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Apollo Tyres Ltd.

BSE: 500877 Sector: Auto
NSE: APOLLOTYRE ISIN Code: INE438A01022
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NSE 00:00 | 01 Jul 189.05 3.95
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OPEN 185.10
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VOLUME 75113
52-Week high 250.00
52-Week low 165.40
P/E 46.95
Mkt Cap.(Rs cr) 12,016
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 185.10
CLOSE 185.10
VOLUME 75113
52-Week high 250.00
52-Week low 165.40
P/E 46.95
Mkt Cap.(Rs cr) 12,016
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Apollo Tyres Ltd. (APOLLOTYRE) - Director Report

Company director report

Dear Member

Your Directors have pleasure in presenting the 48th Annual Report on the business andoperations of Apollo Tyres Ltd. ("the Company") together with the auditedfinancial statements for the financial year ended March 31 2021.

FINANCIAL PERFORMANCE

The financial performance of the Company for the financial year ended March 31 2021 issummarised below:

(Rs Milliorn)

Year ended

Year ended

Particulars March 31 2021 March 31 2020 March 31 2021 March 31 2020

Standalone

Consolidated

Sales 113545 108327 169546 160965
Other operating income 3789 2356 4424 2537
Revenue from operations 117334 110683 173970 163502
Operating profit (EBITDA excluding other income) 20343 13992 27975 19386
Other income 1215 286 1294 237
Less: Finance costs 3794 2257 4430 2808
Less: Depreciation & amortization expenses 7134 6207 13150 11381
Profit before share of profit/ (loss) in associate/ joint venture exceptional items & tax 10630 5814 11689 5434
Share of profit/ (loss) in associate/ joint venture - - 0 (0)
Exceptional items (110) - (6077) -
Profit before tax 10520 5814 5612 5434
Less: Provision for tax 3292 728 2110 670
Profit after tax 7228 5086 3502 4764

OPERATIONS

In our key market India the tyre industry is closely linked to the automobileindustry. FY21 saw lockdowns across the country wiping out majority of the first quarterof the fiscal. While the sales saw a rebound in the second half of the fiscal it was notenough to cover the loss of the first half of the year. According to the data released byATMA for 11-months the tyre industry declined by around 8% as compared to the 11-monthsnumbers of FY20.

In the Company's other key market Europe the tyre industry performed poorly due tomultiple reasons. Pandemic along with lull in the economic activity saw adverse impact onsales in the region. A detailed analysis of the tyre industry for India and Europe hasbeen shared in the Management Discussion and Analysis section of the annual report.

The standalone revenue from operations of your Company was Rs 117334 million duringFY21 as against Rs 110683 million during the previous financial year. EBIDTA (excludingother income) was at Rs 20343 million as compared to Rs 13992 million during theprevious financial year. The Net Profit for the year under review was '7228 million asagainst Rs 5086 million in the previous fiscal.

The consolidated revenue from operations of your Company was Rs 173970 million duringFY21 as compared to Rs 163502 million in FY20. The consolidated EBITDA (excluding otherincome) was Rs 27975 million for FY21 as compared to Rs 19386 million for the previousfinancial year. On consolidated basis Apollo Tyres earned a Net Profit of Rs 3502million for FY21 as against Rs 4764 million for the previous financial year.

RAW MATERIALS

The year under review had two distinct themes the first half of the year saw theimpact of COVID-19 induced lockdowns leading to demand contraction and significant fall inthe raw material cost. The second half of the year showed a remarkable recovery inautomobile production return of the demand from the aftermarket leading to sharp rise inthe raw material cost.

Oil prices moved to USD 25/barrel in April 20 on account of lockdowns in most parts ofthe world. Increased buying by China led to prices recovering to USD 40/barrel by June.The Crude prices staged a comeback from November 20 onwards on account of vaccine rollout return of demand and OPEC supply management strategy. The year ended with Crudeprices crossing USD 70/bbl. In Q4 FY21 Brent Crude prices were 20% higher than the sameperiod last year.

The USD/ INR exchange rate averaged 74.0 in FY21 as against 70.8 in FY20. The rupeeweakened by 5% during the fiscal year.

The weakness in demand due to the lockdowns in Q1 led to Natural Rubber prices touchinga level of '120/kg. The prices gained momentum from August 20 onwards clocking a level of'135/ kg and breaching the barrier of '160/kg by December 20. The decision to hike theMinimum Support Price of Natural Rubber to '170/kg led to prices climbing to this level inMarch 21. The inverted duty on Natural Rubber at 25% or '30/kg whichever is lowercontinued during the year. The demand supply gap to the tune of 45% in India and lack ofavailability of suitable grades for radial application led to continued imports of NaturalRubber. The port restriction on imports of Natural Rubber remained in force during theyear.

The year saw availability concerns in key raw materials such as Nylon Fabric CarbonBlack Polyester Beadwire and Steel Tyre Cord. The Company managed to secure the suppliesof raw materials through continued focus on new vendor development long term contractsand partnership approach with its Raw Material Business Partners. The Company shared itsvision and expectation from its partners through a virtual Global Partners' Summitconducted in Sept 20. The partners were also recognized for their best practices duringthe Summit.

The Customs duty @20% on imports of Nylon Fabric continued during the year. Thistogether with the duty on Natural Rubber points to a continuing inverted duty structure.The antidumping duty on imports of Styrene Butadiene Rubber (SBR) from Korea Thailand andEurope and on imports of Rubber Chemicals from Europe remained in force during the year.

The global shipping and logistics industry faced shortages of containers blanksailings port congestion leading to sharp spike in Ocean Freight rates during the secondhalf of the year adding to the cost push. The Company continued its focus on conservingcash through optimizing the inventory levels.

DIVIDEND

Your Company has a consistent track record of dividend payment. In compliance with theDividend Distribution Policy of the Company the Directors are pleased to recommend adividend of Rs 3.50 (350%) per share of Re. 1/- each on Equity Share Capital of theCompany for FY21 for your approval.

The dividend if approved shall be payable to the Members holding shares as on cut-offdate i.e. July 16 2021.

RESERVES

The amount available for appropriations including surplus from previous year amountedto Rs 45339 million. Surplus of Rs 42116 million has been carried forward to the balancesheet. A general reserve of Rs 1000 million has been provided.

BOARD OF DIRECTORS

A) Appointment/ Re-appointment of Directors

Mr. Francesco Crispino (DIN: 00935998) was appointed as an Independent Director of theCompany not liable to retire by rotation to hold office for a term of 5 consecutiveyears with effect from July 3 2020 to July 2 2025 by the Members at the AGM held onAugust 20 2020.

Mr. Vishal Mahadevia (DIN: 01035771) was appointed as a Non-Executive Non-IndependentDirector of the Company liable to retire by rotation with effect from August 21 2020 bythe Members through Postal Ballot dated September 24 2020.

General Bikram Singh (Retd.) (DIN: 07259060) was reappointed as an Independent Directorof the Company not liable to retire by rotation to hold office for a second term of 3consecutive years with effect from August 11 2020 to August 10 2023 by the Members atthe AGM held on August 20 2020.The Board noted that his continuous association would beof benefit to the Company.

Mr. Vinod Rai (DIN: 00041867) was re-appointed as an Independent Director of theCompany not liable to retire by rotation to hold office for a second term of 5consecutive years with effect from February 9 2021 to February 8 2026 by the Membersthrough resolution passed by Postal Ballot on September 24 2020. The Board noted that hiscontinuous association would be of benefit to the Company.

Pursuant to the provisions of Section 152(6) of the Companies Act 2013 Mr. SatishSharma (DIN: 07527148) and Mr. Francesco Gori (DIN: 07413105) Directors of the Companyare liable to retire by rotation and being eligible offers themselves for re-appointment.

The Board is of the opinion that the Independent Directors of the Company possessrequisite qualifications experience and expertise and hold highest standards ofintegrity.

None of the aforesaid Directors are disqualified under Section 164(2) of the CompaniesAct 2013. Further they are not debarred from holding the office of Director pursuant toorder of SEBI or any other authority.

B) Changes in Directors and Key Managerial Personnel

During the year under review and between the end of the financial year and on the dateof this report except the aforementioned Appointments/ Re-appointments of Directorsthere are no other change in Directors and Key Managerial Personnel of the Company.

C) Declaration by Independent Directors

In terms with Section 149 (7) of the Companies Act 2013 Independent Directors of theCompany have submitted declarations that they meet the criteria of Independence asprovided in Section 149(6) of the Companies Act 2013 and also Regulation 16(I)(b) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

The Independent Directors have also complied with the Code for Independent Directors asper Schedule IV of the Companies Act 2013. All our Independent Directors are registeredon the Independent Directors Databank.

D) Formal Annual Evaluation

Pursuant to the provisions of the Companies Act 2013 the Board is required to carryout annual evaluation of its own performance and that of its Committees and individualDirectors. The Nomination and Remuneration Committee (NRC) of the Board also carries outevaluation of every Director's performance. Accordingly the Board and NRC of your Companyhave carried out the performance evaluation during the year under review.

For annual performance evaluation of the Board as a whole it's Committee(s) andindividual Directors including the Chairman of the Board the Company has formulated aquestionnaire to assist in evaluation of the performance. Every Director has to fill thequestionnaire related to the performance of the Board its Committees and individualDirectors except himself by rating the performance on each question on the scale of 1 to5 1 being Unacceptable and 5 being Exceptionally Good.

On the basis of the response to the questionnaire a matrix reflecting the ratings wasformulated and placed before the Board for formal annual evaluation by the Board of itsown performance and that of its Committees and individual Directors. The Board wassatisfied with the evaluation results.

E) Separate Meeting of Independent Directors

In terms of requirements under Schedule IV of the Companies Act 2013 and Regulation25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aseparate meeting of the Independent Directors was held on February 5 2021.

The Independent Directors at the meeting inter alia reviewed the following:-

• Performance of Non- Independent Directors and Board as a whole.

• Performance of the Chairman of the Company taking into account the views ofExecutive Directors and NonExecutive Directors.

• Assessed the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.

F) Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeelaid down a Nomination & Remuneration Policy for selection and appointment of theDirectors Key Managerial Personnel and Senior Management and their remuneration. Theextract of the Nomination and Remuneration Policy covering the salient features areprovided in the Corporate Governance Report forming part of Board's Report.

The Nomination & Remuneration Policy of the Company is available on the website ofthe Company and the web link is: https://corporate.apollotyres.com/investors/corporate-governance/Rsfilter=CodesPolicies

G) Code of Conduct for Directors and Senior Management

The Company has formulated a Code of Conduct for Directors and Senior ManagementPersonnel and has complied with all the requirements mentioned in the aforesaid code. Forfurther details please refer the Corporate Governance Report.

PRODUCT & MARKETING

In FY21 the APMEA operations continued its focus on key themes for the Indian market -consolidating its leadership position and expanding market share by introducing newproducts across segments. During the fiscal the Company inaugurated its new greenfieldplant in Andhra Pradesh India.

In the Medium and Heavy Commercial Vehicle (M&HCV) category the Company's truckrange registered all time highest numbers and from Q3 onwards peaked at highest ever sales

month after month. In the Truck Bus Bias (TBB) segment the Company launched its biasrib tyre Apollo Abhimanyu which has been tested for more than 2.5 million kms of fieldand indoor testing. The Company also launched its premium drive tyre Apollo XT100 HD thenew flagship Bias drive tyre in the TBB range.

In the Pickups and Small Commercial Vehicle (SCV) category the Company's Endumaxx LThas found fitments in reputed OEMS including Ashok Leyland Tata Motors and Isuzu as wellas increased market share in the replacement market.

In the Passenger Vehicle category the Company launched Apterra Cross for the CompactSUV segment even as its flagship pattern Apterra HT2 for the SUV segment continued tobe one of highest growing pattern.

To cater to the growing and highly profitable luxury car segment the Company expandedits Aspire 4G portfolio and now has the complete tyre portfolio to cater to luxury carbrands.

During the year the Company inaugurated its motorcycle tyre plant in Vadodara Gujaratfor high end cross ply and steel radial products. The fiscal saw the Company launching aspecialized off-road pattern for Royal Enfield motorcycles - actiGRIP R6 and actiGRIP F6.

In Europe the Company completed its specialization of its plant in Enschede TheNetherlands. This will help it to make the Dutch operations economically viable as itfocusses on profitable products like agricultural tires and high value - niche segmentpassenger car tyres.

During the fiscal the Company has revamped the product portfolio of Apollo brandedtyres in Europe. While the market share of the Vredestein brand remained stable over thefiscal given the decline in the PV tyres market the Company inched its market share upin Ultra High Performance (UHP) and Ultra Ultra High Performance (UUHP) segments. InIndustrial Construction segment the Company added new OEM customers including Caterpillarand Liebherr and posted good growth riding on back of a strong replacement volumes.

A detailed analysis of the Company's key initiatives for both regions have been sharedin the Management Discussion and Analysis section of the annual report.

FUTURE OUTLOOK

The second wave of COVID-19 pandemic means bad news for the various economiesincluding India. International Monetary Fund (IMF) is projecting a global growth at 6% in2021 moderating to 4.4% in 2022. Of course high uncertainty surrounds this outlook inrelation to the path of the pandemic the effectiveness of policy support to provide abridge to vaccine-powered normalization and the evolution of financial conditions. InEurope the economic activities are currently undergoing stress due to COVID-19 inducedlockdowns and falling demand. As per the IMF the European economy is expected to recoverby 4.7% in 2021. In its update in April IMF said it expects India's GDP to grow 12.5% inFY22 the highest among emerging and advanced economies. GDP growth for FY23 is pegged at6.9%. India is the only country expected to register a double-digit growth this fiscal.However the rapid spread of the second wave of COVID-19 might temper the bullish outlook.

Against such an outlook the Company continues to have a cautious approach. The focusis on employee safety and conserving cash. The Company is re-engineering production andcutting down on all avoidable costs and focusing on the good cost - R&D eTrainingbrand building etc.

For the APMEA region it has planned key launches in the M&HCV category for FY22 inTBB and TBR categories including some future flagship products to further improve marketshare. In other categories like LCV/SCV 2W and OHT it will continue its efforts to driveradialisation as it offers the best value to customers and maintaining the strongtechnology position of the Company.

Europe region has been working on refreshing its entire portfolio in last 2 years. Theregion is confident that these upgraded products will help it to consolidate and grow itsposition in the market. The region will continue to focus on the all season segment wherethe Company has been one of the pioneers. The newly introduced high performing productsand the widest portfolio of sizes will help consolidate and grow the position in thissegment.

Further the Company has refreshed its summer range with the new Ultrac and upgradedVorti+. These new products will help build a position in the summer tyre category. It hasfirmed up plans to accelerate the introduction of 'Apollo' branded TBR tyres andIndustrial tyres in key European markets.

COMMISSIONING OF ANDHRA PRADESH GREENFIELD FACILITY

The Company's 7th manufacturing unit globally and the fifth one in India wascommissioned on June 25 2020 virtually and the first tyre was rolled out from the AndhraPradesh greenfield facility in the southern part of the country.

Located in Chinnapanduru village in Chittoor district of Andhra Pradesh (AP) thisfacility of the Company is spread over 256 acres. The Company will invest close to '40000million in the Phase I of this greenfield facility. While the capacity will be ramped upgradually as the demand improves by 2022 this plant will have a capacity to produce15000 passenger car tyres and 3000 truck-bus radials per day. With a modular layout thecapacity at this facility can be increased with minimal engineering efforts and witheconomies on investments.

This highly automated plant uses IT driven systems and robotics and employs young andskilled associates on the shop floor mostly hired locally. The deployment ofstate-of-the- art manufacturing technologies at this facility will enable the Company totarget premium OEMs and aftermarket customers in India. This will further consolidate theCompany's vision of providing world quality products to global markets.

INAUGURATION OF A TWO WHEELER MANUFACTURING FACILITY

A dedicated commercial facility to manufacture two wheeler radial and cross ply tyresin Company's Limda Plant was virtually inaugurated on July 15 2020 by Mr. Onkar KanwarChairman and Managing Director.

This facility spread over more than 10000 square meter area is housed withinCompany's Limda plant in Vadodara. This facility

has an initial capacity to produce 30000 motorcycle radials and 60000 motorcyclecross ply tyres per month and will cater to the premium segment of the two-wheelerindustry.

MATERIAL CHANGES AND COMMITMENTS

Except the impact of COVID-19 as mentioned in this report no material changes andcommitments affecting the financial position of your Company have occurred between the endof the financial year of the Company to which the financial statements relate and on thedate of this report.

SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS

No significant material orders have been passed during the year under review by theregulators or courts or tribunals impacting the going concern status and Company'soperations in future.

CHANGE IN THE NATURE OF BUSINESS IF ANY

There is no change in the nature of business of your Company during the year underreview.

INTERNAL FINANCIAL CONTROLS

Internal Financial Control (IFC) means the policies and procedures adopted by theCompany for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets timely prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information.

The Company has identified and documented key internal financial controls as part ofStandard Operating Procedures (SOPs). The SOPs are designed for critical processes acrossall plants warehouses and offices wherein financial transactions are undertaken. The SOPscover the standard processes risks key controls and each process is identified to aprocess owner. In addition the Company has a well-defined Financial Delegation ofAuthority (FDoA) which ensures approval of financial transaction by appropriatepersonnel.

The Company uses SAP-ERP to process financial transactions and maintain its books ofaccounts. The SAP has been setup to ensure adequacy of financial transactions andintegrity & reliability of financial reporting. SAP was implemented in the Europeanoperations in year 2016. SAP was also implemented at Company's Greenfield plants inHungary and Andhra Pradesh.

The financial controls are evaluated for operating effectiveness through management'songoing monitoring and review process and independently by Internal Audit. The testing ofcontrols by Internal Audit are divided into three separate categories viz. a) automatedcontrols within SAP b) segregation of duties within SAP and restricted access to keytransactions c) manual process controls.

In our view the SOPs FDoA SAP-ERP and independent reviews by the Internal Audit helpin establishing adequate internal financial controls with reference to its financialstatements and such internal financial controls are operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required by Regulation 34 (2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a detailed Management Discussion and Analysis Report ispresented in a separate section forming part of the Annual Report.

SUBSIDIARY/ ASSOCIATE COMPANIES

As the Company follows its vision to become a global tyre brand of choice it hasmultiple Subsidiaries for facilitating these operations in various countries. As on March31 2021 your Company had 34 Overseas Subsidiary Companies (including step subsidiaries)1 wholly owned Subsidiary in India 1 Associate Company and 1 Joint Venture.

Vredestein Marketing B.V. a wholly owned subsidiary of Apollo Vredestein B.V. wasliquidated on September 30 2020.

Apollo Tyres Centre of Excellence Limited a wholly owned subsidiary of the Company wasincorporated in India on October 10 2020.

As per the provisions of Section 129 of the Companies Act 2013 the consolidatedfinancial statements of the Company its Subsidiaries and Associates are attached in theAnnual Report. The annual accounts of Subsidiaries and Associates will be made availableto shareholders on request and will also be kept for inspection by any shareholder at theRegistered Office and Corporate Office of your Company. A statement in Form AOC-1containing the salient features of the financial statements of the Company's SubsidiariesAssociates and Joint Venture for the year ended March 31 2021 is also attached withfinancial statements.

MATERIAL SUBSIDIARIES

Your Company has following material unlisted Subsidiaries viz. Apollo Vredestein B.V.Apollo Tyres (Hungary) Kft. Apollo Tyres B.V. Apollo Tyres Cooperatief U.A. and ApolloTyres Holdings (Singapore) Pte Ltd. as on March 31 2021.

Pursuant to Regulation 24(1) of the SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 Mr. Akshay Chudasama an Independent Directorof the Company was nominated as Director on the Board of Apollo Vredestein B.V. ApolloTyres (Hungary) Kft. Apollo Tyres Holdings (Singapore) Pte Ltd. and Ms. Pallavi Shroffan Independent Director of the Company was nominated as Director on the Board of ApolloTyres B.V. & Apollo Tyres Cooperatief U.A with effect from April 1 2019.

a) Apollo Vredestein B.V.

Apollo Vredestein B.V. focuses on manufacturing marketing sales and distribution oftyres for passenger cars commercial vehicles agricultural and industrial vehicles andbicycles. The Company's distribution network extends through Europe.

During the year the Company has completed specialization of its manufacturing plant inEnschede The Netherlands. After this reorganization the plant will primarily produceUltra-high performance segment of passenger car tyres and continue to focus on premiumagricultural tyres and Spacemaster tyres.

Launch of a new visual identity for the Vredestein brand including an updated logo anda new vibrant colour scheme was a major brand promotion initiative during the year whichtranslated into a complete set of on-line and offline advertising campaigns. Three productintroductions for passenger car tyres were launched virtually including the creation of adigital experience centre for the Vredestein brand and live streams with Company's topexecutives.

FY21 was a landmark year for new product introductions across segments.

b) Apollo Tyres (Hungary) Kft.

Apollo Tyres (Hungary) Kft. is one of the latest manufacturing facility within ApolloTyres group. The Company produces both passenger and commercial vehicle tyres.

During FY21 the Company continued to ramp up its production capacity for both productcategories.

c) Apollo Tyres Holdings (Singapore) Pte. Ltd.

The principal activities of the Company is of sourcing raw materials for Apollo Tyresmanufacturing plants in India and Europe besides the provision of other services to thegroup. 56% of the raw material procurement is for Natural Rubber for the year FY21. Majorsourcing countries are Thailand Indonesia and China. Company has also started outsourcingfinished goods for APMEA and Europe regions for certain specific tyre categories.

Global Supply Chain team based out of Singapore consolidates and manages Global OceanFreight Transport Optimization Offtake activities Supply Chain Cost Analysis MouldManagement and Certification Projects.

In addition Corporate HR team based out of Singapore is managing and facilitatingthe effective deployment of HR systems and policies globally in key areas such as TalentAcquisition Rewards & Mobility Talent Management and core HR processes which arealigned to the business objectives of Apollo Tyres with the mandate of enhancingorganizational effectiveness and human capital utilization.

d) Apollo Tyres B.V.

Apollo Tyres B.V. incorporated in Netherlands is a Holding Company with twoSubsidiaries Apollo Vredestein B.V. and Apollo Tyres (Hungary) Kft.

e) Apollo Tyres Cooperatief U.A.

Apollo Tyres Cooperatief U.A. a direct Subsidiary of the Company is incorporated inThe Netherlands. The Company is primarily acting as a Holding Company for all overseasoperations.

DEPOSITS

During the year under review your Company did not accept deposits covered underChapter V of the Companies Act 2013.

AUDITORS

M/s. Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.001076N/N500013 (the firm licenses audit software as well as audit methodology from GrantThornton

International Ltd) had been appointed as Statutory Auditors of your Company for aperiod of 5 years from FY18 to FY22 at the Annual General Meeting held on July 5 2017.

AUDITORS' REPORT

The report given by M/s. Walker Chandiok & Co LLP Chartered Accountants StatutoryAuditors on financial statements of the Company for FY21 is part of the Annual Report. Thecomments on statement of accounts referred to in the report of the Auditors are selfexplanatory. The Auditors' Report does not contain any qualification reservation oradverse remark.

During the year under review the Auditors had not reported any matter under Section143(12) of the Companies Act 2013. Therefore no detail is required to be disclosed underSection 134(3)(ca) of the Companies Act 2013.

COST AUDIT

M/s. N.P. Gopalakrishnan & Co. Cost Accountants were appointed with the approvalof the Board to carry out the cost audit in respect of the Company's plants at Perambra(Kerala) Limda (Gujarat) Chennai (Tamil Nadu) and Chinnapandur (Andhra Pradesh) as wellas Company's leased operated plant at Kalamassery (Kerala) for FY21.

Based on the recommendation of the Audit Committee M/s. N.P. Gopalakrishnan & Co.Cost Accountants being eligible have also been appointed by the Board as the CostAuditors for FY21 subject to Members' approval. The Company has received a letter fromthem to the effect that their re-appointment would be within the limits prescribed underSection 141(3)(g) of the Companies Act 2013 and that they are not disqualified for suchre-appointment within the meaning of Section 141 of the Companies Act 2013. Theremuneration to be paid to M/s. N.P. Gopalakrishnan & Co. for FY22 is subject toratification of the shareholders at the ensuing AGM.

Cost records as specified by the Central Government under SubSection (1) of Section 148of the Companies Act 2013 are made and maintained by the Company.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hadre-appointed M/s. PI & Associates Company Secretaries as Secretarial Auditor of theCompany for FY21 to undertake secretarial audit of the Company.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark. Secretarial Audit Report given by Secretarial Auditors is annexed with the reportas Annexure I.

MEETINGS OF THE BOARD OF DIRECTORS

A calendar of meetings is prepared and circulated in advance to the Directors. Duringthe year 7 (seven) Board meetings were convened and held. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The details of all Board/Committee meetings held are given in the Corporate Governance Report.

AUDIT COMMITTEE

The details of the Audit Committee including its composition and terms of referencementioned in the Corporate Governance Report form part of Board's Report.

The Board during the year under review had accepted all recommendations made to it bythe Audit Committee.

VIGIL MECHANISM

The Company has formulated a vigil mechanism through Whistle Blower Policy to deal withinstances of unethical behaviour actual or suspected fraud or violation of Company'scode of conduct or ethics policy. The details of the policy are explained in the CorporateGovernance Report and also posted on the website of the Company.

COMMITTEES OF BOARD

Pursuant to requirement under Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors has constituted variousCommittees of Board such as Audit Committee Nomination & Remuneration CommitteeStakeholders Relationship Committee Business Responsibility Committee Risk ManagementCommittee and Corporate Social Responsibility Committee. The details of composition andterms of reference of these Committees are mentioned in the Corporate Governance Report.

SHARE CAPITAL

During the year under review the 108000000 Compulsorily Convertible Preference Shares(CCPS) having face value of Rs 100/- each were issued and allotted to Emerald SageInvestment Ltd on April 22 2020 and October 7 2020 the same were converted to63050966 Equity Shares on December 5 2020. Consequent to the aforesaid conversion theissued and paid up Equity Share Capital of the Company has increased from 572049980equity shares to 635100946 equity shares.

The Issued Subscribed and Paid-up Equity Share Capital of the Company as on March 312021 was 635100946 equity shares of Re 1/- each.

a) Issue of equity shares with differential rights

Your Company has not issued any equity shares with differential rights during the yearunder review.

b) Issue of sweat equity shares

Your Company has not issued any sweat equity shares during the year under review.

c) Issue of employee stock options

Your Company has not issued any employee stock options during the year under review.

d) Provision of money by Company for purchase of its own shares by employees or bytrustees for the benefit of employees.

Your Company has not made any provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees during the year under review.

CONVERSION OF CCPS TO EQUITY SHARES

During the year under review the Company had allotted the following CompulsorilyConvertible Preference Shares ("CCPS") to Emerald Sage Investment Ltd anaffiliate of Warburg Pincus LLC

(a) 54000000 (Fifty four million) 6.34% CCPS having face value of Rs 100/-each("Tranche 1 CCPS") at par for cash for an aggregate amount of Rs5400000000 (Rupees five thousand four hundred million only) on April 22 2020.

(b) 54000000 (Fifty four million) 6.34% CCPS having face value of Rs 100/- each("Tranche 2 CCPS") at par for cash for an aggregate amount of Rs 5400000000(Rupees five thousand four hundred million only) on October 7 2020.

The aforementioned Tranche 1 and Tranche 2 CCPS were converted to Equity Sharesaggregating to 63050966 at a conversion price of Rs 171.29 and the allotment to EmeraldSage Investment Ltd. was made on December 5 2020.

The aforesaid Equity Shares allotted to Emerald Sage Investment Ltd have been listed onstock exchanges (NSE and BSE) and permitted for trading effective from December 28 2020.

After the aforementioned allotment of Equity Shares the cumulative ownership ofaffiliates of private equity funds managed by Warburg Pincus LLC including the Allotteeis approximately 18%.

DEBENTURES

During the year the following series of Secured Redeemable Non-Convertible Debentures(NCDs) were issued and allotted by the Company on Private Placement basis:-

S1 Series of NCDs No. No. of NCDs @ Face Value Rs 1000000 each Value (' in Million) Date of Allotment
1 APT 8.75% NCDs 2030 5000 5000 April 9 2020
2 Apollo Tyre 7.70% NCDs2025 5000 5000 May 18 2020

The aforesaid NCDs are listed on the debt segment of the National Stock Exchange ofIndia Limited (NSE).

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

During the year under review your Company has not given any loan or guarantee which iscovered under the provisions of Section 186 of the Companies Act 2013. However detailsof investments made during the year are given under notes to the financial statements.

RELATED PARTY TRANSACTIONS

All contracts/ arrangements/ transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis and do not attract the provisions of Section 188 of the Companies Act 2013. Duringthe year the Company had not entered into any contract/ arrangement/ transaction withrelated parties which could be considered material in accordance with the policy of theCompany on materiality of related party transactions.

Suitable disclosures as required by the Indian Accounting Standards have been made inthe notes to the financial statements. The policy on related party transactions asapproved by the Board is uploaded on the Company's website.

MANAGERIAL REMUNERATION

a) The details required pursuant to Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the CorporateGovernance Report.

b) During the year under review Mr. Neeraj Kanwar (DIN: 00058951) Vice Chairman &Managing Director also received remuneration from Apollo Tyres (UK) Pvt. Ltd. whollyowned Subsidiary of the Company.

PARTICULARS OF EMPLOYEES

Particulars of employees as required in terms of the provisions of Section 197 of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are set out in Annexure A to the Board's Report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Your Company has in place a formal policy for prevention of sexual harassment of itsemployees at workplace and the Company has complied with provisions relating to theconstitution of Internal Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.

During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.Furthermore there was no pending compliant/ case at the beginning as well as ending offinancial year.

HEALTH SAFETY & ENVIRONMENT

As a firm commitment to Health Safety and Environment (HSE) the year saw multipleinitiatives to implement and review the HSE plans and achieve the defined KPIs. Fordetails on HSE please refer to Management Discussion and Analysis Report.

AWARDS AND RECOGNITIONS

In its constant quest for growth and excellence your Company was honoured andrecognised at various forums. The prominent Awards are listed below for your reference.

Name of the Award Category Awarded by
ICQCC2020 Quality Bangladesh Society for Total Quality Management
Certificate of Recognition for the Ministry of Health
Appreciation efforts and contribution towards ending Tuberculosis and Family Welfare

RISK MANAGEMENT

The Company has constituted a Risk Management Committee (RMC) of the Board comprisingof Directors and Senior

Executives of the Company. The RMC has a Risk Management Charter and Policy that isintended to ensure that an effective Risk Management framework is established andimplemented within the organisation. The Company has also formed Internal Risk Committees(IRCs) which review risk registers for Asia Pacific Middle East Africa (APMEA) Regionincluding India Europe region and Corporate Functions including United States (US) Regionheaded by President (APMEA) President (Europe) and Chief Financial Officer as Chairpersonof the respective Committees. The IRCs review each risk on a quarterly basis and evaluateits impact and plans for mitigation. Further details about the RMC including itscomposition are mentioned in the Corporate Governance Report which forms part of theBoard's Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company initiated its CSR activities way before the Companies Act 2013 came inexistence. The Company has a well-defined CSR policy which is made as per the requirementof Section 135 of the Companies Act 2013. All the CSR activities are aligned withNational and Sustainable Development Goals. The Company has a CSR team who exclusivelyworks towards achievement of CSR goals of the organisation. All the CSR activities of theCompany are routed through registered trust (Apollo Tyres Foundation) and runs under theclose monitoring and guidance of CSR committee.

In the reporting year the organisation has undertaken various initiatives related toHealthcare Programme for Trucking Communities Solid Waste Management and SanitationProgramme for Communities Livelihood for Underprivileged Women Biodiversity Conservationand Philanthropy Initiatives; focussing on eradicating hunger and poverty preventivehealth and promoting education.

Corporate Social Responsibility Report pursuant to clause (o) of sub section (3) ofSection 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility)Rules 2014 including salient features mentioned under outline of Company's CSR policyforms part of this Report as Annexure II.

The CSR Policy of the Company is available on the website of the Company and theweblink is: - https://corporate.apollotyres. com/investors/corporate-governance/Rsfilter=CodesPolicies

BUSINESS RESPONSIBILITY REPORT

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amendedfrom time to time mandates the top 1000 Listed Companies by market capitalisation toinclude Business Responsibility Report ("BR Report") in their Annual Report.

Your Company falls under the top 500 Listed Companies by market capitalisation.Accordingly a BR Report describing the initiatives taken by the Company from anenvironmental social and governance perspective forms part of this Report as AnnexureIII.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars required under Section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 regarding conservation of energy technologyabsorption and foreign exchange earnings and outgo are given in Annexure IV forming partof this report.

ANNUAL RETURN

As per Section 134(3)(a) of the Companies Act 2013 the Annual Return referred to inSection 92(3) has been placed on the website of the Company www.apollotyres.com under theInvestors Section (Refer link: https://corporate.apollotyres.com/en-in/investors/corporate-governance/Rsfilter=Others ).

CORPORATE GOVERNANCE REPORT

Your Company always places major thrust on managing its affairs with diligencetransparency responsibility and accountability thereby upholding the important dictumthat an organisation's corporate governance philosophy is directly linked to highperformance.

The Company is committed to adopting and adhering to established world-class corporategovernance practices. The Company understands and respects its fiduciary role andresponsibility towards its stakeholders and society at large and strives to serve theirinterests resulting in creation of value and wealth for all stakeholders.

The compliance report on corporate governance and a certificate from M/s. WalkerChandiok & Co LLP Chartered Accountants Statutory Auditors of the Companyregarding compliance of the conditions of corporate governance as stipulated underChapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isattached herewith as Annexure V to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

As required by Section 134(3)(c) of the Companies Act 2013 your Directors state that:

(a) in the preparation of the annual accounts for the financial year ended March 312021 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

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

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

SECRETARIAL STANDARDS

During the year under review your Company had complied with all the applicableSecretarial Standards.

ACKNOWLEDGEMENT

Your Company's organisational culture upholds professionalism integrity and continuousimprovement across all functions as well as efficient utilisation of the Company'sresources for sustainable and profitable growth.

Your Directors wish to place on record their appreciation to the respective StateGovernments of Kerala Gujarat Haryana Tamil Nadu and Andhra Pradesh and the NationalGovernments of India Netherlands and Hungary. We also thank our customers businesspartners members bankers and other stakeholders for their continued support during theyear. We place on record our appreciation for the contribution made by all employeestowards the growth of your Company.

For and on behalf of the Board of Directors

ONKAR KANWAR
Place : London Chairman & Managing Director
Date : May 12 2021 DIN: 00058921

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