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Directors Report of Ceat Ltd.

Mar 31, 2017

To,

The Members of CEAT Limited

The Directors are pleased to present their Fifty-Eighth report, together with the Standalone and Consolidated Audited Financial Statements of the Company for the year ended March 31, 2017.

FINANCIAL HIGHLIGHTS

I. Standalone:

'' in Lacs

Particulars

2016-17

2015-16

Total Revenue

6,41,797.53

6,16,481.77

Total Expenses

5,93,799.94

5,52,562.22

Profit before Taxation

46,665.04

62,779.56

Tax expense:

- Current Tax

11,444.94

15,057.86

- Deferred Tax

5,789.80

3,203.87

- MAT credit entitlement

(6,842.28)

Profit for the period

36,272.58

44,517.83

Other Comprehensive Income:

Items that will not be reclassified to profit or loss

- Actuarial losses for gratuity

(483.99)

315.53

- Income tax effect on actuarial losses for Gratuity

167.50

(109.20)

Items that will be reclassified to profit or loss

- Net Movement in cash flow hedges

(377.10)

(53.95)

- Income tax effect on net movement in cash flow hedges

130.51

18.67

Total Comprehensive Income for the period

35,709.50

44,688.88

II. Consolidated:

'' in Lacs

Particulars

2016-17

2015-16

Total Revenue

6,45,992.96

6,17,359.68

Total Expenses

6,00,932.35

5,57,531.76

Profit before Taxation

43,728.06

58,687.93

Tax expense:

- Current Tax

11,660.33

15,308.60

- Deferred Tax

5,823.68

3,425.32

- MAT credit entitlement

(6,842.17)

-

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

36,115.46

43,754.17

Other Comprehensive Income:

Items that will not be reclassified to profit or loss

- Actuarial losses for gratuity

(416.05)

280.87

- Income tax effect on actuarial losses for Gratuity

164.51

(97.20)

Items that will be reclassified to profit or loss

- Movement in cash flow hedges

73.33

(53.95)

- Income tax effect on net movement in cash flow hedges

130.51

18.67

Movement in foreign exchange fluctuation reserve

(63.73)

110.17

Total Comprehensive Income for the period (after non-controlling interest)

36,004.03

44,012.73

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

During the year under review, on consolidated basis your Company recorded net revenue from operations ofRs,6,44,130.10 Lacs with a growth of 4.81% overRs,6,14,591.14 Lacs for the last fiscal. The Company recorded a net profit ofRs,36,115.46 Lacs, a negative growth of 17.46% over net profit ofRs,43,754.17 Lacs of the last fiscal.

On standalone basis, your Company recorded net revenue from operations ofRs,6,37,651.80 Lacs with a increase of 4.21% overRs,6,11,813.26 Lacs of the last fiscal. The Company recorded a net profit ofRs,36,272.58 Lacs negative a decrease of 18.52% over net profit ofRs,44,517.83 Lacs of the last fiscal.

CEAT continued to be one of the fastest growing tyre Companies in India, for a second year in a row, with a four year Revenue CAGR of 5.3% and a four year PAT CAGR of 178.42%.

INDUSTRY UPDATE-

The calendar year 2016 was a challenging one for the world economy. Weak international trade and subdued investment slowed world growth to its weakest pace since 2009. Economic activity is projected to pick up in 2017 and 2018, especially in emerging markets. Even though the outlook is brighter this year, heightened uncertainty about policy direction in major economies casts a shadow over the prospects of recovery.

Amid this challenging environment, India has emerged amongst the fastest growing major economies in the world. The Indian economy was expected to grow by more than 7.75% in FY 2016-17, supported by strong government reforms, the Reserve Bank of India''s inflation focus and benign global commodity prices. However, the second half of FY

2016-17 witnessed a slowdown in growth primarily due to the demonetization impact and a sharp rise in commodity prices.

During FY 2016-17, overall sales growth remained buoyant for the Indian Automobile industry with growth across all categories except Medium & Heavy Commercial vehicles. However, exports continued to remain a cause of concern, predominantly in the two-wheeler segment. The domestic vehicle sales grew by 7.4%, while exports showed a negative growth of 7%. Domestic Passenger vehicles and two-wheelers grew by 9.16% and 7.54% respectively. The automotive industry production which grew by 8% during FY 2014-15, decelerated to 2.3% in FY 2015-16. However, structural tailwinds point to sustenance of this trend and an annual production growth of about 7% during FY 2016-17.

The domestic tyre industry was helped by the fall in input costs in the first half specially Natural Rubber prices which fell by 15% during 2016 and crude which was on a downward spiral in 2016. This led to some margin expansion in the first half of 2017. Growth in demand from the Original Equipment

Manufacturers (OEM) and the replacement market resulted in a positive growth in FY 2016-17 over the previous year. However, the revenues of the tyre industry was affected by unabated flow of cheap Chinese tyres in the country.

STATE OF COMPANY''S AFFAIRS

Adhering to its purpose of "Making Mobility Safer and Smarter. Every day." the Company continues its unwavering commitment to its adopted vision and strategy.

A validation of the sustained efforts that the Company has been putting in this direction was the No. 1 ranking in the J.D. Power

2017, India Original Equipment Tyre Customer Satisfaction Index (TCSI) Study released on March 28, 2017. In this highly acclaimed survey, CEAT ranked highest in overall customer satisfaction, with a score of 893 (on a 1,000-point scale).

During the year under review, a total of 92 new products were launched across different product categories. A breakthrough innovation in the form of ''Puncture Safe'' motorcycle tyres was launched to address a key pain area of customers. The Company has filed a patent for the same. The Company increased its market share in the two-three wheeler and passenger car segment (motorcycle 26% to 30% and scooter 24% to 30% and Passenger Car Radials (PCR) 7% to 8.5%). In the Truck and Bus Radial (TBR) segment, the Company launched the "WIN Series" and grew by 15% in the TBR replacement market. During the year under review, the Company continued its efforts for channel expansion, in a bid to maximise customer reach. The Company''s network currently caters to 600 districts comprising of more than 4,500 dealers, 250 two-wheeler distributors, 450 franchisees- CEAT Shoppes and CEAT Hubs, and more than 350 multi-brand outlets and shop-in-shops. In FY 2016-17, the Company gained acceptance with premium brands in the OEM category viz. Royal Enfield Himalayan, Bajaj Vikrant, Honda Navi and Tork in two-wheelers and Verna Refresh, i10 refresh, Renault Sedan/ SUV and Nissan SUV in the PC/UV category.

Exports however, continue to remain a cause of concern primarily due to devaluation of certain currencies and overall global slowdown. The Company continues to work relentlessly to improve its exports volumes.

In line with CEAT''s purpose to make mobility safer and smarter, the Company launched its media campaign "It helps" for both passenger and motorcycle tyres. This campaign is focussed on the issue of jaywalking on roads, and communicates that CEAT''s two-wheeler tyres have the best-in-class wet and dry grip, which keep the rider safe.

Further in line with the Company''s focus on improving road safety, two online campaigns named #NoMoreFunny and

Drive Safe Dad Bobblehead were also launched. While the #NoMoreFunny campaign focusses on reducing the drunken driving, the Bobblehead campaign is focussed on reducing the instances of overspeeding on roads. Both of these campaign have gone viral in the online space, with over 1 million views each received on YouTube.

Several other marketing initiatives including Overdrive Kwid Drive from Delhi to Paris, MTV Roadies, MTV Chase the Monsoon and Mahindra Adventure were also undertaken. The Company also strengthened its brand association with cricket through a bat endorsement by Ajinkya Rahane.

The Company also continued its journey of making the workplace safer, cleaner and healthier. The British Safety Council Sword of Honour received by Halol plant was a validation of the Company moving in the right direction. Also all the plants of the Company, including the lastest Nagpur smart plant are ISO 140001 and OHSAS 18001 compliant.

Favourable raw material prices, a shift to the high margin non truck product portfolio and building of an extensive distribution network contributed to increased volumes and margins for the Company during the first half of FY 2016-17. The second half however, witnessed pressure in margins due to the combined effect of demonetization and increase in the raw material prices. The Company received an upgrade in its long term credit rating from AA- to AA.

DIVIDEND

Considering the profits for the year under review and also the capital expenditure requirements of the Company, your Directors are pleased to recommend a dividend ofRs,11.50 per equity share ofRs,10.00 each (i.e. 115%) for the financial year ended March 31, 2017.

During the year under review, the Company has adopted a Dividend Distribution Policy and the same is annexed herewith as "Annexure A".

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 financial year on March 31, 2017 to which the financial statements relates and the date of this Report.

CAPACITY EXPANSION

During the year under review, the Company completed the capacity expansion undertaken at its Halol Plant and ramped the capacity to 120MT/day. The Company also set-up a green field manufacturing plant at Nagpur with an initial capacity of 120 MT/day for manufacture of two-three wheeler tyres at a capital outlay ofRs,420 Crores. Currently, this facility is ramped up to 66 MT/day and is expected to be ramped up to full capacity in the second quarter of FY 2017-18.

Additionally, the Company also proposes to set up an off-the-road tyre manufacturing capacity through its wholly owned subsidiary CEAT Specialty Tyres Limited, in two phases involving a total capital outlay ofRs,650 Crores. The first phase for 40MT/day capacity involving a capital expenditure ofRs,330 Crores is expected to be completed by the third quarter of FY 2017-18.

The Company has also announced expansion projects for investment of approx.Rs,2800 crores over a period of 5 (five) years up to FY 2021-22 through capacity addition at its plants at Halol (Truck Bus Radial capacity of 208 tonnes/day) and Nagpur (two-wheeler capacity of 140 tonnes/day) and investment in a greenfield capacity of 150 tonnes/day for manufacture of PCR.

FUTUREOUTLOOK

According to reports by research agencies India could grow at a potential of 7.7 - 8 % during the period 2016 to 2020 powered by greater access to banking, technology adoption, urbanization and other structural reforms.

According, to ICRA, domestic tyre demand is expected to grow by 6-7% over the next two-three years ending FY 2018-19, supported by a broad based revival in Original Equipment (OE) demand and economic activity in the country. Pick up in rural expenditure with good monsoon would translate into higher OEM demand for the rural centric two-wheeler and tractor segments. Growing fleet on ground and higher miles driven/ freight moved would drive replacement sales. The future outlook of the tyre industry is therefore expected to be stable.

The Company expects to continue the growth path gaining share in the two-wheeler, passenger car and utility vehicles segment. It also expects to increase its market share in the TBR segment. The Company shall continue to focus on increasing capacities, enhancing brand visibility, new product development and service innovation.

SUBSIDIARY COMPANIES

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

The Company does not have any material subsidiary whose net 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 httpV/www. ceat.com/Investors intimation.aspx

CEAT Specialty Tyres Limited

CEAT Specialty Tyres Limited (CSTL), a wholly owned subsidiary of the Company, is engaged in manufacturing and sale of tyres for off-the-road vehicles/ equipment, which find application across industries including ports, construction, mining and agriculture. During the year under review, CSTL commenced setting up of its green field facility at Ambernath, in the State of Maharashtra with an initial capacity of 40 MT/ day, which would subsequently be ramped up to 100 MT/day, in the next phase. The commercial production from this facility is expected from the second quarter of the current fiscal.

During the year under review, CSTL registered a revenue ofRs,22,417.23 Lacs (Previous yearRs,10,251.39 Lacs) and a net loss ofRs,1,003.22 Lacs in FY 2016-17 (Previous yearRs,1,197.58 Lacs) through its trading operations in Off- Highway tyres.

Rado Tyres Limited

Rado Tyres Limited (RTL), having its two-three wheeler tyres manufacturing capacity at Cochin, currently supplies its entire production of automotive tyres (two-three wheeler) to the Company. During the year under review, RTL registered a revenue ofRs,898.06 Lacs as compared to a revenue ofRs,1,201.40 Lacs in FY 2015-16, registering a deficit of 25.25%. The net loss for the year under review has however gone up toRs,124.39 Lacs fromRs,108.05 Lacs in the previous year, mainly due to labour unrest during September to November 2016 claiming higher bonus. The production tickets for FY 2016-17 have also being lower than previous year.

Overseas Subsidiaries:

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

JOINT VENTURE IN SRI LANKA

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

During the year under review, ACHL has registered a revenue/ lower revenue of LKR 47,053.31 Lacs (''21,406.24 Lacs) as compared to LKR 46,338.21 Lacs (''21,843.83 Lacs) in FY 2015-16. However, the profit after tax has reduced by 20.99% to LKR 6,235.46 Lacs (''2,836.75 Lacs) as compared to LKR 7.891.76 Lacs (''3,617.93 Lacs) in FY 2015-16. 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 ''1,639.23 Lacs to the Company.

JOINT VENTURE IN BANGLADESH

CEAT AKKhan Limited, (CAL), is the 70:30 joint venture (JV) of the Company in Bangaldesh. CAL is setting up a green field facility for manufacture of automotive bias tyres in Bangladesh. CAL has been selling CEAT branded automotive tyres, outsourced from the Company in the local market since the last 3 (three) years. For the year under review, the revenue of CAL is BDT 6,586.07 Lacs (''5,618.58 Lacs) as compared to BDT 6.613.77 Lacs ('' 5,541.02 Lacs) in FY 2015-16. The net loss for the year under review is BDT 521.98 Lacs ('' 469.94 Lacs) as compared to the net loss of previous year BDT 594.92 Lacs ('' 435.50 Lacs).

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

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Section 129(3) of the Companies Act 2013 and Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015, 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 Indian Accounting Standards issued by the Institute of Chartered Accountants of India.

BUSINESS RISK MANAGEMENT

Pursuant to the requirement of Regulation 21 of SEBI (Listing Obligations and Disclosure Regulations) Regulations 2015, the Company has constituted a Risk Management Committee. 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 in place a Business Risk Management framework to identify risks and minimize their adverse impact on business and strives to create transparency which in turn enhances the Company''s competitive advantage.

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

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors has formed a committee on Corporate Social Responsibility (CSR) in accordance with Companies Act, 2013. The composition of the same has been given in Corporate Governance Report.

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

Netranjali - The project aims at providing comprehensive Vision/Eye care to prevent avoidable blindness. During the year, 8,40,310 under-privileged in three target groups viz. elderly, truckers and children were educated on eye care. The project screened 1,20,645 people through 935 Eye Camps, distributed over 54,685 spectacles and made 13,685 referrals for severe cases.

Swayam - The project aims to promote Gender Equality and Women''s Empowerment and drive powerful social change in the transport industry by training underprivileged women in driving skills to enhance livelihood across sectors such as Taxi, school vans and entrepreneurial ventures and covered 17 locations by completing 57 training batches.

Road Smarrt - In line with the motto of safety, the Company launched "Road Smarrt" to advocate safe driving and prevention of road fatalities. The Company targeted school children and parents to create awareness amongst children who are the future road users. The Company launched sessions in 20 schools in Mumbai covering over 10,000 children.

Pehlay Akshar - The project focuses on Primary Education with emphasis on English speaking and reading skills to enhance employability. During the year, the project covered 30 schools and trained 290 teachers impacting 35,000 students. Further, the initiative reached out to 2,912 students across 26 schools in Mumbai, Halol and Nashik.

Jeevan - The project focuses on improving quality of life in areas of clean drinking water, sanitation and health and nutrition. The project provided nutritional support and safe drinking water in schools and installed rain harvesting structures. Further, in support of the Swachh Bharat Abhiyan, sanitation facilities were provided through construction of toilets in the communities around the Company''s plants.

Employability- Skill Development (Project-Saksham)/ (Project Sanjeevani) - These two projects are skill development programs, which focuses on alternate livelihoods training for empowering women and technical training to youth.

- Saksham- During the year under review, 155 less privileged women and youths were trained in tailoring, entrepreneurship, mobile phone repairing and preparing nutritional snacks.

- Sanjeevani- The project trained 182 less privileged women and youths in patient care assistance as an alternate livelihood option in the communities around the Company''s plants.

The Annual Report on CSR activities in pursuance of the Companies (Corporate Social Responsibility Policy) Rules,

2014 is annexed herewith as "Annexure B".

The Company has spent the entire amount ofRs,1,011 Lacs towards CSR activities during the FY 2016-17.

VIGIL MECHANISM /WHISTLE BLOWER POLICY

Pursuant to Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 link http://www. ceat.com/Investors intimation.aspx.

RELATED PARTY TRANSACTIONS

The Company has formulated a policy on Related Party Transactions for purpose of identification and monitoring of such transactions. The said 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 wherever necessary, before the Board/ members for approval. The related party transactions entered during the financial year were on an arm''s length basis and 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 C" in the prescribed Form AOC-2.

SHARE CAPITAL

The paid up equity capital of the Company as on March 31, 2017 wasRs,4,045.01 Lacs. The said shares are listed on the BSE Limited and the National Stock Exchange of India Limited. There is no change in the paid-up capital of the Company, during the year under review.

NON-CONVERTIBLE DEBENTURES

The Company during FY 2015-16, had issued and allotted 2,000 Secured Redeemable Non-Convertible Debentures ofRs,10 Lacs each on private placement basis aggregating toRs,20,000 Lacs. The said Secured Redeemable Non-Convertible Debentures are listed on BSE limited.

CREDIT RATING

Your directors are pleased to inform you that during the year under review, the long term credit rating of the Company improved from "AA-" to "AA" with "Stable" outlook by its rating agencies viz. CARE and India Ratings (Fitch). The rating of AA indicates high degree of safety regarding timely servicing of financial obligations and very low credit risk. A ''Stable'' outlook indicates expected stability (or retention) of the credit ratings in the medium term on account of stable credit risk profile of the entity in the medium term.

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

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 D".

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 E" 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 ("the 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 the 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 F" and forms part of this report.

FIXED DEPOSITS

During the year under review, your Company discontinued the Fixed Deposit Scheme and repaid all the outstanding fixed deposits along with interest accrued up to September 30, 2016.

Hence, there are no deposits outstanding as on March 31,2017. 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, which are provided in the notes to the Financial Statements. The loans and/or advances given to the employees bear interest at applicable rates.

DIRECTORS

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

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 Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year under review, Mr. K. R. Podar, Independent Director of the Company, ceased to be a Director of the Company with effect from February 9, 2017, because of resignation from the Board due to health reasons.

The Board at its meeting held on March 22, 2017 considered and approved the re-appointment of Mr. Anant Vardhan Goenka as Managing Director for a period of 5 (five) years w.e.f April 1, 2017 to March 31, 2022 subject to the approval of the members at the Fifty-Eighth Annual General Meeting of the Company.

In accordance with the Companies Act, 2013 and Articles of Association of the Company, Mr. H. V. Goenka 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.

KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Kumar Subbiah was appointed as the Chief Financial Officer with effect from January 16, 2017 in place of Mr. Manoj Kumar Jaiswal. Ms. Shruti Joshi was appointed as the Company Secretary with effect from September 1, 2016 in place of Mr. H. N. Singh Rajpoot. The Company has appointed Mr. Arnab Banerjee as the Whole time Director, designated as the Executive Director-Operations. The Board at its meeting held on March 22, 2017 approved the re-appointment of Mr. Anant Vardhan Goenka as Managing Director for a further period of 5 (five) years with effect from April 1, 2017 subject to the approval by the shareholders at the ensuing Annual General Meeting.

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

INTER-SE RELATIONSHIPS BETWEEN THE DIRECTORS

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

FAMILIARIZATION PROGRAMME FOR

INDEPENDENT DIRECTORS

Pursuant to the Code of Conduct for Independent Directors specified under the Companies Act, 2013 and requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a familiarization 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 familiarization 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, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT PERSONNEL

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

EVALUATION OF BOARD, ITS COMMITTEES AND DIRECTORS

For the purpose of evaluation, the Board had finalized a questionnaire and engaged a third party to conduct an independent online confidential survey using the said questionnaire. The results of the survey/feedback were then deliberated at Board Meeting and evaluation of the Board, its Committees and the Directors were reviewed.

MEETINGS OF THE BOARD OF DIRECTORS

During the year, 6 (Six) 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 Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD COMMITTEES

Detailed composition of the mandatory Board Committees viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders'' Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee and non-mandatory committee viz. Finance and Banking Committee and Special Investments/Project Committee, 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 and composition of the same has been given in Corporate Governance Report.

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 along with 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, 2017 and the Statement of Profit and Loss for the said financial year ended March 31, 2017.

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 are operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE REPORT

In compliance with the Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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, forms part of this Annual Report. Further, 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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

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

STATUTORY AUDITORS

The Company at its AGM held on September 26, 2014 had 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 Annual General Meeting to the conclusion of the Fifty-Eight Annual General Meeting subject to ratification of their appointment by the members every year. Further, the first term of the appointment of Statutory Auditors expires at the conclusion of Fifty-Eight Annual General Meeting and pursuant to the provisions of Section 139 (2) (b), an audit frim can be appointed for two terms of five consecutive years. Accordingly statutory auditors have confirmed that their appointment for a further term of 5 (five) years, if approved at the ensuing Annual General Meeting, would be in compliance with Sections 139 and 141 of the Companies Act, 2013.

INTERNAL AUDITORS

The Board has appointed Messrs KPMG as Internal Auditors for the period of 1 (one) year up to March 31, 2018 under Section 138 of the Companies Act, 2013 and they have completed the internal audit as per the scope defined by the Audit Committee.

SECRETARIAL AUDITORS

The Company has appointed Messrs Parikh and Associates, Company Secretaries to conduct the Secretarial Audit for the financial year ended March 31, 2017, as required by Section 204 of the Companies Act, 2013 and rules made there under. The Secretarial Audit Report furnished by Messrs Parikh and Associates is annexed to this report as "Annexure H".

COST AUDITORS

The Board of Directors has appointed Messrs D. C. Dave & Co., Cost Accountants, as Cost Auditors of the Company for FY 2017-18 and recommends ratification of their remuneration by the Members at the ensuing Annual General Meeting.

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 the Secretarial Audit Report.

The Statutory Auditors have not reported any instances of fraud to the Central Government and Audit Committee as per the provisions of Section 143 (12) of the Companies Act, 2013 read with Rule 13 of the Companies (Audit and Auditors) Rules, 2014.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING 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 reference to the Financial Statements are stated in Management Discussion and Analysis which forms part of this Annual Report.

HUMAN RESOURCES

CEAT continues to be a people focused organization continuously building next generation leadership.

One of the main enablers of achieving CEAT vision 2016-2021, is Unleashing Talent which emphasizes on people focus of the organization. The Company has increased its investment and capacity in training and development to develop people to their maximum potential. Focus on training and development continued through a combination of functional, technical and behavioral training programs adding up to 3.2 man-days per employee of training in FY 2016-17. The Company has been persistent on achieving process and quality excellence by building internal academies and involving employees at the grass-root 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, 4 (four) Internal Complaints Committees (ICC) have been set up to redress complaints. During the year under review 2 (two) complaints were received and resolved satisfactorily.

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: April 28, 2017


Mar 31, 2016

The Directors are pleased to present their Fifty-Seventh report, together with the Standalone and Consolidated Audited Financial Statements of the Company for the year ended March 31, 2016.

FINANCIAL HIGHLIGHTS

I) Standalone: Rs. in Lacs

Particulars 2015-16 2014-15

Total Revenue 5,54,131.05 5,57,029.51

Profit before Tax 63,606.94 44,286.26

Provision for:

- Current Tax 15,057.86 13,248.69

- Deferred Tax 3,296.81 1,140.18

Profit after Tax 45,252.27 29,897.39

Surplus brought forward from previous year 77,301.95 51,937.23

Amount available for appropriation 1,22,554.22 81,834.62 Appropriations:

- Interim Dividend / Proposed Dividend on Equity Shares 4,651.76 4,045.01

- Tax on Interim Dividend / Proposed Dividend 714.11 487.66

- Amount Transferred to debenture redemption reserve 1,667.00 -

Surplus carried forward 1,15,521.35 77,301.95

II) Consolidated: Rs. in Lacs

Particulars 2015-16 2014-15

Total Revenue 5,74,398.57 5,77,473.30

profit before Tax 64,251.00 47,156.83

Provision for:

- Current Tax 16,269.02 14,433.54

- Adjustment of tax petaining to earlier years 29.58 -

- Deferred Tax 3,485.83 1,331.09

Profit after Tax & minority interest 44,648.80 31,717.98

Surplus brought forward from previous year 83,782.56 56,597.22

Amount available for Appropriation 1,28,490.14 88,315.20

Appropriations:

- Interim Dividend / Proposed Dividend on Equity Shares 4,651.76 4,045.01

- Tax on Interim Dividend / Proposed Dividend 714.11 487.63

- Amount transferred to debenture redemption reserve 1,667.00 -

Surplus carried forward 1,21,457.27 83,782.56

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

On consolidated basis, your Company recorded net revenue from operations of Rs. 5,71,412.49 Lacs with a negative growth of 0.67% over Rs. 5,75,213.89 Lacs of the last fiscal. The Company recorded a net profit of Rs. 44,648.80 Lacs reflecting a growth of 40.77% over net profit of Rs. 31,717.98 Lacs of the last fiscal.

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

On standalone basis, your Company recorded net revenue from operations of Rs. 5,49,414.78 with a decrease of 0.85% over Rs. 5,54,142.02 Lacs of the last fiscal. The Company recorded a net profit of Rs. 45,252.27 Lacs reflecting a growth of 51.36% over net profit of Rs. 29,897.39 Lacs of the last fiscal.

INDUSTRY UPDATE

The global economy witnessed another year of sluggish growth. While advanced economies showed modest recovery, emerging market and developing economies faced challenges. Amidst the global growth challenges, India emerged to be the fastest growing economy at 7.6% outpacing even China.

The Indian Automobile Industry in FY 2015-16 witnessed moderate growth of 2.6% over FY 2014-15, which has been caused primarily on account of sluggish rural demand due to adverse economic conditions and a second consecutive year of poor monsoon.

The vehicle segments that drove overall growth in domestic market include Passenger Segment (Cars and Utility Vehicles), Medium and Heavy Commercial Vehicles (M&HCV) and Scooters, which grew in FY 2015-16 by 7.24%, 29.91% and 11.79% respectively over FY 2014-15. Passenger Segment growth has been highest in the last 5 (five) years, mainly due to new launches and discounts provided by the auto manufacturers. On the fip-side, Light Commercial Vehicles (LCV) and motorcycles pulled down the sales growth.

In Tyre Industry, the revenues remained muted, with almost negligible growth in FY 2015-16 over FY 2014-15, due to defationary pricing, unfavourable monsoons, muted infrastructure growth and significant increase in imports. Anti-dumping probe in US for Chinese tyres has lead Chinese manufacturers to push tyres to the developing economies. Chinese imports have also impacted the Indian market most in the Truck Bus Radial (TBR) segment with a year on year growth of 64%. This has translated into Chinese TBR tyres capturing ~35% of domestic TBR replacement market.

Increase in radialization globally, China dumping and weakening currencies of some key emerging economy against Indian Rupee caused a significant contraction in export both in volume and realization.

Another year of sluggish global growth aided by slow-down in China resulted in the raw material prices remaining moderate throughout the year, except last quarter of FY 2015-16 which witnessed a spurt in the prices of natural rubber and crude.

Inspite of a sluggish top line growth, the industry profit margins remained healthy on account of overall favourable input raw material costs.

STATE OF COMPANY''S AFFAIRS

The Company continued its focus on new product development. A total of 70 new products were launched in FY 2015-16. With an objective to penetrate further and improve customer reach, the Company continued to expand its distribution network. The dealer network, currently comprises of 4300 dealers, with 400 CEAT Franchisees (Shoppes & Hubs) and over 250 distributors. The CEAT Shoppe network, an exclusive retail channel of the Company, is now at 231 outlets as compared to 176 outlets as at March 31, 2015. CEAT Shoppes have contributed significantly in enhancing CEAT''s Brand image. They have also contributed to the growth in sales of the passenger segment. The Company''s new initiatives viz. Multi Brand Outlet (MBO) and Shop in Shop (SIS) concepts have reflected a healthy growth and have reached to 240 and 45 respectively, in FY 2015-16. The MBO and SIS concept aims at improving the product penetration in replacement market via enhanced product and brand visibility across select dealer counters. Further, to increase the reach in replacement market with lower population strata, the Company has expanded its presence in the smaller towns and rural areas, through an extensive distributor network, mainly for two-wheeler and passenger car tyres. As a result, the number of districts covered has gone up to over 600 from around 460 in FY 2014-15.

The Company launched two new television campaigns – the "Our Grip Your Stories" Campaign for utility vehicle tyres and the Tubeless campaign for motorcycle tyres, and also participated in key events like the MTV Roadies, MTV Chase the Monsoon, India Bike Week 2016 and Mahindra Adventure. These initiatives have enhanced the brand and product recall in the minds of end consumers.

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

In FY 2015-16, the exports volumes for the Company however came down by over 17% on the back of overall global slowdown, sustained impact of low cost Chinese tyres, increasing radialization in global markets and impact of relative currency movement of key emerging and developing economies. While the global economy outlook continues to be sluggish, the Company is relentlessly working to improve exports volume from the current levels.

One key milestone for the Company in the year gone by was adoption of its new purpose "Making Mobility Safer and Smarter, Every day". Additionally, the Company has also finalised its vision and strategy for the next five years.

The Company continued its journey of "Safer, Cleaner and Healthier Workplace" by successfully clearing the yearly surveillance audit for ISO 140001 and OHSAS 18001 at its Bhandup, Nashik and Halol manufacturing units, with zero non conformity.

During the year under review, the Company won the Gold for Best use of Mobile Media during Drive Safe Dad campaign and Bronze award for Best use of Social Media during MTV Chase the Monsoon Season 2, at The ABBY''s. The Company also won the Gold for Best use of Digital Media and Bronze for the Best use of Digital Platforms, at the Emvies, with both these awards being received for the Drive Safe Dad campaign.

Further, with shift to an increased non-truck product mix, considerable decrease in finance costs and moderate raw material prices, the Company''s profit margins have improved during the year under review.

DIVIDEND

The Board at its meeting held on March 16, 2016 declared an interim dividend of Rs. 11.5 per equity share of Rs. 10.00 each (i.e.115%) for the financial year ended March 31, 2016 and recommends the Members to confirm it as final dividend for the year ended March 31, 2016.

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 financial year on March 31, 2016 to which the financial statements relates and the date of this Report.

CAPACITY EXPANSION

The Company had undertaken expansion of capacity at its Halol Plant by 120 MT/day for manufacturing with a capital outlay of Rs. 650 Crores, which is expected to be fully ramped up by first quarter of FY 2017-18. Towards this, the Company has already commissioned a capacity of 39 MT/day by the end of March 2016.

Further, the Company had also planned to set-up a green field project, with an initial capacity of 120 MT/day, to manufacture two-three wheeler tyres in Buti Bori near Nagpur in the State of Maharashtra. This project with a capital outlay of Rs. 420 Crores will be implemented in phases. The Company has already implemented the first phase of this project, which has added a capacity of 15 MT/day. The Company expects to reach the full capacity of this project by the second quarter of FY 2017-18.

In addition to the abovementioned capacity enhancements at its own plants, the Company will also be investing Rs. 330 Crores in another greenfield project at Ambernath (near Mumbai), to produce off-highway radial tyres. This project is being set-up by its wholly owned subsidiary namely CEAT Specialty Tyres Limited. The commercial production at this facility is expected to start in the last quarter of FY 2016-17.

FUTURE OUTLOOK

The Outlook of FY 2016-17 for the auto and auto ancillary sector is stable, with volume growth expected to improve. The passenger car segment is likely to grow by 8% in FY 2016-17 while the utility vehicle segment is expected to grow by 12%.

The Commercial Vehicle (CV) segment is expected to clock single digit volume growth in FY 2016-17, with a Y-o-Y volume growth for M&HCVs expected to moderate to 8-10% from almost 30% levels in FY 2015-16. The key driver for the segment''s growth would be in demand for high tonnage vehicles as feet owners seek to minimise their per ton transportation cost by taking advantage of improved road infrastructure in the country. The focus of Union Budget 2016 on infrastructure improvement is also expected to give a boost to M&HCV segment.

Motorcycles are likely to exhibit annual volume growth of ~3% in FY 2016-17, depending on behaviour of the rural consumer. Scooters are however expected to continue to show a decent volume growth backed by urban-centric demand. However, the growth rate is expected to remain at 12% in FY 2016-17.

The overall outlook for the tyre industry therefore, is estimated to be better in FY 2016-17 with a volume growth of ~8-10%. Radialisation in M&HCV is also expected to grow resulting in an increase in demand for TBR tyres.

The Company expects to continue the growth path in passenger and two wheeler segments. Additionally, it will also work to increase the share of pie in the expanding passenger radial market. As a result, the Company expects to grow in FY 2016-17, on account of the increased demand, with a short term downward bias in profit margins, due to increase in raw material prices from the FY 2015-16 levels. However, the Company is working to mitigate this in future by its focused investments - in passenger segment capacities, enhancing the brand visibility and product differentiation through technology and in new product development.

SUBSIDIARY COMPANIES

At the end of the year under review, the Company had following four subsidiaries namely CEAT Speciality Tyres Limited, Mumbai, Rado Tyres Limited, Cochin, Associated CEAT Holdings Company (Private) Limited, Colombo, Sri Lanka, (ACHL), CEAT AKKhan Limited, Dhaka, Bangladesh (CAL).

The Company does not have any material subsidiary whose net 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

CEAT Specialty Tyres Limited (CSTL), which is a wholly owned subsidiary of the Company, is engaged in manufacturing and sale of tyres for off-the-road vehicles/ equipment, which find application across industries including ports, construction, mining and agriculture. Towards this, it plans to set up a green field project with an initial capacity of 40 MT/day, which would subsequently be ramped up to 100 MT/day. CSTL has already initiated the civil work of the said green field project. During the year under review, CSTL has commenced trading in Off- Highway tyres and sources these tyres from the Company.

CSTL has registered in the year under review, a revenue of Rs. 10,251.39 Lacs (Previous year Rs. 0.11 Lacs) and a net loss of Rs. 1,205.65 Lacs in FY 2015-16 (Previous year Rs. 30.65 Lacs).

Rado Tyres Limited

Rado Tyres Limited (RTL) works currently supplies its entire production of automotive tyres to the Company. During the year under review, RTL registered a revenue of Rs. 1,201.40 Lacs as compared to a revenue of Rs. 1,158.23 Lacs in FY 2014-15, registering a growth of 3.73%. The net loss for the year under review has however gone up to Rs. 124.46 Lacs from Rs. 22.77 Lacs in the previous year, mainly due to significant increase in payment of wages to the workmen/employees under the new Long Term Settlement (LTS), huge maintenance cost, increased power cost and accounting for various one time expenditures like employee benefit expenses, (including gratuity provisions, on revised wages paid under new LTS Agreement), etc.

Overseas Subsidiaries:

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

JOINT VENTURE IN SRI LANKA

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

During the year under review, ACHL has registered a lower revenue of LKR 46,338.11 Lacs (Rs. 21,843.79 Lacs) as compared to LKR 47,397.21 Lacs (Rs. 22,096.58 Lacs) in FY 2014-15. However, the profit after tax has grown by 6.21% to LKR 7,927.68 Lacs (Rs. 3,659.56 Lacs) as compared to LKR 7,463.91 Lacs (Rs. 3,532.74 Lacs) in FY 2014-15. 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. 1,167.86 Lacs to the Company.

JOINT VENTURE IN BANGLADESH

As reported in the previous year, the Company has a 70:30 joint venture (JV) company, CEAT AKKhan Limited (CAL), which is setting up a green field facility for manufacture of automotive bias tyres in Bangladesh. However, CAL has been selling automative tyres in the local market in the last more than 2 years. For this purpose CAL has been outsourcing CEAT branded automative tyres from the Company. It has registered, in the year under review, a revenue of BDT 6,704.53 Lacs (Rs. 5,617.06 Lacs) as compared to BDT 5,980.76 Lacs (Rs. 4,709.25 Lacs) in FY 2014-15. The net loss for the year under review is BDT 594.91 Lacs (Rs. 435.50 Lacs) as compare to the net loss of previous years BDT 1,392.48 Lacs (Rs. 1,054.49 Lacs).

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

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Section 129(3) of the Companies Act, 2013 and Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirment) Regulations, 2015, 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 Regulation 21 of SEBI (Listing Obligations and Disclosure Regulations) Regulations 2015, the Company has constituted a Risk Management Committee. 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 in place 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 associated with its operations and an action plan for mitigation of the same is already in place. The business risks and its mitigation have been dealt with in the Management Discussion and Analysis section of this Report.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors has formed a committee on Corporate Social Responsibility in accordance with Companies Act, 2013. The composition of the same has been given in Corporate Governance Report.

As part of its initiatives under "Corporate Social Responsibility" (CSR) and it''s vision to drive ''holistic empowerment'' of the community & the society at large, the Company has undertaken following projects in accordance with it''s CSR policy, read with Schedule VII of the Companies Act, 2013, through RPG Foundation (the Trust), a public charitable trust qualified to undertake CSR activities:

i. Vision/Eye Care (Project-Netranjali) – the Company through the 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/drivers. In FY 2015-16, 6,57,880 beneficiaries were covered through eye check- up camps and awareness sessions. Futher, 66,430 beneficiaries were screened with 18,595 receiving free spectacles.

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 2015-16, more than 3,000 less privileged women were mobilised from low income communities and 1,744 were trained in Mumbai, Thane, Pune, Nashik, Nagpur, Hyderabad, Bangalore, Chennai, Madurai, New Delhi, Mathura, and also mobilised women in Coimbatore, Tiruppur.

iii. Primary Education (Project-Pehlay Akshar) – 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 2015-16, the Company reached out to 2,580 children across 21 schools in Bhandup, Worli, Nashik 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 2015-16, 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 10,000 children in 7 schools for providing safe drinking water, while also carrying out installations of rain harvesting structures in 4 schools benefitting 5,600 people. Further, in response to the Swachh Bharat Abhiyan of the Government of India, the Trust has made sanitation facilities available to 5,000 individuals through construction of individual and community toilets in the communities around the Company''s plants.

v. Employability - Skill Development (Project-Saksham) – This project is a skill development program, which focuses on alternate livelihoods training for empowering the women and technical training to the youth. In FY 2015-16, the project trained 763 less privileged women and youths from slums and rural communities in tailoring, embroidery, mobile phone repairing, bag making, patient care assistance program, etc. as an alternate livelihood option.

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

The Company has spent the entire amount of Rs. 773.35 Lacs towards CSR activities during the FY 2015-16.

VIGIL MECHANISM /WHISTLE BLOWER POLICY

Pursuant to Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 link http://www.ceat.com/Investors_intimation.aspx.

RELATED PARTY TRANSACTIONS

The Company has formulated a policy on Related Party Transactions for purpose of identification and monitoring of such transactions. The said 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 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 B" in the prescribed Form AOC-2.

SHARE CAPITAL

The paid up equity capital of the Company as on March 31, 2016 was Rs. 4,045.01 Lacs. The said shares are listed on the BSE Limited and the National Stock Exchange of India Limited. There is no change in the paid-up capital of the Company, during the year under review.

NON-CONVERTIBLE DEBENTURES

During the year under review, the Company has issued and allotted 2,000 Secured Redeemable Non-Convertible Debentures of Rs. 10 Lacs each on private placement basis aggregating to Rs. 20,000 Lacs. The said Secured Redeemable Non-Convertible Debentures are listed on BSE limited.

CREDIT RATING:

Your directors are pleased to inform you that during the year under review, the long term credit rating of the Company improved from A to AA- by its rating agencies viz. CARE and India Ratings (Fitch). The rating of AA- indicates high degree of safety regarding timely servicing of financial obligations and very low credit risk.

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

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 C".

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 D" 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 E" and forms part of this report.

FIXED DEPOSITS

Your Company is eligible to accept deposit from 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.

The Fixed Deposits of Rs. 3,415.85 Lacs accepted by the Company pursuant to the said Fixed Deposits Scheme were outstanding as on March 31, 2016.

The Company has not accepted any fresh deposits during the year under review.

Further, in accordance with Rule 19 of the Rules, deposits accepted by the Company under the Companies Act, 1956 and the Rules made thereunder, (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, 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, 2016 was Rs. 1,067.22 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 notes to the Financial Statements. The loans and/or advances given to the employees bear interest at applicable rates.

DIRECTORS

Messrs Vinay Bansal, Atul C. Choksey, S. Doreswamy, Mahesh S. Gupta, Haigreve Khaitan, Kantikumar R. Podar,

Ms. Punita Lal and Mr. Ranjit V. Pandit are Independent Directors on the Board of the Company whereupon, the composition of the Board of Directors duly meets the criteria stipulated in Section 152 of the Companies Act, 2013.

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 Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Mr. Paras K. Chowdhary, who was appointed as Non- Executive Director has already completed 3 years from the last date of his employment as the Managing Director/ Whole-time Director of the Company and has furnished a declaration that he is eligible for appointment as an Independent Director as he is not holding the position of key managerial personnel or has been an employee of the Company or any of its subsidiaries or associate company, during the three immediately preceding financial years.

In accordance with the Companies Act, 2013 and Articles of Association of the Company, Mr. Arnab Banerjee 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-à-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.

KEY MANAGERIAL PERSONNEL

During the year under review the Company appointed Mr. Manoj K. Jaiswal as Chief Financial Officer in place of Mr. Subba Rao Amarthaluru, who had resigned as Chief Financial Offcer of the Company. The Company had in the previous years appointed Mr. Anant V. Goenka as Managing Director, Mr. Arnab Banerjee as Executive Director-Operations and Mr. H. N. Singh Rajpoot as Company Secretary. Pursuant to the provisions of Section 203 read with Section 2(51) of the Companies Act, 2013, they are deemed to be Key Managerial Personnel.

INTER-SE RELATIONSHIPS BETWEEN THE DIRECTORS

There are no relationships between the Directors inter-se, except Mr. H. V. Goenka, Chairman and Mr. Anant V. 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 requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT PERSONNEL

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy on Appointment (including criteria thereof), Training, Evaluation and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel (SMP) and their remuneration, which is enclosed as "Annexure F".

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 reviewed and follow-up actions suggested.

MEETINGS OF THE BOARD OF DIRECTORS

During the year, 6 (Six) 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 Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD COMMITTEES

Detailed composition of the mandatory Board Committees viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee and non-mandatory committee viz. Finance & Banking Committee and Special Investments/Project Committee, 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 and composition of the same has been given in Corporate Governance Report.

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 along with 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, 2016 and the Statement of profit and Loss for the said financial year ended March 31, 2016.

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 are operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE REPORT

In compliance with the Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 Annual Report. Further, 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 of the Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as the case may be, forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

Pursuant to the Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Business Responsibility for the year under review has not been made, as the Company does not form part of top 100 listed entities based on market capitalization as on March 31, 2016.

STATUTORY AUDITORS

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-eighth AGM subject to ratification of their appointment every year. They have confirmed that their said appointment, if ratified at the ensuing AGM, will be in compliance with Sections 139 and 141 of the Companies Act, 2013.

INTERNAL AUDITORS

The Board has appointed Messrs KPMG as Internal Auditors for the period of 1 (one) year ending on March 31, 2017 under Section 138 of the Companies Act, 2013 and they have completed the internal audit as per the scope defined by the Audit Committee.

SECRETARIAL AUDITORS

The Company has appointed Messrs Parikh and Associates, Company Secretaries to conduct the Secretarial Audit for the financial year ended March 31, 2016. As required by Section 204 of the Companies Act, 2013 and rules made thereunder. The Secretarial Audit Report furnished by Messrs Parikh and Associates is annexed to this report as "Annexure G".

COST AUDITORS

The Board of Directors has appointed Messrs N. I. Mehta & Co., Cost Accountants, as Cost Auditors of the Company for FY 2016-17 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 the Secretarial Audit Report.

The Statutory Auditors have not reported any instances of fraud to the Central Government and Audit Committee as per the provisions of Section 143 (12) of the Companies Act, 2013 read with Rule 13 of the Companies (Audit and Auditors) Rules, 2014.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING 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 reference to the Financial Statements are stated in Management Discussion and Analysis which forms part of Annual Report.

HUMAN RESOURCES

CEAT continues to be a people focused organization continuously building next generation leadership.

One of the main enablers of achieving CEAT vision 2016-2021, is Unleashing Talent which emphasizes on people focus of the organization. The Company has increased its investment and capacity in training and development to develop people to their maximum potential. Focus on training and development continued through a combination of functional, technical and behavioral training programs adding up to 3.96 man-days per employee of training in 2015-16. The Company has been persistent on achieving process and quality excellence by building internal academies and involving employees at the grass-root 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, 4 (four) Internal Complaints Committee (ICC) have been set up to redress complaints. ICC have 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: April 27, 2016


Mar 31, 2014

The Members of CEAT Limited

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

FINANCIAL HIGHLIGHTS

(Rs, in crores)

For the year ended For the year ended Msrch 31, 2014 March 31,2013

Turnover 5,304.1 4,836.7

Profit before Taxation 377.1 145.7

Provision for:

- Current Tax 88.8 -

- Short/(Excess) Provision for earlier years - (1.7)

- Deferred Tax 34.5 41.0

Net Profit 253.8 106.4

Surplus brought forward from previous year 332.9 253.5

Sum available for Appropriation 586.7 359.9

Appropriations:

- Proposed Dividend on Equity Shares 36.6 13.7

- Corporate Tax on Proposed Dividend 5.3 2.3

- Transfer to General Reserve 25.4 11.0

Balance carried forward 519.4 332.9

DIVIDEND

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

INDUSTRY SCENARIO

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

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

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

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

The domestic tyre demand from the Original Equipment Manufacturers (OEM) segment is largely flat for the second

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

CEAT''S PERFORMANCE

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

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

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

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

The Company has strategically enhanced its OEM network, which significantly contributed to its growth. It has also entered into new partnerships with companies like Renault-Nissan.

CEAT is looking at expanding its rural presence and its operations in the two-wheeler and Passanger Car Radial (PCR) replacement market. Expansion of CEATShoppeisa key initiative taken by the Company to develop an exclusive retail channel to improve service levels and reach in the market. At present, the Company has more than 135 CEAT Shoppes as compared to 100 as on March 31,2013. CEATShoppe has positively contributed to the company''s sales, especially in the passenger car tyre segment accounting for 32 percent of passenger car radials/utility vehicle radials sales.

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

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

FUTURE OUTLOOK

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

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

ISSUE OF EQUITYSHARES UPON CONVERSION OF WARRANTS ALLOTTED ON A PREFERENTIAL BASIS

Pursuant to the special resolution passed by the members through Postal Ballot on March 7,2012, the Company had on March 12,2012 issued and allotted 17,12,176 Warrants to one of the Promoter Group Companies viz

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

JOINT VENTURE IN SRI LANKA

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

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

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

JOINT VENTURE IN BANGLADESH

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

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

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

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 the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed hereto and forms part of this report.

HUMAN RESOURCES

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

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

EMPLOYEE STATEMENT

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

SUBSIDIARY COMPANY

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

The Ministry of Corporate Affairs has, vide General Circular No. 2/2011 dated February 8,2011 granted general exemption from attaching the accounts and financial statements of subsidiary companies as provided under Section 212 (8) of the Companies Act, 1956, provided conditions specified in the said Circular are fulfilled. The Company has fully complied with all the conditions mentioned in the above circular. Therefore, the Annual Accounts of the wholly owned subsidiary of the

Company i.e. Associated CEAT Holdings Company (Private) Limited (ACHL) and those of the subsidiary companies i.e. CEAT Bangladesh Limited (CBL) and Rado Tyres Limited (RTL) have not been annexed to this Report. However, the same are available for inspection at the Registered Office of the Company and also at the Registered Office of ACHL, CBL and RTL. Any member desirous of obtaining the same may request the Company in writing.

FIXED DEPOSITS

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

DIRECTORS

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

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

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

DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

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

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

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

CORPORATE GOVERNANCE

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

AUDITORS

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

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 : July 22,2014


Mar 31, 2013

To, The Members of CEAT Limited

The Directors present their fifty-fourth report, together with the audited accounts for the year ended March 31, 2013.

With deep and profound sorrow, the Board of Directors record that Dr. R. P. Goenka, Chairman, ceased to be a Director of the Company due to his sad demise on April 14, 2013.The Directors place on record their sincere appreciation for the invaluable guidance provided by Dr. Goenka to the Company during his tenure as the Chairman of the Company.

FINANCIAL HIGHLIGHTS

(Rs. in crores)

For the year ended For the year ended March 31,2012 March 31,2012

Turnover 4,836.7 4,435.4

Profit before Taxation 145.7 9.7

Provision for:

- Current Tax 3.7 3.8

Less: MAT Credit Entitlement (31.7) (3.8)

- Short/I Excess) Provision For earlier (1.7) years

- Deferred Tax 41.0 (3.80)

Net Profit 106.4 7.5

Surplus brought forward from 253.5 250.0

previous year

Sum available for Appropriation 359.9 257.5

Appropriations:

- Proposed Dividend on Equity Shares 13.7 3.4

- Corporate Tax on Proposed Dividend 2.3 0.6

- Transfer to General Reserve 11.0

Balance carried forward 332.9 253.5

DIVIDEND

In view of the improved performance of the Company during the year under review, the Board of Directors are pleased to recommend a dividend of Rs. 4.00 per equity share of face value of Rs. 10/- each (i.e. 40 per cent) for the financial year ended March 31, 2013.

INDUSTRY SCENARIO

The Indian economy registered a modest growth of 5 per cent in FY 2013 in terms of Gross Domestic Product (GDP). This was attributable mainly to weakening industrial growth in the context of tight monetary policy through most of the year and continued uncertainty in the global economy.

The global automobile industry witnessed a slump in demand which impacted the tyre industry as well.

Volumes across almost all segments either declined or remained flat. The demand from Original Equipment Manufacturers (OEM) as well as the Replacement Market was sluggish given the reduction in demand of automobiles and unsold inventory.

On the other hand, decline in input costs helped improve margins during the year under review. Almost all major raw materials witnessed a steady decline over the year.

CEAT''S PERFORMANCE

The Company registered a growth of 9.1 per cent in turnover from Rs. 4,435.4 crores in the year 2011-12 to Rs. 4,836.7 crores in 2012-13. Manufacturing operations at the radial plant at Halol, near Baroda in Gujarat ramped up to 80 per cent capacity utilisation by Q4 of the year under review thereby improving the financial performance of the Company.

A favourable product mix towards categories of motorcycle, scooter, passenger car, utility vehicles and last mile tyres contributed positively to the bottom line.

In spite of a shrinking OEM market, the Company''s performance in this segment was impressive with a 37 per cent volume growth posted against last year.

During 2012-13, prices of key raw materials like Natural Rubber and Synthetic Rubber fell by 8 to 10 per cent and helped increase profits for the Company.

The operating margins of the Company improved by 3.2 per cent with the operating profit increasing from Rs. 246.8 crores in the year 2011-12 to Rs. 424.5 crores in the year 2012-13. Net Profit increased from Rs. 7.5 crores in 2011-12 to Rs. 106.4 crores in 2012-13.

The Company also expanded its product portfolio with the CZAR'' range of Utility Vehicle tyres being a key development. An advertising campaign was launched for this new product range while the successful motorcycle tyre ''Be Idiotsafe'' campaign also continued.

FUTURE OUTLOOK

The tyre industry in India is passing through a challenging phase much like the overall economy. Such a drastic fall in the sales of commercial vehicles during the year under review has not been witnessed in a long time. In the short term, therefore, the outlook for tyre industry is not a very optimistic one. The tyre industry''s growth is expected to be in sync with the GDP growth. However, replacement demand from vehicle sales over the past two years can provide an opportunity.

The Company expects tyre demand to revive over medium term.

A weakening Rupee and high interest rates are currently the areas of concern for the tyre industry, but are expected to improve during the course of the year ahead. With the stable forecast of raw material prices, the Company expects a positive year ahead.

JOINT VENTURE IN SRI LANKA

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

During the year under review, ACHL has registered a revenue of LKR 4,569.3 million (Rs. 191.9 crores) as compared to LKR 4,357.4 million (Rs. 185.3 crores) in 2011-12, a growth of 4.9 per cent. Profit after tax has grown by 48.3 per cent to LKR 468.98 million (Rs. 19.7 crores) as compared to LKR 316.21 million (Rs. 13.4 crores) in 2011-12. The joint venture continues to enjoy the overall market leadership in all categories of tyres in Sri Lanka.

With a view to service the growing market in Sri Lanka, the Company''s joint venture is expanding its capacity from 16,000 radial tyres per month to 28,000 radial tyres per month.

ACHL has been consistently paying dividends and for the year 2012-13 the Company received Rs. 5.7 crores as dividend from ACHL.

JOINT VENTURE IN BANGLADESH

The Company is setting up a green field facility for manufacture of automotive bias tyres in Bangladesh with an initial capacity of 65 MT per day by investing USD 55 million. The capacity of the said plant will be scaled to 110 MT per day in due course with an additional investment of USD 15 million. This plant, which is the first major investment for tyre manufacturing in Bangladesh, is expected to become operational by early 2015.

The Company has decided to implement the project as a joint venture and accordingly, has signed a Joint Venture (JV) agreement with A.K. Khan & Company Limited (AKK), one of the leading business groups of Bangladesh and CEAT

Bangladesh Limited, the JV Company, during the year under review. While the Company will hold 70 per cent shareholding of the JV Company, AKK will hold the balance. The Company has also signed the Technology, Trademark and Name License Agreement with the JV Company whereunder, it will provide the technology and operational support to the JV Company. Once the plant becomes operational, the JV Company will be in a position to cater to the growing domestic market of Bangladesh and South East Asia as well.

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

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 the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed hereto and forms part of this report.

HUMAN RESOURCES

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

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

EMPLOYEE STATEMENT

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

SUBSIDIARY COMPANY

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

FIXED DEPOSITS

The Company has no overdue deposits, other than the unclaimed deposits of Rs. 3.07 Crores from 844 depositors as at the end of the year under review.

DIRECTORS

Mr. Paras K. Chowdhary, was appointed as the Whole-time Director for a period of one year with effect from April 1, 2012. Accordingly, the term of Mr. Chowdhary as the Whole- time Director has expired on March 31, 2013. He however, continues to be a Director on the Board of Directors of the Company.

In terms of Article 172 of the Articles of Association of the Company, Mr. Arnab Banerjee was appointed as an Additional Director on the Board of Directors. He would therefore hold office upto the date of the ensuing Annual General Meeting. A Notice has been received under Section 257 of the Act from a member proposing the name of Mr. Banerjee as Director.

Mr. Banerjee has also been appointed as Whole-time Director designated as Executive Director-Operations of the Company for a period of 5 (five) years with effect from May 7, 2013.

In accordance with the Act, and Articles of Association, Mr. H. V. Goenka, Mr. Hari L Mundra and Mr. Atul C. Choksey retire by rotation and being eligible offer themselves for re- appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

ii) such accounting policies have been selected and applied consistently and such judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company in the Balance Sheet as at March 31, 2013 and of the Statement of Profit and Loss for the said financial year viz. April 1, 2012 to March 31, 2013.

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act 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.

CORPORATE GOVERNANCE

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

AUDITORS

Messrs S. R. Batliboi & Associates LLP, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The Board has, subject to the approval of the Central Government, appointed Messrs N. I. Mehta & Co., Cost Accountants, as Cost Auditors of the Company for FY 2013-14.

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: July 18, 2013


Mar 31, 2012

The Directors present their fifty-third report, together with the audited accounts for the year ended March 31, 2012.

FINANCIAL HIGHLIGHTS

(Rs in crores)

For the year For the year ended ended March 31, 2012 March 31, 2011

Turnover 4439.6 3468.3

Profit before Taxation 9.8 33.2

Provision for:

- Current Tax 3.9 7.1

- Short/(Excess ) Provision for earlier years - (0.1)

- Deferred Tax (1.6) 3.9

Net Profit 7.5 22.3

Surplus brought forward from previous year 250.0 237.3

Sum available for Appropriation 257.5 259.6

Appropriations:

- Proposed Dividend on Equity Shares 3.4 6.9

- Corporate Tax on Proposed Dividend 0.6 1.1

- Transfer to General Reserve - 1.7

Balance carried forward 253.5 249.9

DIVIDEND

The Board of Directors are pleased to recommend a dividend of Rs 1.00 per equity share of face value of Rs 10 each (i.e. 10 per cent) for the financial year ended March 31, 2012.

INDUSTRY SCENARIO

The Indian economy is expected to grow at 7.6 per cent in FY 2013 and 8.6 per cent in FY 2014. The financial year 2011-12 was particularly challenging on account of the slowdown in industrial activity, higher capital outflow, increased inflation and global recessionary trends. The lower economic growth, rising fuel prices and higher lending rates have adversely impacted the growth of the automobile sector, particularly the passenger car and commercial vehicle segments. The demand for tyres, consequently, was lower than expected.

Raw material cost increased significantly through the first two quarters of FY 2012, largely due to spiraling prices of Natural Rubber and crude-based raw materials. However, the prices of key raw materials softened over the last two quarters of the year under review and are expected to remain stable in the near future. Coupled with expected rise in demand, the prospects for the industry are encouraging.

CEAT'S PERFORMANCE

The performance of the Company for the year under review followed similar trends as that of the industry in general. While the Company registered a turnover of Rs 4,439.6 crores during the year under review, registering a healthy growth of 28 per cent over Rs 3,468.3 crores in the previous year, its profit was adversely impacted in the first half due to steep rise in the prices of key raw materials particularly of Natural Rubber and crude-based raw materials and in the third quarter due to nearly a month-long disruption in production in Nasik factory on account of labour agitation. Finance cost, which increased significantly due to upward movement in interest rates and additional interest charge on funding of the Halol Plant and increased working capital requirement, also reduced the profit margin of the Company. However, with the help of a much improved performance for the fourth quarter of the year under review, both in terms of revenue of Rs 1,214.8 crores and net profit of Rs 41.5 crores, the Company has been able to register a net profit of Rs 7.5 crores against the net profit of Rs 22.3 crores in the previous year.

The Company registered significant success in the Original Equipment Manufacturers (OEM) market. It not only gained acceptance with several new OEM, but also increased its share of business with the existing OEM partners. As a result, the Company's share in the OEM market has increased to 8.5 per cent from 7 per cent in the previous year, aided by impressive growth in the two-wheeler segment.

Further, CEAT has also consolidated its position in the export market during the year under review and registered a turnover of Rs 1,002 crores, a growth of 62 per cent over the previous year.

The acquisition of the "CEAT" brand from Pirelli & C. S.P.A, Italy has allowed the Company's entry into newer markets, especially Latin America and Europe. The Company has already started establishing its distributor network in these new territories and expects higher revenues in the future.

Truck and bus radial segment registered good growth as compared to truck and bus bias segment, which has de-grown during the year under review. In the passenger car segment, CEAT not only outperformed the industry, but also increased its market share. CEAT has also grown in the two-wheeler segment by providing a special thrust on distribution and by running a successful advertising campaign for motorcycle tyres. Premium range of CEAT products in truck and GRIPP range in motorcycles have been received well by customers.

TYRE Manufacturing PLANT IN BANGLADESH

The Company has decided to venture into a Greenfield bias tyre manufacturing plant in Bangladesh with an initial installed capacity of 65 MT per day. This will entail an approximate investment of Rs 250 crores. This project, the first major investment for manufacture of tyres in Bangladesh, would be implemented by the Company through a subsidiary to be incorporated in Bangladesh. The project is expected to become operational by early 2015.

With this project, the Company will be in a position to cater to the growing markets of Bangladesh and South East Asia.

FUTURE OUTLOOK

With passenger vehicles sales expected to grow at an annual rate of 15 per cent and commercial vehicles at 20 per cent upto FY 2015, the future augurs well for the industry. Increasing radialisation in the commercial vehicle segment and longer distances now travelled by passenger cars and two-wheelers, will translate into higher demand in the replacement segment. The Indian tyre industry is expected to grow at around 14 per cent during FY 2013. Further, macro issues of the Indian economy, particularly weakening Rupee and high interest rates, currently the areas of concern for tyre industry, are expected to improve during the course of the year ahead.

With the stable forecast of raw material prices and overall economic situation of the country, the Company expects a better year ahead.

The Company has embarked on a new product development process led by a Quality Function Deployment (QFD) system with very strong focus on meeting stated and unstated needs of consumers.

The Company is now better poised to accept new challenges and take full advantage of favourable market conditions. The Company expects to increase its market share in all key segments in order to sustain its growth in coming years.

RESEARCH & DEVELOPMENT

During the year under review, the Company has set up a world-class research centre at its new Halol facility with an investment of approximately Rs 30 crores. This state-of-the-art ultra modern facility has capabilities in all key focus areas of tyre research such as advanced materials, computer- aided design and simulation, product development and prototyping, vehicle dynamics, indoor and instrumented outdoor testing.

The product development wing has developed a series of niche products for Ultra High Performance (UHP), Sports Utility Vehicle (SUV) and Winter Tyre segments. The materials development group is currently focusing on fuel-efficient and environmental-friendly tyres using next generation polymers. Another area of thrust is material substitution focusing on formulations suiting availability and price of key materials thus ensuring cost effectiveness and production consistency.

The vehicle dynamics wing works exclusively on tuning the tyre with the vehicle characteristics through rigorous evaluation in India and abroad. This assures better steering control, ride comfort, grip and safety in a vehicle, in both dry and wet conditions. This has enabled CEAT secure approvals from several OEM in passenger cars, SUVs, motorcycle and truck segments.

The Company is planning further investments in research & development in the areas of material research and computer simulation so as to be at the forefront of technology.

CEAT KELANI VENTURE (JOINT VENTURE IN SRI LANKA)

Associated CEAT Holdings Company (Private) Limited (ACHL), the Company's investment arm in Sri Lanka, operates 3 manufacturing plants through its joint venture company CEAT Kelani Holdings Company (Private) Limited.

During the year under review, ACHL has registered a revenue of LKR 4,357.41 million (Rs 1,847.01 million) as compared to LKR 3,790.83 million (Rs 1,542.50 million) in 2010-11, a growth of 15 per cent. Profit after tax has grown by 13.4 per cent to LKR 316.2 million (Rs 134.12 million) as compared to LKR 277.9 million (Rs 112.08 million) in 2010-11.

In line with its performance, ACHL has been consistently paying the dividend. The dividend received by the Company for FY 2011-12 is Rs 6,464.1 million.

The joint venture continues to enjoy dominant market share in all categories of tyres in Sri Lanka.

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 the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed hereto and forms part of this report.

HUMAN RESOURCES

CEAT believes that employees constitute its core strength and continued its focus on developing and nurturing talent through a robust performance management and talent development system during the year under review.

The Company has adopted QBM (Quality Based Management) and initiated several measures for strengthening employee relations through progressive people practices at the shop floor and initiatives towards increased productivity,

EMPLOYEE STATEMENT

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

SUBSIDIARY COMPANY

The Ministry of Corporate Affairs has vide General Circular No. 2/2011 dated February 8, 2011 granted general exemption from attaching the accounts and financial statements of subsidiary companies as provided under Section 212 (8) of the Companies Act, 1956, provided conditions specified in the said Circular are fulfilled.

The Company has fully complied with all the conditions mentioned in the above circular. Therefore, the Annual Accounts of the wholly owned subsidiary of the Company

i.e. Associated CEAT Holdings Company (Private) Limited (ACHL) have not been annexed to this report. However, the same are available for inspection at the Registered Office of the Company and also at the Registered Office of ACHL. Any member desirous of obtaining the same may request the Company in writing.

DIRECTORS

In accordance with the Companies Act, 1956 ("the Act") and Articles of Association, Mr. Mahesh S. Gupta, Mr. Haigreve Khaitan and Mr. K. R. Podar retire by rotation and being eligible offer themselves for re-appointment.

The term of Mr. Paras K. Chowdhary as Managing Director has ended on March 31, 2012. The Board of Directors places on record its appreciation for the valuable contribution and guidance provided by Mr. Chowdhary during his tenure as the Managing Director of the Company.

The Board of Directors has, at the meeting held on March 12, 2012, appointed Mr. Anant Vardhan Goenka as the Managing Director of the Company, for a period of five (5) years with effect from April 1, 2012.

The Board of Directors has also appointed Mr. Paras K, Chowdhary as a Whole-time Director, designated as Chief Management Advisor, for a period of one (1) year with effect from April 1, 2012.

In terms of Article 172 of the Articles of Association.

Mr. Chowdhary was appointed as an Additional Director on the Board of Directors prior to his appointment as the Whole-time Director. He would therefore hold office upto the date of the ensuing Annual General Meeting. A Notice has been received under Section 257 of the Act, from a member proposing the name of Mr. Chowdhary as Director,

ISSUE OF CONVERTIBLE WARRANTS ON A PREFERENTIAL BASIS

Pursuant to the Special Resolution passed by the shareholders through Postal Ballot on March 7, 2012, the Company has on March 12, 2012 issued and allotted 17,12,176 Warrants to the Promoters on a preferential basis convertible into an equal number of equity shares of face value of Rs 10 each at a price of Rs 85.03 per Warrant. Of the said price, 25 per cent has been received upfront at the time of allotment and the Warrants are convertible into equity shares at the option of the allottee within a period of 18 months from the date of allotment, i.e. by September 11, 2013.

DIRECTORS' RESPONSIBILITY STATEMENT

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

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

ii) such accounting policies have been selected and applied consistently and such judgments 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, 2012 and of the Profit and Loss Account for the said financial year viz. April 1, 2011 to March 31, 2012.

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

CORPORATE GOVERNANCE

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

AUDITORS

Messrs N. M. Raiji & Co., who retire at the ensuing Annual General Meeting, have expressed their inability to continue as the Statutory Auditors of the Company due to the ongoing arbitration in the firm amongst the partners.

The Company therefore proposes to appoint Messrs S.

R. Batliboi & Associates, Chartered Accountants, who are one of the leading accounting and auditing firms of the country as the Statutory Auditors of the Company. Messrs

S. R. Batliboi & Associates, Chartered Accountants, have informed the Company that they are eligible to act as the Statutory Auditors, if appointed.

The Board has, with the approval of the Central Government, appointed Messrs N. I. Mehta & Co., Cost Accountants, as Cost Auditors of the Company for FY 2011-12.

Acknowledgement

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

On behalf of the Board of Directors

H. V. Goenka Anant Vardhan Goenka

Vice-Chairman Managing Director

Place : Mumbai

Date : July 6, 2012


Mar 31, 2011

The Directors present their fifty-second report, together with the audited accounts for the year ended March 31, 2011

Rs. in Crores

For the year ended March 31, 2011 For the year ended March 31, 2010

Profit before Taxation 33.24 238.99

Provision for:

Current Tax 7.14 74.09

Short/(Excess) Provision for earlieryears (0.12) -

Deferred Tax 3.94 3.86

Net Profit 22.28 161.04

Surplus brought forward from previous year 237.31 108.44

Sum available for Appropriation 259.59 269.48

Appropriations:

Proposed Dividend on Equity Shares 6.85 13.70

[Corporate Tax on Proposed Dividend 1.06 2.32

Transferto General Reserve 1.70 16.15

Balance carried forward 249.98 237.31

DIVIDEND

The Directors are pleased to recommend a dividend of Rs.2.00 per equity share of Rs. 10/- each (i.e. 20 per cent) for the financiall year ended March 31,2011.

CEAT'S PERFORMANCE

The year under review was one of the most challenging in recent times with regard to raw material cost. Natura rubber prices touched an all time high both in the international and domestic markets. Poor crop in key rubber producing countries and strong surge in demand led to an unprecedented ncrease in the price. Natural Rubber and the entire spectrum of other raw materials showed a rising trend in costs as compared to the previousyearwith Natural Rubber prices surging up by 67 percent, synthetic rubber by 44 per cent, carbon black by 14 percent and nylon fabric by16 percent. The overal basket of raw materials escalated by 40 percent and the upward trend continues in the current year as well With domestic competition intensifying further, despite best efforts, the Company could not pass on the entire cost increase to the customers Consequently, margins saw significant erosion and the net profit declined from Rs. 161.04 Crores in the previous year to Rs. 22.28 Crores during the year under review.

The Company's revenue saw a growth of 23.5 per cent from Rs. 2,808 Crores in the previous yearto Rs. 3,469 Crores during the year under review. Good growth was visible in all three market segments viz. Replacement, Original Equipment Manufacturers (OEM) and Exports. The industry also grew at about the same rate resulting in market share of the Company remaining atthe same levels CEAT continues to be one of the largest exporters of tyres. With better thrust and continued focus, the Company was able to increase its exports to Rs. 624 Crores, as against Rs. 479 Crores for the previous year registering a healthy growth of more than 30 per cent. The market mix for exports also improved significantly, leading to higher price realisation

The Company has attained greater strength in supplychain management and logistics. Hence, it is now better placed to outsource and develop a arge base of vendors who supply finished products undertechnical and manufacturing supervision of the Company. As a result, the Company has succeeded in generating 23 percent of its revenue through outsourcing. CEAT will continue its endeavorto explore the outsourcing option to improve its market share in key segments

RADIAL PLANT AT HALOL, GUJARAT

The Company's state of the art radia plant with an overall planned capacity of 150 MT/day at Halol, Gujarat has successfully been commissioned during the year under review with an installed capacity of 60 MT/day. Full capacity is expected to be commissioned during July-September 2011 quarter This is one of the most eco-friendly and highly efficient plants in India and will manufacture both Truck and Bus Radials (TBR) and Passenger Car Radials (PCR). Commercial production has commenced from March 25, 2011 which is expected to gradually reach full capacity utilisation by the end of the current financiall year.

With the commencement of production of Radial Tyres from the Halol plant the Company is now in a position to caterto the rapidly growing domestic market for Commercial and Passenger segments as well as exploit its extensive channels in key export markets. Going forward, this plant is expected to become the main source of revenue for the Company

BRAND ACQUISITION

The Company historically had ownership rights on the "CEAT" trademark in India and 8 other Asian countries. During the year under review, the Company successfully acquired worldwide ownership rights of the "CEAT" trademark from Pirelli & C. 5.p.A, Italy for Euro 9 million. With the acquisition of the brand which is renowned worldwide, new and hitherto unexplored markets will be accessible to the Company and the Company would be in a position to fully exploit the export market resulting in increased volume and better price realisation from the year 2012

INDUSTRY SCENARIO AND FUTURE OUTLOOK

The Indian economy has emerged from the global financiall crisis remarkably and rapidly with a robust growth of over 8 per cent. The growth was exhibited across all segments of the economy and the growth of the automotive sector has exceeded expectations. The tyre industry being an ancillary of the automotive sector also experienced increased demand The tyre industry is a USD 140 billion ndustry globally and the Indian Tyre ndustry commands a share of only 4.5 per cent at USD 6.8 billion. The industry is projected to grow at a CACR of over 15 percent over the next five years As the Company embarks on a new phase of its journey it is better poised to accept new challenges and take full advantage of favourable market conditions. The Company expects to grow at a good pace in the next few years and hopes to increase market share in all segments particularly PCR and Motorcycle

A dampener on the good demand conditions, however, is the raw materia scenario, particularly that of Natura Rubber, which is expected to continue to exert pressure on margins in the first quarter of 2012. We are hopeful that the raw material prices will stabilise thereafter

RESEARCH & DEVELOPMENT

Along with the radial plant at Halol Gujarat, the Company has set up a new state-of-the-art-Research and Development Centre at the same ocation. This centre has the most contemporary equipment for testing and development of all types of tyres, including tyres manufactured for markets having difficult weather conditions. This will reduce the dependency of the Company on external testing centres and will reduce the need for field testing of tyres

The year 2010-11 also saw significant R&D efforts to develop new raw materials, new range of products and also to enhance the quality of tyres nnovative launches of first of its kind concepts in the truck and farm category during the year under review have set into motion the process of thought leadership by CEAT. In light of the increasing raw material costs successful efforts were made in development of cheaper substitutes for costly raw materials without compromising on quality parameters This has helped the Company to not only reduce cost but also in optimising material consumption

ASSOCIATED CEAT KELANI VENTURE (Joint Venture in Sri Lanka)

The Company has acquired a stake of 45.16 per cent in Associated CEAT Holdings Company Private Limited (ACHL), the Company's investment arm in Sri Lanka during the year. With this acquisition, ACHL has become a wholly owned subsidiary of the Company. ACHL controls 50 percent stake in the joint venture company viz CEAT Kelani Holding Private Limited which in turn has three wholly owned tyre manufacturing companies. ACHL consolidates 50 percent of the joint venture in its accounts as per Sri Lankan llaws

During the year under review, ACHL has registered a revenue of LKR 3,790.83 million during 2010-11 as compared to LKR 2,702.66 million in the previous year, registering a growth of 51.90 per cent. Profit aftertax stood at LKR 277.89 million as compared to profit aftertax of LKR 261.48 million. The Company has dominant market share in all categories of tyres

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 the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is annexed hereto and forms part of this report

HUMAN RESOURCES

The Company continues to focus on performance management through everagingthe Balanced Business Score Card and triggering Culture Transformation. Initiatives have also been taken towards driving productivity through Total Quality Management (TQM) and in developing and retaining critical talent through coaching and mentoring. The TQM movement has taken roots in the manufacturing area and a culture of strong continuous mprovements as well as breakthrough results are setting in.

The Company has kick-started a campaign of improvement in employee engagementthrough "MRM Connect" a forum where the top management of the Company engages with the employees on a quarterly basis and share and exchange views on Company performance. The Company has also started a programme of rewards and recognition for employees through quarterly awards for excellence in performance, leadership and mprovement in cross functiona collaboration

EMPLOYEE STATEMENT

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

SUBSIDIARY COMPANY

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

DIRECTORS

In accordance with the Companies Act 1956 and Articles of Association, Mr. H. V. Coenka, Mr. S. Doreswamy and Mr. Bansi S. Mehta retire by rotation and being eligible, have offered themselves for re-appointment Mr. Vinay Bansal was appointed as director of the Company in the casual vacancy caused due to the demise of Mr. M. A. Bakre. He would hold office up to the date of this Annual Genera Meeting. A Notice has been received from a member proposing the name of Mr. Vinay Bansal as Director retiring by rotation. Members are requested to appoint Mr. Vinay Bansal as Director at this Annual General Meeting and the Board of Directors recommends the appointment of Mr. Vinay Bansal as Director.

Mr. Paras K. Chowdhary was re- appointed as the Managing Director of the Company for a period from January 18, 2011 to March 31, 2012. This re-appointment was approved bythe Board of Directors at their meeting held on October20, 2010 and bythe shareholders vide a resolution passed through Postal Ballot on March 11, 2011

ISSUE OF PREFERENTIAL WARRANTS

Pursuant to the Special Resolution passed bythe shareholders through Postal Ballot on Septembers, 2010, the Company has on September30, 2010 issued and allotted 17,12,170 Warrants to the Promoters on a preferential basis convertible into an equal number of equity shares at a price of Rs. 141.44 perWarrant. Of the said price, 25 per cent has been received up-front at the time of allotment i.e. on September30 2010 and the Warrants are convertible into equity shares at the option of the allottees within a period of 18 months from the date of allotment, the last day forconversion being March 31, 2012

DIRECTORS' RESPONSIBILITY STATEMENT

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

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

i) 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, 2011 and of the Profit and Loss Account for the said financiall year viz. April 1,2010 to March 31, 2011

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

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

CORPORATE GOVERNANCE

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

AUDITORS

Messrs N. M. Raiji & Co., auditors of the Company, retire at the ensuing Annua General Meeting and being eligible offer themselves for re-appointment

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for the continued support and cooperation received from the customers, suppliers, dealers, financial nstitutions, banks, members and Central/State Governments towards conducting the business of the Company during the year under review.



On behalf of the Board of Directors

H.V. Goenka Paras K. Chowdhary

Vice Chairman Managing Director

Place : Mumba

Dated: May 2, 2011

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