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JK Tyre & Industries Ltd.

BSE: 530007 Sector: Auto
NSE: JKTYRE ISIN Code: INE573A01042
BSE LIVE 15:52 | 21 Aug 143.80 -7.60
(-5.02%)
OPEN

151.40

HIGH

152.90

LOW

142.60

NSE 15:56 | 21 Aug 143.10 -8.60
(-5.67%)
OPEN

152.70

HIGH

152.90

LOW

140.50

OPEN 151.40
PREVIOUS CLOSE 151.40
VOLUME 375559
52-Week high 186.55
52-Week low 106.00
P/E 33.13
Mkt Cap.(Rs cr) 3,261
Buy Price 0.00
Buy Qty 0.00
Sell Price 143.80
Sell Qty 2184.00
OPEN 151.40
CLOSE 151.40
VOLUME 375559
52-Week high 186.55
52-Week low 106.00
P/E 33.13
Mkt Cap.(Rs cr) 3,261
Buy Price 0.00
Buy Qty 0.00
Sell Price 143.80
Sell Qty 2184.00

JK Tyre & Industries Ltd. (JKTYRE) - Director Report

Company director report

TO THE MEMBERS

Your Directors are pleased to present the Annual Report of your Company along withaudited financial statements for the financial year ended 31st March 2016.

Operations

The Company recorded an excellent performance during the year under review. Profitbefore tax on a standalone basis stood at C 590 crores an all-time high registering anincrease of 57% on a turnover of C 6580 crores.

On a consolidated basis the Company reported a profit before tax of C 669 croresrecording an increase of 38% on a turnover of C 7654 crores.

The Company maintained its leadership in the Truck/Bus Radial segment while furtherimproving its position in the passenger car tyre segment. Better operating efficienciesall-round cost reduction deeper rural penetration launch of several new products acrosscategories and stable input costs helped the Company achieve this significant improvementin performance.

What makes this performance even more heartening is that it came in the wake of subdueddemand growth in several tyre segments in India and a lower export turnover due todisturbed political and economic conditions in some of the key international markets. Withthe automobile industry poised for stronger growth and economic activity set to improvethe Company's prospects appear brighter .

Acquisition of Cavendish Industries Ltd.

Your Directors are pleased to announce the acquisition of Cavendish Industries Ltd.(Cavendish) effective 13th April 2016. Cavendish houses three tyre plants located inLaksar (Haridwar) which manufacture a wide range of tyres tubes and flaps. With thisacquisition JK Tyre has aggregated 12 tyre plants - nine in India and three in Mexico.The acquisition undertaken at an Enterprise Value of C 2170 crores was funded by acombination of equity and debt. Post-acquisition Cavendish has become a subsidiary witheighty percent shareholding held by the Company along with a subsidiary and the balancethrough associates / group companies.

The acquisition is in line with the strategic vision of JK Tyre emerging as one of theleading global tyre companies with a comprehensive portfolio capable of catering to thedomestic and international markets.

Following the acquisition of Cavendish JK Tyre will possess an additional capacity forTruck and Bus Radials which represents a high-growth segment where the Company is alreadythe market leader. The acquisition will also provide JK Tyre entry into the fast-growingtwo and three-wheeler tyre segments. Therefore the acquisition is strategic revenueaccretive and synergistic with the Company's existing tyre business.

Expansion Project

The Company expanded its Truck/Bus and Passenger Line Radial capacities at itsAll-Radial Chennai plant. This C 1430 crores project was completed in phases during theyear under review. The benefits of this expanded capacity will start accruing during thecurrent year and strengthen the Company's leadership in this fast-growing segment.

Awards

During the year under review your Company received several coveted awards forexcellence in various areas including:

• Ranked No.1 in 'Customer Satisfaction with Original Tyre' by JD Power AsiaPacific Study 2015.

• The 'Brand of the Year' award by the World Branding Forum a global non-profitorganization dedicated to advancing branding standards.

• The 'National Energy Conservation' award 2015 in the tyre sector (Chennaiplant) by the Ministry of Power Government of India.

• The TPM Consistency award for 'Manufacturing Excellence' at the Mysuru plant.

• Felicitated by the 16th National award for 'Excellence in Energy Management(Kankroli plant)' by the CII.

• The National award for 'Excellence in Talent Management' by the Delhi ManagementAssociation.

Dividend

Your Directors are pleased to recommend a dividend of C 2.50 per equity share of C 2each (i.e 125%) on the equity share capital of C 45.36 crores for the financial year ended31st March 2016. The dividend outgo will be C 68.25 crores (inclusive of a dividend taxof C 11.55 crores).

Appropriations

The amount available for appropriation including surplus from the previous year stoodat C 566.22 crores. The Directors propose this to be appropriated as under:

(Rs. crores)

General Reserve 150.00
Dividend 56.70
Corporate Dividend Tax 11.55
Surplus carried to Balance Sheet 347.97
Total 566.22

Extract of Annual Return

An extract of the Annual Return as on 31st March 2016 in the prescribed form MGT 9is attached as Annexure 'A' with this Report and forms a part of it.

Related Party Transactions

During the financial year ended 31st March 2016 all contracts or arrangements ortransactions entered into by the Company with related parties were in the ordinary courseof business and on an arm's length basis and were in compliance with the applicableprovisions of the Companies Act 2013 and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 as applicable.

Further the Company did not enter into any contract or arrangement or transaction withrelated parties that could be considered material in accordance with the policy of theCompany on materiality of related party transactions. In view of the above disclosure inFORM AOC-2 is not applicable.

The Related Party Transaction Policy as approved by the Board is available on theCompany's website.

Particulars of Loans Guarantees and Investments

The particulars of loans guarantees securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are furnished in the financialstatements.

Directors and Key Managerial Personnel

Your Directors express their profound grief on the sad demise of Shri O.P. Khaitan anIndependent Director of the Company on 6th December 2015. Shri Khaitan joined the Board ofthe Company in the year 1974 when it was just about setting up its first automotive tyreplant in Jaykaygram Kankroli an industrially-backward area in Rajasthan. Your Directorspay their respectful homage to Shri Khaitan and place on record their deep appreciationfor the valuable services rendered by him during his long tenure of over 40 years.

Shri Vikrampati Singhania Deputy Managing Director resigned from the Directorship ofthe Company with effect from the close of business hours of 20th January 2016 owing toother commitments. Consequently Shri Singhania also ceased to be a key managerialpersonnel of the Company. The Board took note of the same and placed on record its deepappreciation for the valuable services rendered by him during his long tenure of 20 yearsin various capacities.

The Board of Directors appointed Shri Shreekant Somany as an Additional Director of theCompany pursuant to Section 161 of the Companies Act 2013 effective 16th March 2016. Hehas been appointed as Independent Director for a term of five consecutive years witheffect from the said date subject to the approval of members of the Company at theensuing Annual General Meeting (AGM). In terms of the said Section Shri Somany will holdoffice as Director up to the date of the ensuing AGM. The Company has received a notice inwriting from a member proposing his candidature as a Director The Board recommends theappointment of Shri Somany as a Director.

The Board of Directors of the Company appointed Shri Anshuman Singhania as anAdditional Director of the Company pursuant to Section 161 of the Companies Act 2013effective 16th March 2016. The Board also appointed Shri Anshuman Singhania as aWhole-time Director of the Company for a term of five years commencing 16th March 2016subject to the approval of members of the Company at the ensuing AGM. Shri AnshumanSinghania also became a key managerial personnel of the Company effective from the saiddate.

Shri Singhania will hold office as Director up to the date of the ensuing AGM. TheCompany has received a notice in writing from a member proposing his candidature as aDirector. The Board recommends the appointment of Shri Anshuman Singhania as a Director.

Shri Bharat Hari Singhania retires by rotation and being eligible offers himself forre-appointment at the ensuing AGM.

Declarations have been received from all Independent Directors of the Company that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Further there were no other changes in the KMP composition in terms of Section 203 ofthe Companies Act 2013.

Conservation of Energy Etc.

The details as required under Section 134(3) (m) read with the Companies (Accounts)Rules 2014 are annexed to this Report as Annexure 'B' and forms a part of it.

Consolidated Financial Statements

The consolidated financial statements have been prepared by the Company in accordancewith the applicable accounting standards. The audited consolidated financial statementstogether with the Auditors' Report form a part of the Annual Report.

A report on the performance and financial position of each of the subsidiaries andassociates included in the consolidated financial statements is presented in a separatesection in this Annual Report. Please refer to AOC-1 annexed to the financial statementsin the Annual Report.

Pursuant to the provisions of Section 136 of the Act the financial statements theconsolidated financial statements along with relevant documents and separate auditedaccounts in respect of subsidiaries are available on the website of the Company.

During the financial year under review Natext Biosciences Private Ltd. has become awholly-owned subsidiary of the Company. No Company has ceased to be your Company'ssubsidiary during the said financial year.

Deposits

Pursuant to the approval of members by means of a special resolution dated 22ndSeptember 2015 the Company has continued to accept deposits from the public inaccordance with the provisions of the Companies Act 2013 and rules thereunder.

The particulars with respect to deposits covered under Chapter V of the said Act forthe financial year ended 31st March 2016 are: (a) accepted during the year - C 46.02crores; (b) remained unclaimed as at the end of the year - C 1.85 crores; (c) defaulted inrepayment of deposits or payment of interest thereon at the beginning of the year and atthe end of the year - Nil and (d) details of deposits which are not in compliance with therequirements of Chapter V of the said Act - Nil.

Auditors

(a) Statutory Auditors and their report

M/s Lodha & Co. Chartered Accountants were appointed Auditors of the Company tohold office from the conclusion of the 61st Annual General Meeting (AGM) held on 25thSeptember 2014 until the conclusion of the 64th Annual General Meeting to be held in 2017subject to ratification of the appointment by the members at the respective AGMs held/tobe held in the years 2015 and 2016. Accordingly being eligible matter relating to theappointment of the auditors will be placed for ratification by members at the forthcomingAnnual General Meeting. The observations of the auditors in their report on accounts andthe financial statements read with the relevant notes are selfexplanatory.

(b) Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice asSecretarial Auditor to carry out the secretarial audit of the Company for the financialyear 2015-16. The Report given by him for the said financial year in the prescribedformat is annexed to this Report as Annexure 'C'. The secretarial audit report does notcontain any qualifications reservations or adverse remarks.

(c) Cost Auditor and Cost Audit Report

The Company was not required to get its cost accounts audited for the financial yearended 31st March 2015 pursuant to the provisions of Section 148 of the Companies Act 2013and the Companies (Cost Records and Audit) Rules 2014 dated 30th June 2014. However interms of the Companies (Cost Records and Audit) Amendment Rules 2014 notified on 31stDecember 2014 the audit of the cost accounts of the Company for the financial year ended31st March 2016 is being conducted by M/s R.J. Goel & Co. Cost Accountants Delhi.

Particulars of Remuneration

Details as required under the provisions of Section 197(12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are placed on the Company's website www.jktyre.com as an annexure to the Directors' Report. A physical copy of the same will be madeavailable to any shareholder on request as per provisions of Section 136(1) of the saidAct.

Details as required under the provisions of Section 197(12) of the Companies Act 2013read with Rule 5(2) and 5(3) of the said Rules which form part of the Directors' Reportwill be made available to any shareholder on request as per provisions of Section 136(1)of the said Act.

Corporate Social Responsibility

Your Company aims to contribute to sustainable growth of the society at large. As ameans to this end the Company will continue responding to society's expectations anddemands in a holistic and decisive manner in the fields of environment conservation ofnatural resources health education rural development among others.

The Company has framed its CSR policy in accordance with the provisions of theCompanies Act 2013 and rules made thereunder The contents of the CSR policy are disclosedon the website of the Company.

The annual report on the CSR activities undertaken by the Company during the financialyear under review in the prescribed format is annexed to this Report as Annexure 'D'.

Internal Financial Controls

The Company has in place an adequate budgetary control system and internal financialcontrols with reference to financial statements. No reportable material weaknesses wereobserved in the system during the previous fiscal. Further the Company has laid downinternal financial control policies and procedures which ensure accuracy and completenessof the accounting records and the same are adequate for safeguarding of its assets and forprevention and detection of frauds and errors commensurate with the size and nature ofoperations of the Company. The policies and procedures are also adequate for orderly andefficient conduct of business of the Company. The Company also has a robust managementinformation system for the timely preparation of reliable financial information.

Significant and Material Orders Passed by the Regulators or Courts or Tribunals

During the financial year under review there were no significant and material orderspassed by the regulators or courts or tribunals that could impact the going concern statusof the Company and its future operations.

CORPORATE GOVERNANCE - (including details pertaining to Board Meetings Nomination andRemuneration Policy Performance Evaluation Risk Management Audit Committee and VigilMechanism)

Your Company reaffirms its commitment to the highest standards of corporate governancepractices. Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 a Management Discussion and Analysis CorporateGovernance Report and Auditor's Certificate regarding compliance of conditions ofCorporate Governance are made a part of this Report as Annexures - 'E' & 'F'.

The Corporate Governance Report which forms part of this Report also covers thefollowing:

a) Particulars of the six Board Meetings held during the financial year under review.

b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofdirectors.

c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.

d) The details with respect to composition of Audit Committee and establishment ofVigil Mechanism.

e) Details regarding Risk Management.

Directors' Responsibility Statement

As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:

a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the said Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and

(f) the proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.

Acknowledgements

Your Directors wish to place on record their appreciation for the continued support andcooperation received from various State Governments including those of Rajasthan MadhyaPradesh Karnataka Tamil Nadu Uttarakhand as well as the Governments of India andMexico. The Directors also thank the banks shareholders suppliers dealers and inparticular the valued customers for their trust and patronage.

Your Directors record their appreciation for the dedication and hard work put in by'Team-JK Tyre' which has enabled the Company to continue to grow stronger in thesechallenging times.

On behalf of the Board of Directors
1st July 2016 Dr. Raghupati Singhania
New Delhi Chairman & Managing Director