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Notes to Accounts of Ceat Ltd.

Mar 31, 2016

1. Debenture redemption reserve:

Debenture redemption reserve (DRR) is required to be created in accordance with section 71 of the Companies Act, 2013 read with Companies (Share capital and Debenture) Rules, 2014 at equivalent to 25% of the value of the debentures issued. As per the rules, the Company needs to create Debenture Redemption Reserve for Rs. 5,000.00 Lacs, before the maturity of the first tranche of debentures commencing from FY 2019-20. For the year under review, the Company has created a DRR to the extent of Rs.1,667.00 Lacs and proposes to create an equivalent DRR in the next 2 financial years.

Secured long-term borrowings (includes non-current portion and current maturities)

1. Non-Convertible Debentures (NCD) Rs. 20,000.00 Lacs (Previous year Nil) allotted on July 31, 2015 on private placement basis are secured by a first pari passu charge over the movable assets (except current assets) and immovable assets of the Company situated at the Nashik Plant. As at March 31, 2016, the NCDs carry an interest at 9.40% and repayable as under:

- NCD Series 1: Rs. 1,000 Lacs (5% of the issue amount) repayable on July 31, 2019

- NCD Series 2: Rs. 3,000 Lacs (15% of the issue amount) repayable on July 31, 2020

- NCD Series 3: Rs. 3,000 Lacs (15% of the issue amount) repayable on July 31, 2021

- NCD Series 4: Rs. 3,000 Lacs (15% of the issue amount) repayable on July 31, 2022

- NCD Series 5: Rs. 4,000 Lacs (20% of the issue amount) repayable on July 31, 2023

- NCD Series 6: Rs. 4,000 Lacs (20% of the issue amount) repayable on July 31, 2024

- NCD Series 7: Rs. 2,000 Lacs (10% of the issue amount) repayable on July 31, 2025

2. Term Loan from The Hong Kong and Shanghai Banking Corporation Limited of Rs. 2,812.50 Lacs (Previous year Rs. 4,062.50 Lacs) is secured by a frst pari passu charge over the Company''s immovable assets situated at Bhandup plant. (The creation of security for immovable properties situated at Bhandup is pending as on March 31, 2016). It carries interest at 9.65% as on March 31, 2016 and is repayable in 16 quarterly installments starting September 20, 2014.

3. Term Loan from Export and Import Bank of India Rs. 7,600.00 Lacs (Previous year Rs. Nil) is secured by first pari passu charge over the Company''s movable assets (excluding current assets) and immovable assets situated at the Halol plant and second pari passu charge on the current assets of the Company. (The creation of security for immovable properties situated at Halol is pending as on March 31, 2016). It carries interest at 10.45% p.a. as at March 31, 2016 and is repayable as under:

4. Term Loan from Kotak Mahindra Bank Limited of Rs. 3,000.00 Lacs (Previous year Rs. Nil) is secured by first pari passu charge over the Company''s movable assets (excluding current assets) and immovable assets situated at Halol plant and second pari passu charge over the current assets of the Company. (The creation of security for immovable properties situated at Halol is pending as on March 31, 2016). It carries interest at 10.50% p.a. as at March 31, 2016 and is repayable as under:

5. Term loan from Bank of India of Rs. Nil (Previous year Rs. 10,000.00 Lacs) was pre-paid in full including interest thereon on July 31, 2015.

6. Term loan from ICICI Bank Limited of Rs. Nil (Previous year Rs. 7,000.00 Lacs) was pre-paid in full including interest thereon on August 4, 2015.

7. Term loan from ICICI Bank Limited of Rs. Nil (Previous year Rs. 3,375.00 Lacs) was pre-paid in full including interest thereon on July 11, 2015.

8. Term loan from ICICI Bank Limited of Rs. Nil (Previous year Rs. 1,166.67 Lacs) was repaid in full including interest thereon on August 10, 2015.

9. Term loan from Bank of India of Rs. Nil (Previous year Rs. 2,913.58 Lacs) was pre-paid in full including interest thereon on July 31, 2015.

10. Term loan from IDBI Bank Limited of Rs. Nil (Previous year Rs. 753.38 Lacs) was pre-paid in full including interest thereon on August 31, 2015.

11. Term loan from Bank of Baroda of Rs. Nil (Previous year Rs. 1,750.00 Lacs) was repaid in full including interest thereon on August 31, 2015.

12. Term loan in Indian rupee & in foreign currency from Export Import Bank of India of Rs. 1,218.75 Lacs (Previous year Rs. 3,532.43 Lacs) is secured by first pari passu charge on Company''s movable assets (except current assets) and immovable assets located at Bhandup, Halol and Nashik plants and second pari passu charge over current assets of the Company.

Rupee loan carries interest at 10.45% p.a. as on March 31, 2016 and was repayable in 20 equal quarterly installments starting from November 1, 2011 and foreign currency loan carries interest at 6 months LIBOR plus 275 bps p.a. as on March 31, 2016 and was repayable in 20 equal quarterly installment starting from November 1, 2011.

13. ECB loan from ICICI Bank Ltd. of Rs. Nil (Previous year Rs. 1,953.12 Lacs) was pre-paid in full including interest thereon on September 30, 2015.

14. Long-term buyer''s credit (for Halol expansion project) is secured by way of first pari passu charge on all movable assets (excluding current assets) and immovable assets of the Company situated at Halol plant and second pari passu charge over the current assets of the Company. It is repayable within 3 years from the date of disbursement. (The creation of security for immovable properties situated at Halol is pending as on March 31, 2016). The long-term buyer''s credit carries interest in the range of 12 months LIBOR plus 20 bps to 12 months LIBOR plus 122 bps and 6 months LIBOR plus 94 bps to 6 months LIBOR plus 165 bps and 12 months EURIBOR plus 54 bps to 12 months EURIBOR plus 150 bps. (Variation in range due to the movements in LIBOR / EURIBOR and the size of the deals).

Long-term buyer''s credit (for Nagpur project) is secured by way of first pari passu charge on all movable assets (excluding current assets) and immovable assets of the Company situated at Nagpur plant. It is repayable within 3 years from the date of disbursement. (The creation of security for immovable properties situated at Nagpur is pending as on March 31, 2016). The long-term buyers credit carries interest in the range of 12 months LIBOR plus 95 bps to 12 months LIBOR plus 113 bps and 6 months LIBOR plus 105 bps to 6 months LIBOR plus 175 bps.

Unsecured long-term borrowings (includes non-current portion and current maturities)

15. Public deposits included under the long-term borrowings are repayable after 2 or 3 years from the date of acceptance of public deposit. Long-term public deposits carries interest in the range of 9.50% p.a. to 10.75% p.a.

16. Interest-free deferred sales-tax is repayable in ten equal annual installment commencing from April 26, 2011 and ending on April 30, 2025.

a) Provision for warranty

A provision is recognized for expected warranty claims on product sold during the last three years, based on past experience of the level of returns and cost of claim. It is expected that significant portion of these costs will be incurred in the next financial year and within three years from the reporting date. Assumptions used to calculate the provision for warranty were based on current sales levels and current information available about returns based on the three years warranty period for all products sold. The table below gives information about movement in warranty provision.

Note :

a) Working capital term loan, cash credit facilities from banks, export packing credit from banks and buyers credit from banks are part of working capital facilities availed from consortium of banks. Consortium limits are secured by way of first pari passu charge on the current assets of the Company, wherever situated and by way of second pari passu charge on the movable assets (except current assets) and immovable assets of the Company situated at Bhandup, Nashik and Halol Plants.

All short-term borrowings availed in Indian rupees during the current year carry interest in the range of 9.50% to 10.30% and all short-term borrowing availed in foreign currency during the year carry interest in the range of LIBOR plus 30 bps to LIBOR plus 100 bps.(LIBOR is set corresponding to the period of the loan)

b) The term loan from banks is outstanding balance of the bill discounting facility avalied from scheduled bank

c) The public deposits are accepted for the maturity of the less than one year from the date of receipt.

d) During the current year, the Company had issued Commercial Papers (total available limit Rs. 20,000.00 Lacs) at regular intervals for working capital purposes with interest ranging from 7.30% to 8.20%. The outstanding as at March 31, 2016 is Rs. Nil.

1. Building includes Rs. 0.10 Lacs (Previous year Rs. 0.10 Lacs) being value of unquoted fully-paid shares held in various co-operative housing societies.

2. During the year, the Company has sold the following assets that were held for sale in the previous year:

a) Leasehold land at Additional Ambernath Industrial Area, Ambernath having book value of Rs. 3,543.63 Lacs.

b) Freehold land at Gujarat having book value of Rs. 0.60 Lacs.

3. During the year, the Company has transfered the following expenses which are attributable to the construction activity and are included in the cost of capital work-in-progress (CWIP) / Fixed assets as the case may be. Consequently, expenses disclosed under the respective notes are net of such amounts.

4. In the previous year, pursuant to the Companies Act, 2013 ("the Act"), the management, based on external technical evaluation has reassessed the useful life of fixed assets. In accordance with the Act, the carrying value of the fixed assets as at April 1, 2014 is depreciated over the revised residual life of the fixed assets and where the revised residual life of the fixed assets is nil as at that date, the carrying value of the fixed assets, after retaining the residual value, was adjusted to the General Reserve. Consequently in the previous year, the General Reserve was reduced by Rs. 2,161.65 Lacs (net of deferred tax Rs. 87.87 Lacs).

5. Pursuant to the Companies Act, 2013 ("the Act"), the management, based on internal technical evaluation has assessed the major components and useful life of fixed assets. In accordance with the Act, the carrying value of the components of fixed assets as at April 1, 2015 is depreciated over the balance residual life of the fixed assets and where the balance residual life of the fixed assets is nil as at that date, the carrying value of the components of fixed assets, after retaining the residual value, has been adjusted to the General Reserve. Consequently, the General Reserve has been reduced by Rs. 560.04 Lacs (net of deferred tax Rs. 274.36 Lacs).

6. The Company has acquired a leasehold land at Butibori Industrial Area, Maharashtra Industrial Development Corporation, Nagpur admeasuring 2,40,000 Sq. Mts. @ Rs. 1,150/- per sq. ft. amounting to Rs. 2,760.00 Lacs for a lease term of ninety five (95) years. The Lease agreement for the same was registered on March 24, 2015.

7. In an earlier year, the Company has acquired global rights of "CEAT" brand from the Italian tyre maker, Pirelli. Prior to the said acquisition, the Company was the owner of the brand in only a few Asian countries including India. With the acquisition of the brand which is renowned worldwide, new and hitherto unexplored markets are accessible to the Company. The Company will be in a position to fully exploit the export market resulting in increased volume and price realization. Therefore, the management believes that the Brand will yield significant benefits for a period of at least twenty years.

8. The Company has acquired technical know-how and assistance from International Tire Engineering Resources LLC, for setting up for Halol radial plant. Considering the life of the underlying plant / facility, this technical know-how, is amortized on a straight line basis over a period of twenty years.

9. As a part of ongoing expansion project at Halol, during the year the Company has capitalised and commissioned assets of Rs. 44,768.09 Lacs. This has resulted in additions of 39 MT per day in the installed capacity. Full expansion project of 120 MT per day is however expected to be commissioned, in phase, by end of FY 2016-17.

10. During the year, the Company has commissioned, its Greenfield Unit, situated at Butibori, near Nagpur, Maharashtra, with effect from March 28, 2016. Accordingly, the Company has capitalised the assets amounting to Rs. 9,375.40 Lacs. This has resulted in additions of 15 MT per day in the installed capacity. Full expansion project of 120 MT per day is expected to be commissioned, in phases, by end of FY 2017-18.

11. Gross book value includes Rs. 68,184.11 Lacs (Previous year Rs. 69,177.84 Lacs) on account of revaluation of Land, Building and Plant and machinery in 2007 based on the report issued by independent valuer.

c. Others

The Company has availed the sales-tax deferral loan and octroi refund from the Directorate of Industries for Nashik plant. Hence, the Company has to take prior permission of the appropriate authority for removal / transfer of any asset (falling under the above schemes) from Nashik plant. In case of violation of terms & conditions, the Company is required to refund the entire loan / benefit along with the interest @ 22.50% on account of sales-tax deferral loan and @ 15% on account of octroi refund. (Refer note 19(2)(c)).

d. Demands and disputes considered as "Remote" by the Company

1. The Company has been served with a Show Cause cum Demand Notice from the DGCEI (Directorate General of Central Excise Intelligence) Mumbai, on the ground that, the activity of making tyre set, i.e. inserting Tubes and Flaps inside the Tyres and tied up through Polypropylene Straps, amounts to manufacture / pre-packaged commodity under Section 2(f)(iii) of Central Excise Act, read with Section 2(l) of the Legal Metrology Act, 2009. Accordingly, the authorities worked out the differential duty amounting to Rs. 8,417.79 Lacs i.e., the amount of duty already paid on the basis of transaction value and duty payable on the basis of MRP under Section 4A, for the period from April-2011 to March-2015. The Company believes that Set of TT / TTF(Tyre Tube / Tyre Tube and Flap) is not pre-packaged commodity in terms of provisions of Legal Metrology Act, 2009. The Company has a strong case on the ground that, the said issue has been clarified by the Controller of the Legal Metrology Department vide its letter dated May 1, 1991 that "Tyre with tube & faps tied with three thin polythene strips may not be treated as a pre-packed commodity within the meaning of rule 2(l) of the Standards of Weights and Measures (Packaged Commodities), Rules, 1977". The above clarification has been re-affirmed vide letter dated November 16, 1992 by the Legal Metrology authorities.

2. The Competition Commission of India (CCI) had, while considering the representation made by All India Tyres Dealers Federation (AITDF) made a prima facie view that the major players of tyre industry (including the Company) had some understanding amongst themselves, especially in the replacement market, as they did not pass the beneift of corresponding reduction in prices of major raw material inputs for the period subsequent to the year 2011-12. According to CCI, this practice is in violation of the Competition Act, 2002 ("the Act"). Therefore, CCI had, vide its order passed on June 24, 2014 under Section 26(1) of the Act, directed the Office of the Director General (DG) to investigate the said alleged violation of the Act. DG submitted its Investigation Report to CCI in December 2015, based on which CCI passed an order on February 18, 2016 directing the said tyre manufacturers to file their suggestions / objections by May 5, 2016. The Company''s decision to change the price is purely a business decision which depends upon many factors like cost of production, brand value perception, and profit margin of each product, quality perception of each product in the market, demand and supply situation of each product category and market potential and market shares targets of various product categories etc. In view of the above the Company believes that it has a strong case.

2. The Board of Directors have declared an interim dividend of Rs. 11.50 per share pursuant to which, the total amount distributed as dividend is Rs. 4,651.76 Lacs (Previous year final dividend of Rs. 10 per share, amounting to Rs. 4,045.01 Lacs).

3. Loans and advances in the nature of loans given to subsidiaries and associates and frms / companies in which directors are interested, as required under Schedule V read with Regulation 34 (3) and 53 (f) of the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015 and disclosure required under section 186 (4) of the Companies Act, 2013 :

(a) CEAT Specialty Tyres Limited

The loan balance as at March 31, 2016 is Rs. 3,400.00 Lacs (Previous year Rs. 1,300.00 Lacs). Loan given during the year is Rs. 2,100.00 Lacs (Previous year Rs. 1,300.00 Lacs). The maximum amount outstanding during the year is Rs. 3,400.00 Lacs (Previous year Rs. 1,300.00 Lacs) The repayment schedule for the above loan is of 18 months and the rate of interest charged is 10%. The loan will be utilized for meeting the working capital requirements.

(b) Rado Tyres Limited

The loan balance as at March 31, 2016 is Nil (Previous year Rs. 117.50 Lacs)

The maximum amount outstanding during the year is Rs.117.50 Lacs (Previous year Rs. 189.17 Lacs)

The loan has been fully repaid in August 2015, the rate of interest charged on this loan was 10%.

The loan was utilized for meeting the working capital requirements.

For details of loans, advances and guarantees given and securities provided to related parties, refer note 42

39. Operating lease

The Company has entered into a lease agreement with the leasing company for vehicles, resulting in a non-cancellable operating lease as defined in AS-19 "Accounting for Leases".

Lease rental on the said lease of Rs. 106.41 Lacs (Previous year Rs. 128.68 Lacs) has been charged to Statement of profit and Loss.

4. Related party disclosures:

a) Names of related parties and related party relationship: Related parties where control exists:

- Associated CEAT Holdings Company (Pvt.) Limited ("ACHL") (Subsidiary Company)

- CEAT AKKHAN Limited (previously known as CEAT Bangladesh Limited) (Subsidiary Company)

- Rado Tyres Limited (Subsidiary Company) ("Rado")

- CEAT Specialty Tyres Limited ("CSTL") (Subsidiary Company) (w.e.f. December 8, 2014)

Related parties with whom transactions have taken place during the year and / or previous year:

- CEAT-Kelani Holding Company (Pvt.) Limited ("CKHL") (Joint Venture of ACHL)

- Associated CEAT (Pvt.) Limited ("ACPL") (Subsidiary of CKHL)

- CEAT-Kelani International Tyres (Pvt.) Limited ("CKITL") (Subsidiary of CKHL)

- CEAT Kelani Radials Limited ("CKRL") (Subsidiary of CKHL)

- Asian Tyres (Pvt) Limited ("ATPL") (Subsidiary of CKITL)

- Raychem RPG (Pvt.) Limited ("Raychem") (Directors, KMP or their relatives are interested)

- KEC International Limited ("KEC") (Directors, KMP or their relatives are interested)

- Vinar Systems Pvt. Limited ("Vinar") (Directors, KMP or their relatives are interested)

- B.N. Elias & Co. LLP ("B.N. Elias") (Directors, KMP or their relatives are interested)

- Atlantus Dwellings & Infrastructure LLP ("Atlantus") (Directors, KMP or their relatives are interested)

- Chattarpati Apartments LLP ("Chattarpati") (Directors, KMP or their relatives are interested)

- Allwin Apartments LLP ("Allwin") (Directors, KMP or their relatives are interested)

- Palacino Properties LLP ("Palacino") (Directors, KMP or their relatives are interested)

- Amber Apartments LLP ("Amber") (Directors, KMP or their relatives are interested)

- Swallow Associate LLP ("Swallow") (Directors, KMP or their relatives are interested)

- Janpragati Electoral Trust ("Janpragati") (Directors, KMP or their relatives are interested)

- Khaitan & Co. ("Khaitan") (Directors, KMP or their relatives are interested)

- Mr. Kunal Mundra (Relative of Director) (upto March 31, 2015)

- Key Managerial Personnel (KMP):

i) Mr. Harsh Vardhan Goenka, Chairman

ii) Mr. Anant Vardhan Goenka, Managing Director

iii) Mr. Arnab Banerjee, Whole-time Director

iv) Mr. Subba Rao Amarthaluru, Chief Financial Officer up to July 22, 2015

v) Mr. Manoj Jaiswal, Chief Financial Officer from July 22, 2015 (w.e.f. July 20, 2015)

vi) Mr. H. N. Singh Rajpoot, Company Secretary.

5. Segment reporting:

The Company''s operations comprise of only one business segment – Automotive Tyres, Tubes & Flaps as its primary segment in the context of reporting business / geographical segment as required under mandatory accounting standards AS-17 "Segment Reporting". The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

The geographical Segments considered for disclosure are India and outside India. All the manufacturing facilities are located in India. Revenue and receivables are disclosed by location of customers, while the other geographical information is disclosed by location of assets.

6. Other Information:

a) In the previous year, the Company had acquired 100% stake in CEAT Specialty Tyres Limited (previously known as CEAT Specialty Tyres Private Limited) by purchasing 10,000 shares of Rs. 10 each at face value. Subsequently the Company purchased additional 40,000 shares.

During the current year, the Company purchased additional 1,00,00,000 shares Rs. 10 each at a premium of Rs. 90 per equity share aggregating to Rs. 10,000.00 Lacs. The subsidiary will focus exclusively on ''off-the-road'' and speciality tyres, for sales in India and abroad.

b) In the previous year, the Company allotted 44,94,382 equity shares of Rs. 10 each at a premium of Rs. 880 per equity share aggregating to Rs. 39,999.99 Lacs pursuant to shares issued under a Qualified Institutional Placement (QIP). Out of the total proceeds, the Company incurred Rs. 655.93 Lacs (net of tax) towards issue expenses.

c) In August 2015, the Company acquired 3,50,000 12.5% redeemable cumulative preference shares of Rs. 100 each at par, aggregating to Rs. 350.00 Lacs of Rado Tyres Limited, a subsidiary company.

7. Utilisation of money raised through Qualifed Institutional Placement (QIP):

In the previous year, the Company raised Rs.39,999.99 Lacs through Qualified Institutional Placement, specifically to meet its share in the cost of setting up of various expansion projects viz. capacity expansion of Halol plant, specialty tyres project (through its subsidiary company) and two-three wheeler tyres project and also for augmentation of the long-term working capital required for business growth.

8. Previous year''s figures have been regrouped / reclassified, where necessary to conform to current year''s classification.


Mar 31, 2014

1. CORPORATE INFORMATION

CEAT Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The company''s principal business is manufacturing of automotive tyres, tubes and flaps. The company started operations in 1958 as CEAT Tyres of India Limited and was renamed as CEAT Limited in 1990. The company caters to both domestic and international markets.

The company has three subsidiary companies:-

i) Associated CEAT Holdings Company (Pvt.) Limited incorporated in Sri Lanka

ii) CEAT Bangladesh Limited Incorporated in Bangladesh

iii) Rado Tyres Limited (w.e.f. 27th September, 2013), incorporated in India.

NOTE - 2

1) Contingent Liabilities: (Rs, in Lacs)

As at 31.03.2014 As at 31.03.2013

a) Direct and Indirect Taxation Matters*

Income Tax 127,71.64 19,41.01

Wealth Tax 6.73 6.73

Excise Duty/Service Tax 41,76.33 57,56.53

Sales Tax 34,79.40 46,95.99

b) Show cause notices 155,10.03 165,09.78

c) Bills discounted with Banks 61,26.45 24,55.14

d) Corporate Guarantee

i) Corporate Guarantees given in favour of AB Bank Limited on behalf of CEAT Bangladesh Limited amounting to Bangladesh Taka 16,50.00 Lacs (Previous year Bangladesh Taka 16,50.00 Lacs) 12,78.26 11,48.24

ii) Letter of Comfort given to The City Bank Limited on behalf of CEAT Bangladesh Limited amounting to Bangladesh Taka 16,00.00 Lacs (Previous year Bangladesh Taka Nil) 9,29.64 -

iii) Covered by indemnity undertakingfrom RPG Enterprises Ltd 25,50.00 25,50.00

4) The Board of Directors recommended a Dividend of Rs, 10/- per share (Previous year Rs, 4 per share), the total amount to be distributed as Dividend is Rs, 35,95.57 Lacs (Previous year Rs, 13,69.74 Lacs)

6) a) Loans and advances in the nature of loans given to subsidiary and associate in which directors are interested. Loans and Advances in the nature of Loans to subsidiary Rs, 1,89.17 Lacs (Previous year Rs, 2,15.00 Lacs) repayable in 36 equal installment starting from April, 2013.

b) During the year pursuant to Order of Board for Industrial and Financial Reconstruction (BIFR), Rado Tyres Limited (Rado), has allotted 75,00,000 Equity shares of Rs, 4/-each fully paid up to the company on conversion of loan given to it by the company. The company''s stake in Rado Tyres Limited now stands increased to 58.56% and accordingly Rado Tyres Limited has become a subsidiary of the company w.e.f. 27th September, 2013. (Refer Note 15)

3) Other Commitments

a) The Company has availed the Sales Tax Deferral Loan and Octroi refund from the Directorate of Industries for Nasik Plant. Hence, the Company has to take prior permission of the appropriate authority for removal/transfer of any asset (falling under the above Schemes) from Nasik Plant. In case of violation of terms & conditions, the Company is required to refund the entire loan/benefit along with the interest @ 22.50% on account of Sales Tax deferral Loan and @ 15% on account of Octroi refund.

b) The Company has agreed for a minimum conversion charge of Rs, 29.50 per kg. up to March 31, 2015 to Rado Tyres Limited.

4) On 15th December 2013, CEAT Bangladesh Limited, has obtained the approval from Bangladesh Securities and Exchange Commission to increase its Equity Share Capital to 15,00,00,000 equity shares @ Bangladeshi Taka 10/- each. Pursuant to this approval CEAT Bangladesh Limited has increased the Share capital to 15,00,00,000 equity shares and CEAT Limited has subscribed to additional 4,82,00,000 shares @ Bangladeshi Taka 10/- each and issued 4,50,00,000 equity shares (being 30% of total share capital) @ Bangladeshi Taka 10/- each to A. K. Khan & Company Limited (JV Partner) as per the JV agreement. Pursuant to this allotment, the Company is now holding 70% stake in CEAT Bangladesh Limited (previous year Wholly owned subsidiary) (Refer Note 15).

5) Provision for Warranty:

A provision is recognized for expected warranty claims on product sold during the last three years, based on past experience of the level of returns and cost of claim. It is expected that significant portion of these costs will be incurred in the next financial year and within three years from the reporting date. Assumptions used to calculate the provision for warranties are based on current sales levels and current information available about returns based on the three years warranty period for all products sold. The table below gives information about movement in warranty provision.

6) Post Retirement Benefits Plan

Gratuity

The Company operates a defined plan of Gratuity for its employees under the Gratuity plan, every employee who has completed five years of service gets a gratuity on separation @ 15 days of last drawn salary for each completed year of service. The Scheme is funded with an Insurance company in the form of qualifying Insurance policy.

7) Related party disclosures:

a) Names of related parties and related party relationship: Related parties where control exists:

- Associated CEAT Holdings Company (Pvt.) Limited (ACHL) (Subsidiary Company)

- CEAT Bangladesh Limited (CEAT Bangladesh) (Subsidiary Company)

- Rado Tyres Limited (Subsidiary Company) (w.e.f. 27th September, 2013)

Related parties with whom transactions have taken place during the year :-

- CEAT-Kelani Holding Company (Pvt.) Limited (CKHL) (Joint Venture of ACHL)

- Associated CEAT(Pvt) Limited (ACPL) (Subsidiary of CKHL)

- CEAT-Kelani International Tyres (Pvt.) Limited, (CKITL) (Subsidiary of CKHL)

- CEAT Kelani Radials Limited (CKRL) (Subsidiary of CKHL)

- Asian Tyres (Pvt) Limited (ATPL) (Subsidiary of CKITL) (w.e.f 14th November, 2012)

- Instant Holdings Limited (Investing entity in respect of which CEAT Limited is an Associate)

- Key Management Personnel:

i) Mr. AnantVardhanGoenka, Managing Director

ii) Mr. Arnab Banerjee, Whole-time Director (w.e.f. 7th May, 2013)

iii) Mr. Harsh Vardhan Goenka, Relative of key management personnel

iv) Mr. Paras Kumar Chowdhary, Whole-time Director (Retired on 1st April, 2013)

8) Exceptional Items:

a) The Company had introduced a Voluntary Retirement Scheme (VRS) for employees across the company during the year, 105 employees (Previous year 188 employees) opted for the VRS. The Compensation in this respect aggregates Rs, 6,89.19 Lacs (Previous year Rs, 13,65.33 Lacs) which is disclosed as an exceptional Item.

b) During the previous year, the company had changed its method of recognising provision for warranty from actual claim basis to expected cost based on past trend. The provision based on such parameters as at the beginning of the previous year i.e. April 1,2012 amounting to Rs, 14,04.23 Lacs had been disclosed as an exceptional expense in the previous year.

c) The Company''s Plant at Bhandup, Mumbai, had an incident of Fire at its Raw Material Store on 23rd February, 2014.

Fixed assets of Gross value of Rs, 3,29.67 Lacs with its written down value of Rs, 2,30.87 Lacs and stock valuing Rs, 25,38.16 Lacs, aggregating to Rs, 27,69.03 Lacs were destroyed in the fire. The assets were covered under the insurance policy. The amount of Rs, 25,56.40 Lacs is expected to be recovered from the insurance company and shown as insurance claim receivable. The management is confident of recovering the same. The balance amount of Rs, 2,12.63 Lacs along with the expenditure incurred of Rs, 1,02.11 Lacs (including net incidental charges) has been charged to the Statement of Profit and Loss and aggregate amount of Rs, 3,14.74 Lacs has been treated as an exceptional item.

9) Segment Reporting:

The Company''s operations comprise of only one business segment -Automotive Tyres, Tubes & Flaps as its primary segment in the context of reporting business/geographical segment as required under mandatory accounting standards AS -17 "Segment Reporting". The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

The geographical Segments considered for disclosure are in India and Outside India. All the manufacturing facilities are located in India.

10) Previous year''s figures have been regrouped/reclassified, where necessary to conform to this year''s classification.


Mar 31, 2013

1. CORPORATE INFORMATION

CEAT Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The company''s principal business is manufacturing of automotive tyres, tubes and flaps. The company started operations in 1958 as CEAT Tyres of India Limited and was renamed as CEAT Limited in 1990. The company caters to both domestic and international markets. The company has two main overseas subsidiary companies - Associated CEAT Holdings Company (Pvt) Limited incorporated in Sri Lanka and CEAT Bangladesh Limited incorporated in Bangladesh.

2) The Board of Directors recommended a Dividend of Rs. 4 per share (Previous year Rs. 1 per share), the total amount to be distributed as a Dividend is Rs. 13,69.74 Lacs (Previous year Rs. 3,42.44 Lacs)

2) Loans and advances in the nature of loans given to subsidiaries and associates and firms / companies in which directors are interested.

Loans and Advances in the nature of Loans to Associates Rs. 2,15.00 Lacs (Previous year Rs. 1,50.00 Lacs ) repayable in 36 equal installment starting from April, 2013.

4) Other Commitments

a) The Company has availed the Sales Tax Deferral Loan and Octroi refund from the Directorate of Industries for Nasik Plant. Hence, the Company has to take prior permission of the appropriate authority for removal/transfer of any asset (falling under the above Schemes) from Nasik Plant. In case of violation of terms & conditions, the Company is required to refund the entire loan/benefit along with the interest @ 22.50% on account of Sales Tax deferral Loan and @ 15% on account of Octroi refund.

b) Rado Tyres Limited is an Associate Company, in which CEAT holds 22% share as on 31st March, 2013. As per the Draft Rehabilitation Scheme filed by the Operating Agency with BIFR, the Company has committed to give Rado Tyres Limited a loan of Rs. 2,25.00 Lacs ( Previous year Rs. 1,50.00 Lacs) paid during the year, repayable in 36 equal installment starting from April, 2013 and an advance of up to Rs. 2,25.00 Lacs (Previous year Rs. 50.00 Lacs) already given and the same have been recovered). The Company has also agreed for a minimum conversion charge of Rs. 29.50 per kg. up to March 31, 2015.

c) As per the Joint Venture agreement with A. K. Khan & Company Limited (JV Partner), the Company will subscribe 2,50,000 equity shares of CEAT Bangladesh Limited amounting to Rs. 17.39 Lacs The date of subscription is not finalised.

5) During the previous year the company has issued 17,12,176 convertible warrants on preferential basis to promoter''s / Promoter''s group with an object to augment long term resources of the Company and the amount is being utilised for the intended purpose.

6) Provision for Warranties

A provision is recognized for expected warranty claims on product sold during the last three years, based on past experience of the level of returns and cost of claim. It is expected that significant portion of these cost will be incurred in the next financial year and within three years from the reporting date. Assumptions used to calculate the provision for warranties were based on current sales levels and current information available about returns based on the three years warranty period for all products sold. The table below gives information about movement in warranty provision.

7) Operating Lease

The Company has entered into a sale and lease back agreement with the leasing company for vehicles, resulting in a non- cancellable operating lease as defined in "AS 19" (Leases).

Lease rental on the said lease of Rs. 1,77.62 Lacs (Previous year Rs. 1,79.94 Lacs ) has been charged to Statement of Profit and Loss

8) Post Retirement Benefits Plans

Gratuity

The Company operates a defined plan of Gratuity for its employees under the Gratuity plan, every employee who has completed five years of service gets a gratuity on departure @ 15 days of last drawn salary for each completed year of service. The Scheme is funded with an Insurance company in the form of qualifying Insurance policy.

Leave Encashment

The present value obligation of Leave Encashment is determined based on actuarial valuation using projected unit credit method.

9) Related party disclosures

a) Names of related parties and related party relationship:

Related parties where control exists:

Associated CEAT Holdings Company (Pvt.) Limited (ACHL) (Subsidiary Company] CEAT Bangladesh Limited (CEAT Bangladesh) (Subsidiary Company)

Related parties with whom transactions have taken place during the year

CEAT-Kelani Holdings Company (Pvt.) Limited (CKHL) (Joint Venture of ACHL ] Associated CEAT (Pvt.) Limited (ACPL) (Subsidiary of CKHL] CEAT-Kelani International Tyres (Pvt.) Limited, (CKITL) (Subsidiary of CKHL) CEAT Kelani Radials Limited (CKRL) (Subsidiary of CKHL)

Rado Tyres Limited (Associate Company)

Key Management Personnel:

i) Mr. Paras K. Chowdhary, Whole Time Director (retired on 01.04.2013) ii) Mr. Anant Goenka, Managing Director iii) Mr. Harsh Vardhan Goenka, Relative of key management personnel

The Managerial remuneration is computed as per the provisions of Section 198 of the Companies Act, 1956 read along with the provisions of Schedule XIII there to.

10) Exceptional Items:

a) The Company had introduced a Voluntary Retirement Scheme (VRS) for employees of its Bhandup Unit during the year, 188 employees opted for the VRS. The Compensation in this respect aggregates Rs. 13,65.33 Lacs (Previous year Rs. 3,15.64 Lacs) which is disclosed as an exceptional Item.

b) The Company changed its method of recognizing provision for warranty from actual claim basis to expected cost based on past trends. The provision up to March 31, 2012 amounting to Rs. 14,04.23 Lacs has been disclosed as an exceptional item.

11) Segment Reporting:

The Company''s operations comprise of only one business segment -Automotive Tyres, Tubes & Flaps in the context of reporting business/geographical segment as required under mandatory Accounting Standards AS -17 "Segment Reporting". The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

The geographical Segments considered for disclosure are in India and Outside India. All the manufacturing facilities are located in India.

12) Previous year''s figures have been regrouped / reclassified, where necessary to conform to this year''s classification. The accompanying notes are an integral part of the financial statements


Mar 31, 2012

A) Terms and Rights attached to equity shareholders:

The Company has only one class of equity shares having a face value of Rs 10 per share. Each holder of equity shares is entitled to one vote per equity share. A member shall not have any right to vote whilst any call or other sum shall be due and payable to the Company in respect of any of the shares of such member. All equity shares of the Company rank pari passu in all respects including the right to dividend. The dividend is recommended by the Board of Directors and declared by the members at the ensuing Annual general Meeting. The Board of Directors have a right to deduct from the dividend payable to any member any sum due from him to the Company.

In the event of winding-up, subject to the rights of holders of shares issued upon special terms and conditions, the holders of equity shares shall be entitled to receive remaining assets, if any, in proportion to the number of shares held at the time of commencement of winding-up.

The Shareholders have all other rights as available to Equity Shareholders as per the provisions of the companies Act, 1956, read together with the Memorandum of Association and Articles of Association of the Company, as applicable.

b) The Company does not have any holding company or ultimate holding company. Promoter shareholding in the Company including persons acting in concert with the promoters as on March 31, 2012 is 1,78,43,962 equity shares i.e. 52.11% of the equity share capital of the Company. (Previous year March 31, 2011, 1,67,23,578 ie. 48.84%).

c) Money received against Convertible warrants:

The Company has on March 12, 2012 allotted 17,12,176 Warrants of face value Rs 10 each to Instant Holdings Limited, an entity belonging to the Promoter Group of Companies at a price of Rs 85.03 per Warrant on a preferential basis. The Company has received the 25% of the price of the Warrant i.e Rs 21.26 per Warrant at the time of allotment. The Warrants are convertible into an equivalent number of equity shares at the option of the allottee within a period of 18 months from the date of allotment i.e. upto September 11, 2013.

Also refer Note 4.

Note on forfeiture of Warrants allotted in 2010:

The Company had on September 30, 2010 allotted 17,12,170 Warrants of face value Rs 10/- each to entities belonging to the Promoter Group on a preferential basis at Rs 141.11 per Warrant. The Company has received the 25% of the price of the Warrant i.e. Rs 35.36 per Warrant an amount of Rs 6.05 crores at the time of allotment. The Warrants convertible into an equivalent no. of equity shares were convertible at the option of the allottees within a period of 18 months from the date of allotment i.e. upto March 29, 2012. The allottees failed to exercise their option within the stipulated time period i.e. upto March 29, 2012. The Warrants have since lapsed and the amount paid by the entities of the Promoter Group has been forfeited by the Company and Credited to Capital Reserve Account.

NOTE ON SECURED LONG TERM BORROWINGS

1. Term Loan availed from ICICI Bank Ltd. of Rs 1,17,00.00 lacs (Previous year Rs 90,00.00 lacs) is secured by First pari passu charge on movable (except Current Assets) both present and future and Immovable Properties located at Bhandup, Halol and Nasik Plants and second pari passu charge on the current assets of the Company both present and future.

It is repayable in 10 equal Semi Annual Installments of Rs 13,00.00 lacs each beginning January 11, 2013 after a moratorium of 30 months.

2. ECB loan availed from ICICI Bank Ltd. of Rs Nil, (Previous year Rs 9,19.00 lacs) is secured by First pari passu charge on movable and immovable properties of the Company situated at Bhandup and Nasik Plants both present future.

Repayable in 10 equal Semi Annual Installment of Rs 4,59.00 lacs after a moratorium of 18 months.

3. ECB loan availed from ICICI Bank Ltd. of Rs 33,63.21 lacs (Previous year Rs 43,24.12 lacs ) is secured by First pari passu charge on movable properties (except current assets) both present and future and immovable properties of the Company situated at Bhandup, Halol and Nasik Plants and second pari passu charge over Current Assets both present and future.

Repayable in 24 equal Quarterly Installment of Rs 2,40.00 lacs after a moratorium of 27 months from December 23, 2010.

4. Term Loan availed from ICICI Bank Ltd. of Rs 58,33.33 lacs (Previous year Rs 70,00.00 lacs) is secured by First pari passu charge on immovable properties situated at Bhandup Plant.

Repayable in 12 equal Quarterly Installment of Rs 5,83.00 lacs after a moratorium of 27 months from November 9, 2012.

5. Term Loan availed from Bank of India of Rs 69,13.58 lacs (Previous year Rs 47,50.00 lacs) is secured by First pari passu charge on Company's movable (except Current Assets ) both present and future and immovable properties located at Bhandup, Halol and Nasik Plants and second pari passu charge over Current Assets both present and future.

Repayable in 20 quarterly installments of Rs 5,00.00 lacs each commencing from January 1, 2012.

6. Term Loan availed from Bank of Baroda of Rs 34,99.96 lacs (Previous year Rs 47,50.00 lacs) is secured by First pari passu charge on present & future movable (except Current Assets ) both present and future and immovable located at Bhandup, Halol and Nasik Plant and second paripassu charge over Current properties both present and future.

Repayable in 20 quarterly installments of Rs 2,50.00 lacs each commencing from January 1, 2012.

7. Term Loan availed from export Import Bank of India of Rs Nil lacs (Previous year Rs 12,50.00 lacs) is secured by First pari passu charge on immovable property of the Company situated at RPG House, Mumbai.

8. Term Loan availed from export Import Bank of India of Rs 70,00.71 lacs (Previous year Rs 90,00.91 lacs) is secured by First pari passu charge on movable properties (except Current Assets) both present and future and immovable properties located at Bhandup, Halol and Nasik Plants and second pari passu charge over Current Assets both present and future.

Repayable in 20 equal Quarterly Installments of Rs 5,00.00 lacs after a moratorium of 12 months from November 1, 2011.

9. Term Loan availed from Corporation Bank of Rs 6,24.89 lacs (Previous year Rs 18,75.00 lacs) is secured by First pari passu charge on immovable property of the Company situated at RPG House, Mumbai.

Repayable in quarterly installments of Rs 3,13.00 lacs on 26th of every quarter from December, 2010 after moratorium period of 12 months from the date of first disbursement. (October 2009)

10. Term Loan availed from IDBI Bank Ltd. of Rs 17,59.07 lacs (Previous year Rs 23,87.30 lacs) is secured by First pari passu charge on movable properties (except current assets) both present and future and immovable properties of the Company situated at Bhandup, Halol and Nasik Plants and second pari passu charge on Current Assets both present and future.

Repayable in 20 quarterly installments of Rs 1,25.00 lacs starting from January 1, 2012.

11. Buyer's credit is secured by Letter of Comfort (LOC) / undertaking (LOU) issued by the Bank. The said LOC / LOU is part of the working capital term loan facilities from Bank.

A) Loan availed from Ratnakar Bank Ltd. of Rs 25,00.00 lacs (Previous year Rs Nil) Repayment after 18 months from the date of disbursement i.e. August 18, 2013.

B) Interest free Deferred Sales Tax incentive repayment installments commences from April 26, 2011 and end on April 30, 2025.

Note:

1) Cash Credit and Export packing credit facilities are part of Working Capital facilities availed from Consortium of Banks and are secured by hypothecation by way of first pari passu charge on all its current assets and by way of second pari passu charge on immovable and all movable properties (excluding current assets) of the Company situated at Bhandup, Nasik, Halol Plants and RPG House, Mumbai.

2) Buyer's credit is secured by letter of comfort (LOC) / undertaking (LOU) which is a sublimit of working capital facilities issued by the banks.

1. Building includes Rs 0.11 lacs (Previous year Rs 0.11 lacs) being value of shares held in co-operative housing societies.

2. Free Hold Land includes land acquired at Halol, Gujarat vide Memorandum of Understanding (MOU) for Rs 1.75 lacs which is subject to registration formalities.

3. Lease Hold Land includes land acquired at Additional Ambernath Industrial Area, Ambernath, District Thane, Maharashtra from Maharashtra Industrial Development Corporation (MIDC) vide sanction letter dated Octrober 30, 2009. The Company has taken physical possession of this land on September 1, 2010 which is subject to registration formalities.

4. Fixed assets cost includes assets revalued during last five years on the basis of valuation report submitted by approved valuers about their market value as summarised below:

Rs in lacs

2011-12 2010-11

1) CONTINGENT LIABILITIES:

a) Direct and Indirect Taxation Matters

Income Tax 16,40.69 16,82.62

Wealth Tax 6.73 6.73

Excise Duty / Service Tax 45,60.43 43,34.38

Value Added Tax / Central Sales Tax 44,12.36 44,17.77

b) Disputed demands of Octroi Duty 2,22.10 1,70.77

c) Bills discounted with Banks 18,12.11 27,52.04

d) Corporate Guarantees given on behalf of others

- Covered by indemnity undertakings from RPG Enterprises Ltd. 25,50.00 25,50.00

Rs in lacs 2011-12 2010-11

e) The Company has given Indemnity in respect of Lease transactions entered into with ICICI Bank Ltd., liability for which is indeterminable - -

f) Export obligation under Export Promotion Council Guarantee Scheme 312,47.24 396,07.89

2) CLAIMS AGAINST THE COMPANY NOT ACKNOWLEDGED AS DEBTS (ESTIMATED):

i) in respect of labour matters 5,81.30 6,48.00

ii) other claims 11,80.35 12,35.10

3) CONTRACTS REMAINING TO BE EXECUTED:

Estimated amount of contracts remaining to be executed on capital 12,99.85 91,65.87 account and not provided for - net of advance payments.

4) The Board of Directors recommended a Dividend of Rs 1/- per share, the total amount to be distributed as a Dividend is Rs 3,42.44 lacs (Previous year Rs 6,84.87 lacs).

5) Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) are given as follows:

(a) Principal Amount Due 11.89 -

Interest due - -

(b) Interest paid during the year beyond the appointed day - -

(c) Amount of interest due and payable for the period of delay in making payment without adding the interest specified under the Act - -

(d) Amount of interest accrued and remaining unpaid at the end of the year - -

(e) Amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small Enterprises for the purpose of disallowance as a deductible expenditure under section 23 of the ACT. - -

The above information is based on the information available with the Company, which has been relied upon by the Auditors. No interest has been accrued on delayed payments.

2) DISCLOSURES AS REQUIRED UNDER CLAUSE 32 OF LISTING AGREEMENT.

i) Loans and Advances in the nature of Loans to Associates Rs 1,50.00 lacs (Previous year Rs Nil) and advance of Rs 60.79 lacs (Previous year Rs 1,92.36 lacs)

ii) Loans and Advances in the nature of Loans where there is no repayment schedule, or no interest or interest below Section 372A of Companies Act, 1956: Rs Nil (Previous year Rs Nil)

iii) Loans and Advances in the nature of Loans to firms / Companies in which Directors are interested: Rs Nil (Previous year Rs Nil)

iv) Investment by the Loanee in shares of the Company as at March 31, 2012 is Rs Nil (Previous year Rs Nil)

3) OTHER COMMITMENTS AS CERTIFIED BY THE MANAGEMENT ON WHICH AUDITORS HAVE RELIED UPON.

a) The Company has availed the Sales Tax Deferral Incentive and Octroi refund from the Directorate of Industries for Nasik Plant. Hence, the Company will have to take prior permission of the appropriate authority for removal/transfer of any asset (falling under the above Schemes) from Nasik Plant. In the event of non - compliance of terms & conditions, the Company will be required to refund the entire loan/benefit along with the interest @ 15.5%.

b) Rado Tyres Limited is an Associate Company in which Company holds 22% share as on March 31, 2012. As per the Draft Rehabilitation Scheme filed by the Operating Agency with BIFR, the Company has committed to give Rado Tyres Limited a loan of Rs 2,25.00 lacs (Rs 1,50.00 lacs paid during the year) and an advance of upto Rs 2,25.00 lacs ( Rs 50.00 lacs already given). The Company has also agreed for a minimum conversion charge of Rs 29.5 per Kg. upto March 31, 2015.

4) The Company has issued 17,12,176 convertible warrants on preferential basis to promoter's / Promoter's group with an object to augment long term resources of the Company and the amount is being utilised for the intended purpose.

9) The revised Schedule VI has become effective from April 1, 2011 for the preparation of Balance Sheet and Profit and Loss Statement. Consequent to the changes in the disclosure and presentation requirement, the following classifications and re- grouping has been made in the current year.

(a) The Security Deposits from Dealers amounting to Rs 2,78,55.18 lacs (Previous year Rs 2,64,59.69 lacs) are now grouped in Other Current Liability under the Note No.11 (5)(b) - Deposits from Dealers & Others.

(b) Buyer's Credit has been re-grouped under Long Term Borrowing [Refer to Note No. 5(1)(k)] if it is payable after a period of 12 months and under Short Term Borrowing [Refer to Note No.9(1)(c)] if it is payable within a period of 12 months.

5) OPERATING LEASE

The Company has entered into a sale and lease back agreement with the leasing company for vehicles, resulting in a non- cancellable operating lease as defined in "AS 19" (Leases).

6) exchange differences recognised in profit and loss account

Net foreign exchange gain recognised in Profit and Loss Account is Rs 8,70.32 lacs (Previous year gain Rs 6,18.81 lacs) out of which Rs 60.76 lacs loss (Previous year loss Rs 81.84 lacs) has been shown separately whereas net gain of Rs 9,31.09 lacs (Previous year gain Rs 7,00.64 lacs) are included under appropriate heads of items in Profit and Loss accounts.

7) AUDITOR'S REMUNERATION:

Other Services shown in note 29 includes an Amount of Rs 1.00 lacs (Previous year Rs 1.00 lacs) Audit Fees paid to Cost Auditor.

8) Factory expenses includes an amount of Rs 1 lacs paid as Donation to Kasturba Gram Vikas Mandal, Dholidungari, Taluka-Virpur, District Kheda, Gujarat.

9) Provision for Taxation includes provision for Wealth Tax Rs 6.42 lacs (Previous year Rs 6.64 lacs).

10) RETIREMENT BENEFITS

Brief description: The type of Defined benefit plans is as follows.

Gratuity

The employees Gratuity Fund Scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value obligation is determined based on actuarial valuation using projected unit credit method.

Leave Encashment

The present value obligation of Leave encashment is determined based on actuarial valuation using projected unit credit method.

ix) The contribution expected to be paid to the Gratuity fund during the annual period beginning after the Balance Sheet date is Rs 6,08.72 lacs (Previous year Rs 8,21.18 lacs).

x) Long term liability includes Rs 53.06 lacs (Previous year Rs 61.32 lacs) on account of Compensated Sick Leave absences.

11) DISCLOSURE OF RELATED PARTIES/RELATED PARTY TRANSACTIONS:

a) Related parties: (As certified by the Management)

(i) Related parties:

- Associated CEAT Holdings Company (Pvt.) Limited (Wholly owned Subsidiary Company)

- CEAT-Kelani Holdings Company (Pvt.) Limited (*),

- Associated CEAT (Pvt.) Limited,

- CEAT-Kelani International Tyres (Pvt.) Limited,

- CEAT Kelani Radials Limited

- Rado Tyres Limited ( Associate Company)

(ii) Key Management Personnel:

- Mr. Paras K. Chowdhary, Managing Director

- Mr. Anant Goenka Deputy Managing Director

(*) Indicates no transactions during the year with these related parties.

Note: -

a) Remuneration paid to Mr. Anant Vardhan Goenka is subject to approval of the Central Government. The Company has received approval of the Central Government for the remuneration paid to Mr. Paras K. Chowdhary.

b) The Managerial remuneration is computed as per the provisions of Section 198 of the Companies Act, 1956 read along with the provisions of Schedule XIII there to.

12) SEGMENT REPORTING:

Considering the organisation structure, nature of products and risk and return profile based on geographical distribution, the tyre business is considered as a single segment.

13) Notes required as per general instructions for preparation of Balance Sheet and Profit and Loss Statement as per Revised Schedule VI are given to the extent they are applicable to the Company.

14) Previous year's figures have been regrouped wherever necessary to conform to current year's classification.


Mar 31, 2011

Rs. in lacs

2010-11 2009-10

1) Contingent Liabilities:

a) Direct and Indirect Taxation Matters on which there are decisions of the appellate authorities in the Company's favour, but appeals made by tax authorities

Income Tax 2,41.36 2,04.60

Wealth Tax 6.73 6.73

Excise Duty/Service Tax 40,72.31 40,75.05

Sales Tax 47.59 1.56

b) Direct and Indirect Taxation matters in respect of which the Company is in appeal

Income Tax 14,41.26 10,33.41

Excise Duty/Service Tax 2,62.07 1,64.96

Sales Tax 43,70.18 60,14.86

c) Disputed demands of Octroi Duty 1,70.77 1,56.86

d) Bills discounted with Banks and Finance Companies 27,52.04 20,35.86

e) Corporate Guarantees given on behalf of others 25,50.00 25,50.00 Covered by indemnity undertakings from RPC Enterprises Ltd.

f) The Company has given Indemnity in - - respect of Lease transactions entered into with ICICI Bank Ltd., liability for which is indeterminable

g) Export obligation under Export Promotion Council Guarantee Scheme 396,07.89 -

2) Operating Lease

The Company has entered into a sale and lease back agreement with the leasing company for vehicles, resulting in a non-cancellable operating lease as defined in "AS 19" (Leases) Lease rental on the said lease of Rs. 2,21.30 lacs (Previous yearRs. 2,56.91 lacs) has been charged to Profit and Loss Account

3) Consequent to commencement of commercial production for Radial Tyres on March 25, 2011 at Halol Plant near Vadodara, Pre-Operative expenditure of Rs. 76,21.06 lacs has been capitalised on various Fixed Assets which are put to use

4) Exchange Differences recognised in Profit and Loss Account Net foreign exchange gain recognised in Profit and Loss Account isRs. 6,18.80 lacs (Previous year lossRs. 1,75.36 lacs) out of which Rs. 81.84 lacs loss (Previous year loss Rs. 6,35.28 lacs) has been shown separately whereas net gain of Rs. 7,00.64 lacs (Previous year gain Rs. 4,59.92 lacs) are included under appropriate heads of items in Profit and Loss accounts

5) Retirement Benefits

The required disclosure underthe Revised Accounting Standard 15 is given below Brief description: The type of Defined benefit plans is as follows

Gratuity

The employees Gratuity Fund Scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value obligation is determined based on actuarial valuation using projected unit credit method

Leave Encashment

The present value obligation of Leave Encashment is determined based on actuarial valuation using projected unit credit method

ix) The contribution expected to be paid to the Gratuity fund during the annual period beginning afterthe Balance Sheet date isRs.8,21.18 lacs (PreviousyearRs. 8,84.76 lacs).

x) Long term liability includesRs. 61.32 lacs (Previous yearRs. 70.56 lacs) on account of Compensated Sick Leave absences

6) Micro and Small Scale Business Entities:

There are no Micro and Small Enterprise, to whom the Company owes dues, which are outstanding for more than 30 days as at March 31, 2011. This information as required to be disclosed underthe Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of nformation available with the Company. This has been relied upon by the Auditors

7) Disclosure of related parties/related party transactions:

a) Related parties: (As certified by the Management)

i) Enterprises directly/indirectly controlled

- Associated CEAT Holdings Company (Pvt.) Limited

- CEAT-Kelani Associated Holdings Company (Pvt.) Limited (*),

- Associated CEAT (Pvt.) Limited,

- CEAT-Kelani International Tyres (Pvt.) Limited

- Associated CEAT Kelani Radials Limited

- Rado Tyres Limited

ii) Key Management Personnel

- Mr. Paras K. Chowdhary, Managing Director

- Mr. Anant Vardhan Coenka Deputy Managing Director

(*) Indicates no transactions during the year with these related parties

8) Disclosures as required under clause 32 of listing agreement,

i) Loans and Advances in the nature of Loans to AssociatesRs. Nil (Previous yearRs. Nil)

i) Loans and Advances in the nature of Loans where there is no repayment schedule, or no interest or interest below Section 372A of Companies Act, 1956: Rs. Nil (Previous year Rs. Nil)

ii) Loans and Advances in the nature of Loans to firms / Companies in which Directors are interested: Rs. Nil (Previous year - Nil)

iv) Investment by the Loan in shares of the Company as at March 31, 2011 is Rs. Nil (Previous yearRs. Nil)

9) Segment Reporting:

Considering the organisation structure, nature of products and risk and return profile based on geographica distribution, the tyre business is considered as a single segment

10) Auditor's Remuneration:

Other Services shown in Schedule 17 includes an Amount ofRs. 1.00 lacs (Previous yearRs. 0.80 lacs) Audit Fees paid to Cost Auditor

11) The Company has allotted 17,12,170 Convertible Warrants of face value Rs.10 each at a price of Rs. 1,41.44 perwarrant, on September 30, 2010 to the promoters of the Company on a preferential basis (25% of the price i.e. Rs. 35.36 received by the Company). The warrants are convertible into an equal number of equity shares at the option of the allottee within a period of 18 months from the date of allotment (i.e. before March 31, 2012)

12) Provision for Taxation includes provision for Wealth TaxRs. 6.64 lacs (Previous yearRs. 9.05 lacs)

13) Previous year's figures have been regrouped wherever necessary to conform to current Year's classification.


Mar 31, 2010

1. Term loan availed from IDBI Bank Limited of Rs. 6,00.00 lacs (Previous year Rs 9,00.00 lacs) is secured by first pari passu charge on Fixed Assets of the Company situated at Bhandup and Nasik plants, both present and future.

2. ECB loan availed from ICICI Bank Limited of USD 6.00 million (Previous year USD 8.00 million ) equivalent to Rs. 27,57.00 lacs (Previous year Rs. 36,76.00 lacs ) is secured by first pari passu charge on all movable and immovable properties of the Company situated at Bhandup and Nasik plants, both present and future.

3. ECB loan availed from ICICI Bank Limited of USD 12.50 million (Previous year USD 12.50 million ) equivalent to Rs. 57,65.50 lacs (Previous year Rs. 60,70.19 lacs) is secured by a first pari passu charge on the Fixed Assets of the Company situated at Bhandup, Nasik and Halol, Gujarat both present and future. The company is in the process of creating the charge on its immovable properties located at Bhandup, Nasik and Halol, Gujarat.

4. Term Loan availed from Yes Bank of Rs.33,33.33 lacs has been fully paid off during the year. Pursuant to the repayment, the charge created for the term loan has been satisfied.

5. Term Loan availed from Exim Bank of Rs. 37,50.00 lacs (Previous year Rs.50,00.00 lacs) and Corporation Bank of Rs.43,75.00 lacs (Previous year Rs. 50,00.00 lacs) has been secured by a first pari passu charge on the immovable property of the Company situated at CEAT Mahal, Worli, Mumbai.

6. Project Term loan availed from Bank of India of Rs. 20,00.00 lacs (Previous year Rs.Nil), Bank of Baroda of Rs. 20,00.00 lacs (Previous year Rs.Nil) and IDBI of Rs. 2,49.03 lacs (Previous year Rs.Nil) is secured by a first pari passu charge on the immovable and movable properties of the Company situated at Bhandup, Nasik and Halol, Gujarat both present and future. The Company has created charge on the movable Fixed Assets of the Company in favour of Bank of India and IDBI Bank Ltd. The Company is in the process of creating the charge on its immovable properties located at Bhandup, Nasik and Halol, Gujarat.

7. Working Capital facilities availed from Consortium of Banks led by Bank of India are secured by hypothecation of first pari passu charge on Inventories and Book debts and by second pari passu charge on immovable properties of the Company situated at Bhandup, Nasik plants and CEAT Mahal property at Worli. The Company is in process of creating the second pari - passu charge on immovable properties situated at Halol, Gujarat.

8. The vehicle loans availed from Banks and Financial Companies are secured by way of hypothecation of the vehicles financed by them.

9) Operating Lease

The Company has entered into a sale and lease back agreement with the leasing company for vehicles, resulting in a non- cancellable operating lease as defined in "AS 19" (Leases).

Lease rental on the said lease of Rs.2,56.91 Lacs (Previous year Rs.1,14.30 Lacs) has been charged to Profit and Loss Account.

10) Exchange Differences recognised in Profit and Loss Account

Net foreign exchange loss recognised in Profit and Loss Account is Rs. 1,75.36 Lacs out of which Rs.6,35.28 Lacs loss has been shown separately whereas net gain of Rs. 4,59.92 Lacs are included under appropriate heads of items in Profit and Loss accounts.

11) Retirement Benefits

The required disclosure under the Revised Accounting Standard 15 is given below

Brief description: The type of Defined benefit plans is as follows.

Gratuity

The Employees Gratuity Fund Scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value obligation is determined based on actuarial valuation using Projected Unit Credit Method.

Leave Encashment

The present value obligation of Leave Encashment is determined based on actuarial valuation using Projected Unit Credit Method.

12) Micro and Small Scale Business Entities:

There are no Micro and Small Enterprise, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

13) Disclosure of related parties/related party transactions:

a) Related parties: (As certified by the Management) (i) Related parties:

Associated CEAT Holdings Company (Pvt.) Limited

- CEAT-Kelani Associated Holdings Company (Pvt.) Limited (*),

- Associated CEAT (Pvt.) Limited,

- CEAT-Kelani International Tyres (Pvt.) Limited,

- Associated CEAT Kelani Radials Limited

- RadoTyres Limited. (ii) Key Management Personnel:

- Mr. Paras K. Chowdhary, Managing Director

- Mr. Anant Vardhan Goenka, Deputy Managing Director

(*) Indicates no transactions during the year with these related parties.

14) Disclosures as required under clause 32 of listing agreement.

i) Loans and Advances in the nature of Loans to Associates Rs. Nil (Previous year Rs. Nil)

ii) Loans and Advances in the nature of Loans where there is no repayment schedule, or no interest or interest below Section 372A of Companies Act, 1956: Rs. Nil (Previous year Rs.Nil)

iii) Loans and Advances in the nature of Loans to firms / Companies in which Directors are interested: Rs. Nil (Previous year Rs.Nil)

iv) Investment by the Loaneein shares of the Company as at March 31,2010 is Nil.

15) Segment Reporting:

Considering the organisation structure, nature of products and risk and return profile based on geographical distribution, the tyre business is considered as a single segment.

16) Earnings Per Share (EPS): 2009-10 2008-09

a) Weighted Average Number of shares at the beginning and end of the year 342,43,534 342,43,534

b) Net Profit/(Loss) afterTax available for Equity Shareholders (Rupees in Lacs) 161,04.15 (16,11.17)

c) Face value per share (Rupees) 10 10

d) Basic and Diluted Earnings Per Share (Rupees) 47.03 (4.71)

17) Auditors Remuneration:

Other Services shown in Schedule 17 includes an Amount of Rs.0.80 lacs (Previous year Rs.0.80 lacs) Audit Fees paid to Cost Auditor.

18) Provision for Taxation includes provision for Wealth Tax Rs. 9.05 lacs (Previous year Rs.9.94 lacs)

19) Previous years figures have been regrouped wherever necessary to conform to current years classification.

 
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