balkrishna industries ltd Directors report

2. INDUSTRY STRUCTURE AND DEVELOPMENT:

Your Company is one of the worlds leading manufactures of "Off- Highway Tires". It has the widest product range with more than 3,200 SKUs (Stock Keeping Units). Your Company has made its mark in speciality segments like Agricultural, Mining, Construction, Industrial, Earthmover, Port, ATV (All-Terrain Vehicle), and Turf care applications in both cross ply and radial construction.

Your Company is always paying close attention when it comes to latest market trends as well as the technological developments.

As a result of global economic slowdown and ongoing war, there is some pressure on exports which seems to be improving. We are fairly hopeful of the demand growing in the coming quarters with a reduction in inflation.

Standalone: During the year under consideration on Standalone basis, your Company achieved Revenue from Operations of Rs.9,81,052 Lakhs as against Rs.8,26,671 Lakhs during the previous financial year, an increase of 18.67%. EBITDA has decreased to Rs.2,05,343 Lakhs from Rs.2,40,610 Lakhs during previous financial year and Net profit has decreased to Rs.1,07,871 Lakhs from Rs.1,41,069 Lakhs during previous financial year. The revenue from exports is about 79%.

Consolidated: During the year under consideration on Consolidated basis, your Company achieved Revenue from operations Rs.9,75,953 Lakhs as against Rs.8,29,512 Lakhs during the previous financial year, an increase of 17.65%. EBITDA has decreased to Rs.2,05,364 Lakhs from Rs.2,44,667 Lakhs during previous financial year, and Net profit has decreased to Rs.1,05,740 Lakhs from Rs.1,43,538 Lakhs during previous financial year.

4. EXPORT HOUSE AND AUTHORISED ECONOMIC OPERATOR STATUS:

In accordance with provisions of Foreign Trade Policy, your Company continues to enjoy the "Five Star Export House" status w.e.f September 2021. In addition to this, your Company is also Authorised Economic Operator (AEO) Tier II which helps your company in faster processing and clearance of cargo, deferred payment of duty, direct port delivery/entry and other benefits.

5. PROJECTS AND EXPANSION:

Expansion of Carbon Black and Captive Power Plant: During the year the capacity to manufacture Carbon Black has been increased from 1,15,000 MTPA to 2,00,000 MTPA in December, 2022 (well ahead of schedule) leading to an increase in the capacity of power generation in the Captive Power Plant. The high value advanced Carbon Black of 30,000 MTPA is now expected to be completed by H2 FY 2024.

Modernization, Automation and Technology Upgradation: During the year under review, your Company has successfully completed the modernization, automation and technology upgradation at its Bhiwadi, Chopanki and Bhuj Plants.

Waluj Plant: The expansion at new Waluj plant to have overall capacity of 55,000 MTPA is completed.

6. DIVIDEND:

You are aware of the consistent track record of dividend payment by your Company over last three decades. In keeping with this trend, the Board of Directors are pleased to recommend a Final Dividend of Rs.4 (200%) per equity share for the financial year 20222023. This is in addition to 3 interim dividends each of Rs.4 (200%) per equity share aggregating to Rs.12 (600%) per equity share. The aggregate dividend for the year thus works out to Rs.16 (800%) per equity share. The final dividend is subject to approval of the Shareholders at the ensuing Annual General Meeting of the Company Scheduled to be held on 22^nd July, 2023. The final dividend once approved by Shareholders will be paid within the stipulated time after deduction of applicable tax at source. The Record Date for the purpose of payment of final dividend will be 11^th July, 2023.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015"), the Dividend Distribution Policy can be accessed at the Companys website at: https://www.bkt-tires.com/ww/us/investors- desk.

7. SHARE CAPITAL:

The paid-up Share Capital of the Company as on 31^st March, 2023 remains unchanged at Rs.3,866 Lakhs. The Company has neither issued shares with differential voting rights, nor granted stock options, nor sweat equity and none of the Directors of the Company hold any such shares or convertible instruments.

8. RESERVES:

The Company proposes to transfer Rs.40,000 Lakhs to General Reserves.

9. OUTLOOK FOR THE FINANCIAL YEAR 2023-24:

Concerns of global economic slowdown, the Impact of war in Ukraine and the Risks of stagflation envisaging numerous market scenarios are pressing the need for Tire Material industry players to be more vigilant and forward-looking. COVID-19 has changed the dynamics of Tire Material supply chain which is further influenced by the burgeoning drive for a cleaner and sustainable environment.

Over the last few years, the global automobile industry has witnessed a considerable increase in demand for different vehicles, which boosted the sale of Tire globally. Most of our customer segments are thriving for mechanization and modernization. This trend is expected to prevail with continuing growth in tire production and demand over the next five years.

Despite the Challenges due to global economy due to recessionary conditions, rising interest rate and political turmoil which has led to slowing of external demand, your Company is determined to grow further in "Off Highway Tire" segment with its core strength of Research and Development which is supported by the state-of-the-art manufacturing facilities. Simultaneous expansion projects at Companys plants are leading to the launch of advanced and eco-friendly tires also lead to sustainable market growth of tires. In the Union Budget of 2022-23 there is Duty tweak of Compounded rubber which according to the industry will pinch the margins. The increase in duty is in line with the demands of the All India Rubber Industry Association.

The Captive Power Plant of the Company at Bhuj will hedge energy cost and provide better flow of energy to the plant. While your Companys demand outlook is strong, our approach is to remain vigilant to ensure that we are agile and evolve our dynamics.

10. MATERIAL CHANGES AND COMMITMENTS:

In terms of Section 134(3)(l) of the Companies Act, 2013, there are no material changes and commitments affecting the financial position of your Company which have occurred between the close of the financial year of the Company on 31^st March, 2023 to which the Financial Statements relate and up to the date of this report.

Opportunities:

Your Company operates into a segment predominantly known as "large varieties - low volume segment", which is not only capital intensive but also labour intensive. Your Company is fully geared to take advantage of the peculiarities of the said segment and has developed a large base of SKUs to meet the diverse needs and applications. Your Company is witnessing gains in market leadership due to its strong and robust product portfolio.

Moreover, this segment is neither exposed to any technological obsolescence nor wild fluctuations in demand for its products.

The Company is continuously marching ahead to explore incremental opportunity in the form of developing "Ultra Large Earthmovers & Mining Radial Tires" markets and taking advantage of the shift from Bias to Radial Tires, which is growing continuously. In order to take advantage of this opportunity, the Company had set up Indias first Ultra Large size all-steel OTR Radial tire plant at Bhuj and further added capacity to cater the market demand. Your Company is continuously expanding its base into various segments like agricultural, mining, industrial, construction, winter and solid tires under both technologies - Bias as well as Radials.

Threats:

Like any other Company, your Company is also exposed to various threats like competition, retention of employees, labour issues, increase in raw material prices and its timely availability, etc.

An economic downturn or slowdown in the key markets (India and Europe) may lead to decrease in volumes and capacity utilisation. Volatile exchange rates, Price Competition and fears of aggravation in Russia-Ukraine war are some of the threats. It may increase the operating cost of running the business. Increases in raw material cost can impact the profitability of the Company.

12. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS & RETURN ON NET WORTH:

As per Schedule V read with Regulation 34(3) of Listing Regulations, details of significate changes (i.e change of 25% or more as compared to the immediate previous financial year) in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations thereof are provided in Note No. 52 & 54 of Standalone and Consolidated financial statement respectively forming part of this Annual Report.

13. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has put in place well defined procedures, covering financial and operating functions. Delegation of authority and segregation of duties are also addressed to ensure that the financial transactions are properly authorised. The Company believes that Internal Control is one of the key pillars of governance, which provides freedom to the management within a framework of appropriate checks and balances.

The Company has a robust internal control framework, which has been developed considering the nature, size and risks in the business. The Company has adequate internal control systems in place and has reasonable assurance on authorising, recording and reporting transactions of its operations. The Company has well-placed, proper and adequate internal controls environment, commensurate with its size, scale and complexities of its operations. The Company has already developed and implemented a framework for ensuring internal controls over financial reporting.

This framework includes entity level policies, processess and operating level standard operating procedures (SOP). Internal control systems are an integral part of your Companys Corporate Governance structure. Information Technology (IT) policies and processes also ensure that they mitigate the current business risks. The Company has successfully implemented ERP system, supported by SAP software & backed by necessary Bandwidth. The systems and processes are continuously improved by adopting best in class processes and automation and implementing the latest IT tools which help further for maintaining financial and commercial discipline. These have been designed to provide reasonable assurance with regard to credibility of data and compliances, inter-alia:

a. recording and providing reliable financial and operational information;

b. complying with the applicable statutes;

c. safeguarding assets from unauthorized use;

d. executing transactions with proper authorization, and ensuring compliance with corporate policies;

e. prevention and detection of frauds / errors;

f. continuous updating of IT systems;

g. managing the risk of security exposure or compromise.

Your Company has adopted Cyber Security and Data Privacy Policy. Further, your Company understands the significance of protecting personal and sensitive data (as per the regulatory provisions such as price sensitive information, details of complainant in case of discrimination or POSH related incidents) and the requirement for appropriate controls while collecting, transferring, storing and processing personal data. It anticipates that all information shall be handled responsibly in accordance with the applicable laws.

The management has assessed the effectiveness of the Companys internal control over financial reporting as of 31^st March, 2023.

The Company recognizes that in todays fast growing digital world, one must be equally conscious of cyber threats. Your Company has a robust system to prevent any intrusion into their IT systems and servers thereby protecting the IT assets of the Company.

Your Company has appointed M/s. Deloitte Haskins & Sells LLP to assess the effectiveness of internal financial controls of the Company. Their assessment was based on an internal audit plan, which was reviewed in consultation with the Audit Committee and is found to be quite adequate.

The Audit Committee reviewed the reports submitted by the Management and Internal Auditors. Based on their evaluation (as defined in section 177 of the Companies Act, 2013 and Regulation 18 of Listing Regulations, 2015), the Companys Audit Committee has concluded that, as of 31^st March, 2023, the Companys internal financial controls were adequate and operating effectively.

14. HUMAN RESOURCES:

With a motivated team of 3,472 employees (permanent) as on 31^st March, 2023, your Company is proud to inform that the employees have been the key players in its progress. This workforce is focussed towards building a Sustainable organisation. Immense emphasis is placed on to have a safe workplace with an agile team. Your Company believes in a culture of inclusion, trust, skill development, empowerment, and all-round development of its employees. Your Company continues to build strong pillars of cultural values which strengthens the business operations. Young Talent is coached and mentored by a seasoned leadership team.

Effective Communication channels help your Company to transcend its Vision and Mission till the bottom of the pyramid. Your Company visualises the greater good of its workforce which would conversely make the Company achieve its business goals in a competitive environment. Your Company keeps an "Employee First" approach and accords topmost priority to all human issues within the organisation.

The core cultural values of your Company is nurturing top quality talent, teamwork, innovation, respect for all, open door policy and creation of a future ready workforce with Happy Hearts. Your Companys organisation structure is robust and committed to deliver the best business results. Your Company through its people policies, promotes the congruence of employee personal vision and the Companys goals.

There is a constant sharing of information about the business with the employees. Your Company provides fast track career paths for the young talent. Employee engagement programmes and developmental sessions have created an outstanding workforce which is focussed and cognizant of its responsibilities. An objective performance management system has provided satisfaction and growth to all employees. Your Company strongly believes in harnessing a culture of trust and mutual respect amongst all employees. The values and principles of your Company have given good results in challenging times. Industrial relations continue to be cordial across the plants.

15. SUBSIDIARY COMPANIES:

At the end of the year under review, the Company had one Domestic and four Overseas Wholly Owned Subsidiary Companies (WOS). The domestic WOS is known as BKT Tires Limited and the Overseas WOS are BKT EUROPE S.R.L., BKT USA INC, BKT TIRES (CANADA) INC., BKT EXIM US, INC. The Company also has one step down subsidiary in the name of BKT Tires Inc. based in USA which is a 100% subsidiary of BKT Exim US, INC. The Company does not have any material subsidiary as per the thresholds laid down under the Listing Regulations. A policy on material subsidiaries has been formulated by the Company and posted on the website of the Company and can be accessed at: https://www.bkt-tires.com/ww/us/investors-desk.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial position of subsidiary companies in Form AOC-1 attached as Annexure I.

16. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (3)(c) and 134(5) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief, make the following statements that:

(i) that in the preparation of the annual accounts for the year ended 31^st March, 2023, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2023 and the Statement of Profit and Loss of the Company for the financial year ended 31^st March, 2023;

(iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the annual accounts of the Company on a "Going Concern" basis;

(v) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and

(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are adequate and operating effectively.

17. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an arms length basis. During the year, the Company has not entered into any contracts /arrangements / transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to your Company.

The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board and can be accessed on the Companys website at: https://www.bkt-tires.com/ww/us/investors-desk. The details of transactions / contracts / arrangements entered by the Company with Related parties during the financial year are set out in the Notes to the Financial Statement.

The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and proposed to be entered in the ordinary course of business and at arms length during the financial year. All related party transactions are placed before the Audit Committee for review and approval.

18. CORPORATE SOCIAL RESPONSIBILITY:

The Companys social initiatives empower society at a large and provide a holistic growth platform. The Company believes that Corporate Social Responsibility (CSR) projects undertaken by it should be sustainable with the long-term purpose of improving the quality of livelihood of the less privileged. The funds on CSR projects / activities are spent very carefully to ensure that the desired objectives are achieved. CSR Activities has been segregated as to have a reach in different areas such as promoting education, improving healthcare, sustainability, rural development.

The Board of Directors of the Company has approved a Corporate Social Responsibility (CSR) Policy based on the recommendation of the CSR Committee. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-II.

The Board of Directors has formed a committee on CSR in accordance with the Companies Act, 2013. The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, composition and attendance of the Directors during the financial year ended 31^st March, 2023 are given separately in the Corporate Governance Report. During FY 2021-22, the Company had spent excess CSR amount of Rs.11 lakhs. During the year under review, the Company was required to spend Rs.2,889 Lakhs.

The Company had identified various CSR projects having a total commitment of Rs.2,878 Lakhs and after considering the excess spend in FY 2021-22 the company has completed their obligation of Rs.2,889 Lakhs for FY 2022-23. In terms of Amendment to Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the CSR Rules 2021") effective from 22^nd January, 2021, the Company in FY 2021-22 had identified Ongoing Project upto Rs.75 lakhs of which Company had spent Rs.72 lakhs till 31^st March, 2022 and had deposited Rs.3 lakhs in separate Bank account opened with a Scheduled Bank in Compliance with CSR Rules 2021. During the year under review, out of Rs.3 lakhs, Company had spent Rs.1.5 lakhs towards ongoing Project and would spend remaining Rs.1.5 lakhs in FY 2023-24 in Compliance with CSR Rules 2021.

The CSR policy of the Company is available on the Companys website and can be accessed at: https://www.bkt-tires.com/ww/us/ investors-desk.

19. RISKS RELATED TO BUSINESS:

Risk is an integral and unavoidable component of business. BKTs nature and scale of the business operations calls for a robust risk management framework to deal with impacts of external and internal environment. In todays challenging and competitive environment, mitigating risks is imperative. The range of risks are not only limited to business disruptions to COVID-19, but include volatile commodity prices, raw material price fluctuation, growing demand of customers, cybersecurity risks, etc. Common risks include changing regulations, competition, business risk, technology obsolescence, investments and retention of talent.

Business risk, inter alia, further includes financial risk, social risk, political risk, environmental risk and legal risk. These ranges of risks have been meticulously addressed through a comprehensive risk management process. For managing risks more efficiently, the Company has undertaken a detailed risk management exercise and has identified key risks that can have a critical impact on the Companys performance. Risks, once identified, are periodically monitored, along with emerging risks on the dual scale of impact and probability. The Company has inter alia identified the following key risks:

Operational Risk:

Operational risks like equipment obsolescence can impact production. To mitigate such risks, the Company continuously monitors equipment obsolescence and upgrades equipment from time to time and undertakes preventive maintenance measures. The Company has also made significant investment in equipment modernisation.

The Companys major raw material is Natural and Synthetic Rubber, Carbon Black and Nylon fabric. Due to the high demand of all the major raw materials and shutting down of some raw material manufacturers, the prices and the supply have been adversely affected. In view of this we have experienced that an increase in cost gets set off by an increase in prices over a period of time.

Market Risk:

Your Company manages market risk by expanding its presence in different markets, deeper penetration into existing markets and by launching new products. Furthermore, the Company spends requisite amount on marketing and promotional activities to ensure customer retention and brand-building. Company has also invested in building larger network of distributors and dealers across the market to avoid the risk in case of fluctuations in market.

Labour Relations:

Since the manufacturing process of the Company is labour intensive, it requires lot of skilled as well as un-skilled workers. Maintaining a huge work force is a challenging task.

I n order to mitigate the said risk, the Company follows good HR practices to promote the welfare and safety of its workmen and maintain a cordial working environment. All workers are paid more than government stipulated wages.

Retention of skilled manpower:

Like other players in the industry, the Company is also exposed to this risk, more particularly when there is shortage of skilled manpower in the industry. However, the Company is able to manage the said risk by good HR practices and rewarding its employees handsomely. Company provides various opportunities for career development.

Currency Fluctuation:

The Company revenues are mainly through exports. Further, since most of the raw materials and capital equipment are imported, the Company is exposed to foreign currency risk. However, it enjoys natural hedge as most of its revenues are in foreign currency.

However, since, the Company is a net foreign exchange earner and mostly hedges its net exposure in advance by way of forward contracts, it is immune to a large extent from the fluctuation in currencies.

Technology Risk:

Due to growing digitalisation the company is exposed to vulnerability to cyber-attacks. To avoid such risks your company has put in place policies and procedure for data privacy. Also, adaptation of Security operations control and technologies to safeguard IT data and applications. Focus is also maintained on mandatory employee training on cybersecurity awareness.

RISK MANAGEMENT AND MITIGATION:

Risk Management is the identification, assessment, and prioritisation of risks followed by coordinated and economical application of resources to minimise, monitor and control the probability and/or impact of uncertain events or to maximise the realisation of opportunities. Risk management also provides a system for the setting of priorities when there are competing demands on limited resources. Risk management also attempts to identify and manage threats that could severely impact or bring down the organisation.

The Companys Board of Directors has overall responsibility for the establishment and overseeing of the Company risk management framework. Pursuant to Regulation 21 of Listing Regulations, Risk Management Committee was constituted comprising of Mr. Pannkaj Ghadiali, an Independent Director as Chairman of the Committee, Mr. Arvind Poddar and Mr. Vipul Shah, Directors of the Company are Members of the Committee. The primary objective of the Committee is to control the various risks that the Company is exposed to, with a view to prevent unacceptable losses, to provide an effective means of identifying, measuring and monitoring credit exposure risks by the Company and to keep such risk at or below predetermined levels. The Company has framed an Enterprise Risk Management Policy (the "Policy") to realise the following benefits for the Company:

a. Enhanced risk management for the organization including strategy setting.

b. Facilitate risk-based decision making.

c. Improve governance and accountability.

d. Enhance credibility with key stakeholders such as investors, employees, government, regulators, society, etc.

e. Create, protect and enrich stakeholder value.

The policy contains the objectives of risk management, companys approach to risk management and the risk organization structure for identification, management and reporting of risks. The policy specifies the roles and responsibilities of key stakeholders and other key personnel of the Company with regards to risk management. The policy also aims to ensure and identify process of risk identification and management in compliance with the provisions of the Companies Act, 2013.

Following objectives are achieved through the Risk Management program of the Company viz:

a. Enable organizational sustainability taking cognizance of the impact of its products, services & operations on society and the environment

b. Reduce potential gaps in achieving companys objectives

c. Align and integrate existing risk management practices in the organization

d. Build confidence of investor community and stakeholders

e. Enhanced Corporate Governance

f. Successfully respond to changing business environment

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companys Activities.

The Audit Committee oversees how management monitors compliance with the Companys risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit Committee.

There are no risks, which in the opinion of the Board threaten the existence of the Company.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the year under review, as recommended by the Nomination and Remuneration Committee, the Board of Directors of the Company has approved the re-appointment of Mr. Pannkaj Ghadiali as Independent Director of the Company for a term of five years w.e.f. 8^th November, 2022 which was duly approved by the members of the Company at the 60^th Annual General Meeting held on 7^th July, 2022.

The Company has received declaration from all Independent Directors of the Company confirming that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 as well as Regulation 16(1)(b) of the Listing Regulations, 2015.

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirement set out by the SEBI. The Company has complied with the requirements of Corporate Governance as stipulated under the Listing Regulations, 2015 and accordingly, the Report on Corporate Governance forms part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of the Corporate Governance is attached to the Report on Corporate Governance.

21. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:

The Company has devised the Nomination and Remuneration Policy for the selection, appointment and remuneration of Directors, Key Managerial Personnel and remuneration of other employees including Senior Management employees who have the capacity and ability to lead the Company towards achieving sustainable development. The extract of Nomination and Remuneration Policy is provided in the Corporate Governance Report and forms part of Boards Report.

The Criteria for appointment and remuneration of Directors is as under:

(i) Criteria for Appointment of Managing Director / Whole Time Director/ Director:

The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience particularly in Tire Industry, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.

(ii) Criteria for Appointment of Independent Director:

The Independent Director shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.

22. PERFORMANCE EVALUATION:

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to applicable provisions of the Act and the corporate governance requirements as prescribed by applicable regulations of Listing Regulations 2015.

The performance of the Board was evaluated after seeking inputs from all the Directors present in the meeting based on criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The Nomination and Remuneration Committee had evaluated the performance of individual Directors based on criteria such as the contribution of the individual Director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

The Securities and Exchange Board of India (SEBI) vide circular SEBI /HO /CFD /CMD/ CIR/ 2017/004 dated 5^th January, 2017, issued a Guidance Note on Board Evaluation about various aspects involved in the Board Evaluation process to benefit all stakeholders. While evaluating the performance, the above guidance note was considered. Performance evaluation of Independent Directors was carried out by the entire board.

A meeting of the Independent Director for the 2022-23, with Mr. Pannkaj Ghadiali as the Chairman, was held on 18^th March, 2023, to review the performance of the Non-Independent Directors, the Board as a whole and the Chairman on the parameters of effectiveness and to assess the quality, quantity and timeliness of the flow of information between the Management and the Board. The same were discussed in the board meeting that followed the meeting of the Independent Directors, at which the performance of the board, its committees, and individual Directors were also discussed. The Directors expressed their satisfaction with the evaluation process.

Statutory Auditor:

During the year under review, as recommended by the Audit Committee, the Board of Directors has approved the appointment of M/s Jayantilal Thakkar & Co. (Firm Registration Number 104133W) as Statutory Auditors of the Company, for a period of 5 (five) consecutive financial years from the conclusion of 60^th AGM till the conclusion of the 65^th AGM on remuneration, terms and conditions as may be approved by the Board and pursuant to approval of members of the Company at 60^th Annual General Meeting M/s Jayantilal Thakkar & Co. was appointed as Statutory Auditors of the Company.

The Notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report do not contain any qualification, reservation, adverse remark or disclaimer.

Internal Auditor:

The Board has appointed M/s. RTD & Associates, Chartered Accountants as Internal Auditors for a period of 1 (One) year for Financial Year 2022-23 under Section 138 of the Companies Act, 2013 and they have completed the Internal Audit as per the scope as defined by the Audit Committee.

Secretarial Auditor:

The Company has appointed Mr. G.B.B Babuji, Company Secretary in Whole Time Practice, to conduct Secretarial Audit for the financial year 2022-23 as required by Section 204 of the Companies Act, 2013 and rules made thereunder. The Company provided all assistance and facilities to the Secretarial Auditors for conducting their audit. Further, pursuant to SEBI Circular CIR/CFD/ CMD1/27/2019 dated 8^th February, 2019, Mr. G.B.B Babuji, has also conducted the Annual Secretarial Compliance. The Secretarial Audit Report for the financial year ended 31^st March, 2023 is annexed herewith marked as Annexure - III.

Cost Auditor:

In terms of Section 148 of the Companies Act, 2013 read with Rule 4(3) of Companies (Cost Records and Audit) Rules, 2014, ("Cost Records Rules") as amended from time to time, the Company maintained its Cost Records on regular basis in such manner which facilitates the calculation as may be prescribed by the Rules. The cost records are maintained in such manner which enable the Company to exercise, to the extent possible, control over the various operating costs to achieve optimum economies in utilization of resources. Since the Companys revenue from exports, in foreign exchange, exceeds 79% per cent of the Companys total revenue and pursuant to Rule 4 of Cost Records Rules of Companies Act, 2013 as amended from time to time, Cost Audit is not applicable to the Company for the financial year 2022-23.

24. AUDITORS QUALIFICATION:

There are no qualifications in the reports of the Statutory Auditors and Secretarial Auditor. There was no instance of fraud during the year under review, which is required to be reported by Statutory Auditors in their reports as mentioned under sub-section (12) of Section 143 of the Act. Subject Audit Report.

25. INDUSTRIAL RELATIONS:

The industrial relations with staff and workers during the year under review continue to be cordial.

26. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

There is no change in the nature of business of your Company during the year under review.

i. Vigil Mechanism /Whistle Blower Policy:

The Vigil Mechanism of the Company which also incorporate a whistle blower policy in the terms of SEBI (Listing Obligations and Disclosure Requirements), 2015 deals with instances of fraud and mismanagement, if any. Adequate safeguards have been provided against victimization of persons who use the vigil mechanism. The Policy on vigil mechanism and whistle blower policy may be accessed on the Companys website at: https://www.bkt-tires.com/ww/us/investors-desk .

ii. Audit Committee:

The Audit Committee consist of Mr. Pannkaj Ghadiali an Independent Director as Chairman, Mr. Rajendra Hingwala, Mr. Sandeep Junnarkar & Mrs. Shruti Shah, Independent Directors as the members. All the recommendations made by the Audit Committee have been accepted by the Board. All the members have relevant experience in financial matters.

iii. Audit Trail:

Ministry of Corporate Affairs vide the Notification dated 24.03.2021 has mandated that every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

Accordingly, your Company has already in past placed an accounting software in place which records the audit trail of each and every transaction which creates an edit log of each changes made in the books of accounts and the audit trail is being preserved by the Company as per the Statutory requirements.

iv. Number of Board Meetings:

The Board of Directors of the Company met five times in the year, the details of which are provided in the Corporate Governance Report.

v. Particulars of loans given, investment made, guarantees given and securities provided:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient are provided in Note Nos. 5,10,14, 46 and 48 to the financial statement forming part of this Annual Report.

vi. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo:

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 are provided in Annexure - IV and forms an integral part of this report.

vii. Annual Return:

Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act, 2013, copies of the Annual Returns of the Company prepared in accordance with Section 92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014 may be accessed on the Companys website at: https://www.bkt-tires.com/ww/us/investors-desk .

viii. Particulars of Employees and related disclosures:

The information required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - V.

A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Report.

However, having regard to the provisions of the first proviso to Section 136 of the Act, the details are excluded in the report sent to members. Members who are interested in obtaining the particulars may write to the Company Secretary at registered/ corporate office of the Company. The aforesaid information is available for inspection 21 days before and up to the date of the ensuing AGM during the business hours on working days.

ix. Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:

The Company has adopted zero tolerance for sexual harassment at the workplace and has formulated a policy on prevention, prohibition, and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company has complied with provisions relating to the constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company have setup ICCs to redress complaints on sexual harassment.

x. Business Responsibility and Sustainability Committee Report:

Your Company does business that delivers long-term shareholder value and benefits the society. Your Company continue to focus on its commitments which are aligned with national priorities and United Nations Sustainability Development Goals.

In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under "Business Responsibility and Sustainability Report" (BRSR). The BRSR seeks disclosure on the performance of the Company against nine principles of the "National Guidelines on Responsible Business Conduct (NGRBCs). As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for the top 1000 listed companies by market capitalisation. Accordingly, for the financial year ended 31^st March, 2023, your Company is publishing BRSR instead of Business Responsibility Report. BRSR describes the initiatives taken by the Company from an environmental, social and governance prospective, in the prescribed form is annexed as Annexure - VI and forms an integral part of the Annual Report.

xi. Compliance with the Institute of Company Secretaries of India ("ICSI") Secretarial Standards:

The relevant Secretarial Standards issued by the ICSI related to the Board Meetings and General Meeting have been complied with by the Company.

No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review:

a. Details relating to deposit and unclaimed deposits or interest thereon.

b. Issue of equity shares with differential rights as to dividend or voting.

c. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme.

d. None of the managerial personnel i.e. Managing Director, Joint Managing Director and Whole-time Director of the Company are in receipt of remuneration / commission from Subsidiary Companies of the Company.

e. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Companys operation in future.

xii. IBC Code & One-time Settlement:

There is no proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (IBC Code). There has not been any instance of one-time settlement of the Company with any bank or financial institution.

28. CAUTIONARY STATEMENTS:

Certain statements in the "Directors Report & Management Discussion and Analysis" describing the Companys views about the Industry, expectations/ predictions, objectives etc., may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the Statement. Companys operations may inter-alia affect with the supply and demand stipulations, input prices and their availability, changes in Government regulations, taxes, exchange fluctuations and other factors such as Industrial relations and economic developments etc. Investors should bear the above in mind.

29. APPRECIATION:

Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and areas as well as the efficient utilization of the Companys resources for sustainable and profitable growth.

The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the dedicated and committed services by the Companys executives, staff and workers.