NSE Symbol: | BSE Code: | ISIN: | Sector:

  • Add to Portfolio
  • Add to Watchlist
  • Add to Alert
  • Add to Message
Add to Portfolio
Change Change %
-6.75 -0.96%

Updated:08 Jul, 2015, 11:45 AM IST

Change Change %
-10.60 -1.51%

Updated:08 Jul, 2015, 11:51 AM IST

Directors? Report


The Members of CEAT Limited

The Directors present their fifty– fifth report, together with the audited accounts for the year ended March 31, 2014.


In view of the impressive performance achieved by the Company during the year under review, the Board of Directors are pleased to recommend a dividend of Rs. 10.00 per equity share of Rs. 10.00 each (i.e.100 per cent) for the financial year ended March 31, 2014.


The challenges faced by the Indian economy during the last fiscal continued during FY 2013–14 as well. India continued to grapple with problems like slowdown in industrial and economic activity, increased inflation and fiscal imbalances. However, the second half of the year under review witnessed some positive developments in the form of policy announcements and global economic recovery.

The growth of the automotive industry was not impressive in FY 2013–14 with commercial vehicles and passenger vehicles dragging down volumes even as tractors and scooters continued their positive trend.

Export sales however, grew by about 7.2 percent during the period from April 2013 to March 2014.

The Indian tyre industry, following the trends of the automotive industry, has not registered any significant growth. The total tyre volume growth during the year under review has been 2 to 4 percent due to higher than anticipated weakness in the passenger car and truck and bus segments.

The domestic tyre demand from the Original Equipment Manufacturers (OEM) segment is largely flat for the second consecutive year during FY 2013–14, with contraction across all segments, barring scooters and tractors. Replacement tyre volume demand during FY 2013–14 grew by 5–6 percent. The continued decline in the Medium and Heavy Commercial Vehicles (M&HCV) industry and delayed replacement of vehicles by fleet owners translated into higher replacement demand for tyres in this segment.


During the year under review, CEAT outperformed the industry and has emerged as one of the fastest growing tyre companies in the industry. The Company registered a turnover of Rs. 5,304.1 crores during the year under review, registering a robust growth of 9.6 per cent over Rs. 4,836.7 crores in the previous fiscal.

The net profit of the Company surged from Rs. 106.4 crores in FY 2012–13 to Rs. 253.8 crores in during the year under review on the back of changing product mix, higher capacity utilisation, reduced interest cost, and expanding presence in the international markets as well as lower natural rubber prices.

CEAT has continuously focussed on new product launches and has launched over a 100 new products in FY 2013–14. Product ranges like ?Gripp LN (low noise)? for passenger car radials and ?Zoom? for motorcycle tyres have been very successful. The Company will continue to invest steadily in new product development to cater to the ever changing needs of the modern consumer.

Over the last few years, CEAT has focussed on changing its product portfolio by increasing volumes in non–truck segment like two wheelers and passenger cars which have better margins. A favourable product mix has contributed positively to the bottom line of the Company.

The Company has strategically enhanced its OEM network, which significantly contributed to its growth. It has also entered into new partnerships with companies like Renault–Nissan. CEAT is looking at expanding its rural presence and its operations in the two–wheeler and Passanger Car Radial (PCR) replacement market. Expansion of CEAT Shoppe is a key initiative taken by the Company to develop an exclusive retail channel to improve service levels and reach in the market. At present, the Company has more than 135 CEAT Shoppes as compared to 100 as on March 31, 2013. CEAT Shoppe has positively contributed to the company?s sales, especially in the passenger car tyre segment accounting for 32 percent of passenger car radials/utility vehicle radials sales.

In order to boost its international presence, the Company has identified specific geographic clusters for expansion, and for this purpose, it has already set up an office in Indonesia in addition to the one in Middle East. This has helped establish a local connect with the dealers through on–ground marketing activities.

During the year under review, the Company launched the Dhoom 3 branded, high–speed, special–edition tyres and also released video games based on the box–office monster. Its new Dhoom 3 tyre is targeted at the younger segment and has provided a boost to the Company?s image as a quality tyre manufacturer. The Company?s advertisement campaigns have garnered the award under the ?Best Ongoing Campaign? at the Effies, a prestigious advertising award.


The Indian tyre industry is expected to show a muted 2 to 3 percent growth in revenues in FY 2014–15 over the current estimate for FY 2013–14. Sluggishness in the OEM automotive industry is expected to continue. However, the demand in the domestic replacement market is expected to be comparatively stronger supported by a large vehicle user base that has been accumulated over the last 3–4 years of strong automobile sales.

Raw material prices are expected to be stable thereby assisting operating margins of tyre manufacturers. However, with stable raw material prices and a subdued demand scenario, there might be pricing pressure that can impact operating margins negatively. The Company will continue to focus on profitable product categories, market segments and key international geographies.


Pursuant to the special resolution passed by the members through Postal Ballot on March 7, 2012, the Company had on March 12, 2012 issued and allotted 17,12,176 Warrants to one of the Promoter Group Companies viz Instant Holdings Limited (Instant) on a preferential basis convertible into an equal number of equity shares of face value of Rs. 10/– each at a price of Rs. 85.03 per Warrant. Of the said price, 25% was received upfront at the time of allotment. The Warrants were convertible into equity shares at the option of the allottee within a period of 18 months from the date of allotment, i.e. by September 11, 2013. The allottee exercised its option for conversion of the said Warrants by paying the balance 75% i.e. Rs. 63.77 per Warrant and accordingly, the said Warrants were converted in to 17,12,176 equity shares and allotted to Instant on July 23, 2013. These 17,12,176 equity shares were listed on the BSE Limited and the National Stock Exchange of India Limited on August 27, 2013.


Associated CEAT Holdings Company Private Limited (ACHL), the Company?s investment arm in Sri Lanka, operates 3 (three) manufacturing plants owned by its joint venture company CEAT–Kelani Holdings Company Private Limited.

During the year under review, ACHL has registered a revenue of LKR 4,889.2 million (Rs. 227.2 crores) as compared to LKR 4,569.3 million (Rs. 191.9 crores) in FY 2012–13, a growth of 7 per cent. Profit after tax has grown by 47.5 per cent to LKR 687.4 million (Rs. 33.7 crores) as compared to LKR 469.0 million (Rs. 20.6 crores) in FY 2012–13. The joint venture continues to enjoy the overall market leadership in all categories of tyres in Sri Lanka.

ACHL has been consistently paying dividends and for FY 2013–14 the Company received Rs. 8.4 crores as dividend from ACHL.


The Company has entered into a 70:30 joint venture (JV) agreement with A.K. Khan & Company Limited (AKK), one of the leading business groups of Bangladesh. The JV Company, CEAT Bangladesh Limited, is setting up a green field facility for manufacture of automotive bias tyres in Bangladesh with initial capacity of 65 MT per day by investing US$ 55 million. The capacity of the said plant will be scaled to 110 MT per day in due course with an additional investment of USD 15 million at current prices. This plant, which is the first major investment for tyre manufacturing in Bangladesh, is expected to become operational by early 2015.

Once the plant becomes operational, the JV Company will be in a position to cater to the growing domestic market of Bangladesh and South East Asia as well.

The JV Company has already commenced seed marketing of the ?CEAT? branded tyres in the domestic market.


A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed hereto and forms part of this report.


CEAT believes that its employees are a valuable asset and core strength of the Company. The Company continued its focus on developing and nurturing talent and encouraging innovation and excellence.

The Company has adopted Total Quality Management and initiated several measures for strengthening employee relations through progressive people practices at the shop floor and initiatives towards increased productivity. Labour relations remained cordial during the year under review.


In terms of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees of the Company, are required to be set out in this report. However, as per provisions of Section 219 (1) (b) (iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company. Those members who are desirous of obtaining full information are requested to write to the Company.


During the year under review, Rado Tyres Limited has become a subsidiary of the Company pursuant to the Order dated August 5, 2013 passed by the Board of Industrial and Financial Reconstruction.

The Ministry of Corporate Affairs has, vide General Circular No. 2/2011 dated February 8, 2011 granted general exemption from attaching the accounts and financial statements of subsidiary companies as provided under Section 212 (8) of the Companies Act, 1956, provided conditions specified in the said Circular are fulfilled. The Company has fully complied with all the conditions mentioned in the above circular. Therefore, the Annual Accounts of the wholly owned subsidiary of the Company i.e. Associated CEAT Holdings Company (Private) Limited (ACHL) and those of the subsidiary companies i.e. CEAT Bangladesh Limited (CBL) and Rado Tyres Limited (RTL) have not been annexed to this Report. However, the same are available for inspection at the Registered Office of the Company and also at the Registered Office of ACHL, CBL and RTL. Any member desirous of obtaining the same may request the Company in writing.


The Company has no overdue deposits, other than the unclaimed deposits of Rs. 2.82 crores from 666 depositors as at the end of the year under review.


Ms. Punita Lal, was appointed as an Additional Director of the Company by the Board of Directors at its meeting held on April 29, 2014. She would therefore hold office upto the date of the ensuing Annual General Meeting (AGM). Ms. Lal, qualifies to be an Independent Director and her appointment has been recommended by the Nomination and Remuneration Committee. Accordingly, it is proposed to appoint Ms. Lal as an Independent Director for a term of 5 (five) consecutive years with effect from the date of the fifty–fifth AGM of the Company and she shall not be liable to retire by rotation.

As per declarations made under Section 149 of the Companies Act, 2013, Messrs. Vinay Bansal, Atul Chokesy, S. Doreswamy, Mahesh S. Gupta, Haigreve Khaitan and K. R. Podar qualify to be Independent Directors and they are proposed to be appointed as Independent Directors as recommended by the Nomination and Remuneration Committee for a period of 5 (five) consecutive years with effect from the date of the fifty–fifth Annual General Meeting. They will not be liable to retire by rotation.

In accordance with the Companies Act, 2013 and Articles of Association, Mr. Paras K. Chowdhary retires by rotation and being eligible offers himself for re–appointment.


Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors, to the best of their knowledge and belief, confirm that:

i) the applicable Accounting Standards have been followed in the preparation of the annual accounts.

ii) such accounting policies have been selected and applied consistently and such judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company in the Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss for the said financial year viz. April 1, 2013 to March 31, 2014.

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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


A report on Corporate Governance, along with a certificate from the Statutory Auditors of the Company, regarding the compliance of conditions of Corporate Governance, and also the Management Discussion and Analysis Report, as stipulated under Clause 49 of the Listing Agreement, are annexed to this report.


Messrs S. R. Batliboi & Associates LLP, Statutory Auditors of the Company, were due for retirement at the ensuing Annual General Meeting (AGM). However, they have expressed their unwillingness for re–appointment due to preoccupations. The Company therefore proposes to appoint Messrs S R B C & Co., LLP as the Statutory Auditors at the ensuing AGM for a period of 3 (three) consecutive years from the conclusion of the fifty–fifth AGM to the conclusion of the fifty–eight AGM. They have confirmed that their appointment, if made, will be in compliance with Section 139 and 141 of the Companies Act, 2013. The Board has appointed Messrs N. I. Mehta & Co., Cost Accountants, as Cost Auditors of the Company for FY 2014–15 and recommends ratification of their remuneration by the members at the ensuing AGM.


Your Directors place on record their appreciation for the continued support and co–operation received from the employees, customers, suppliers, dealers, financial institutions, banks and members towards conducting the business of the Company during the year under review.

On behalf of the Board of Directors

H. V. Goenka


Place: Mumbai

Date: July 22, 2014