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JK Tyre & Industries Ltd.

BSE: 530007 Sector: Auto
NSE: JKTYRE ISIN Code: INE573A01042
BSE 00:00 | 27 Sep 150.95 -2.05
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NSE 00:00 | 27 Sep 150.95 -2.05
(-1.34%)
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OPEN 153.00
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VOLUME 110146
52-Week high 166.00
52-Week low 55.00
P/E 10.29
Mkt Cap.(Rs cr) 3,717
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 153.00
CLOSE 153.00
VOLUME 110146
52-Week high 166.00
52-Week low 55.00
P/E 10.29
Mkt Cap.(Rs cr) 3,717
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company director report

Your Directors are pleased to present the Annual Report of your Company along withAudited Financial Statements for the financial year ended 31st March 2021.

OPERATIONS

The year began with outbreak of the Covid-19 pandemic an unparalleled calamity in therecent history of mankind.

The world as we know was thrown into turmoil and all that was taken for granted wasthreatened impacting lives and livelihood. A number of global economies went into a stateof enforced and extended lockdowns to contain its spread. With shutdown of entireoperations for the first time in the history of JK Tyre for almost two months beginningend of

March 2020 we were faced with an unprecedented situation.

The paramount focus of your Company was on employee safety health morale and securityof all operational assets.

The Company maintained high levels of communication within the organization at alllevels and with all stakeholders ed including vendors OEM buyers channel partners andend users. Focus was laid on sustaining cash flows and anticipating market requirements inpreparation of resumption of operations. Major functions were conducted in virtual modeand adoption of digital practices were encouraged. The operations at plants resumedgradually from 3rd week of May 2020 onwards. Q2 rapidly took a ‘V' shaped recoverytrajectory. The Company saw a sharp comeback in Q3 & Q4 and recorded highest eversales in these Quarters in the history of the Company.

JK Tyre recorded a higher turnover at H9145 crores on a consolidated basis andoperating profit of H1349 crores which is 33% higher compared to the preceding year. On astandalone basis the turnover was H6170 crores with operating profit of H887 croreswhich is 31% higher over the preceding year.

With lean operations smart marketing stronger IT infrastructure cost compressionreduced working capital and receivables JK Tyre is well placed to capture the growingdemand and further improve its performance. The Government's emphasis on infrastructureand Atmanirbhar measures preference for personal mobility is expected to providetailwinds in the year ahead. However global headwinds like increase in commodity pricesremain a cause of concern.

KEY HIGHLIGHTS:

1. Turnover of H 9145 Crores despite closure of all economic activities for 2 months

- Rolled out 20 millionth TBR Tyre - 1st in India

- Enlarged distribution outreach by adding 1400 channel partners across the country

- Higher exports at H1176 crores

- Added prestigious OEM brands to our customer portfolio

2. Achieved higher Operating Margin despite global slow down

- Increased capacity utilization; extensive cost cutting fix expenses - Aggressivecutin

- All round improvements in manufacturing efficiencies across plants and globalbenchmark in several parameters

- 55% power requirement met through renewable resources

3. Reduced Working Capital deployment in India Operations

- Reduction in Working Capital cycle

- Strict credit discipline and cash management

- Reduced interest cost

4. Reduction in Debt

- Reduced borrowings by H892 crores (consolidated)

- Increased liquidity

- Improvement in credit rating

- Improved leveraging and other financial

5. Accelerated Pace of Innovation

- Launched 231 SKUs during FY 2020-21

- Premiumised product portfolio across categories

- Accelerated sale of "Smart" tyres.

6. Brand Building

- Leveraged Digital media and increased customer connect across platforms

- Sustained motorsport

- Strengthened product positioning; increased market share

7. Digitalization

- Extended digitalization across functions

- AI Supported claim resolution time significantly reduced (from 3 days to 30 Minutes)leading to superior customer experience - effort recognized with Best Digitization awardby CII

- Improved Working Capital management

8. HR

- Retrained and transformed mindsets in embracing "digital first"

- Recognized among top 30 India's best workplaces in manufacturing sector for 2020 bythe "Great Place to Work"

9. Deepened our ESG culture & Invested in HSE

- Emerged "greener" company (Zero Waste to Landfill and Single Use PlasticFree)

- Reduced carbon footprint by 54%

- Global benchmark in water usage in Tyre industry

- Lowest energy consumption first 3 in the world

- Adopted 4 Rs approach (Recycling Re-use

Renewables and Reduction)

All these actions resulted in improvement in profitability -

PAT increased multifold to H331 crores in FY 2020-21.

INVESTMENTS IN ACQUISITIONS

It is indeed a matter of great satisfaction that the investments made in severalacquisitions during past few years have paid rich dividends - Vikrant Tyres Mysuru forlaunch of Truck radials; JK Tornel Mexico for strengthening foothold in Americas andrecent acquisition of Cavendish for Truck radial tyre capacity and our entry in2/3-wheeler tyres - a growing segment which we had been wanting for a long time tocomplete the product basket.

These tyre companies have been turned around in shortest possible time and have addedtremendous value for JK Tyre.

RAW MATERIAL

The FY 2020-21 shall be remembered as year of extremes. As the year moved ahead thecountry witnessed "V" shape recovery. During second half of the year it reachedits peak. The raw material ecosystem was neither prepared for complete lockdown nor wasprepared to meet the galloping needs of the revival of economy especially Tyre Industry.

First half of the year saw subdued prices because of lower demand and with the rise ofmanufacturing activity it turned into shortage of various products leading to higherprices.

Supply Chain disruption including shortage of containers vessel space and number ofsailings resulted into vicious circle of lower raw material availability and higherfinished goods demand.

Product by product the availability of inputs got constrained and the price risehappened across the globe. Right from first week the Company started critical monitoringof the entire supply chain scenario and with detailed planning closely working withstrategic partners followed by diversification of supplier base to different geographiesetc. With the result the Company was able to meet its production needs.

R&D AND TECHNOLOGY

Since beginning your Company has been having very strong focus on technologydevelopment & maintaining competitive scan and edge domestically as well as globally.

A strong team of over 200 Scientists and Engineers located at "Raghupati SinghaniaCentre of Excellence" Mysuru is involved in developing innovative and newertechnologies to maintain competitive edge.

Accordingly the Company's RESEARCH & DEVELOPMENT and TECHNOLOGY team are fullyaligned with current & future needs of the customers and various markets the Companyoperates in.

To ensure consistent high-quality products validation and testing capabilities arecontinuously enhanced. This also helps in meeting stringent OEM requirement. In additionstate-of-the-art predictive technology and solutions are developed at the Company's"RPS Centre of Excellence" at IIT Madras.

The Company has embarked on the journey of TQM for business excellence. This has helpedin strengthening the regime of continuous improvement on all aspects of productivityquality cost & delivery. The Company is extending the rigor of TQM to itsstakeholders especially suppliers and dealers as a part of strengthening end-to-endquality.

AWARDS

JK Tyre has been recognised as:

- Great Workplace for the period Mar 21- Feb 22 by ‘Great Place to WorkInstitute' India.

- Superbrand (8th time in a row) by Superbrand India.

- Iconic Brand of India 2020 by Economic Times

- Trusted Brand 2020 by Reader's Digest

- Kankroli Tyre Plant received 14th National Water Awards for Excellence in WaterManagement 2020 by CII within the Fence Category

- Kankroli Tyre Plant awarded Sword of Honour Award for commitment to excellent healthand safety management.

- Kankroli Tyre Plant received CSR Award - Large Enterprise 2020 by Udaipur Chamber ofCommerce and Industry (UCCI)

- Chennai Tyre Plant received CII's National Energy Management Award 2020 for the FifthConsecutive Year.

- Banmore Tyre Plant has been rated "GreenCo Gold" category by CII duringGreenco Summit 2020

DIVIDEND

Your Directors are pleased to recommend a dividend of

H2 per equity share of H2 each (i.e. 100%) on the equity share capital of H49.25 croresfor the financial year ended 31st March 2021. The dividend outgo will be H49.25 crores.The Dividend is subject to deduction of tax at source as may be applicable. The dividendpay-out is in accordance with the Dividend Distribution Policy of the Company.

APPROPRIATIONS

The amount available for appropriation including surplus from the previous year stoodat H985.30 crores and the same has been carried forward to Balance Sheet.

ANNUAL RETURN

The Annual Return referred to in Section 134(3)(a) of the Companies Act 2013 isavailable on the website of the Company: https://www.jktyre.com/annual-returns.aspx

RELATED PARTY TRANSACTIONS

During the financial year ended 31st March 2021 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 (SEBI Listing Regulations) 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 the

Company on materiality of related party transactions. In view of the above disclosurein FORM AOC-2 is not applicable.

The Policy on materiality of Related Party Transactions and on dealing with RelatedParty Transactions as amended and approved by the Board is available on the Company'swebsite.

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

The Board of Directors appointed Shri Anshuman Singhania

Dy. Managing Director as a Managing Director of the Company for a term of five yearscommencing 21st October 2020 and he will continue to be a Key Managerial Personnel (KMP)of the Company.

The Board also re-appointed (i) Dr. Raghupati Singhania as a Managing Director of theCompany for a term of five years commencing 1st October 2021 and (ii) Shri Arun K.Bajoria as the Whole-time Director of the Company with the designation ‘Director& President - International Operations' for a term of three years commencing 20thJanuary 2022. Shri Bharat Hari Singhania's present term as a Managing Director of theCompany shall determine on 30th September 2021 and he has expressed his desire not to seekre-appointment. He shall therefore cease to be a Managing Director and a KMP of theCompany w.e.f. 1st October 2021 and will continue as a non-executive director of theCompany. However considering the need for smooth transition of responsibilities ShriBharat Hari

Singhania a promoter director and an industrialist with over 60 years of experiencehas agreed to be available to the Company and management for a period of three years forhis guidance and mentorship for which he will be paid remuneration as approved by theBoard.

All the matters of re-appointments as well as continuation of

Shri Bharat Hari Singhania as a non-executive director and payment of remuneration asaforesaid are subject to the approvals of the members of the Company at the ensuing

Annual General Meeting (AGM) and are recommended by the Board for approval.

Shri Arun K. Bajoria Director & President - International

Operations retires by rotation in his capacity as a Director and being eligibleoffers himself for re-appointment at the ensuing AGM. The Board recommends re-appointmentof Shri Arun K. Bajoria.

Further there were no other changes in the Directors/KMP of the Company during theyear.

Declarations have been received from all the Independent Directors of the Company thatthey meet the criteria of independence prescribed under the Companies Act 2013 and theSEBI Listing Regulations. All the Independent

Directors are registered on the Independent Directors Data

Bank.

CONSERVATION OF ENERGY ETC.

The details as required under Section 134(3)(m) of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 are annexed to this Report as Annexure ‘A' andforms a part of it.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of your for the financial year ended 31st March2021 prepared in accordance with the provisions of the Companies

Act 2013 SEBI Listing Regulations and the Accounting Standards. The auditedconsolidated financial statements together with the Auditors' Report form a part of theAnnual Report.

A report on each of the subsidiaries and associates together withhighlightsoftheirperformancesandfinancialposition is presented in a separate section inthe Annual Report. Please refer to AOC-1 annexed to the financial in the Annual Report.Highlights of the contribution of major operating subsidiaries and associates to theoverall performance of the Company during the year under review are given hereunder:

Name of Company Turnover PBT
- Cavendish Industries Ltd. 2570.72 142.15
- JK Tornel (together with its 1135.33 1.30
subsidiaries)

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements the consolidated statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.

During the financial year under review no Company has become or ceased to be yourCompany's subsidiary or associate. The Company does not have any Joint Venture.

DEPOSITS

Pursuant to the approval of members by means of a special resolution dated 22ndSeptember 2015 the Company has been accepting public deposits in accordance with theprovisions of the Companies Act 2013 and rules thereunder.

The particulars with respect to deposits covered under

Chapter V of the said Act for the financial year ended 31st March 2021 are:

(a) accepted during the year - H58.50 crores;

(b) remained unpaid or unclaimed as at the end of the year

- H1.85 crores;

(c) default in repayment of deposits or payment of interest thereon at the beginning ofthe year maximum during the year and at the end of the year NIL; and

(d) details of deposits which are not in compliance with the requirements of Chapter Vof the said Act - NIL.

AUDITORS

Company

(a) been Statutory Auditors and their Report

In accordance with the provisions of the Companies

Act 2013 and rules thereunder M/s S S Kothari Mehta & Company CharteredAccountants were re-appointed Auditors of the Company to hold office from the conclusionof the 67th Annual General Meeting (AGM) held on 22nd September 2020 until the conclusionof the 72nd AGM to be held in the year 2025. The observations of the auditors in theirreport on accounts and the financial statements read with the relevant notes statementsare self-explanatory. Further no fraud has been reported by the Auditors to the AuditCommittee or the Board.

(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 FY 2020-21.The Report given by him for the said financial year in the prescribed format is annexedto this Report as Annexure

‘B.1'. The secretarial audit report does not contain any financial qualificationsreservations or adverse remarks.

The Company has one material unlisted subsidiary incorporated in India namely -Cavendish Industries Ltd. (CIL). The Secretarial Audit Report of Shri Namo Narain

Agarwal the Secretarial Auditor for the FY 2020-21 of

CIL in the prescribed format is annexed -Annexure ‘B.2'.

(c) Cost Auditor and Cost Audit Report

The Company is required to maintain the cost records as specified by the CentralGovernment under sub-section (1) of Section 148 of the Companies Act 2013 and accordinglysuch accounts and records are made and maintained by the Company. The Cost Audit for thefinancial ended 31st March 2020 was conducted by M/s R.J. Goel & Co. CostAccountants Delhi and as required the Cost Audit Report was duly filed with theMinistry of Corporate Affairs Government of India. The Audit of the cost accounts of theCompany for the financial year ended 31st March 2021 is also being conducted by thesaidfirm.

PARTICULARS OF REMUNERATION

Details as required under the provisions of Section

197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointmentand Remuneration of

Managerial Personnel) Rules 2014 are placed on the and material Company's websitewww.jktyre.com as an annexure to the Board's Report. A physical copy of the same will bemade available to any shareholder on request as per provisions of

Section 136(1) of the said Act.

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 Board's Reportwill be made available to any shareholder on request as per provisions of Section 136(1)of the said Act.

CORPORATE SOCIAL RESPONSIBILITY

As a responsible corporate citizen the Company has been undertaking and participatingin the socially important projects in the fields of health education rural developmentadult literacy renewable energy among others - ever since it commenced operations i.e.even before Corporate Social Responsibility (CSR) was mandated by law.

The Company has also framed a CSR policy in accordance with the provisions of theCompanies Act 2013 and rules made thereunder. The CSR Policy of the Company the Projectsapproved by the Board the composition of the CSR

Committee and other relevant details are disclosed on the website of the Company.

The annual report on the CSR activities undertaken by the

Company during the financial year under review in the prescribed format is annexed tothis Report as Annexure ‘C'.

INTERNAL FINANCIAL CONTROLS

With a view to have a robust Internal Financial Control system the Company has put inplace budgetary controls internal reporting policies and procedures. These systemspolicies and procedures are reviewed from time to time and are updated. This ensuresaccuracy and completeness of the accounting records safeguarding of the assets andresources of the Company and also helps in prevention and detection of frauds and errors.The policies and procedures are also year adequate for orderly and efficient conduct ofbusiness of the Company. The Company also has a robust management information systemcommensurate with the size and nature of its operations which not only facilitates speedybusiness decisions but also helps in sharing reliable information across various levels inthe Company. No reportable material weaknesses were observed in the system during theprevious fiscal.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the financial year under review there were no orders passed by the regulatorssignificant or courts or tribunals that could impact the going concern status of theCompany and its future operations.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company andthe date of this report.

CHANGE IN THE NATURE OF BUSINESS

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

SUSTAINABILITY & BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the SEBI (Listing

Obligations and Disclosure Requirements) Regulations

2015 the Sustainability & Business Responsibility Report of the Company for thefinancial year ended 31st March in the prescribed format giving an overview of theinitiatives taken by the Company from an environmental social and governance perspectiveis given in a separate section of the

Annual Report and forms part of it. An ESG & Sustainability Report is also beingpublished separately.

CORPORATE GOVERNANCE - INCLUDING DETAILS PERTAINING TO BOARD MEETINGS NOMINATION ANDREMUNERATION POLICY PERFORMANCE EVALUATION RISK MANAGEMENT AUDIT COMMITTEE AND VIGILMECHANISM ETC.

Your Company reaffirms its commitment to the highest standards of corporate governancepractices. Pursuant to the SEBI Listing Regulations a Management Discussion and AnalysisCorporate Governance Report and Auditor's Certificate regarding compliance of conditionsof Corporate

Governance are made a part of this Report as Annexures - ‘D' & ‘E'.

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

(a) Particulars of the four 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 controls evaluationof directors. The Policy is also available on the website of the Company atwww.jktyre.com.

(c) The manner in which formal annual evaluation of the performance of the Board itsCommittees and of individual directors has been made.

(d) The details with respect to composition of the Audit

Committee and establishment of Vigil Mechanism.

(e) Details regarding Risk Management.

(f) Dividend Distribution Policy.

(g) Compliance with provisions under the Sexual Harassment of Women at Workplace(Prevention Prohibition and

Redressal) Act 2013.

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 if any; (b)the accounting policies have been selected and applied consistently and judgments andestimates made are reasonable and prudent so as to give a true and fair view ofthestateofaffairs 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)controls to be followed by the the internal financial

Company have been laid down and that such internal are adequate and were operatingfinancial 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.

Your Directors further state that applicable Secretarial Standards issued under Section118 of the Companies Act

2013 have been complied with.

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' particularly during the socio-economic challenges posed by Covid-19pandemic which has enabled the Company to continue to grow stronger despite thesedifficult times.

On behalf of the Board of Directors
19th May 2021 Dr. Raghupati Singhania
New Delhi Chairman & Managing Director

.