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BSE: 500878 Sector: Auto
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OPEN 1133.35
52-Week high 1666.00
52-Week low 983.80
P/E 14.50
Mkt Cap.(Rs cr) 4,583
Buy Price 1132.05
Buy Qty 79.00
Sell Price 1133.20
Sell Qty 58.00
OPEN 1133.35
CLOSE 1133.35
52-Week high 1666.00
52-Week low 983.80
P/E 14.50
Mkt Cap.(Rs cr) 4,583
Buy Price 1132.05
Buy Qty 79.00
Sell Price 1133.20
Sell Qty 58.00

CEAT Ltd. (CEATLTD) - Director Report

Company director report


The Members of CEAT Limited

Your Directors are pleased to present their Fifty-Ninth reporttogether with the Standalone and Consolidated Audited Financial Statements of the Companyfor the year ended March 31 2018.

Financial Highlights

I. Standalone:

` in lacs




Total Revenue



Total Expenses (excluding exceptional items)



Profit before Taxation



Tax expense:
– Current Tax



– Deferred Tax



Profit for the period



Other Comprehensive Income
Items that will not be reclassified to profit or loss
– Actuarial losses for gratuity



– Income tax effect on actuarial losses for Gratuity



Items that will be reclassified to profit or loss
– Movement in cash flow hedges



– Income tax effect on movement in cash flow hedges



Total Comprehensive Income for the year



II. Consolidated:

` in lacs




Total Revenue



Total Expenses (excluding exceptional items)



Profit before Taxation



Tax expense:
– Current Tax



– Deferred Tax



Profit after tax non-controlling interest and share of profit from Joint Venture



Other Comprehensive Income
Items that will not be reclassified to profit or loss
– Actuarial losses for gratuity



– Income tax effect on actuarial losses for Gratuity



Items that will be reclassified to profit or loss
– Movement in cash flow hedges



– Income tax effect on movement in cash flow hedges



– Net Movement in foreign exchange fluctuation reserve



Total Comprehensive Income for the year (attributable to equity holders of parent)



In the preparation of financial statements no treatment different fromthat prescribed in the relevant Accounting Standards have been followed.

During the year under review on_ consolidated_ basis_ your_ Company_recorded_ net_ revenue_ from_ operations_(net of excise duty) of ` 623077_lacs with agrowth of 8% over_` 576651 lacs (net of excise duty) for the last fiscal. The Companyrecorded a net profit of ` 23797 lacs a decrease of 34% over net profit of

` 36115 lacs of the last fiscal.

On standalone basis your Company recorded net revenue from operations(net of excise duty) of ` 616134 lacs with a increase of 8% over ` 570173 lacs (net ofexcise duty) of the last fiscal. The Company recorded a net profit of ` 27872 lacs_adecrease of 23% over net profit of ` 36273 lacs of the last fiscal.

Industry Update

The global economy is experiencing a cyclical recovery showing signsof a rebound in investment manufacturing activity and trade. This improvement comesagainst the backdrop of benign global financial conditions generally accommodativepolicies rising confidence and firming commodity prices. Global growth is expected to besustained over the next couple of years and even accelerate somewhat in emerging marketsand developing economies. Although near-term growth could surprise on the upside theglobal outlook is still subject to substantial downside risks including the possibilityof financial stress increased protectionism and rising geopolitical tensions.

India though has emerged as the fastest growing major economy in theworld with GDP growth at about 6.7% in FY 2017-18 and is expected to grow above 7.3% in FY2018-19. The manufacturing sector is estimated to have grown by 4.6% in FY 2017-18 ascompared to growth of 7.9% in FY 2016-17.

With improvements in the economic scenario there have been investmentsin various sectors of the economy and increased M&A activity and private equity deals.Moody's upgraded India's sovereign rating after 14 years to Baa2 with a stableeconomic outlook. India has improved its ranking in the World Bank's Doing BusinessReport by 30 spots over its 2017 ranking. The Government of India under the Make in Indiainitiative is trying to give boost to the contribution made by the manufacturing sectorand aims to take it up to 25% of the GDP from the current 17%. Besides the Government hasalso launched the Digital India initiative which focuses on three core components:creation of digital infrastructure delivering services digitally and to increase thedigital literacy.

The Indian auto industry is one of the largest in the world. Theindustry accounts for 7.1% of the country's Gross Domestic Product (GDP). India isalso a prominent auto exporter and has strong export growth expectations for the nearfuture. Overall automobile exports grew 15.81% year-on-year between April-February2017-18.

Indian tyre industry is expected to post a higher volume growth of8-10% for FY 2017-18. According to ICRA research the growth will be supported by robustgrowth pick-up across all industry subsegments. Automobile production in FY 2017-18 isexpected to rise strongly by 14% plus up from 5.2% in FY 2016-17 and 3.2% in FY 2015-16.Thus a strong traction in OEM volumes during April 2017-January 2018 coupled with thedemand in replacement markets post the Goods and Service Tax (GST) upheaval have pushedthe volume growth estimates for tyres up from an earlier 7-8% to 8-10%.

With stronger than expected volume uptick in Medium and HeavyCommercial Vehicle (M&HCV) tyres (OEM and replacement segments) tyre tonnage demandis estimated to grow by ~8%. In unit terms Truck and Bus (T&B) replacement demand hasgrown by 4-5% during FY 2017-18 up from the 3% de-growth in FY 2016-17 supportedby pickup in infrastructure activity around the county. While radialization in T&Bwould promote higher re-treading and therefore could lead to slower demand for newtyres benefits from the visible trend towards higher tonnage multi-axle vehicles withincreasing number of tyres will support T&B volumes.

On the exports front USA Germany and the UAE continue to remain thekey destinations while South American markets have shown a strong recovery. Exports (involumes) grew during FY 2017-18 riding on the healthy demand across productsegments mainly premium tyres. Export volumes are estimated to grow by ~8-9% during FY2019-22 with favourable demand outlook and rising competitiveness of Indian tyre makers.However low cost Chinese tyres in overseas markets especially post the removal of AntiDumping Duty (ADD) by USA on Chinese tyres in February 2017 remains a key challenge.

As for imports the same has declined by 31% (volume-wise) in FY2017-18 post demonetization and re-imposition of ADD on import of new Chinese Truck andBus radial (TBR) tyres for a period of five years effective from September 18 2017.

Industry revenues grew by a sharp 18.6% (Y-o-Y) during Q3 FY2017-18 compared to 12.6% growth in the preceding quarter though on a fairly lower base.The quarter also witnessed a strong growth in sales volumes across product categoriesespecially in the OE segments despite subdued realisations. This was on the back of sharprise in exports gradually declining imports and fading impact of GST related concerns.

Industry-wide operating margins had slipped sharply in Q1 FY2017-18 to four-year lows of ~8% following the sudden spike in both domestic and globalnatural rubber (NR) prices and higher than normal NR stocking by auto OEs duringFebuary/March 2017. However the margins improved in Q3 FY 2017-18 as NR prices havedeclined sharply in the last four months ended February 2018 and have remained range-boundat ` 125-130/ kg. Global NR prices continue to trade at a discount of ~14% averaging at `117 per kg for 11M FY 2017-18.

The prices of crude derivatives have been gradually rising in recentmonths albeit with a lag. After a 33% jump in crude oil price between October 2017 andJanuary 2018 the same has declined by ~5% in February 2018 with higher US shale oilproduction in recent months. The prices of synthetic rubber (SR) are up by 29% carbonblack (CB) up by 35% and caprolactum by 14%. Overall it is expected that the prices ofcrude derivatives to rise by over 20% in Q4FY2018 due to the time lag effect of the oilprices increase and CB shortage issues. Further with the additional cess on customs dutyof imported products input costs on imported raw materials are expected to increase fromApril 2018 though it is expected to be largely passed on. Higher raw material costs willimpact the operating margins of players.

Tyre industry is also well aligned with the Make in India campaign ofthe Government of India. The new Greenfield facilities being set up by tyre manufacturersin India are a reflection of India's growth aspirations and manufacturingcapabilities. India has emerged as preferred destination for Greenfield and Brownfieldinvestments in tyre sector.

The leading tyre companies have their in-house Research andDevelopment (R&D) to not only produce technologically superior tyres but also to meetthe diverse requirements. The current R&D spends by tyre majors have increased to 2%of revenue and are fast catching up with the 3.5% spends of the global tyre companies.

State of Company's Affairs

During the year under review the Company became the first tyre companyin the world outside Japan to receive the Deming Prize in 2017. The Deming Prizerecognises companies that achieve business transformation by implementing Total QualityManagement (TQM). The Deming Prize reinforces and consolidates the Company'sreputation as a high-quality producer of tyres and enables the Company to gain idealpartner status for leading automobile companies in the world. Additionally the Company hasalso been awarded the prestigious "Great Place to work" certification.

During the year under review the Company has launched a new safetyinitiative "CEAT Safety Grip" yet another step towards making Mobility Saferand Smarter. Everyday. To ensure safe travel for bike riders against uncertainties duringthe monsoon season the Company has launched its newest advertising campaign‘Nehlau' considering the issues faced by the bikers of water splashes andgetting drenched owing to the onslaught of larger vehicles moving at high speeds. Toovercome the common problem of tyre slippage faced by farmers the Company'sAayushmaan tyres offered superior grip leading to better yield and efficiency.

During the year under review the Company developed 65 new products.Last few years have seen a healthy roll-out of new innovative products across categories.Innovative product launches remained at the forefront to grow business across countries.The Company set up its European technical Centre at Frankfurt Germany to focus on breakthrough products for customers and focus on passenger segment.

Pursuing a differentiated strategy CEAT had shifted its focus awayfrom the large but highly competitive truck and bus tyre segment (T&B) to the fastergrowing and higher margin segments - 2Ws Passenger Car Radials (PCR) and Specialty tyres.The Company's revenues from focus segments such as 2W PCR and Specialty tyres haveshown 25% CAGR since FY 2009-10 contributing 50% to revenues in first half of FY 2017-18compared to 20% in FY 2009-10. CEAT's market share in 2Ws tyre replacement hasincreased from ~10% in FY 2010-11 to ~30%.

The Company's network currently extends to more than 4500 dealersand over 30000 sub-dealers. The Company currently has 4 manufacturing facilities atBhandup Nashik Nagpur and Halol and is setting up a green field project. It has itsrepresentative offices at Indonesia Germany and the United Arab Emirates to servecustomers in foreign markets. It also operates a plant for manufacture of specialty tyresthrough its wholly owned subsidiary CEAT Specialty Tyres Limited.

Exports volume increased by 14.1% during the first half of FY2017-18. In value terms the growth in exports came a bit lower at 13.3% as realisationsremained moderate and the pricing was controlled by softened raw material prices.

The Company was also awarded with the' IAA Indian Awards 2017 forthe Best Ad Film (HAATH DIKHAO – CEAT CAR TYRES) in the Auto category. The Companyduring the year became the title sponsor of Ultimate Table Tennis. The Company partneredwith MMRDA to eliminate the nuisance of potholes during rainy season by filling thesepotholes with bitumen and the rubber from the Company's old tyres. During the yearunder review the Company tied up with a young cricket batsman Shubman Gill and one ofthe most proli_c all-rounders in women's cricket Harmanpreet Kaur a valuableaddition to Team CEAT which already has the likes of Rohit Sharma Ajinkya Rahane andIshaan Kishan on board.

While continuing the journey towards the purpose of the Company‘making Mobility Safer and Smarter Everyday' the Company has taken a pledgethat the Company's products services will solve core problem of its customers. TheCompany will give safety its rightful place first on the Indian roads which are some ofthe most treacherous in the world and then build on the good work in all the markets theCompany touches.


Considering the profits for the year under review and also the capitalexpenditure requirements of the Company your Directors are pleased to recommend adividend of ` 11.50 per equity share of `10.00 each (i.e. 115%) for the financial yearended March 31 2018.

The amount lying in the Unpaid Dividend Account of the company inrespect of the last seven years as on March 31 2018 is as follows:

Financial Year

Amount in `















The above dividends are due for transfer to Investor Education andProtection Fund after completion 7 years from the respective dates of payment. During theyear under review the Company has transferred ` 1476080 to the Investor Education andProtection Fund.

The Company has adopted a Dividend Distribution Policy and the same isannexed herewith as "Annexure A".

Transfer to Reserve

Your Directors have proposed not to transfer any sum to the GeneralReserve.

Material Changes and Commitments if any Affecting the FinancialPosition of the Company:

There are no material changes and commitments affecting the financialposition of the Company which have occurred between the close of financial year on March31 2018 to which the financial statements relates and the date of this Report.

Capacity Expansion

The Company is setting up a greenfield manufacturing capacity with anestimated investment of over ` 2000 crores to be incurred over the next three to fiveyears and an initial capacity of the project is ~250 MTD for manufacture of passenger carradial tyres including motor cycle radial tyres. The Company also plans to utilize theproposed plant for exports. Civil work for the first phase of the project has begun andthe plant is expected to begin production in the next twelve months.

During the year under review the Company through its wholly ownedsubsidiary CEAT Specialty Tyres Limited commenced commercial production at the Ambernathplant for manufacture of off-the-road tyres for the specialty segment.

Future Outlook

The global tyre volume is likely to reach 2.7 bn units by 2022. At thesame time upheavals in the world tyre supply with an array of high-growth opportunitiesand new technologies are helping forge new areas of opportunity in the industry. Thegrowth is motivated by strong economic upturn and vehicle production and replacementdemand from a wide variety of end-users globally. Rapid advancements in technology and thegrowing demand for environmentally viable tyres have augmented the growth of the market.

Optimistic economic outlook booming auto sales fast development ofroad infrastructure huge investment in capacity creation rising demand from the youngpopulation expanding middle-class etc. are set to drive growth of the Indian tyreindustry. The government in Budget FY 2018-19 has allocated higher investment towardsinfrastructure development (from ` 4.94 lacs crores to ` 5.97 lacs crores). This coupledwith policy measures to simplify faster road construction will strengthen the roadtransport infrastructure. This in turn is expected to augment the offtake of all kindsof tyres.

With the government's focus on GST emission norms and safetystandards the Indian automotive industry is likely to experience significant technologyadvancements over the next four to five years. Technology-driven trends couldrevolutionise the way industry players respond to changing consumer behaviour whiledeveloping partnerships and driving transformational change.

Subsidiary Companies

At the end of the year under review the Company had following foursubsidiaries namely CEAT Specialty Tyres Limited Mumbai (CSTL) Rado Tyres LimitedCochin (RTL) Associated CEAT Holdings Company (Private) Limited Colombo Sri Lanka(ACHL) CEAT AKKhan Limited Dhaka Bangladesh (CAL).

The Company does not have any material subsidiary whose net worthexceeds 20% of the consolidated net worth of the holding company in the immediatelypreceding financial year or has generated 20% of the consolidated income of the Companyduring the previous financial year. A policy on material subsidiaries has been formulatedby the Company and posted on the website of the Company at the link investor/corporate-governance.

CEAT Specialty Tyres Limited

CEAT Specialty Tyres Limited (CSTL) a wholly owned subsidiary of theCompany is engaged in manufacturing and sale of tyres for off-the-road vehicles andequipments which find application across industries including ports construction miningand agriculture. During the year under review CSTL commenced commercial production at itsfacility at Ambernath in the State of Maharashtra. CSTL has set up an overseas subsidiaryviz. CEAT Specialty Tires Inc. in USA.

During the year under review CSTL registered a revenue of

` 26666 lacs (Previous year ` 22417 lacs) and a net loss of

` 3716 lacs in FY 2017-18 (Previous year ` 1003 lacs).

Rado Tyres Limited

Rado Tyres Limited (RTL) having its two-three-wheeler tyresmanufacturing facility at Kothamangalam Kerala supplies its entire production ofautomotive tyres (two-three-wheeler) to the Company. During the year under review RTLregistered a revenue of ` 31 lacs as compared to a revenue of ` 898 lacs in FY2016-17 registering a de-growth of 96.55% largely due to cessation of production at thefactory. The net loss for the year under review has gone up to ` 870 lacs from ` 124 lacsin the previous year mainly due to stoppage of production and payment of VRS to all itsemployees. Consequent to the stoppage of production on March 20 2017 the productiontickets for FY 2017-18 have been Nil and only the prevailing inventory wasdispatched from Rado factory.

Overseas Subsidiaries:

Details of ACHL and CAL are given below under the heads "JointVenture in Sri Lanka" and "Joint Venture in Bangladesh".

Joint Venture in Sri Lanka

ACHL the Company's investment arm in Sri Lanka has a 50:50 jointventure company viz. CEAT-Kelani Holdings Private Limited which operates fourmanufacturing plants through its wholly owned subsidiaries in Sri Lanka.

During the year under review ACHL has registered a revenue of LKR52078 lacs (` 21882 lacs) as compared to LKR 47053 lacs (` 21406 lacs) in FY 2016-17.However the profit after tax has reduced by 9.16% to LKR 5664 lacs (` 2380 lacs)as compared to LKR 6235 lacs (` 2837 lacs) in FY 2016-17. ACHL's jointventure continues to enjoy the overall market leadership in all categories of tyres in SriLanka.

ACHL has been consistently paying dividends and it has during the yearunder review paid a dividend of LKR 4563 (` 1927 lacs) to the Company.

Joint Venture in Bangladesh

CEAT AKKhan Limited (CAL) is the 70:30 joint venture (JV) of theCompany in Bangladesh. CAL is setting up a green field facility for manufacture ofautomotive bias tyres in Bangladesh. CAL has been selling CEAT branded automotive tyresoutsourced from the Company in the local market since the last 4 (four) years. For theyear under review the revenue of CAL is BDT 7504 lacs (` 5917 lacs) as comparedto BDT 6586 lacs (` 5619 lacs) in FY 2016-17. The net loss for the year underreview is BDT 422 lacs (` 363 lacs) as compared to the net loss of previous year BDT 522lacs (` 470 lacs).

A report on the performance and financial position of each of theCompany's aforesaid subsidiaries forms part of the Annual Report.

Associate Company-

During the year under review Tyresnmore Online Private Limited (TNM)a private limited company incorporated on June 2 2014 having its registered office in NewDelhi engaged in the business of selling automotive tyres accessories and providingservices of installing fitting wheel balancing and wheel alignment for automotive tyreshas become an associate of the Company. The Company has on June 23 2017 acquiredapproximate 31.93% of the fully diluted share capital of TNM by investing ` 400 lacsthrough subscription of 50855 Compulsorily Convertible Preference Shares("CCPS") of face of ` 1 each and 100 Equity Shares of face of ` 1 each ofTNM.

During the year under review TNM registered a revenue of `104 lacs anda net loss/profit of ` 112 lacs in FY 2017-18.

Consolidated Financial Statements

In accordance with Section 129(3) of the Companies Act 2013 andRegulation 34(2) of SEBI (Listing Obligations and Disclosure Requirement) Regulations2015 the Consolidated Financial Statements of the Company including the financialdetails of all the subsidiary companies associate/joint venture of the Company forms partof this Annual Report. The Consolidated Financial Statements have been prepared inaccordance with the Indian Accounting Standards issued by the Institute of CharteredAccountants of India.

Business Risk Management

Pursuant to the requirement of Regulation 21 of SEBI (ListingObligations and Disclosure Regulations) Regulations 2015 the Company has constituted aRisk Management Committee. The details of this Committee and its terms of reference areset out in the Corporate Governance Report which forms part of this Report.

The Company has in place a Enterprise Risk Management framework toidentify risks and minimize their adverse impact on business and strives to createtransparency which in turn enhances the Company's competitive advantage.

Pursuant to the aforesaid business risk framework the Company hasidentified the business risks associated with its operations and an action plan formitigation of the same is in place. The business risks and its mitigation have been dealtwith in the Management Discussion and Analysis section of this Report.

Corporate Social Responsibility

The Board of Directors has formed a committee on Corporate SocialResponsibility (CSR) in accordance with the provisions of the Companies Act 2013. TheCommittee consists of following members:

Mr. Anant Vardhan Goenka (Managing Director)

Mr. Hari L. Mundra (Non-Executive Non-Independent Director) and Mr.Vinay Bansal (Non-Executive Independent Director)

The Company with a vision to drive ‘holistic empowerment' ofthe community has carried out the following CSR initiatives through RPG Foundation("the Trust") a public charitable trust qualified to undertake CSR activitiesin accordance with Schedule VII of the Companies Act 2013:

Netranjali – The project aims at providing comprehensiveVision/ Eye care to prevent avoidable blindness. During the FY 2017-18 the projectscreened 145744 people through 1540 Eye Camps and 249 days of Vision Centredistributed over 74498 spectacles and made 10768 referrals for severe cases.

Swayam – The project aims to promote Gender Equality andWomen's Empowerment and drive powerful social change in the transport industry bytraining underprivileged women in driving skills to enhance livelihood across sectors suchas Taxi school vans two-wheeler delivery executives and entrepreneurial ventures. 645women completed their training for Four-wheeler driving and 303 women completed theirtraining for Two-Wheeler riding. These women are in the process of procuring theirPermanent Driving Licenses. These women were trained across Mumbai Nagpur ChennaiDelhi Indore Bhopal Jaipur etc.

Road Smarrt - In line with the motto of safety the Companylaunched "Road Smarrt" to advocate safe driving and prevention of roadfatalities. The project started in FY 2016-17 and completed in FY 2017-18. The Companytargeted school children and parents to create awareness amongst children who are thefuture road users. The Company launched sessions in 312 schools reaching over 1.27 lacschildren and also provided Defensive Driving training to 1000 Drivers.

Pehlay Akshar (Schooling)- The project focuses on Primary Educationwith emphasis on English speaking and reading skills to enhance employability. Theinitiative reached out to 3000 students across 16 schools in Mumbai Halol and Nashik.

Pehlay Akshar School Enrichment Program (Pehlay Akshar

– Training)- The project focuses on transformation of publiceducation by helping teachers to develop "Magic classrooms" where children feelsafe and are encouraged to learn. In FY 2017-18 the program trained 989 teachersfrom government and municipal schools. This included 3 training sessions spread across theacademic year with weekly group coaching sessions that focused on implementing the‘Magic Classroom' principles in the schools.

Jeevan– The project focuses on improving quality of life inareas of clean drinking water health and nutrition. Through the project 50 sessions onadolescent health were conducted covering 500 children.

At Panchmahal district in Gujarat 1200 children in schools wereprovided highly nutritious snacks before the mid-day meal as a proactive effort to reducemalnourishment. As a part of developing alternate livelihoods this intervention alsosupported 50 women who were trained to develop these nutritious snacks and supply themto the 1200 children. This project was undertaken jointly by all RPG Group of Companieshaving facilities in Gujarat (CEAT KEC International and Raychem RPG).

Employability Skill Development (Project-Saksham)/ (Project Sanjeevani)– These two projects are skill development programs that aim to providelivelihoods training to empower women and youth and enable them to take up employment thatcan transform their lives.

Saksham- During the year under review 170 less privileged womenand youth were trained in two-wheeler repairing mobile repairing motor rewinding and asbeauty advisors.

Sanjeevani- The project trained 250 less privileged women and youthin bed side assistant/patient care assistant programs as an alternate livelihood option inthe communities around the Company's plants. 50 candidates were trained in Halollocation the training of which has been undertaken jointly by the RPG Group of Companieshaving facilities in Gujarat (CEAT KEC International and Raychem RPG).

The Annual Report on CSR activities in pursuance of the Companies(Corporate Social Responsibility Policy) Rules 2014 is annexed herewith as "AnnexureB".

The Company has contributed the entire amount of ` 1070.93 lacs to RPGFoundation the implementing agency towards CSR activities during the FY 2017-18.

Vigil Mechanism /Whistle Blower Policy

Pursuant to Section 177 of the Companies Act 2013 and Regulation 22 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hasadopted vigil mechanism in the form of Whistle Blower Policy to deal with instances offraud or mismanagement if any. The Policy can be accessed at the website of the Companyat link https://www.ceat. com/corporate/investor#corporate-governance.

Related Party Transactions

TThe Company has formulated a policy on Related Party Transactions forpurpose of identification and monitoring of such transactions. The said policy on RelatedParty Transactions as approved by the Board is uploaded on the Company's website.

All Related Party Transactions are placed before the Audit Committeeand wherever necessary before the Board/ members for approval. The Company has notentered into any transactions with related parties during the year under review whichrequired reporting in Form AOC-2 in terms of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014.

Share Capital

The paid up equity capital of the Company as on March 31 2018 was `4045.01 lacs. The said shares are listed on the BSE Limited and the National StockExchange of India Limited. There is no change in the paid-up capital of the Companyduring the year under review.

Non-Convertible Debentures

The Company during FY 2015-16 had issued and allotted 2000 SecuredRedeemable Non-Convertible Debentures of ` 10 lacs each on private placement basisaggregating to ` 20000 lacs. The said Secured Redeemable Non-Convertible Debentures arelisted on BSE limited.

Credit Rating

Your directors are pleased to inform you that during the year underreview the long term credit rating of the Company is affirmed/ assigned as "AA"with "Stable" outlook by its rating agencies viz. CARE and India Ratings(Fitch). The rating of AA indicates high degree of safety regarding timely servicing offinancial obligations and very low credit risk. A ‘Stable' outlook indicatesexpected stability (or retention) of the credit ratings in the medium term on account ofstable credit risk profile of the entity in the medium term.

The short term facilities of the Company have been granted the ratingof A1+ by CARE and India Ratings (Fitch). The rating of A1+ indicates very strong degreeof safety regarding timely payment of financial obligations and carries the lowest creditrisk.

The ratings on Non convertible Debentures issue of the Company havebeen reaffirmed as "AA" with "Stable" outlook by the CARE RatingLimited a Rating Agency ("CARE").

The ratings on Commercial Paper issue of the Company have beenreaffirmed as A1+ by CARE.

Extract 0f Annual Return

The details forming part of the extract of the Annual Return in theprescribed Form MGT-9 is annexed herewith as "Annexure C".

Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo

A statement giving details of conservation of energy technologyabsorption foreign exchange earnings and outgo in accordance with Section 134(3) (m) ofthe Companies Act 2013 read with Rule 8 of The Companies (Accounts) Rules 2014 isannexed hereto as "Annexure D" and forms part of this report.

Particulars of Employees

The statement required pursuant to Section 197 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial

Personnel) Rules 2014 ("the said Rules") in respect ofemployees of the Company are required to be set out in this report. However the secondproviso of the sub rule (3) of Rule 5 of the said Rules permits the Company to provide thesaid statement on specific request of member in writing. Therefore the Annual Reportexcluding the said statement is being sent to all the members of the Company and suchstatement shall be made available to the members on request.

The prescribed particulars of employees required under Section 134(3)(q) and Rule 5(1) of the said Rules are attached as "Annexure E" andforms part of this report.

Fixed Deposits

There are no deposits outstanding as on March 31 2018 nor the Companyhas accepted any fresh deposits during the year under review which are not in compliancewith the requirements of the Act.

There were no defaults in respect of repayment of any deposits orpayment of interest thereon.

The Company has no overdue deposits other than the unclaimed depositsas at the end of the year under review.

Particulars of Loans Guarantees or Investments

In terms of Section 134 (3) (g) the Report of the Board of Directorsshall include the details of particulars of Loans Guarantees and Investments underSection 186 of the Companies Act 2013 which are provided in the notes to the FinancialStatements. The loans and/or advances given to the employees bear interest at applicablerates.


During year under review Mr. Pierre E. Cohade was appointed as anAdditional Director (Non-Executive Non Independent Director) on the Board of the Companyby the Board of Directors at its meeting held on February 1 2018. He would therefore holdoffice up to the date of the ensuing Annual General Meeting (AGM). However the Companyhas received a Notice from one of its member proposing the appointment of Mr. Cohade as aDirector (Non-Executive Non Independent) of the Company and such appointment has also beenrecommended by the Nomination and Remuneration Committee of the Board of Directors of theCompany. Accordingly it is proposed to appoint Mr. Cohade as a Director (Non-ExecutiveNon Independent) liable to retire by rotation.

Mr. Vinay Bansal Mr. Atul C. Choksey Mr. S. Doreswamy Mr.Mahesh S. Gupta Mr. Haigreve Khaitan Mr. Ranjit V. Pandit Mr. Paras K. Chowdhary andMs. Punita Lal are Independent Directors on the Board of the Company and the compositionof the Board of Directors duly meets the criteria stipulated in Section 152 of theCompanies Act 2013.

All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Mr. Anant Vardhan Goenka Managing Director and Mr. Arnab BanerjeeExecutive Director-Operations do not receive any profit related commission from any of thesubsidiary of the Company.

The Board at its meeting held on March 26 2018 considered andapproved the re-appointment of Mr. Arnab Banerjee as Whole-time Director (WTD) of thecompany designated as Executive Director – Operations for a period of 5 (five)years w.e.f May 7 2018 to May 6 2023 subject to approval of shareholders at the ensuinggeneral meeting of the Company.

In accordance with the Companies Act 2013 and Articles of Associationof the Company Mr. Hari L. Mundra retires by rotation and being eligible offers himselffor re-appointment.

Pecuniary Relationship or Transactions of the Non-Executive Directorsand Disclosures on the Remuneration of the Directors

All pecuniary relationship or transactions of the Non-ExecutiveDirectors vis--vis the Company along with criteria for such payments and disclosures onthe remuneration of the Directors along with their shareholding are disclosed in FormMGT-9 which forms a part of this Report.

Key Managerial Personnel

The Board at its meeting held on March 26 2018 approved reappointmentof Mr. Arnab Banerjee as the Whole- time Director designated as the ExecutiveDirector-Operations for a further period of 5 (five) years with effect from May 7 2018 toMay 6 2023 subject to the approval by the shareholders at the ensuing Annual GeneralMeeting. Mr. Anant Vardhan Goenka was reappointed as the Managing Director for a period of5 (five) years by the members at the Annual General Meeting held on August 8 2017.

Mr. Kumar Subbiah and Ms. Shruti Joshi have been appointed as the ChiefFinancial Officer and Company Secretary respectively.

The above are the Key Managerial Personnel of the Company pursuant tothe provisions of Section 203 read with Section 2(51) of the Companies Act 2013.

Inter-Se Relationships Between the Directors

There are no relationships between the Directors inter-se exceptbetween Mr. Anant Vardhan Goenka Managing Director and Mr. H. V. Goenka Chairman.Mr. Anant Vardhan Goenka is the son of Mr. H. V. Goenka Chairman.

Familiarization Programme for Independent Directors

Pursuant to the Code of Conduct for Independent Directors specifiedunder the Companies Act 2013 and requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has framed a familiarization programme forall its Independent Directors to familiarize them on their roles rights andresponsibilities in the Company the nature of the industry in which the Company operatesand its business model. The familiarisation programme is posted on the website of theCompany at the link corporate/investor#corporate-governance.

Policy on Appointment Training Evaluation and Remuneration ofDirectors Key Managerial Personnel and Senior Management Personnel

The Board has on the recommendation of the Nomination and RemunerationCommittee framed a policy on Appointment Training Evaluation and Remuneration ofDirectors Key Managerial Personnel and Senior Management Personnel (SMP) and theirremuneration which is enclosed as "Annexure F".

Evaluation of Board Its Committees and Directors

For the purpose of evaluation the Board had finalised a questionnaireand engaged a third party HR Craft Business Consulting Private Limited to conduct anindependent online confidential survey using the said questionnaire. The results of thesurvey/feedback were then deliberated at Board Meeting and evaluation of the Board itsCommittees and the Directors were reviewed.

Meetings of the Board of Directors

During the year 5 (five) Board Meetings were convened and held onApril 28 2017 August 3 2017 November 14 2017 February 1 2018 and March 26 2018.The details of which are given in the Corporate Governance Report. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013 andRegulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Discolure Under Secretarial Standards on Meeting of Board of Directors(Ss-1):

During the year under review the company has complied with all theapplicable Secretarial Standards.

Board Committees

Detailed composition of the mandatory Board Committees viz. AuditCommittee Nomination and Remuneration Committee Stakeholders' RelationshipCommittee Corporate Social Responsibility Committee Risk Management Committee andnon-mandatory committee viz. Finance and Banking Committee Special Investments/ProjectCommittee and Committee of Directors number of meetings held during the year under reviewand other related details are set out in the Corporate Governance Report which forms partof this Report.

There have been no situations where the Board has not accepted anyrecommendations of the Audit Committee.

The Company has formed Audit Committee and composition of the same isgiven in the Corporate Governance Report which forms part of this Report

Directors' Responsibility Statement

Pursuant to Section 134(3) (c) of the Companies Act 2013 yourDirectors to the best of their knowledge and belief make following statements that:

i) The applicable Accounting Standards have been followed in thepreparation of the annual accounts along with the proper explanation relating to materialdeparture if any.

ii) Such accounting policies have been selected and appliedconsistently and such judgements and estimates have been made that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company in theBalance Sheet as at March 31 2018 and the Statement of Profit and Loss for the saidfinancial year ended March 31 2018.

iii) Proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.

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

v) The proper internal financial controls were in place and that suchinternal financial controls are adequate and were operating effectively.

vi) The systems to ensure compliance with the provisions of allapplicable laws were in place and that such systems were adequate and are operatingeffectively.

Management Discussion and Analysis and Corporate Governance Report

IncompliancewiththeRegulation34ofSEBI(ListingObligationsand DisclosureRequirements) Regulations 2015 separate section on Management Discussion and Analysisas approved by the Board of Directors which includes details on the state of affairs ofthe Company forms part of this Annual Report. Further the Corporate Governance Reportduly approved by the Board of Directors together with the certificate from the StatutoryAuditors confirming the compliance with the requirements of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 forms part of this Annual Report.

Business Responsibility Report

In compliance with the Regulation 34 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on Business ResponsibilityReport as approved by the Board which includes principles to assess compliance withenvironmental social and governance norms for the year under review forms part of theAnnual Report.

Statutory Auditors

The Company at its AGM held on August 8 2017 appointed Messrs S R B C& CO LLP as the Statutory Auditors for a second term of 5 (five) consecutive yearsfrom the conclusion of the Fifty-Eighth Annual General Meeting to the conclusion of theSixty-Third Annual General Meeting subject to rati_cation of their appointment every year.They have confirmed that their appointment if rati_ed at the ensuing AGM will be incompliance with Sections 139 and 141 of the Companies Act 2013.

Internal Auditors

The Board has appointed Messrs KPMG as Internal Auditors for the periodof 1 (one) year up to March 31 2019 under Section 138 of the Companies Act 2013 and theyhave completed the internal audit as per the scope defined by the Audit Committee.

Secretarial Auditors

The Company has appointed Messrs Parikh and Associates CompanySecretaries to conduct the Secretarial Audit for the financial year ended March 31 2018as required by Section 204 of the Companies Act 2013 and rules made thereunder. TheSecretarial Audit Report furnished by Messrs Parikh and Associates is annexed to thisreport as "Annexure G".

Cost Auditors

The Board of Directors has appointed Messrs D. C. Dave & Co. CostAccountants (Membership No. M7759) as Cost Auditors of the Company for FY 2018-19 andrecommends rati_cation of their remuneration by the Members at the ensuing Annual GeneralMeeting.

Explanation and Comments on Auditors and Secretarial Audit Report

There are no qualification disclaimer reservation or adverse remarkmade either by the Statutory Auditors in Auditors Report or by the Company Secretary inpractice (Secretarial Auditor) in the Secretarial Audit Report except for reporting adelay in transfer of certain amount relating to unclaimed matured deposits and interestthereon. The delay was inadvertent.

The Statutory Auditors have not reported any instances of fraud to theCentral Government and Audit Committee as per the provisions of Section 143 (12) of theCompanies Act 2013 read with Rule 13 of the Companies (Audit and Auditors) Rules2014.

Significant and Material Orders Passed by the Regulators or Courts orTribunals Impacting the Going Concern Status

There are no significant and material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and Company's operations infuture.

Change in the Nature of Business

During the year under review there was no change in the nature of thebusiness.

Internal Financial Control

Details in respect of adequacy on internal financial controls withreference to the Financial Statements are stated in Management Discussion and Analysiswhich forms part of this Annual Report.

Human Resources

The Values of the Company and Quality Base Management define the way ofworking at the Company. The Company continues to use innovative methods to embedbehaviours led by values in the organisation. A unique campaign ‘Leader SpeakSeries' was launched on whatsApp and email. This had senior management speak aboutpeople that exemplify the Company's values.

During the year under review the Company was recognised as a"Great Place To Work – Certified' by the Great Place to Work Organisation.This is a combination of feedback given by the Company's employees and the strongpeople practices which is the foundation of the people philosophy in the Company. TheCompany believes in a culture of inclusion trust empowerment and development foremployees. This year the Company focussed on building gender sensitivity across ourManufacturing Locations by using an innovative medium of interactive theatre to engage andeducate the associates.

In our journey to build best in class sales force through our SalesAcademy the Company trained its entire field force on processes product features andbenefits. This has resulted in significant improvement of the overall competence acrossour sales organisation. The Company continues to invest significantly in building aculture of Coaching and Mentoring through number of structured interventions and haveimproved the penetration of this intervention.

In the journey towards making the Company a fun place to work in-housetalent show "CEAT's Got Talent" was introduced which showcased talentacross the organisation.

Disclosure Under Sexual Harrasement Of Women at the Workplace(Prevention Prohibition and Redressal) Act 2013.

In accordance with the provisions of the Sexual Harassment of Women atthe Workplace (Prevention Prohibition and Redressal) Act 2013 4 (four) InternalComplaints Committees (ICC) have been set up to redress complaints. During the year underreview no complaints were received.


Your Directors place on record their appreciation for the continuedsupport and co-operation received from the Employees Customers Suppliers DealersFinancial Institutions Banks and Members towards conducting the business of the Companyduring the year under review.

On behalf of the Board of Directors

H. V. Goenka


Place: Mumbai Date: April 30 2018