from July 23, 2009 and as the Managing Director effective from August 1, 2009 by the Board of Directors of the Company at the meeting heldonJuly23,2009 to fill the vacancy caused due to the resignation of Mr. Biswarup Dhar.

The Board placed on record its appreciation of Mr. Dhars contribution to the Company.

At the forthcoming Annual General Meeting, Mr. Frank Huber and Mr. BernhardSteinruecke will retire by rotation and being eligible, offer themselves for re-appointment as per the terms of the Articles of Association of the Company. A brief resume / particulars relating to them are given separately under the report on Corporate Governance. Your Directors recommend their re-appointment at the forthcoming Annual General Meeting.

Mr. Dietmar Heinrich resigned from the Companys Directorship with effect from October 31, 2009. The Board appreciated his contribution as Director of the Company. The office of his Alternate Director Mr. Kamlesh Tapadar was considered as vacated automatically with effect from October31,2009.

In place of Mr. Heinrich, Mr. Bruno Krauss, Executive Vice President- Finance, Schaeffler Group Asia Pacific Region and member of the Regional Asia Pacific Executive Management Board, was appointed as Additional Director w.e.f. February 11,2010 by the Board of Directors of the Company. The Company has received notice under Section 257 of the Companies Act, 1956 proposing candidature of Mr. Bruno Krauss forthe office of the Director.

During the year, the office of Alternate Directors was considered as vacant on arrival of their original Directors and with the consent of original Directors they were re-appointed as their Alternate Directors in the respective board meetings, the last of which was held on October 22,2009.

As on December 31, 2009 Mr. R. Sampath Kumar and Mr. Yezad Kapadia are the Alternate Directors of Mr. Frank Huber and Mr. Wolfgang Dangel respectively. On the request of Mr. Bruno Krauss, the Board of Directors in its meeting held on February 11, 2010 has appointed Mr. Kamlesh Tapadar as his Alternate Director.

PARTICULARS OF EMPLOYEES

The statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended and forming part of this report is given in Annexure - IV. However, pursuant to the provisions of Proviso (b)(iv) to Section 219 (1) of the Companies Act, 1956 all reports and accounts are being sent to all the shareholders of the Company except this Annexure - IV. Any shareholder interested in getting a copy of the said statement may write to the Company Secretary at Registered or at Head Office of the Company.

CORPORATE GOVERNANCE

A separate section on Corporate Governance is included in the Annual Report and the certificate from M/s Samdani Kabra & Associates, Company Secretaries, Vadodara (Gujarat), the Companys Secretarial Auditors confirming the compliance of conditions on Corporate Governance as stipulated in Clause 49 of the Listing Agreementwith StockExchanges, is annexed thereto (Annexure - II).

AUDITORS

The Statutory Auditors, M/s Mohinder Puri & Company, Chartered Accountants, who retire at the conclusion of the 47th Annual General Meeting to be held on April 22, 2010 and being eligible, offer themselves for reappointment. A certificate from them has been received to the effect that their reappointment, if made, would be within the limits prescribed under Section 224 (IB) of the CompaniesAct, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information required as per Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 has been given in the Annexure forming part of this report (Annexure - III).

DIRECTORSRESPONSIBILITY STATEMENT

The Directors state that:

i) In the preparation of annual accounts, all applicable accounting standards have been followed,

ii) Accounting policies as listed in the Schedule 15 to the financial statements have been selected and applied consistently. Reasonable and prudent judgments as well as estimates have been made, so as to give a true and fair view of the state of affairs of the Company as on December 31, 2009 and of the profit of the Company for the accounting year ended on that day,

iii) Proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with the provisions of the Companies Act, 1956 so as to safeguard the assets of the Company and to detect and prevent fraud and other irregularities,

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere appreciation for the wholehearted and continued support extended by the shareholders, Schaeffler Group, suppliers, customers, stockists & importers, banks and all employees of the Company during the year under review.

For and on behalf of the Board

Avinash Gandhi

Mumbai: February 11, 2010 Chairman

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