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Notes to Accounts of Ceat Ltd.

Mar 31, 2017

1. Contingent liabilities and assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non—occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

A contingent assets is not recognized unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements. Contingent liabilities and contingent assets are reviewed at each balance sheet date.

1. Building includes as at March 31, 2017Rs,0.10 Lacs (As at March 31, 2016Rs,0.10 lacs; As at April 1, 2015Rs,0.10 lacs ) being value of unquoted fully-paid shares held in various co-operative housing societies.

2. During the previous year, the Company had sold the following assets that were held for sale in the year 2014-15:

a) Leasehold land at Additional Ambernath Industrial Area, Ambernath having book value ofRs,3,543.63 lacs.

b) Freehold land at Gujarat having book value ofRs,0.60 lacs.

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

4. As a part of ongoing expansion project at Halol, during the year the Company has capitalized and commissioned assets ofRs,18,343.21 lacs(March 31, 2016:Rs,44,768.09 lacs). This has resulted in the installed capacity as on March 31, 2017 to 76 MT per day (as on March 31, 2016: 39 MT per day). Full expansion project of 120 MT per day is however expected to be commissioned, in phase, by end of July 2017.

5. In the previous year, the Company had commissioned, its Greenfield Unit, situated at Butibori, near Nagpur, Maharashtra, with effect from March 28, 2016. Accordingly, the Company has capitalized the assets amounting toRs,22,995.61 lacs (March 31, 2016:Rs,9,375.40 lacs). This has resulted in the installed capacity as on March 31, 2017 to 54 MT per day (as on March 31, 2016: 15 MT per day). Full expansion project of 120 MT per day is expected to be commissioned, in phases, by end of FY 2017-18.

6. The amount of borrowing costs capitalized during the year ended March 31, 2017 wasRs,1,437.03 lacs (March 31, 2016: ''1,447.08 lacs). The rate used to determine the amount of borrowing costs eligible for capitalization was 8.89% (March 31, 2016: 9.50%) which is the effective interest rate of specific borrowings.

7. Refer note 20 for details on pledges and securities.

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

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

*These debts are secured to the extent of security deposit obtained from the dealers.

- No trade receivables are due from directors or other officers of the company either severally or jointly with any other person.

- For terms and conditions relating to related party receivables, refer note 43.

-Trade receivables are non-interest bearing and generally on terms of 30 to 60 days credit period.

a) Includes'' nil for March 31, 2017 (March 31, 2016Rs,nil, April 1, 2015Rs,4.53 Lacs) outstanding for a period exceeding seven years. This amount is no longer payable as the Company has adjusted this amount towards call-in arrears of partly paid-up equity shares of the Company held by the shareholders, pursuant to a resolution passed by the Board of Directors.

Notes:

a) Deposit to the extent ofRs,0.20 lacs (March 31, 2016:Rs,750.20 lacs, April 1, 2015:Rs,637.41 lacs) is created for the purpose of deposit repayment reserve account and cannot be used for any other purpose.

b) These balances are available for use only towards settlement of matured deposits and interest on deposits. Also includesRs,0.20 lacs (March 31, 2016:Rs,0.20, lacs April 1, 2015: ''0.20 lacs)outstanding for a period exceeding seven years, in respect of which a Government agency has directed to the Company to hold and not transfer / repay.

c) These balances are available for use only towards settlement of corresponding unpaid dividend liabilities.

a) Includes 688 (March 31, 2016- 688; April 1, 2015- 688) equity shares offered on right basis and kept in abeyance.

b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having face value of ''10 per share. Each holder of equity shares is entitled to one vote per equity share. Dividend is recommended by the Board of Directors and is subject to the approval of the members at the ensuing Annual General Meeting except interim dividend. The Board of Directors have a right to deduct from the dividend payable to any member, any sum due from him to the Company.

I n the event of winding-up, the holders of equity shares shall be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders. The shareholders have all other rights as available to equity shareholders as per the provision of the Companies Act, applicable in India read together with the Memorandum of Association and Articles of Association of the Company, as applicable.

d) As per the records of the Company as at March 31, 2017 no calls remain unpaid by the directors and officers of the company.

e) The Company has not issued any equity shares as bonus for consideration other than cash and has not bought back any shares during the period of 5 years immediately preceding March 31, 2017.

f) General Reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriations purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income , items included in the general reserve will not be reclassified subsequently to statement of profit and loss.

Proposed dividends on equity shares, which are subject to approval at the annual general meeting are not recognized as a liability (including Dividend Distribution Tax thereon) in the year in which it is proposed.

1. Non-Convertible Debentures (NCD)Rs,20,000.00 lacs (March 31, 2016:Rs,20,000.00 lacs, April 1, 2015:Rs,Nil) allotted on July 31, 2015 on private placement basis are secured by a first pari passu charge over the movable assets (except current assets) and immovable assets of the Company situated at the Nashik Plant. As at March 31, 2017, the NCDs carry an interest at 9.25% p.a. and is repayable as under:

- NCD Series 1:Rs,1,000.00 lacs (5% of the issue amount) repayable on July 31, 2019

- NCD Series 2:Rs,3,000.00 lacs (15% of the issue

amount) repayable on July 31, 2020

- NCD Series 3:Rs,3,000.00 lacs (15% of the issue amount) repayable on July 31, 2021

- NCD Series 4:Rs,3,000.00 lacs (15% of the issue amount) repayable on July 31, 2022

- NCD Series 5:Rs,4,000.00 lacs (20% of the issue amount) repayable on July 31, 2023

- NCD Series 6:Rs,4,000.00 lacs (20% of the issue amount) repayable on July 31, 2024

- NCD Series 7:Rs,2,000.00 lacs (10% of the issue amount) repayable on July 31, 2025

2. Term loan from The Hong Kong and Shanghai Banking Corporation Limited (HSBC) ofRs,Nil (March 31, 2016:Rs,2,812.50 lacs, April 1, 2015:Rs,4,062.50 lacs) was pre-paid in full including interest thereon on June 21, 2016. It was secured by a first pari passu charge over the Company''s immovable assets situated at Bhandup plant. It carried interest at 9.65% p.a. as on March 31, 2016.

3. Term Loan from Export Import Bank of India (EXIM)Rs,10,900.00 lacs (March 31, 2016:Rs,7,600.00 lacs, April 1, 2015:Rs,Nil) is secured by first pari passu charge over the Company''s movable assets (excluding current assets) and immovable assets situated at the Halol plant and second pari passu charge on the current assets of the Company. (The Company has created the first charge on the movable properties (except current assets) and the second charge on the current assets of the Company. The security on the immovable property of the Company situated at Halol is created). It carries interest at 9.50% p.a. as at March 31, 2017 and is repayable as under:

4. Term Loan from Kotak Mahindra Bank Limited ofRs,3,000.00 lacs (March 31, 2016:Rs,3,000.00 lacs, April 1, 2015:Rs,Nil) is secured by first pari passu charge over the Company''s movable assets (excluding current assets) and immovable assets situated at Halol plant and second pari passu charge over the current assets of the Company. (The Company has created the first charge on the movable properties (except current assets) and the second charge on the current assets of the Company. The security on the immovable property of the Company situated at Halol is created). It carries interest at 9.15% p.a. as at March 31,

2017 and is repayable as under:

5. Term loan from Bank of IndiaRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,10,000.00 lacs) was pre-paid in full including interest thereon on July 31, 2015. It was secured by a first pari passu charge over the Company''s immovable assets situated at Bhandup and Nashik plants. It carried interest at 11.50% p.a. as on March 31, 2015.

6. Term loan from ICICI Bank Limited ofRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,7,000.00 lacs) was pre-paid in full including interest thereon on August 4, 2015. It was secured by a first pari passu charge over the Company''s immovable assets situated at Bhandup and Nashik plants. It carried interest at 11.50% p.a. as on March 31, 2015.

7. Term loan from ICICI Bank Limited ofRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,3,375 lacs) was pre-paid in full including interest thereon on July 11, 2015. It was secured by first pari passu charge over the Company''s movable assets (excluding current assets) both present and future and immovable assets both present and future situated at Bhandup, Halol and Nashik plants and second pari passu charge on the current assets of the Company both present and future. It carried interest at 12% p.a. as on March 31, 2015.

8. Term loan from ICICI Bank Limited ofRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,1,166.67 lacs) was repaid in full including interest thereon on August 10, 2015. It was secured by a first pari passu charge over the Company''s immovable assets both present and future situated at Bhandup plant. It carried interest at 12% p.a. as on March 31, 2015.

9. Term loan from Bank of IndiaRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,2,913.58 lacs) was pre-paid in full including interest thereon on July 31, 2015. It was secured by first pari passu charge over the Company''s movable assets (excluding current assets) both present and future and immovable assets both present and future situated at Bhandup, Halol and Nashik plants and second pari passu charge on the current assets of the Company both present and future. It carried interest at 11.50% p.a. as on March 31, 2015.

10. Term loan from IDBI Bank Limited ofRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,753.38 lacs) was pre-paid in full including interest thereon on August 31, 2015. It was secured by first pari passu charge over the Company''s movable assets (excluding current assets) both present and future and immovable assets both present and future situated at Bhandup, Halol and Nashik plants and second pari passu charge on the current assets of the Company both present and future. It carried interest at 12% p.a. as on March 31, 2015.

11. Term loan from Bank of Baroda ofRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,1,750.00 lacs) was repaid in full including interest thereon on August 31, 2015. It was secured by first pari passu charge over the Company''s movable assets (excluding current assets) both present and future and immovable assets both present and future situated at Bhandup, Halol and Nashik plants and second pari passu charge on the current assets of the Company both present and future. It carried interest at 12% p.a. as on March 31, 2015.

12. Term Loan from The Hong Kong and Shanghai Banking Corporation Limited (HSBC) ofRs,8,000.00 lacs (March 31, 2016:Rs,Nil, April 1, 2015:Rs,Nil) is secured by a first pari passu charge over the Company''s immovable assets situated at Bhandup plant. It carries interest at 8.13% p.a. and 8.33% p.a. as on March 31, 2017 and is repayable in 16 quarterly instalments post moratorium of 12 months from the date of first disbursal. (The mortgage for the loan will be completed as a part of security trustee arrangement).

13. Term loan in Indian Rupee & in foreign currency from Export Import Bank of India ofRs,Nil (March 31, 2016: ''

1,218.75 lacs, April 1, 2015:Rs,3,532.43 lacs) has been repaid in full along with the interest as per the repayment schedule. Last instalment was paid on August 01, 2016. It was secured by first pari passu charge on Company''s movable assets (except current assets) and immovable assets located at Bhandup, Halol and Nashik plants and second pari passu charge on the current assets of the Company. Rupee loan carried interest at 10.45% p.a. and foreign currency loan carried interest at 6 months LIBOR plus 275 bps p.a. as on March 31, 2016.

14. External Commercial Borrowing (ECB loan) from ICICI Bank Ltd. ofRs,Nil (March 31, 2016:Rs,Nil, April 1, 2015:Rs,1,953.12 lacs) was pre-paid in full including interest thereon on September 30, 2015. It was secured by first pari passu charge over the Company''s movable assets (excluding current assets) both present and future and immovable assets both present and future situated at Bhandup, Halol and Nashik plants and second pari passu charge on the current assets of the Company both present and future. It carried interest at 3 months LIBOR plus 250 bps p.a. as on March 31, 2015.

15. Long-term buyer''s credit (for Halol expansion project) is secured by way of first pari passu charge on all movable assets (excluding current assets) and immovable assets of the Company situated at Halol plant and second pari passu charge over the current assets of the Company. It is repayable within 3 years from the date of disbursement. (The Company has created the first charge on the movable properties (except current assets) and the second charge on the current assets of the Company. The security on the immovable property of the Company situated at Halol is created). The long-term buyer''s credit carries interest in the range of 12 months LIBOR plus 20 bps p.a. to 12 months LIBOR plus 122 bps p.a. and 6 months LIBOR plus 52 bps p.a. to 6 months LIBOR plus 165 bps p.a. and 6 months EURIBOR plus 125 bps p.a. and 12 months EURIBOR plus 54 bps p.a. to 12 months EURIBOR plus 150 bps p.a. (Variation in range due to the movements in LIBOR/EURIBOR and the size of the deals.)

16. Long-term buyer''s credit (for Nagpur project) is secured by way of first pari passu charge on all movable assets (excluding current Assets) and immovable assets of the Company situated at Nagpur plant. It is repayable within 3 years from the date of disbursement. (The creation of security for immovable properties situated at Nagpur is complete). The long-term buyer''s credit carries interest in the range of 12 months LIBOR plus 20 bps p.a. to 12 months LIBOR plus 113 bps p.a. and 6 months LIBOR plus 50 bps p.a. to 6 months LIBOR plus 175 bps p.a. (Variation in range due to the movements in LIBOR/EURIBOR and the size of the deals.)

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

17. Public deposits included under the long-term borrowings were pre-paid in full including interest thereon on September 30, 2016. As on March 31, 2017, an amount ofRs,49.69 lacs (interest) and approx.Rs,78.22 lacs (principal) remains unclaimed, in cases where the deposit holders have not encashed their warrants or claim is under dispute or the same are delayed or misplaced by the postal authorities. It carried interest in the range of 9.50% p.a. to 10.75% p.a. as on March 31, 2016.

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

19. Outstanding balances shown in foot notes above, are grossed up to the extent of unamortized transaction cost.

a) Provision for warranty

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

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities related to income taxes levied by the same tax authority.

During the year ended March 31, 2017 and March 31, 2016, the company has paid dividend to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence, DDT paid is charged to equity.

During the previous year, the increase of the corporate income tax rate from 33.99% to 34.608% which was effective from April 1, 2015. As a result, the relevant deferred tax balances have been premeasured at 34.608%.

The deferred revenue relates to accrual of custom duty availed on import of plant and equipment for Halol Phase I under EPCG scheme. As at March 31, 2017 the estimated amount for deferred revenue amounted toRs,1,132.09 lacs ( March 31, 2016:Rs,1,214.22 lacs, April 1, 2015:Rs,1,296.35 lacs)

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

All short-term borrowings availed in Indian rupees during the current year carry interest in the range of 6.25% to 9.50% and all short-term borrowing availed in foreign currency during the year carry interest in the range of LIBOR plus 45 bps to LIBOR plus 50 bps. (LIBOR is set corresponding to the period of the loan)

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

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

d) During the previous year, the Company had issued Commercial papers (total available limitRs,20,000.00 lacs) at regular intervals for working capital purposes with interest ranging from 6.13% to 7.55%. The outstanding amount as at March 31, 2017 isRs,2,480.77 lacs (As at March 31, 2016Rs,NIL ; as at April 1, 2015Rs,NIL).

a) Sale of goods includes excise duty collected from customers ofRs,67,479.27 lacs (March 31, 2016:Rs,66,367.74 lacs).

b) The Company has recognized a government grant ofRs,Nil (March 31,2016:Rs,223.47 lacs) as refund of octroi duty under the package scheme of incentive received from Directorate of Industries, Government of Maharashtra for Nashik plant (refer note 42 d).

The Company has also recognized a government grant ofRs,1,220.15 lacs (March 31,2016:Rs,860.89 lacs) as income on account of Export Incentive under Merchandise Exports from India Scheme (MEIS) from Directorate General of Foreign Trade, Government of India.

The Company has recognized a government grant ofRs,82.13 lacs (March 31, 2016:Rs,82.13 lacs) relating to benefit received from Export Promotion Capital Goods (EPCG)

The above expenditure of research and development has been determined on the basis of information available with the Company and as certified by the management.

Note 20: Earnings per share

Basic Earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

Note 21: Significant accounting judgments, estimates and assumptions

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require an adjustment to the carrying amount of assets or liabilities in future periods. Difference between actual results and estimates are recognized in the periods in which the results are known / materialized.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company has based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

a) Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the Company''s domicile. Based on approved plans and budgets, the company has estimated that the future taxable income will be sufficient to absorb MAT credit entitlement, which management believes is probable. Accordingly, the Company has recognized MAT credit as an asset. Further details on taxes are disclosed in note 23.

b) Defined benefit plans (gratuity benefits)

The Company''s obligation on account of gratuity, compensated absences and present value of gratuity obligation are determined based on actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Increase in future salary and gratuity is based on expected future inflation rates.

Further details about gratuity obligations are given in note 41.

c) Provision for decommissioning liability

The Company has recognized a provision for decommissioning obligations associated with a land taken on lease at Nashik manufacturing facility for the production of tyres. In determining the fair value of the provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs. The carrying amount of the provision as at March 31, 2017 wasRs,54.69 lacs (March 31, 2016:Rs,49.06 lacs, April 1, 2015:Rs,44.00 lacs). The Company estimates that the costs would be realized in year 2066 at the expiration of the lease and calculates the provision using the Discounted Cash Flow (DCF) method based on the following assumptions:

- Estimated range of cost per square meter -'' 45 -Rs,50

- Discount rate - 11.50%

d) Provision for warranty

The estimated liability for warranty is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of obligations and management estimates regarding possible future incidence based on corrective actions on product failure. The timing of outflows will vary as and when the obligation will arise - being typically up to three years. The rate used for discounting warranty provisions is 11.50%.

e) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note 47 and 48 for further disclosures.

Note 22: Post-retirements benefit plan

a) Defined Contribution plan

The Company has recognized and included in Note No.33 "Contribution to Provident and other funds" expenses towards the defined contribution plan as under:

b) Defined Benefit plan - Gratuity

The Company has a defined benefit gratuity plan which is funded with an Insurance company in the form of qualifying Insurance policy. The company''s defined benefit gratuity plan is a salary plan for employees which requires contributions to be made to a separate administrative fund.

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, every employee who has completed five years of service gets a gratuity on separation @ 15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of qualifying insurance policy.

The fund has the form of a trust and it is governed by the Board of Trustees, which consists of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.

Each year, the Board of Trustees reviews the level of funding. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. The Board of Trustees have appointed LIC of India, Birla Sun life insurance, India First life insurance & HDFC life insurance to manage its funds. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

In case of death, while in service, the gratuity is payable irrespective of vesting. The company makes annual contribution to the company gratuity scheme administered by LIC through its gratuity funds.

ix) The principal assumptions used in determining gratuity and leave encashment for the Company''s plan are shown below Description of risk exposures

Valuations are performed on certain basic set of predetermined assumptions and other regulatory frame work which may vary overtime. Thus, the Company is exposed to various risks in providing the above gratuity benefit which are as follows:

Interest rate risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Liquidity risk

This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise due to non availability of enough cash/ cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Salary escalation risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Demographic risk

The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory risk

Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. Increase in the maximum limit on gratuity ofRs,10 lacs).

Asset liability mismatching or market risk

The duration of the liability is longer compared to duration of assets, exposing the Company to market risk for volatilities/fall in interest rate.

Investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority and other relevant factors, such as supply and demand in the employment market.

The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

The Company''s best estimate of contribution during the next year isRs,1,582.13 lacs.

The weighted average duration (based on discounted cash flows) of defined benefit obligation is 8 years.

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity out flows happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in an increase in liability without corresponding increase in the asset).

Note 23: Commitments and contingencies

a. Leases

Operating lease commitments — Company as lessee

The Company has entered a lease agreement with the leasing company for vehicles, resulting in a non-cancellable operating lease. There is no restriction placed upon the Company by entering these leases. The lease term range from one year to five years and are renewable at the option of the Company.

Lease rental on the said lease ofRs,128.90 lacs (March 31, 2016Rs,106.41 lacs) has been charged to Statement of Profit and Loss.

* in respect of above matters, future cash outflows are determinable only on receipt of judgments pending at various forums / authorities. The amount of expected reimbursement to the Company is not ascertainable as on the Balance Sheet date.

d. Others

The Company has availed the Sales Tax Deferral Loan and Octroi refund from the Directorate of Industries for Nashik Plant. Hence, the Company has to take prior permission of the appropriate authority for removal/transfer of any asset (falling under the above schemes) from Nashik Plant. In case of violation of terms & conditions, the Company is required to refund the entire loan/benefit along with the interest @ 22.50% on account of Sales Tax Deferral Loan and @ 15% on account of Octroi refund. (Refer Note 29(b)).

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

1. The Company has been served with a Show Cause cum Demand Notice from the DGCEI (Directorate General of Central Excise Intelligence) Mumbai, on the ground that, the activity of making tyre set,

i.e. inserting Tubes and Flaps inside the Tyres and tied up through Polypropylene Straps, amounts to manufacture / pre-packaged commodity under Section 2(f)(iii) of Central Excise Act, read with Section 2(l) of the Legal Metrology Act, 2009. Accordingly, the authorities worked out the differential duty amounting toRs,8,655.63 lacs i.e., the amount of duty already paid on the basis of transaction value and duty payable on the basis of MRP under Section 4A, for the period from April-2011 to April-2015. The Company believes that Set of TT / TTF (Tyre and Tube / Tyre, Tube and Flap) is not pre-packaged commodity in terms of provisions of Legal Metrology Act, 2009. The Company has a strong case on the ground that, they said issue has been clarified by the Controller of the Legal Metrology Department vide its letter dated May 1, 1991 that "Tyre with tube & flaps tied with three thin polythene strips may not be treated as a pre-packed commodity within the meaning of rule 2(l) of the Standards of Weights and Measures (Packaged Commodities), Rules, 1977". The above clarification has been re-affirmed vide letter dated November 16, 1992 by the Legal Metrology authorities.

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

Note 24: Related party transactions a) Names of related parties and related party relationship

Related parties where control exists

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

- CEAT AKKHAN Limited (Subsidiary Company)

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

- CEAT Specialty Tyres Limited ("CSTL") (Subsidiary Company)

Related parties with whom transactions have taken

place during the year

- CEAT Kelani Holdings (Pvt.) Limited ( Joint venture of ACHL)

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

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

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

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

- RPG Enterprises Limited ("RPGE")(Directors, KMP or their relatives are interested)

- RPG Lifesciences Limited ("RPGLS") (Directors, KMP or their relatives are interested)

- Zensar Technologies Limited("Zensar") (Directors, KMP or their relatives are interested)

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

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

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

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

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

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

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

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

- Palacino Properties LLP ("Palacino") (Directors, KMP

or their relatives are interested)

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

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

- Key Management Personnel (KMP):

i) Mr. Harsh Vardhan Goenka, Chairman

ii) Mr. Anant Vardhan Goenka, Managing Director

iii) Mr. Arnab Banerjee, Whole-time Director

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

v) Mr. Manoj Jaiswal, Chief Financial Officer up to January 15, 2017.

vi) Mr Kumar Subbiah, Chief Financial Officer w.e.f. from January 16, 2017.

vii) Mr. H. N. Singh Rajpoot, Company Secretary up to August 31, 2016.

viii) Ms. Shruti Joshi, Company Secretary w.e.f. from September 1, 2016.

ix) Mr. Paras K. Chowdhary, Independent Director

x) Mr. Vinay Bansal, Independent Director

xi) Mr. Hari L Mundra, Independent Director

xii) Mr. Atul Choksey, Independent Director

xiii) Mr. Mahesh Gupta, Independent Director

xiv) Mr. Haigreve Khaitan, Independent Director

xv) Ms. Punita Lal, Independent Director

xvi) Mr. S.Doreswamy, Independent Director

xvii) Mr. Kantikumar Poddar, Independent Director (up to February 9, 2017)

xviii) Mr. Ranjit Pandit, Independent director

Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.

The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefit as they are determined on an actuarial basis for the Company as a whole.

Managerial remuneration is computed as per the provisions of section 198 of the Companies Act, 2013. The amount outstanding are unsecured and will be settled in cash.

Loans and guarantee to Subsidiary

Following are the details of loans and guarantee given to subsidiary companies in which directors are interested, as required under Schedule V read with Regulation 34 (3) and 53 (f) of the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015 and disclosure required under section 186 (4) of the Companies Act, 2013.

Maximum outstanding during the year as loan to CSTL wasRs,5,000.00 lacs.(March 31, 2016:Rs,3,400.00 lacs)

ii. CEAT has given a corporate guarantee uptoRs,22,800.00 lacs to Ceat Speciality Tyres Limited as a collateral security for raising the term loans. The outstanding guarantee as on March 31, 2017 isRs,13,476.98 lacs.

Note 25: Segment information

For management purpose, the Company comprise of only one reportable segment - Automotive Tyres, Tubes & Flaps.

The Executive Management Committee monitors the operating results of this segment for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

During the year 2016-17 and 2015-16, no single external customer has generated revenue of 10% or more of the Company''s total revenue.

During the year 2016-17 and 2015-16, no single country has generated revenue of more than 10% of total revenue.

Note 26: Hedging activities and derivatives Derivatives designated as hedging instruments

The Company uses derivative financial instruments such as foreign currency forward contracts to hedge foreign currency risk arising from future transactions in respect of which firm commitments are made or which are highly probable forecast transactions. It also uses cross currency interest rate swaps (CCIRS), Range Forwards, and Coupon Only Swap (COS) to hedge interest rate and foreign currency risk arising from variable rate foreign currency denominated loans. All these instruments are designated as hedging instruments and the necessary documentation for the same is made as per Ind AS 109.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates. CCIRS have been designated as effective hedging instrument from April 1, 2016 onwards.

* CCIRS has been designated as an effective hedging instrument w.e.f. April 1, 2016 ** Options outstanding as on March 2015 were not designated as effective hedging instrument

Cash flow hedges

Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of recognized purchase payables, committed future purchases, recognized sales receivables, forecast sales and Foreign Currency loan (Buyer''s Credit) in US dollar & Euro. The forecast sales transactions are highly probable, and comprise about 25% of the Company''s total expected sales in US dollar.

Cross currency Interest Rate Swaps (CCIRS) measured at fair value through OCI are designated as hedging instruments in cash flow hedges for Foreign currency loan (Buyer''s Credit) in US Dollar.

Derivative options like Range Forwards, COS measured at Fair value through OCI are designated as hedging instruments in cash flow hedges for Foreign currency loan (Buyer''s Credit) in US Dollar.

The terms of the foreign currency forward contracts match the terms of the expected highly probable forecast transactions. As a result, no hedge ineffectiveness arise requiring recognition through the statement of profit and loss.

* The trade payables / short term borrowings are naturally hedged (off-set) to the extent of exposure under trade receivables / advances for respective currencies.

The cash flow hedges of the expected future sales / recognized sales receivables as at March 31, 2017 were assessed to be highly effective and a net unrealized gain ofRs,367.27 lacs, with a deferred tax liability ofRs,127.10 lacs relating to the hedging instruments, is included in OCI. Comparatively, the cash flow hedges of the expected future sales as at March 31, 2016 were assessed to be highly effective and an unrealized gain ofRs,317.45 lacs with a deferred tax liability ofRs,109.86 lacs was included in OCI in respect of these contracts.

The cash flow hedges of the expected future purchases / recognized purchase payables as at March 31,2017 were assessed to be highly effective, and as at March 31, 2017, a net unrealized loss ofRs,682.42 lacs with a related deferred tax asset ofRs,236.17 lacs was included in OCI in respect of these contracts. Comparatively, the cash flow hedges of the expected future purchases/ recognized purchase payables as at March 31,2016 were also assessed to be highly effective and an unrealized loss ofRs,329.98 lacs with a deferred tax asset ofRs,114.20 lacs was included in OCI in respect of these contracts.

Note 27: Fair values

Set out below, is a comparison by class of the carrying amounts and fair value of the Company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values

The Cash Flow hedges of the Buyer''s Credit outstanding as on March 31,2017 were assessed to be highly effective, and as at March 31, 2017, a net unrealized loss ofRs,1,520.47 lacs with a related deferred tax asset ofRs,526.20 lacs was included in OCI in respect of these contracts. Comparatively, the cash flow hedges of the Buyer''s Credit outstanding as on March 31, 2016 were assessed to be ineffective.

The management assessed that fair values of cash and cash equivalents, trade receivables, trade payables less than 1 year, bank overdrafts, current borrowing and other current financial assets and liabilities (except derivative financial instrument those being measured at fair value through other comprehensive income) approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The foreign exchange forward contracts used for hedging the recognized import trade payables / export trade receivables have been valued based on the Closing spot value. The following methods and assumptions were used to estimate the fair values:

- The fair value of quoted mutual funds are based on price quotations at the reporting date.

The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. The foreign exchange forward contracts used for the expected future sales/expected future purchase have been valued using forward pricing, based on present value calculations. These values are the realizable values which could be exchanged with the counterparty. The foreign exchange forward contracts used for the recognized export receivables/recognized import payables have been measured using the closing currency pair spot. The forward premium is separately amortized over the period of the forward. These values are close estimations of the fair values which could be realized on immediate winding up of the deals. The swap contracts and the option contracts have been valued at the market realizable values obtained from the counterparty and the same have been valued using the swap valuation / option valuation, based on present value calculations

Note 28: Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Company''s assets and liabilities.

*For valuation under level 3 following assumptions were made:

a. All repayments of borrowings will happen at end of financial year and not during the year.

b. For valuation purpose we have taken discounting rate of 11.50% which represents additional borrowing rate.

Note29: Financial risk management objectives and policies

The Company''s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include trade and other receivables, mutual fund investments, and cash and cash equivalents that derive directly from its operations. The Company also enters into derivative transactions.

The Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors through its risk managements committee reviews and agrees policies for managing each of these risks, which are summarized below.

a. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments.

The sensitivity analysis in the following sections relate to the position as at March 31, 2017 and March 31, 2016.

The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of hedge designations in place at March 31, 2017.

The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other postretirement obligations and provisions.

The following assumptions have been made in calculating the sensitivity analysis:

- The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2017 and March 31, 2016 including the effect of hedge accounting

- The sensitivity of equity is calculated by considering the effect of any associated cash flow hedges and hedges of a net investment in a foreign subsidiary at March 31 2017 for the effects of the assumed changes of the underlying risk.

i. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. To manage this, the Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. At March 31 2017, after taking into account the effect of interest rate swaps, approximately 58% of the Company''s total borrowings are at a fixed rate of interest (March 31, 2016: 50%; April 1, 2015: 55%).

The following table provides a break-up of company''s fixed and floating rate borrowing

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.

31, 2017, the company hedged 98% (March 31, 2016: 86%) of its foreign currency receivables/payables.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD and EURO rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Company''s exposure to foreign currency changes for all other currencies is not material.

ii. Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency) and the Company''s net investments in foreign subsidiaries.

The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 6 month period for the foreign currency denominated trade payables and trade receivables. The foreign currency risk on the foreign currency loans are mitigated by entering into Cross Currency Swaps. When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.

At March 31, 2017, the Company hedged 95% (March 31, 2016: 100%, April 1, 2015: 100 %), of its foreign currency loans. This foreign currency risk is hedged by using foreign currency forward contracts. At March

The movement in the pre-tax effect is a result of a change in the fair value of the financial asset/liability due to the exchange rate movement. The derivatives which have not been designated in a hedge relationship act as an economic hedge and will offset the underlying transactions when they occur. The same derivatives are not covered in the above table.

In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

iii. Equity price risk

The Company invests its surplus funds in various debt instruments and debt mutual funds. These comprise of mainly liquid schemes of mutual funds (liquid investments) and fixed deposits.

Mutual fund investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments. However due to the very short tenor of the underlying portfolio in the liquid schemes, these do not pose any significant price risk.

There is no material equity risk relating to the Company''s equity investments which are detailed in note 5. The Company equity investments majorly comprises of strategic investments rather than trading purposes.

b. Commodity price risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of rubber and carbon black and therefore require a continuous supply of rubber and carbon black. Due to the significantly increased volatility of the price of the rubber and carbon black, the Company also entered into various purchase contracts for rubber and carbon black (for which there is an active market).

The Company''s Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.

Commodity price sensitivity

The following table details the Company''s sensitivity to a 5% movement in the input price of rubber and carbon black. The sensitivity analysis includes only 5% change in commodity prices for quantity sold or consumed during the year, with all other variables held constant. A positive number below indicates an increase in profit or equity where the commodity prices decrease by 5%. For a 5% increase in commodity prices, there would be a comparable impact on profit or equity, and the balances below would be negative.

c. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables are noninterest bearing and are

generally on 30 days to 90 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored. Credit risk on receivables is also mitigated by securing the same against security deposit, letter of credit and advance payment.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.

Export customers are against Letter of Credit, bank guarantees, payment against documents and open credit and insurance cover on export outstanding under open credit is also taken. Generally deposits are taken from domestic debtors under replacement segment. The carrying amount and fair value of security deposit from dealers amounts to ''30,756.54 lacs (March 31, 2016:Rs,29,666.08 lacs; April 1, 2015:Rs,29,905.34 lacs) as it is payable on demand. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.

Other financial assets and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s

Board of Directors on an annual basis, and may be updated throughout the year subject to approval as per the Investment policy. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

d. Liquidity risk

The company prepares cash flow on a daily basis to monitor liquidity. Any shortfall is funded out of short term loans. Any surplus is invested in liquid mutual funds. The company also monitors the liquidity on a longer term wherein it is ensured that the long term assets are funded by long term liabilities. The company ensures that the duration of its current assets is in line with the current assets to ensure adequate liquidity in the 3-6 months period.

The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

e. Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company''s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Company''s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Company to manage risk concentrations at both the relationship and industry levels

Collateral

The Company has hypothecated the entire current assets to its consortium of bankers. The term lenders also have a second charge on the varied current assets.

Note 30: Capital management

For the pur


Mar 31, 2016

1. Debenture redemption reserve:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

a) Provision for warranty

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

Note :

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

c. Others

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

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

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

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

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

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

(a) CEAT Specialty Tyres Limited

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

(b) Rado Tyres Limited

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

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

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

The loan was utilized for meeting the working capital requirements.

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

39. Operating lease

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

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

4. Related party disclosures:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

- Key Managerial Personnel (KMP):

i) Mr. Harsh Vardhan Goenka, Chairman

ii) Mr. Anant Vardhan Goenka, Managing Director

iii) Mr. Arnab Banerjee, Whole-time Director

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

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

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

5. Segment reporting:

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

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

6. Other Information:

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

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

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

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

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

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

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


Mar 31, 2014

1. CORPORATE INFORMATION

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

The company has three subsidiary companies:-

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

ii) CEAT Bangladesh Limited Incorporated in Bangladesh

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

NOTE - 2

1) Contingent Liabilities: (Rs, in Lacs)

As at 31.03.2014 As at 31.03.2013

a) Direct and Indirect Taxation Matters*

Income Tax 127,71.64 19,41.01

Wealth Tax 6.73 6.73

Excise Duty/Service Tax 41,76.33 57,56.53

Sales Tax 34,79.40 46,95.99

b) Show cause notices 155,10.03 165,09.78

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

d) Corporate Guarantee

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

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

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

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

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

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

3) Other Commitments

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

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

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

5) Provision for Warranty:

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

6) Post Retirement Benefits Plan

Gratuity

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

7) Related party disclosures:

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

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

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

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

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

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

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

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

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

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

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

- Key Management Personnel:

i) Mr. AnantVardhanGoenka, Managing Director

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

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

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

8) Exceptional Items:

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

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

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

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

9) Segment Reporting:

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

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

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


Mar 31, 2013

1. CORPORATE INFORMATION

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

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

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

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

4) Other Commitments

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

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

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

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

6) Provision for Warranties

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

7) Operating Lease

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

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

8) Post Retirement Benefits Plans

Gratuity

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

Leave Encashment

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

9) Related party disclosures

a) Names of related parties and related party relationship:

Related parties where control exists:

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

Related parties with whom transactions have taken place during the year

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

Rado Tyres Limited (Associate Company)

Key Management Personnel:

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

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

10) Exceptional Items:

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

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

11) Segment Reporting:

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

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

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


Mar 31, 2012

A) Terms and Rights attached to equity shareholders:

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

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

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

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

c) Money received against Convertible warrants:

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

Also refer Note 4.

Note on forfeiture of Warrants allotted in 2010:

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

NOTE ON SECURED LONG TERM BORROWINGS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Note:

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

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

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

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

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

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

Rs in lacs

2011-12 2010-11

1) CONTINGENT LIABILITIES:

a) Direct and Indirect Taxation Matters

Income Tax 16,40.69 16,82.62

Wealth Tax 6.73 6.73

Excise Duty / Service Tax 45,60.43 43,34.38

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

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

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

d) Corporate Guarantees given on behalf of others

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

Rs in lacs 2011-12 2010-11

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

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

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

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

ii) other claims 11,80.35 12,35.10

3) CONTRACTS REMAINING TO BE EXECUTED:

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

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

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

(a) Principal Amount Due 11.89 -

Interest due - -

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5) OPERATING LEASE

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

6) exchange differences recognised in profit and loss account

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

7) AUDITOR'S REMUNERATION:

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

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

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

10) RETIREMENT BENEFITS

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

Gratuity

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

Leave Encashment

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

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

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

11) DISCLOSURE OF RELATED PARTIES/RELATED PARTY TRANSACTIONS:

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

(i) Related parties:

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

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

- Associated CEAT (Pvt.) Limited,

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

- CEAT Kelani Radials Limited

- Rado Tyres Limited ( Associate Company)

(ii) Key Management Personnel:

- Mr. Paras K. Chowdhary, Managing Director

- Mr. Anant Goenka Deputy Managing Director

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

Note: -

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

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

12) SEGMENT REPORTING:

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

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

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


Mar 31, 2011

Rs. in lacs

2010-11 2009-10

1) Contingent Liabilities:

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

Income Tax 2,41.36 2,04.60

Wealth Tax 6.73 6.73

Excise Duty/Service Tax 40,72.31 40,75.05

Sales Tax 47.59 1.56

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

Income Tax 14,41.26 10,33.41

Excise Duty/Service Tax 2,62.07 1,64.96

Sales Tax 43,70.18 60,14.86

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

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

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

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

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

2) Operating Lease

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

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

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

5) Retirement Benefits

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

Gratuity

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

Leave Encashment

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

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

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

6) Micro and Small Scale Business Entities:

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

7) Disclosure of related parties/related party transactions:

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

i) Enterprises directly/indirectly controlled

- Associated CEAT Holdings Company (Pvt.) Limited

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

- Associated CEAT (Pvt.) Limited,

- CEAT-Kelani International Tyres (Pvt.) Limited

- Associated CEAT Kelani Radials Limited

- Rado Tyres Limited

ii) Key Management Personnel

- Mr. Paras K. Chowdhary, Managing Director

- Mr. Anant Vardhan Coenka Deputy Managing Director

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

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

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

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

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

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

9) Segment Reporting:

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

10) Auditor's Remuneration:

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

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

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

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


Mar 31, 2010

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

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

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

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

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

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

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

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

9) Operating Lease

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

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

10) Exchange Differences recognised in Profit and Loss Account

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

11) Retirement Benefits

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

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

Gratuity

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

Leave Encashment

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

12) Micro and Small Scale Business Entities:

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

13) Disclosure of related parties/related party transactions:

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

Associated CEAT Holdings Company (Pvt.) Limited

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

- Associated CEAT (Pvt.) Limited,

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

- Associated CEAT Kelani Radials Limited

- RadoTyres Limited. (ii) Key Management Personnel:

- Mr. Paras K. Chowdhary, Managing Director

- Mr. Anant Vardhan Goenka, Deputy Managing Director

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

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

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

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

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

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

15) Segment Reporting:

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

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

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

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

c) Face value per share (Rupees) 10 10

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

17) Auditors Remuneration:

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

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

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

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