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

  • Add to Portfolio
  • Add to Watchlist
  • Add to Alert
  • Add to Message
Add to Portfolio
NSE
1097.50
Change Change %
-3.20 -0.29%

Updated:31 Aug, 2015, 15:59 PM IST

BSE
1098.45
Change Change %
-0.40 -0.04%

Updated:31 Aug, 2015, 15:57 PM IST

DIRECTORS' REPORT

THE MEMBERS OF CEAT LIMITED

Your Directors are pleased to present their fifty–sixth report, together with the Audited Financial Statements for the year ended  March 31, 2015.

In the preparation of financial statements, no treatment different from that prescribed in an Accounting Standard has been followed.

During the year under review, CEAT continued to be one of the fastest growing tyre Companies in India.

On standalone basis,your Company recorded total income of Rs. 5,59,166.46 Lacs with a growth of 4.42 % over Rs. 5,35,481.05 Lacs of the last fiscal. The Company recorded a net profit of Rs. 29,897.39 Lacs reflecting a growth of 17.81 % over net profit of Rs. 25,378.22 Lacs of the last fiscal.

On consolidated basis, your Company recorded net revenue from operations of Rs. 5,80,238.33 Lacs with a growth of 4.47 % over Rs. 5,55,397.86 Lacs of the last fiscal. The Company recorded a net profit of Rs. 31,717.98 Lacs reflecting a growth of 16.94 % over net profit of Rs. 27,123.50 Lacs of the last fiscal.

INDUSTRY UPDATE

The Indian automobile industry faced and contracted demand during the year under review, particularly in commercial and farm segments. However, demand for passenger cars and 2–wheelers vehicles registered a positive growth. This had a corresponding impact on the domestic tyre industry as well, with the respective tyre categories matching the demand pattern of the corresponding automobile categories.

Contraction in demand was experienced in the Indian export market also, on account of the increased demand for radial tyres being supplied by other countries, and corresponding shrinkage in demand for bias tyres. Further, the prices realised from export markets also registered continued reduction, due to competition from low cost Chinese tyres.

A slowdown in demand from China, the world's biggest consumer of rubber, along with increased supply in markets such as Thailand, has kept international rubber prices on a tight leash during the year under review. The drop in the crude oil prices triggered a price decline for the crude based raw materials as well. This helped the industry register respectable margins

STATE OF COMPANY'S AFFAIRS

The Company continued its focus on development of new products and launched a number of new products in FY 2014–15, which included tubeless tyres for 2–Wheelers, new size introduction for compact SUVs and off–road biking tyres. These products have received good responses in their respective markets and segments and contributed to 27% of the turnover. The Company has continued its focus on expansion of dealer and distribution network to ensure enhanced and easy availability of its product range. The dealer network comprises of 3500+ dealers, with 300+ CEAT Franchisees (Shoppes & Hubs) and over 250 distributors. The CEAT Shoppe network, an exclusive retail channel of the Company, is now nearing 200 outlets as compared to 125 plus outlets at the end of March 31, 2014. The Shoppe has not only contributed in improving the brand image of the Company, but also the sales which continued to show strong double digit growths. The Company has also launched the Multi Brand Outlet and Shop in Shop concepts which aims at improving the product penetration in replacement market via enhanced product and brand visibility across select dealer counters. Further, to increase the reach  to replacement market in lower pop strata, the Company has also expanded its presence in the sub–urban and rural areas, mainly for 2–wheeler and passenger car tyres. As a result of this distribution drive the number of districts covered has gone up to 460 from almost 375 in last financial year.

The Company also increased its advertising spends and participated in key properties like Cricket World Cup 2015, MTV Roadies, MTV Chase the Monsoon and Mahindra Adventure, thereby improving the product recall in the minds of end consumers.

Cricket being passion for many in India CEAT strengthened its association with the game to promote its brand image and expanded its business to introduce a new line of 'CEAT' branded cricketing gear.

The presence of an extensive distribution network combined with the right mix in product portfolio, and the extensive marketing activities during the year under review has helped the Company in increasing its volumes in the more profitable passenger segment.

For export markets, the Company has developed tyres tailored to specific export markets. Further to boost international presence, the Company has focussed its attention in developing certain export markets through the liaison offices set up in Indonesia and Middle East. These offices have helped the Company to improve sales by establishing local connect with the dealers.

In the OEM market, the Company has a strong presence, which has had a positive impact over the years. In this year the Company has further strengthened its relationship with OEMs via increased share of business in passenger car segment; entering into new models and becoming the partner of choice across the 2–wheeler segment. The Company has also added Honda Scooters & Motorcycles India, Yamaha and Renault to its OEM kitty in the current year. The Company would be supplying Scooter tyres to Honda; Motorcycle radial tyres in premium models to Yamaha and Passenger Car tyres for the newly launched Renault KWID. These additions have considerably enhanced the Company's visibility in the OEM business.

Further during the year, the R&D team worked on several projects to reduce tyre weight and material cost which has aided in improving the margins. Additionally, the team tied up with premium institutes and global vendors to work on projects in nanotechnology and bio–based, hybrid materials.

An important milestone in our journey of "Safer, Cleaner and Healthier Workplace" was the ISO 140001 & OHSAS 18001 Certifications received by our manufacturing plants at Bhandup, Nashik & Halol. This has helped us in strengthening our EHS processes and would aid in reaching our targeted "Zero Accidents" levels.

During the year under review, the Company won the bronze award at the prestigious Effies for the best campaign in the category; automobile and auto parts, two wheelers and auto related. CEAT also won 2 (two) awards at this years' Goa fest (Abbys), India's definitive honour that recognizes creativity. CEAT was awarded Silver in the Best Digital Campaign for the Social Cause and Bronze for Best Digital Campaign in the Experiential Marketing category.

All of the above initiatives have enabled the Company to maintain higher capacity utilisation of 80–90% during FY 2014–15. Further, moderate raw material cost and reduced finance cost have helped the Company in maintaining reasonable margins during the year under review.

DIVIDEND

Considering the profits for the year under review and also the capital expenditure requirements of the Company, 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 %) for the financial year ended March 31, 2015 for approval of members.

TRANSFER TO RESERVE

Your Directors have proposed not to transfer any sum to the General Reserve.

MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the close of the financial year on March 31, 2015 to which the financial statements relate and the date of this Report.

CAPACITY EXPANSION

The Company has undertaken a capacity expansion of 11,000 Tyres / day in its plant at Halol in the State of Gujarat at an estimated capital outlay of Rs. 65,000 Lacs to produce passenger radial tyres. Further, the Company proposes to set up a green field project of an initial capacity of 40,500 Tyres / day near Nagpur in the State of Maharashtra at a capital outlay of Rs. 42,000 Lacs to manufacture 2/3 Wheeler tyres. The Halol and Nagpur projects are expected to commence commercial production during first half of the current and next fiscal years respectively.

FUTURE OUTLOOK

The Indian Tyre Industry is expected to register a better growth during the fiscal 2016, considering the optimistic macro–economic conditions and projected growth of automobile industry. Passenger car, Motorcycle and Truck/Bus are expected to register a growth of 7 – 9%, while scooter and small commercial vehicles are expected to register double digit growth in coming years. The demand for tractor tyres is dependent on season and is not expected to show any significant growth in coming year.

The reduction of prices in key base commodities (like crude) in the second half of the year under review, is yet to be reflected fully. The raw material prices are expected to be stable and may assist tyre manufacturing companies in maintaining operating margins. However, recent regulatory changes viz. increase in basic import customs duty on natural rubber [raised from 20% or Rs. 30/kg (whichever is lower), to 25% or Rs. 30/kg (whichever is lower)], will have an impact on the raw material procurement costs. To mitigate the impact of the above, the Company's aim is to improve its product mix further by shifting towards the more profitable product categories, focus on key international geographies and increase operational efficiency through its 'Total Quality Management' initiative to counter changes in the operating environment. With a constant focus on profitable product categories, market segments and key international geographies, CEAT is strategically poised to achieve its vision of being amongst the most profitable tyre companies in India by 2016.

SUBSIDIARY COMPANIES

At the end of the year under review, the Company had following four subsidiaries namely, CEAT Speciality Tyres Limited (CSTL) (became subsidiary on December 8, 2014) Mumbai and Rado Tyres Limited, Cochin, (RTL) Associated CEAT Holdings Company (Private) Limited, Colombo, Sri lanka (ACHL), CEAT AKKHAN Limited, Dhakka, Bangladesh (CAL)

OVERSEAS SUBSIDIARIES:

The Company does not have any material subsidiary whose net worth exceeds 20% of the consolidated net worth of the holding company in the immediately preceding financial year or has generated 20% of the consolidated income of the Company during the previous financial year. A policy on material subsidiaries has been formulated by the Company and posted on the website of the Company at the link <http://www.ceat.com/Investors_intimation.aspx>

CEAT SPECIALTY TYRES LIMITED (CSTL)

During the year under review, CSTL, became a wholly owned subsidiary of the Company with effect from December 8, 2014. Its business is manufacture and sale of tyres for off–the–road vehicles/equipment which find application across industries including port, construction, mining and agriculture. CSTL has already initiated the process to set up a project to manufacture 100 MT per day of the above product. The project is expected to commence commercial production in FY 2017–18.

RADO TYRES LIMITED (RTL)

RTL works as captive manufacturing facility and supplies its tyres only to the Company as being a very old and inefficient plant, it has encountered a frequent breakdown of its equiptments and therefore could not manufacture tyres at its rated capacity. As such, its could not help the Company to meet event part of its requirement. During the year under review, Rado registered a revenue from operations of Rs. 1,147.76 lacs as compared to a revenue of Rs. 957.42 Lacs in FY 2013–14, a growth of 19.88%. The net loss for the year under review has been significantly lower at Rs. 22.77 Lacs as against Rs. 149.08 lacs for the previous year. RTL continues to supply its entire production to the Company.

A report on the performance and financial position of each of the Company's aforesaid subsidiaries is annexed in the prescribed Form AOC–1 to this Report as 'Annexure –I'

Overseas Subsidiaries:

Details of ACHL and CAL are given below under the heads 'Joint Ventures in Sri Lanka' and 'Joint Venture in Bangladesh'

JOINT VENTURE IN SRI LANKA (ACHL)

ACHL, the Company's investment arm in Sri Lanka, has a 50:50 Joint Venture (JV) company viz. CEAT–Kelani Holdings Company Private Limited which operates 4 (four) manufacturing plants through its wholly owned subsidiaries in Sri Lanka.

During the year under review, ACHL has registered a higher revenue of LKR 2,025.00 lacs 952.76 lacs) as compared to LKR 1,687.50 Lacs (Rs. 784.18 Lacs) in FY 2013–14. However, the profit after tax has grown by 20.05% to LKR 2,023.73 lacs 952.17 lacs) as compared to LKR 1,685.68 lacs (Rs. 783.33 lacs) in FY 2013–14. The ACHL's joint venture continues to enjoy the overall market leadership in all categories of tyres in Sri Lanka.

ACHL has been consistently paying dividends and it has, during the year under review, paid a dividend of Rs. 950.60 Lacs to the Company.

JOINT VENTURE IN BANGLADESH (CAL)

As reported in the previous year, the Company has a 70:30 Joint Venture (JV) company, CAL, which is setting up a green field facility for manufacture of automotive bias tyres in Bangladesh with initial capacity of 65 MT per day at an investment of Rs. 7,717.06 Lacs and is the first major investment for tyre manufacturing in Bangladesh.

While the land for the project has already been purchased and orders for critical equipment have been placed, the civil work is currently on hold due to a civil case filed by the Forest Department, claiming its title on a small piece of the said land, which has been contested by the JV.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with Section 129(3) of the Companies Act, 2013 and Clause 32 of the Listing Agreement entered into with the Stock Exchanges, the Consolidated Financial Statements of the Company, including the financial details of all the subsidiary companies of the Company, forms part of this Annual Report. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India.

BUSINESS RISK MANAGEMENT

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee (RMC). The details of this Committee and its terms of reference are set out in the Corporate Governance Report, which forms part of this Report.

The Company has a Business Risk Management framework to identify risks and strive to create transparency, minimize adverse impact on the business and enhance the Company's competitive advantage.

Pursuant to the aforesaid business risk framework, the Company has already identified the business risks and action plan for mitigation of the same is already in place. The business risk and its mitigation have been dealt with in the Management Discussion and Analysis section of this Report.

Directors' Report 39 CORPORATE SOCIAL RESPONSIBILITY

As part of its initiatives under 'Corporate Social Responsibility' (CSR) and the Company's vision to drive 'holistic empowerment' of the community around the local vicinity of our plants, and society at large, the Company has undertaken following projects in accordance with CSR policy of the Company, pursuant to provisions of Section 135 read with Schedule VII of the Companies Act, 2013

i. Vision/Eye Care (Project–Netranjali) – CEAT through RPG Foundation launched this flagship programme in FY 2014–15, to work towards the cause of preventing avoidable blindness in India. This is a key need in India, as India has the world's largest blind population, with 80% of cases of blindness being preventable with early stage interventions. Three different target groups were covered via this project – school children, slum communities and truckers. In FY 2014–15 1,44,000 beneficiaries were covered in total through eye check­up camps and awareness sessions. 10,161 beneficiaries were screened with 3,229 receiving free spectacles. A research carried out during the camps revealed that truckers were the most vulnerable amongst the groups covered, with 74% of the population (over 40 years) having refractive errors. This can have an impact on their livelihood as well as overall road safety. It therefore be imperative to have Netranjali camps for this susceptible community.

ii. Women Empowerment (Project–Swayam) – This project is working on Promotion of Gender Equality and Women's Empowerment by driving powerful social change in the motor driving/transport industry. It aims to empower less privileged women by training them in driving skills to enhance their livelihood across various sectors like taxi, school vans, entrepreneurial ventures, etc. In FY 2014–15, more than 2,000 less privileged women were mobilised from slum communities and 361 were trained all across Mumbai and Pune for the training of which about 300 are being placed in Priyadarshini Cab Services, Meru Cabs, Uber Cabs, School van Services, On–call driver service, V–Link, etc.

iii. Primary Education (Project–PehlayAkshar) – This project is a large scale program for Primary Education with special focus on practical English speaking and reading skills to enhance employability, thereby, giving these children, an equal opportunity for making their lives brighter. In FY 2014–15, the Company reached out to 2,580 children across 19 schools in Bhandup, Worli and  Halol.

iv. Community Development– Water and Malnutrition (Project–Jeevan) – This is an integrated community development project which focuses on improving all round quality of life in the areas of clean drinking water, sanitation and overall health and nutrition based interventions amongst others. In FY 2014–15, the project reached out to 750 children and adolescent girls to provide nutrition supplements and awareness sessions on health and hygiene. Besides this the project also reached out to 8,141 children in 9 schools for providing safe drinking water, while also carrying out installations of rain harvesting structures in 3 schools benefiting 3,850 people.

v. Employability – Skill Development (Project–Saksham) – This project is a skill development program, which focuses on alternate livelihoods training economically empowering women and technical training for youth. In FY 2014–15 the project trained 688 less privileged women and youth from slums and rural communities in tailoring, embroidery, mobile phone repairing, bag making, patient care assistance programme etc. as an alternate livelihood option.

The Annual Report on CSR activities in pursuance of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as 'Annexure–II'.

The amount of Rs. 77.35 Lacs out of the mandatory CSR expenditure amount, which remained unspent during the financial year 2014–15, has been carried forward to the next financial year 2015–16 and shall be spent on ongoing CSR projects.

VIGIL MECHANISM /WHISTLE BLOWER POLICY

Pursuant to Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Board has adopted vigil mechanism in the form of Whistle Blower Policy, to deal with instances of fraud or mismanagement, if any. The Policy can be accessed at the website of the Company at the link <http://www.ceat.com/Investors_intimation.aspx>.

RELATED PARTY TRANSACTIONS

The Company has developed a Related Party Transactions policy for purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website.

All Related Party Transactions are placed before the Audit Committee and also the Board/Members for their approval, wherever necessary. The related party transactions entered during the financial year were on an arm's length basis and were in the ordinary course of business except the contracts/ arrangements or transactions entered into by the Company with related parties referred to in sub–section (1) of Section 188 of the Companies Act, 2013 during the course of business but which were not at arm's length basis. The details of the same are annexed herewith as 'Annexure–III' in the prescribed Form AOC–2.

There were no materially significant related party transactions during the financial year.

None of the Directors has any pecuniary relationships or transactions vis–a–vis the Company.

SHARE CAPITAL

The paid up equity capital of the Company as on March 31, 2014 was Rs. 35,95,57,100/–. During the year under review, the Company had, pursuant to the special resolution passed

by the members at the AGM held on September 26, 2014 and through Postal Ballot on November 24, 2014, issued and allotted 44,94,382 Equity shares at a price of Rs. 890/–per share aggregating to Rs. 40,000.00 Lacs (Rs. Forty Thousand Lacs only) to the eligible investors by way of Qualified Institutional Placement in accordance with the Chapter VIII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR).

The said shares were listed on the BSE Limited and the National Stock Exchange of India Limited on December 1, 2014.

Consequently, the share capital of the Company has increased to Rs. 40,45,00,920/– during the year under review.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in the prescribed Form MGT 9 is annexed herewith as 'Annexure–IV'.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed hereto as 'Annexure–V' and forms part of this report.

PARTICULARS OF EMPLOYEES

The statement required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (said Rules) in respect of employees of the Company, are required to be set out in this report. However, the second proviso of the sub rule (3) of Rule 5 of said Rules permits the Company to provide the said statement on specific request of member in writing. Therefore, the Annual Report excluding the said statement is being sent to all the members of the Company and such statement 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–VI' and forms part of this report.

FIXED DEPOSITS

Your Company is eligible to accept deposits from the public pursuant to Section 76 of the Companies Act, 2013 ('the Act') and the Companies (Acceptance of Deposits) Rules, 2014 ('the Rules'). Pursuant to the Special Resolution passed by the members at the Annual General Meeting (AGM) of the Company held on September 26, 2014, the Board of Directors of the Company, approved the Fixed Deposit Scheme for acceptance of deposits from members and persons other than members in accordance with the requirements of the Act and the Rules. Pursuant thereto, the Company accepted deposits for an amount of Rs. 2,461.49 Lacs during the year under review, which remained outstanding as on March 31, 2015.

In accordance with Rule 19 of the Rules, the deposits accepted under the Companies Act, 1956 and the Rules made There under (Earlier Deposits), the Company shall continue to repay such Earlier Deposits and the interest due thereon for the remaining period in accordance with the terms and conditions and period of such Earlier Deposits in compliance of the Act and the Rules. The amount of Earlier Deposits outstanding as on March 31, 2015 was Rs. 5,238.00 Lacs.

There were no defaults in respect of repayment of any deposits or payment of interest thereon during the year under review. The Company has not accepted any deposits which are not in compliance with the requirements of the Act.

The Company has no overdue deposits, other than the unclaimed deposits as 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 Directors shall include the details of particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013 granted are given in the Note no. 15, 16, 22, 31 and 34 of notes to the Financial Statements. The loans and/or advances given to the employees bear interest at applicable rates.

DIRECTORS

Messrs Vinay Bansal, A. C. Choksey, S. Doreswamy, Mahesh S. Gupta, Haigreve Khaitan, K. R. Podar and Ms. Punita Lal were appointed as Independent Directors at the Annual General Meeting held on September 26, 2014, whereupon, the composition of the Board of Directors duly meets the criteria stipulated in Section 152 of the Companies Act, 2013.

Further, Mr. Ranjit V. Pandit, was appointed as an Additional Director of the Company by the Board of Directors at its meeting held on March 3, 2015. He would therefore hold office upto the date of the ensuing AGM. Mr. Pandit, qualifies to be an Independent Director and his appointment has been recommended by the Nomination and Remuneration Committee. Accordingly, it is proposed to appoint Mr. Pandit as an Independent Director for a term of 5 (five) consecutive years with effect from the date of the ensuing AGM of the Company and he shall not be liable to retire by rotation.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

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

PECUNIARY RELATIONSHIP OR TRANSACTIONS  OF THE NON–EXECUTIVE DIRECTORS AND DISCLOSURES ON THE REMUNERATION OF THE DIRECTORS

All pecuniary relationship or transactions of the Non–Executive Directors vis–a–vis the Company, along with criteria for such payments and disclosures on the remuneration of the Directors along with their shareholding are disclosed in Form MGT–9 which forms a part of this Report.

Directors' Report 41 KEY MANAGERIAL PERSONNEL

The Company had in the previous years, appointed Mr. Anant Vardhan Goenka as Managing Director, Mr. Arnab Banerjee as Executive Director–Operations, Mr. Subba Rao Amarthaluru as Chief Financial Officer and Mr. H. N. Singh Rajpoot as Company Secretary. Pursuant to the provisions of Section 203 of the Companies Act, 2013, they are deemed to have become Key Managerial Personnel, defined in Section 2(51) w.e.f April 1, 2014.

INTER SE RELATIONSHIPS BETWEEN THE DIRECTORS

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

FAMILIARIZATION PROGRAMME FOR  INDEPENDENT DIRECTORS

Pursuant to the Code of Conduct for Independent Directors specified under the Companies Act, 2013 and the revised Clause 49(II) (B) (7) of the Listing Agreement entered into with the Stock Exchanges, the Company has framed a familiarisation programme for all its Independent Directors to familiarize them on their roles, rights and responsibilities in the Company, the nature of the industry in which the Company operates and its business model. The familiarisation programme posted on the website of the Company at the link <http://www.ceat.com/Investors_intimation.aspx>.

POLICY ON APPOINTMENT, TRAINING EVALUATION  AND REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy on Appointment, Training, Evaluation and Remuneration of Directors and Senior Management Personnel (SMP) and their remuneration which is enclosed as 'Annexure VII'.

EVALUATION OF BOARD, ITS COMMITTEES AND  DIRECTORS

For the purpose of evaluation, the board finalised a questionnaire and engaged a third party to conduct an independent online confidential survey using the said questionnaire. The results of the survey were then deliberated at Board Meeting and evaluation of the Board, its committees and the Directors were approved.

MEETINGS OF THE BOARD OF DIRECTORS

During the year 7 (seven) Board Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement

BOARD COMMITTEES

Detailed composition of the mandatory Board Committees viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee, Risk Management Committee and non–mandatory committee viz. Finance & Banking Committee, Special Investments/Projects Committee and QIP Committee numbers, number of meetings held during the year under review and other related details are set out in the Corporate Governance Report which forms a part of this Report.

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

The Company has formed Audit Committee comprising of Mr. Mahesh S. Gupta (Independent Director), Mr. S. Doreswamy (Independent Director) and Mr. Hari L Mundra (Non–Independent Director) as members.

Mr. Mahesh S. Gupta has been appointed as the Chairman of the Audit Committee.

DIRECTORS' RESPONSIBILITY STATEMENT

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

i. The applicable Accounting Standards have been followed in the preparation of the annual accounts alongwith the proper explanation relating to material departure, if any.

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, 2015 and the Statement of Profit and Loss for the said financial year ended March 31, 2015.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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.

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

vi. The systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS AND  CORPORATE GOVERNANCE REPORT

In compliance with Clause 49 of the Listing Agreement entered into with the Stock Exchanges, separate Section on management Discussion and Analysis, as approved by the Board of Directors, which includes details on the state of affairs of the Company as required to be disclosed in the Directors' Report, forms part of this

the Corporate Governance Report, duly approved by the Board of Directors together with the certificate from the Statutory Auditors confirming the compliance with the requirements of Clause 49 forms part of this Annual Report.

STATUTORY AUDITORS

The members of the Company had, at its AGM held on September 26, 2014 appointed Messrs S R B C & Co., LLP as the Statutory Auditors for a period of 3 (three) consecutive years from the conclusion of the fifty–fifth AGM to the conclusion of the fifty–eight AGM subject to ratification of their appointment every year. They have confirmed that their appointment, if ratified at the ensuing AGM, will be in compliance with Section 139 and 141 of the Companies Act,  2013.

INTERNAL AUDITORS

The Board has appointed M/s KPMG as Internal Auditors for the period of 15 months ending on March 31, 2016 under Section 138 of the Companies Act, 2013 and they have completed the internal audit as per scope given by the Audit Committee.

SECRETARIAL AUDITORS

The Company has appointed M/s Parikh and Associates, Company Secretaries to conduct the Secretarial Audit for the financial year ended March 31, 2015. As required by Section 204 of the Companies Act, 2013 and rules made thereunder, the Secretarial Audit Report furnished by M/s Parikh and Associates is annexed to this report as 'Annexure–VIII'.

The Board has appointed Messrs N. I. Mehta & Co., Cost Accountants, as Cost Auditors of the Company for FY 2015­16 and recommends ratification of their remuneration by the members at the ensuing AGM.

EXPLANATION AND COMMENTS ON AUDITORS  AND SECRETARIAL AUDIT REPORT

There is no qualification, disclaimer, reservation or adverse remark made either by the Statutory Auditors in Auditors Report or by the Company Secretary in practice (Secretarial Auditor) in Secretarial Audit Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY  THE REGULATORS OR COURTS OR TRIBUNALS INPACTING THE GOING CONCERN STATUS

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

CHANGE IN THE NATURE OF BUSINESS

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

INTERNAL FINANCIAL CONTROL

Details in respect of adequacy on internal financial controls with  Management Discussion and Analysis which forms part of this Report.

HUMAN RESOURCES

CEAT continues to be a people focused organization continuously building next generation leadership, by promoting and developing internal talent to meet its long–term vision. This year, the Company increased its investments in training and development to substantially develop high potential employees and technical capabilities.

The Company has entered in to long–term wage settlements with its internal union substantially improving labour relations.

The Company has been persistent on achieving process and quality excellence by building internal academies and involving employees at the grassroot level in continuous improvement through Total Quality Management (TQM) initiatives.

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 at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, Internal Complaints Committee (ICC) has been set up to redress complaints. ICC has not received any complaints during the year under review.

ACKNOWLEDGEMENT

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

Chairman

Place: Mumbai  

Date: May 22, 2015